PINEVILLE, Kentucky, is an unlikely place to set up a bank with global aspirations. But when Security First Network Bank opened its head office there last week, the location was irrelevant because the bank plans to offer its services almost exclusively through the Internet.
Using the Internet to connect with the bank鈥檚 computers, customers will be able to write cheques to pay bills and make inquiries about their accounts. Eventually, the bank plans to offer credit cards, and sell stocks, bonds and insurance. The bank is chartered by the US government and its accounts are insured by the Federal Deposit Insurance Corporation against losses such as theft 鈥� including the electronic variety.
To provide the connection between bank and customer, Security First is relying on Netscape, the communications program that is already widely used to 鈥渂rowse鈥� the Internet鈥檚 World Wide Web. The scheme uses an encryption technique in which a publicly known 鈥渒ey鈥� can be used to encrypt a message while a secret, private key is needed to decrypt it. For now, the banks鈥� customers will all be from the US. To trade internationally, which the bank wants to do soon, it will have to restrict the complexity or 鈥渟trength鈥� of its keys, because it is illegal to export strong encryption from the US (Technology, 2 September).
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At the start of each banking session, the customer鈥檚 Netscape program produces an encryption key unique to that session. It then encrypts the key with the bank鈥檚 public key and transmits it to the bank, which decodes the message with its private key. In this way, both the bank and the customer can be certain that they are communicating with one another and not a hacker.
The bank鈥檚 computers are protected by 鈥渇irewalls鈥� intended to stop hackers from penetrating the system. Bank officials claim that the encryption system provides a 鈥渧irtual bank vault鈥�, as safe as any bricks-and-mortar bank.
But virtuality only goes so far: the money in a customer鈥檚 account has to come from somewhere. Security First says customers can have their pay cheques electronically credited to their accounts, or money can be wired in. Failing that, customers will have to mail a paper cheque with funds for their account to Security First using real stamps.