E-Trade Group is adding a layer of high-tech security to its on-line investment service.
The company said this week that it will work with Verisign Inc., a leader in the field of electronic authentication, to provide all clients with digital certificates.
A spokeswoman for the Palo Alto, Calif., Internet brokerage said it will phase in the issuance of certificates and expects all customers to complete the registration process by yearend. On March 31, the close of the fiscal half-year for which E-Trade reported revenue of $57.2 million and net income of $5.3 million, the company said it had 145,000 active accounts.
Marketed by Verisign as Digital IDs, the certificates provide a high level of assurance that a remote computer user is legitimately signed and authorized to conduct on-line transactions.
E-Trade becomes one of the few financial services providers to add digital certification to a currently available service, though Verisign and its competitors indicate that many more are likely to follow.
This year Liberty Financial Cos. of Boston began using digital certificates to safeguard on-line access to its Stein Roe mutual fund family and other affiliates. Like E-Trade, Liberty saw the security measure as a selling point.
Liberty relied on BBN Corp., an Internet technology pioneer in Cambridge, Mass., for its digital certificates. In May, BBN agreed to be acquired by GTE Corp., whose Cybertrust product line is a principal competitor of Verisign's.
E-Trade said the certification method will simplify the log-in and password process. And president and chief executive officer Christos M. Cotsakos pointed out that customers' personal certificates can be put to other uses.
"We believe our customers will quickly appreciate (that) their customized Verisign Digital IDs can be used to access and communicate with E-Trade as well as serve as a universal ID card for the Internet," he said.
"Internet investing services are growing dramatically," said Stratton Sclavos, president and CEO of Verisign, Mountain View, Calif. He said "even more exciting new services" will grow out of the alliance with E-Trade over the next year.
Banks, still relying mainly on passwords and available forms of data encryption, have not yet put their home banking systems on the certification bandwagon. But in another sense banks are big promoters of the concept, because it is a key component of the MasterCard-Visa Secure Electronic Transactions protocol for Internet credit card payments.
Verisign, exploiting a "preferred vendor" relationship with Visa International, is vying with MasterCard and American Express partner GTE for SET business. It stresses it can be a "one-stop shop" for all certificate applications, Verisign SET product manager Rita Proano said in an interview last week.
Verisign, a spinoff of data encryption provider RSA Data Security Inc., has issued a million of its branded IDs to users of Microsoft Corp. and Netscape Communications Corp. Web browsers. Visa and the Discover Card organization are among those using Verisign for customized IDs.
"Because our brand doesn't have to show through, it makes it easier for banks to accept (Verisign's approach), and we offer a quick time to market," said Anil Pereira, the company's director of corporate marketing.
"Many if not most financial institutions are investigating how they will use digital certificates for authentication," Ms. Proano added. "I don't think everyone will jump in at once. I see it unfolding slowly and taking off in the next year."
