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A biometric banking encryption device offers a new way to conduct transactions.
Esther Shein, CFO Magazine
November 1, 2007
It's just a box, a little red box. But soon, that little red box may change how banking is conducted.
Known as "CryptoVue," the biometric encryption system enables banks to conduct a wide range of financial transactions and data-processing chores wirelessly, reducing their dependency on T1 lines and other land-based networks.
Considering that feature, it's hardly surprising that community banks in Gulf states have been the first to embrace CryptoVue. In the small Mississippi bayou town of Plaquemine, Louisiana, Iberville Bank installed a CryptoVue box roughly six months after Hurricane Katrina devastated the area. Bank senior vice president James LaBauve says Iberville management had been looking for more efficient — and more reliable — ways to send document images between the bank's branches, operations center, and receiving banks (for settlement).
In the past, Iberville had relied mostly on 512k lines to connect its 13 branches and operations center. The network was not only subject to bad weather, it was starting to sag under increasing data traffic. "It made a lot of sense to go wireless," explains LaBauve. "It provides substantially more bandwidth than copper channels."
It's also cheaper than hiring messengers to deliver checks. LaBauve reckons Iberville Bank will save about $70,000 annually in courier charges alone.
Is It Meant to B2B?
Wireless networking is nothing new, of course. Scores of businesses routinely use wireless networks for intercompany communications as well as consumer offerings. But wireless networking is a radical departure for financial institutions. For years, banks have sent data over expensive private networks, in large part because they believe that financial data is too sensitive to risk sending out over public airwaves.
CryptoVue, which is coupled with Motorola's Canopy wireless technology, addresses that concern. The system features biometrically controlled encryption and a packet-filtering firewall. John Burns, CEO of ERF Wireless Enterprise Network Services, CryptoVue's maker, says multiple financial-institution controls are required by federal and state regulators, who typically recommend that the vendor implement tertiary controls (meaning that ERF monitors the device 24/7). Currently, five smaller bank groups in three states — Louisiana, Texas, and Missouri — have deployed CryptoVue-based networks.
Large commercial banks, on the other hand, have been slow to warm to the concept of wireless networks. Managers of business-to-business financial operations remain particularly skeptical. This is understandable, given the more complex requirements of contracts, payment orders, letters of credit, and the like. In fact, some industry insiders aren't convinced wireless transmissions will catch on in B2B banking any time soon. Says Don Rhodes, policy manager, Payments and Technology, at the American Bankers Association: "Bankers think the impact will be more on the consumer side, particularly for bill payment."
Maybe. But consumer-aimed technologies have often found their way into the workplace (see "Crossing Over," February), and that pattern has held for the banking sector as well. "These things usually start in retail," notes Brad Strothkamp, a senior analyst with Forrester. "Then they move into small banks for true business-to-business [use]. That's the path online banking took."
IT consultant Steven Omelan sees a steady — but measured — rollout of wireless-banking services. The former head of technology services for Fidelity National Information Solutions, Omelan reckons only about 10 percent of retail banks will convert from private to public networks this year. "Security and reliability concerns for delivery of the services will slow it down slightly," he says. "But it's coming."
Back in Louisiana, Iberville Bank management doesn't seem overly worried about the security of wireless banking. In July, it signed another deal with ERF. That project will tap the bank's excess network capacity to provide wireless Internet-service products to retail and commercial customers in Baton Rouge.
Esther Shein writes about business technology.