Royal Bank of Canada has a stake in a new wireless technology company formed to develop banking and brokerage over personal digital assistants.

Baldhead Systems Inc., a Toronto electronic commerce software developer, and Royal formed Sona Innovations Inc. to develop secure wireless financial services.

The bank, which provided financial backing and some technical people, has a 20% equity stake in Sona. Baldhead, which contributed developers and intellectual property, holds the remaining 80%. Other financial terms were not disclosed.

The deal accelerates the development of wireless banking for personal digital assistants over cellular phones. Royal has been testing wireless banking over smart-card-enabled digital phones since last year with Microcell Solutions Inc.

Though that partnership continues, the bank has opted to make wireless banking available on personal digital assistants first, said Tom Wolf, senior vice president for electronic business at Royal Bank. The bank expects to begin promoting the customized, co-branded service to its 10 million banking and brokerage customers by yearend. Sona also plans to sell the wireless service to other banking companies, first in North America and then globally.

Use of personal digital assistants in Canada has exploded in recent months, said Miro Forest, president of Forest Telecom Consultants in Toronto. When the market got so hot, he said, "everyone wanted information about their portfolios instantly. So the population of Palm Pilots is high in a place like Toronto, where Royal Bank will do most of this business."

Sona will use Baldhead technology that takes advantage of Secure Socket Layer encryption to safeguard transactions. The method does not require customer passwords to be decrypted at any time.

"Baldhead is one of the first developers to implement this for personal digital assistants," Mr. Wolf said. "Eventually it's the way all devices will go."

With the Microcell device that Royal is also testing, a piece of middleware is required to convert Web-site information into an Internet protocol before it can be distributed to a cell phone. "When you do that conversion, there's a moment when that information is in the clear," Mr. Wolf said. "Ultimately we'll secure an end-to-end session for our customers."

Last month Royal Bank invested $10 million in Mediagrif Interactive Technologies of Montreal. The two will create a $14 million joint venture that will build digital marketplaces for Royal Bank's 430,000 corporate customers.

"We're following along with our business-to-business strategy [with Mediagrif] and with our device and channel strategy [with Baldhead]," Mr. Wolf said.

Bill Halpenny, the vice president of sales and marketing at privately held Baldhead, said Royal will be Sona's first customer but the new company is talking with other banks.

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