The competitive need for on-line banking and the revenue potential of on-line discount brokerage means that Internet ventures by financial institutions are a top priority.
But, as Netizens realize, all Internet banking applications are not created equal, which is why Toronto-based Scotiabank defined two objectives early in the development of its on-line banking and discount brokerage Internet site: Make it among the most secure sites on the Internet and enable virtually seamless movement between applications. "We felt that building piecemeal products and selling them through independent delivery systems is not the way to go," says Robert Marshall, evp of retail products at Scotiabank. "We decided we needed to wrap a security blanket around all these systems and make them available in a very similar interface to our customer(s)."
Customer focus groups made it clear to the $176 billion-asset institution early in the process that security was customers' primary concern. The bank turned to Ottawa-based Entrust Technologies to create a security system that Scotiabank officials contend is among the most secure in the world.
Entrust's underlying technology includes 128-bit public key encryption and digital certificates generated for each end user. Scotia is positioned as the certification authority. "There's no question that to crack the algorithm it would take a million PCs a thousand years, and they still couldn't generate enough computer power," says Entrust president and CEO John Ryan.
Further, Entrust's client software is downloaded off the Web onto the customer's PC so that no personal information ever enters the network. Customer data is encrypted at the application level, as opposed to most Secure Sockets Layer (SSL) servers which encrypt data only while in transit. This distinction sets the Scotiabank site apart from SSL-secured sites because it prevents would-be hackers from stealing customer data by creating a "spoof" site, Ryan says.
For a Scotiabank-like application, Entrust charges between $10 and $20 per user, which translates into a huge cost savings over that being spent by financial institutions using dial-up systems. "If you have an Entrust infrastructure for an average cost of $15 per user, you can add 100,000 users," Ryan says. "If you had that number for banking and brokerage on dial-up modems, the cost would just be astronomical."
Having great security, however, doesn't engender confidence if customers aren't aware of it. So while navigating the site, several screens remind customers that the site is secured by Entrust, with a brief explanation of the technology. "When (electronic commerce) does take hold, it will be because people realize there is a distinction between a secure site and something that isn't secure," Marshall says.
Beyond security, the other objective of Scotiabank's Internet site is to Webcast customer-centric applications in an effort to enhance customer satisfaction and increase cross-selling opportunities. To this end, after customers log into the Entrust-secured Scotiabank site, they can easily peruse any business line of the bank. They can conduct standard on- line banking functions like balance inquiries and transfers, bill payment and Visa transaction reviews. And with a click of the mouse-no need to logout or enter separate passwords-discount brokerage customers can access a newly created StockLine application to order trades, get real-time quotes, view their portfolios and read portfolio-related news stories (Trades are not executed in real-time as Canadian regulations stipulate all trades must be reviewed by a broker.).
Scotiabank officials say they seriously considered buying an existing on-line brokerage firm to facilitate rapid entry into consumer trading, but, in the end, decided to develop the offering in-house because "in having control over the product and its evolution, in the future, we can begin to develop the competitive advantage we feel will be required," says Andrew Scipio del Campo, president and CEO of Scotia Discount Brokerage.
And having these two distinct businesses so easily navigable for consumers will give Scotiabank a significant competitive advantage in the industry. Says Scipio del Campo, "We think this will be a natural facilitator in terms of cross-selling, really from the first moment, and building as we build our site."
-sausner tfn.com
