FleetBoston Begins Offering Virtual Safe-Deposit Boxes

In the latest attempt at generating an online banking revenue stream, FleetBoston Financial Corp. is introducing a new service for what may end up being a pretty narrow market: virtual safe-deposit boxes.

Some smaller companies already provide similar services but haven't gotten a lot of takers, said Paul Jamieson, an analyst at Gomez Advisors Inc. in Lincoln, Mass. Other virtual lockbox services include SafeDepositBox.com in Atlanta, used by Alpharetta, Ga.-based NetBank Inc. and Fort Lauderdale, Fla.-based BankAtlantic Bancorp. Zions Bancorp in Salt Lake City also offers a virtual safe deposit box. Jamieson said he doesn't expect much demand for digital lockboxes, at least initially.

The potential cost of the virtual lockboxes is $120 per year, and that's a high price to pay for electronic storage these days, said Richard Bell, an analyst at Needham, Mass.-based TowerGroup.

Nevertheless, Jamieson said he does expect Fleet's banking competitors to jump into the fray, if only to be able to boast to their customers that they offer comparable services.

Last week, Fleet announced plans to launch a system that will let customers to store important electronic documents in password-protected accounts. The FileTrust service is scheduled to be launched at the end of next month in a pilot project aimed at small businesses. It's expected to be followed by an extended service for individual customers early next year. Large firms will eventually be able to use customized versions of the technology.

The rollout of FileTrust is related to the new federal law that went into effect Oct. 1 that gives weight to digital signatures and the storage of business documents in electronic form. FleetBoston officials said they expect companies to soon have large collections of legal, tax-related and other documents that need to be kept online in a secure location.

Users will be able to rent space on the FileTrust system and upload or download files via the Web using a personal identification number and a password to gain access to documents, at a cost of up to $10 a month. Pricing will be based on the features customers use and their existing business relationships with the bank, said Blaise Heltai, managing director of global Internet strategy at FleetBoston.

Companies will also be able to set up guest access privileges to let other users like lawyers or accountants view specific files that are stored in their allotted areas of the system.

That could create potential security problems, according to Bell. "It's only as secure as the password," he said, adding that banks require traditional lockbox users to do more than just have a key - they may need to show photo identification, for example.

But according to Robert Erman, general manager of the Boston office of New York-based Plural Inc., which developed the product for Fleet, more security features - such as smart cards - will be added to the system in the future, though he declined to offer time frames for those features.

"One of the trade-offs is having mass availability," Erman said. Customers who use the electronic lockbox to store sensitive documents for use while they travel might not have smart-card readers or retina scanners everywhere they go, he explained.

Fleet also plans to offer services like digital signatures and electronic notarization.

Copyright © 2000 IDG Communications, Inc.

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