Internet banking refers to systems that offer bank customers access to their accounts and general information on bank products and services through a Personal Computer (PC) or some other technical device. Internet banking products and services can include wholesale products for corporate customers as well as retail and fiduciary products for individual consumers. Thus, products and services obtained through Internet banking may mirror products and services offered through other bank delivery channels, such as Cash management, Wire transfer, Automated Clearing House (ACH) Transactions, Bill Presentment and Payment. Other Internet banking services may include providing Internet access as an Internet Service Provider (ISP).Internet banking as a subject has been receiving great attention in the banking industry and on the part of regulatory authorities. As with other areas of e-commerce, discussions about Internet banking often proceed without reference to the actual state of market developments. Historically, banks have used information systems technology to process checks (item processing), drive ATM machines (transaction processing), and produce reports (management information systems).In the past, the computer systems that made the information systems operate were rarely noticed by customers. Today, Web sites, electronic mail, and electronic bill presentment and payment systems are of significant importance for banks to reach their customers. All banking services including electronic payments, loans, deposits, or securities have become heavily dependable on information and telecommunication technology. It is mainly due to this, that the banks are the biggest users of IT equipment.However, with improvements in the quality of services the important question appears purporting whether this process can provide economic value for banks? Needless to say that every increase in the customers satisfaction does not transfer itself into the higher bank profits, especially in the case of very expensive investments in IT and telecommunication equipments. This paper describes the current state of Internet banking and discusses its implications for the banking industry and regulatory policy in Iran.