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First Union locks up e-banking

First Union launches a four-month trial to test the use of digital certificates in home banking over the Internet.

First Union (FTU), a bank-holding company with 12 million banking customers, today said its launching a four-month trial to test the use of digital certificates in home banking over the Internet.

Certificate authority GTE CyberTrust will issue the electronic IDs under First Union's brand name. First Union says it is the first bank to use digital certificates for online home banking.

"I think this will help consumer perception about the security of [Internet banking]," said Cliff Condon, senior analyst at Forrester Research. "The security issue is slowing people's adoption rate of using financial services on the Internet."

The certificates verify the identity of online users and simplify the log-in process. Today online customers must enter an account code, personal identification number (PIN), and password. With the digital certificate, users will still need a password.

"Digital certificates are a very new technology, so everything we are learning is absolutely new," said bank spokeswoman Mollie Shook, who named customer response and security as two key reasons why the bank is testing the technology.

By early fall, CyberTrust will issue certificates to a limited number of users of First Union's existing Cyberbanking service. The certificates, which use public-key encryption techniques, will provide user identification, access to user accounts, and data security.

Initially digital certificate customers will be able check the balances of their accounts. Later, First Union will let them pay bills and transfer funds.

For CyberTrust, the deal is notable because it is its first announcement in the Internet home-banking segment. Forrester Research projects home banking will reach 7.3 million households and manage $46.9 billion online by the year 2001. Different sorts of digital certificates also will be used for online credit card transactions and for secure email.

First Union is the nation's sixth-largest bank-holding company with assets of $137 billion as of March 31.