An investment in a Canadian company is expected to help Citigroup Inc. deliver financial services over wireless devices sooner.

Citigroup's advanced technology unit, e-Citi, and the Helsinki telecommunications company Sonera Ltd. announced last week that they have taken a combined 40% stake in 724 Solutions Inc., a software company that has made a mark in financial services through its involvement in Bank of Montreal's Veev wireless service.

The companies declined to say how the 40% is divided. Sonera invested $25 million, a Sonera senior vice president, Harri Vatanen, confirmed. But e-Citi was less forthcoming. Alan Young, vice president of access devices and distribution technologies, said only that it has injected "enough money to roll this out globally on an accelerated basis and to cut down the cost of delivery on a global scale."

724 Solutions said it will use a data encryption security program from Sonera to deliver Citigroup's services worldwide over such devices as mobile phones and smart phones, personal digital assistants, palmtop computers, and digital televisions. Citigroup's customers could then gain access to their bank accounts, pay bills, transfer funds, and trade securities.

The service would be made available to other banks.

Analysts are anticipating explosive growth in the hand-held device and phone market, with a billion phones alone projected worldwide within four to six years. GartnerGroup, among others, sees wireless phones becoming the most common client device by 2005. Citigroup sees the devices as a way to achieve its goal of increasing its retail customer base from 100 million to one billion by 2010.

"To do this we needed to look at electronic means," Mr. Young said. "The Internet is a big part, but mobile phones have the potential to be even bigger." He added, "We want to serve more customers for less money while maintaining a profitable relationship."

724 Solutions, meanwhile, wants to reach 200 million customers through financial institutions, said Greg Wolfond, chairman and chief executive officer. "This goes a long way toward getting there. We think more banks will come on board this year to make it happen.''

Since May, Bank of Montreal and Bell Mobility, a division of Bell Canada, have been testing mobile banking with 400 customers using 724's software. The Canadian bank plans to roll out its Veev service at its U.S. subsidiary, Harris Bankcorp of Chicago, and at Bancomer of Mexico, in which Bank of Montreal is a shareholder.

Last month privately held 724 Solutions said it would begin testing wireless banking with Bank of America Corp. next year.

Mr. Young said e-Citi negotiated its investment in 724 Solutions "on a rapid time-scale. We liked the technology, and after hunting far and wide we couldn't find another provider that had the breadth of service 724 offered."

Sonera, through its SmartTrust mobile commerce division, will contribute digital signature technology and 1,024-bit data encryption to 724 Solutions' applications.

Sonera, formerly the state-owned Telecom Finland Ltd., is the largest of 50 telecommunications operators in Finland. More than 60% of Finland's population of five million have mobile phones. This is said to be the highest mobile-phone penetration in the world.

Sonera has been working with OkoBank of Finland since early 1996 to offer customers real-time access to bank account information via handsets.

"We have been innovative in mobile banking," said Mr. Vatanen, founder and president of Sonera's SmartTrust unit. Explaining the investment in 724, he said, "We needed a company to deliver software packages to banks. If you put our security and wireless technology know-how with 724's applications, you have a powerful combination."

He said the investment would enable Sonera to take advantage of expected growth in the number of wireless terminals that use the global system for mobile communications standard, or GSM, which is ubiquitous in Europe and growing quickly elsewhere. The number of these devices is expected to triple within four years from the current 300 million.

Mr. Vatanen said he sees great potential in the United States in next five years because of its high Internet penetration. "It's powerful when you combine the Internet and wireless technology,'' he said.

Citigroup said it envisions delivering services beyond banking. Customers could, for example, use mobile phones to compare airfares and check in at airports. "e-Citi believes it will enable us to deliver electronic commerce services in real time to our customers wherever they are, at whatever time they choose, over any device,'' Mr. Young said.

Mr. Vatanen said Sonera is "looking at new locations to meet local requirements." This could mean additional investments in 724 Solutions. Sonera already has three development centers in Germany, two in the United Kingdom, and one in Hong Kong.

724 Solutions said it expects its staff of 100 to double in the next year. "We are hiring an average of five to six people a week," Mr. Wolfond said. The company plans to open offices in San Francisco and New York, and is looking to expand in Asia and Europe.

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