In five years, everybody will have a plastic card in their pocket that will be accepted for almost every type of transaction. By the end of this decade, even the State pension will be paid electronically and spent via a card.

That's the prediction of Mr Tom Conlon, manager of payments strategy at Bank of Ireland.

We are undergoing a transition in personal banking, he says - a move away from cash and cheques to electronic transactions.

The main banks admit that they have not covered themselves in glory in their handling of this transition.

In some quarters, the relationship between banks and their customers has become an uneasy one, characterised by poor communication, frustration and disappointment. So where did it all go wrong, and are things really that bad?

Customer dissatisfaction is based, to a large extent, on resistance to change and what is seen as the cavalier, greedy actions of the banks. Privately, the banks complain that Irish customers are a bit spoilt.

The problem is that banks do not see themselves as a public service, while their customers have come to think of them as exactly that. When it comes to money, things get personal.

But banking does not operate in a vacuum. It reflects and drives the way we carry out our commercial and personal transactions - business to business, business to consumer, and consumer to consumer - for large and small values.

It's now possible to avail of financial services through your supermarket and to pay bills and move money around online, at ATMs or over the telephone. Tesco Personal Finance, which offers a credit card in the Republic, is planning to extend its financial product offerings next year.

Also next year, British company PayPoint will be establishing a presence in the Republic, in more than 100 locations, providing bill payment services in convenience stores and petrol stations.

An Post is firmly established in the retail payments business and has the biggest network, with over 1,900 outlets at its disposal. The managing director of the post offices division, Mr Eamonn Ryan, says An Post is prepared to bid for any transactional services. It also operates an online bill payment service, billpay.ie, and the One Direct call centre, which sells other financial services and products.

Despite the growth in providers of banking-type services and of retail payment options, any moves by the banks to restrict over-the-counter transactions generate strong protests.

Whether bank customers really are hard done by because of restrictions on cheque cashing, for example, is a matter of opinion. The Consumers' Association of Ireland (CAI) would argue that customers are being unfairly treated. The banks say they are introducing new services and channels a lot faster than they are phasing out existing over-the-counter services.

Before examining the overall strategy for the development of personal banking in the Republic, let's cast our minds back to the branch network of 15 years ago.

It was all so different in the old days, when the local bank branch was like a cross between a community centre and a gentlemen's club. The wise and friendly bank manager greeted each customer with a cheery hello and his door was always open.

You could fill out lodgement and withdrawal slips to your heart's content, cash cheques and have your money counted out and handed to you by a human being.

And that was about it. For the grand total of 21 hours a week, banks provided their services through one channel and one channel only - the branch network. The customer base was much smaller because less people had bank accounts or jobs, and more people existed on cash from week to week.

The kinds of problems and complaints that are arising now are an echo of what happened in the mid-1980s, when the banks were pushing to get people to move from cash to cheques.

Now we are very fond of cheques. Within the EU, the Republic has a level of cheque usage rivalled only by France. Even allowing for the fact that some other countries have traditionally depended on credit instructions rather than cheques, the Irish position clearly lags behind others in the use of card-based, credit transfer and direct debit transactions.

Today's battle, as the banks see it, is to get customers to move to electronic payment and to make use of remote banking services. And the banks admit they have not done themselves any favours in the manner in which they have implemented these changes.

The CAI is calling for consultation with customers before the withdrawal of any service, and flexibility on the part of the banks to accommodate the needs of vulnerable groups.

Irish financial institutions are engaged in a range of initiatives to develop the retail payments system. These include the development of internet platforms, examining a move to online debit card processing and the prospects for "electronic purse" (a reloadable plastic card for small change transactions) technology.

Last year, a Department of Finance/Central Bank working group reported on strategic issues facing the Irish banking sector.

It reported the likely scenario was that remote electronic delivery would become at least as important as branch-based delivery over the period ahead. However, it noted that branches would continue to play a key role in the distribution of banking products.

The report suggested that the significance of the branch for the bank-customer relationship would be uncertain and changeable over the next five years. It recommended that the regulatory authority for the financial services sector should monitor and report on this from a customer perspective. The single financial services regulator has still not been set up.

But how do the banks themselves see the role of the branch network evolving?

According to Mr Eugene Sheehy, managing director of AIB's operations in the Republic, retail banking in the high street is still very strong and the bank is investing in the network.

"Banks in Ireland will continue to invest heavily in the branch networks but what's going on inside branches will change," he says. Mr Sheehy estimates that the overall number of AIB branches will probably be the same in five years' time, but that the branches will be geared towards savings and investment advice and "richer and more complex" services.

Bank of Ireland also reaffirms its commitment to keeping a presence in every community.

"In the future, we will have branches where you can drop in for other services rather than drawing out cash, and there'll be time to have a meaningful relationship with the bank staff," Mr Conlon envisages.

In five or 10 years, there will be more new brands operating in the Irish market, and household names will continue to disappear. The latest newcomers - Bank of Scotland, Northern Rock and MBNA - have been good for competition and shown that the market is open.

In the meantime, consumers' biggest drawback is inertia. Customers have the freedom to respond to banking practices they don't like by moving their business elsewhere, but they do not.

Customers don't have to purchase the in-house investment or insurance products recommended by their banks - but they do. They do not have to pay the highest rate for current account charges - but they do. They don't have to leave their savings on deposit with the institutions offering the worst rates of interest - but they do.

Complaining is all very well, but the best way for disgruntled customers to get results is to take advantage of the market and seek out the best possible deal for their money.