World Bank Alliance Goes Live

Computerworld - A group of four major banks based in Europe and the U.S. said last week that they have gone live with a system that will guarantee the identity of the players making large electronic payments on business-to-business exchanges.

The technology, which uses smart cards to confirm identities, was developed by New York-based consortium Identrus LLC and provides a legal framework for large financial transactions.

Bank of America Corp. in Charlotte, N.C., and European financial institutions ABN AMRO Holding NV, Deutsche Bank AG and HypoVereinsbank AG are the first to deploy business-to-business payment applications based on the system developed by Identrus, which was formed last year by a group of eight banks. The consortium now has more than 30 members, including The Chase Manhattan Corp. and Citigroup Inc.

Identrus spokeswoman Laura Rime said business customers of the participating banks are eligible to receive a digital certificate and a smart card. A customer would then use the smart card to log on to a Web-based system to make electronic payments to other companies that also have Identrus certificates, she said.

Identrus is a vendor-neutral consortium of financial institutions and, as such, is the closest thing the business world has to a global standard for securing large-scale electronic payments, said Avivah Litan, an analyst at Gartner Group Inc. in Stamford, Conn.

"You need a bank-owned consortium to pull [the development of such a standard] off," Litan said. However, she added, a recent Gartner survey showed that moving to digital certificates for processing business-to-business payments isn't a high priority for most companies, with less than 1% of business-to-business transactions currently authenticated with digital certificates.

"User IDs and passwords work fine today," Litan said.

But Amsterdam-based ABN AMRO, for one, is already using smart-card technology for corporate customers using its proprietary Windows-based online banking systems.

Identrus will enable the bank to maintain the same level of security as it moves to an open, Web-based system, said Susan Stellini, senior vice president of global transaction services at ABN AMRO.

Read more about Financial Services in Computerworld's Financial Services Topic Center.