Citigroup Inc. is hoping to create a business out of offering corporate treasurers digital credentials, a technology that has been available for years but seen little use in the banking industry.
The credentials, often called digital signatures, let people use encrypted data to verify their identities. That capability has become more important as online fraud has become more common.
The New York company has already tested two credential-related services - one that would give treasurers permission to initiate high-value wire transfers, and one that would automate changes to multiple customer accounts - and it is planning to develop other applications that could be offered as commercial services for a fee.
Gary E. Greenwald, the global head of information products in Citi's corporate and investment banking global transaction services unit, said that the technology is well established, and that the hurdle for his unit has been to demonstrate the value of digital credentials for customers.
"If you can show an ROI on this thing in some way, all these things are poised to come together," Mr. Greenwald said in an interview last week.
Companies are willing to pay for a digital signature service because it makes wire transfer payments more secure, and Citi is preparing to roll out the transfer service worldwide, he said. "We're at the point where we're ready to scale it. We're ready for the global ramp-up and rollout phase."
Arlene S. Chapman, a senior consultant to the Association for Financial Professionals, a trade group for corporate treasurers, said that early signature applications were "too complicated for cost-efficient and effective adoption."
However, the market has shifted for several reasons, including the growth of electronic commerce, increased concern about identity theft, and an increase in international payments, she said.
"All these factors have come together and are heightening the interest and awareness in these digital identity products and processes," Ms. Chapman said. Citi's signature services are "a good step" that would be useful to corporate treasurers.
The signatures are based on public-key infrastructure, which has been widely accepted as a complex but effective encryption format.
Mr. Greenwald said Citi is already offering its signature service for nonfinancial uses. For two years the company has provided credentials to employees of a pharmaceutical client performing clinical trials for the Food and Drug Administration.
However, electronic authentication also falls squarely into Citi's bailiwick as a provider of cash management services to corporate customers, he said. "The center-of-the-plate use case should be financial transactions."
Last month at the annual Sibos conference sponsored by the global financial cooperative Swift, Citi announced that it had used the electronic credentials for a financial transaction: A treasury executive of the French food company Group Danone had authenticated himself to set up a wire transfer from Citi, and BNP Paribas SA had relied upon the credential to accept the payment.
Mr. Greenwald said that Citi has developed another cash management application, which can automate changes to a company's accounts, such as when an employee, as a result of a promotion, is authorized to initiate payments.
In the past such an employee would have had to sign signature cards for potentially hundreds of accounts, but the digital credential transforms the process into "a global search and replace process," he said.
Three companies, which he would not name, are testing that service now.
Banks are in a natural position to offer digital credentials, and corporate customers are more likely to trust a bank than a technology vendor, Mr. Greenwald said. "At the end of the day, there's a profound difference between a digital identity issued by the two-guys-in-a-garage identity company and one issued by Citigroup."
Susan Feinberg, the research director in the wholesale banking group of TowerGroup, a Needham, Mass., market research unit of MasterCard Inc., said, "Citi is creating a new business in identity management, being that trusted party and having very stringent practices how you authenticate an individual.
"People are now starting to focus on what are the business problems and the business applications, rather than the technology," Ms. Feinberg said.
Authenticating corporate treasurers is becoming a more important task, she said. Swift - formally the Society for Worldwide Interbank Financial Telecommunication - changed its rules this year to let companies connect directly to the SwiftNet messaging network, rather than connecting only indirectly through their banks.
"Swift never cared about user-level authentication" in the past, because the bank took responsibility for confirming the identity and authority of the sender of a payment message, but now that users make those confirmations directly to SwiftNet, there is a bigger need to validate the customers, she said.
Karen J. Wendel, the chief executive officer of IdenTrust Inc. of San Francisco, which provides the technology underlying the credentials, acknowledged the difficulty of establishing the signatures not only as a reliable standard technology but also as a viable business.
"Citi is known as a technology player," she said. "Citi is willing to go out, test it, see how it works, and iterate. It's a great way to get things moving."
Right now 22 banks around the world use IdenTrust's credentials, mainly to authenticate their own corporate customers, Ms. Wendel said. The Citi wire transfer test was significant, because a second banking company was able to rely on the credential, she said.
"The other guys are still trying to figure out where the market is going to go," she said. "We need to have a couple more of the world's largest cash management banks" before this approach to identity management will take off in the market.
