Major Bank Introduces Online Safe-Deposit Box

B O S T O N, Oct. 11, 2000 -- Metal safe deposit boxes have been a longtimestaple of the banking industry.

But that was last century.

With a new federal law that took effect Oct. 1 making digitallysigned documents legally binding, valuable electronic documents arenow as sure to pile up on computer hard drives as their paperpredecessors did in metal file cabinets.

It’s only natural that banks would be ready to step in and offersecure storage havens.

FleetBoston Financial Corp. on Tuesday launched an online safedeposit box system called fileTRUST, calling itself the first majorbank in the country to offer the service.

The virtual boxes are initially aimed at small business ownersand will offer 24-hour access to whatever digital information acustomer chooses to store inside them.

Regardless of whether Fleet’s system is successful, itsintroduction by the country’s eighth-largest bank could makevirtual safe deposit boxes more widely available, analysts say.

“It doesn’t take much time, once large institutions do things,to trip a domino effect,” said Richard Bell, an online bankinganalyst for TowerGroup in Needham, Mass.

Biggest, Not the First

Fleet’s fileTRUST is not unique.

Several smaller banks offer similar services, includingBankAtlantic in Florida, the online bank NetBank and Zions FirstNational Bank in Utah.

But no bank the size of Fleet, which has $181 billion inholdings, has invested as heavily in the technology, said DouglasKilgour, marketing director for safedepositbox.com. Kilgour’sAtlanta-based company sells a similar service to financialinstitutions. He said Fleet is the only bank to have built its owninternal system.

Fleet’s pilot system aims to appeal to small business owners,such as lawyers, doctors or certified public accountants, who don’twant to deal with the cost and hassle of creating computer filebackup systems — but need to protect and access valuable data.

Virus-Proof Storage?

Information is electronically stored in the virtual box,which can be “unlocked” and downloaded 24 hours a day via theInternet.

Fleet touts the box as protection again viruses, system failuresand theft. An identification number and password is required toaccess the box. Fleet spokeswoman Alison Gibbs declined to providefurther details about the security measures the bankinginstitution has taken to protect the virtual safety deposit boxes.

Downloaded documents will carry the same legal weight as aphotocopy, said Brian Moynihan, Fleet’s director of new-productdevelopment.

“It’s about ease of use and accessibility,” Moynihan said.

Fleet will run a pilot project with about 100 small businessowners through the fall, with plans to make it available to allcustomers by early next year. The cost is $11 a month for 40megabytes of storage — enough to hold 40,000 pages of text, Fleetsaid.

Not a Killer App

Kilgour said Fleet’s move shows online banking is starting toexpand past the basics, and offer more sophisticated extras — broadening the appeal to people who hadn’t previously consideredit, he said.

But Bell said he doubted features like virtual safe depositboxes would lure those wary of online banking.

“I don’t think it’s a great advance,” he said. “It doesn’tchange any of the rules. It doesn’t offer a compelling servicevalue to get people to adopt online banking that otherwise wouldnot have adopted it.”

But, he said, it could bolster Fleet’s retail bankingreputation, which took a beating during its recent merger withBankBoston.

“Retail banking is about details,” he said. “It’s one moredetail.”