The Mass. appeal of digital certificates

In the eyes of many public information technology officials, electronic commerce still falls into the category of "any day now" technology. Given the multiplicity of security, privacy, operational and legal issues still left to be resolved, state and local managers' first instinct might be to erect a psychological "Stop" sign.

But in Massachusetts, online transactions are greeted with a different road sign: "Proceed With Caution."

State IT officials have adopted a progressive yet selective policy that introduces online transactions in narrow instances where and when they make economic and operational sense. The policy allows the commonwealth to better serve citizens now without waiting for full legal and legislative approval of online transactions; gain firsthand experience with security schemes such as public-key encryption, digital certificates and digital signatures; and accurately identify where true areas of concern remain.

"When it comes to online commerce, I would say the Massachusetts state government is enlightened and progressive," said Benjamin Wright, a Dallas attorney and author of The Law of Electronic Commerce. "[State chief information officer] Louis Guiterrez and his staff are pushing it and asking the right questions."

Since September 1997, the Massachusetts Division of Banks (DOB), in concert with the state's Information Technology Division (ITD), has been conducting a pilot test of digital certificates-the electronic documents, issued by a third-party authority, that are used to verify the identity of organizations and secure electronic transactions over the Internet.

As a service to consumers and banks, the DOB each week compiles and disseminates a sampling of interest rates. Previously, the data was faxed to the division and then re-

entered manually into a spreadsheet before being distributed to sites online as well as to state publications and general-interest newspapers.

Now, some of the banking institutions are filing the interest data over the Internet, using a custom-built application and digital certificates issued by GTE CyberTrust, Needham, Mass. The software automatically accepts rates as they are submitted, validates them and posts them to the DOB's World Wide Web site, said John Shontell, IT director at the Massachusetts Office of Consumer Affairs and Business Regulation, which oversees the DOB.

About 10 institutions initiated the pilot, with another 35 to 40 banks and credit unions signed up and waiting to be trained on the use of digital certificates and the interest application. About 150 to 200 banks post their rates in a normal week (more when rates are dropping and banks want to get the word out to consumers), and Shontell said he expects that most, if not all, banks will be using the Internet option in the near future. Shontell is confident the new system will allow the banking division to post more thorough information in more places. Currently, most consumers see just a subset of interest-rate material-for example, the 15- and 30-year fixed mortgage rates published in many local papers. Now the commonwealth can use the DOB Web site to provide consumers with more detailed and broad-based rate information-say, points associated with any rates, or auto-loan rates as well as mortgage rates-in one easily accessible place.

Financial Learning Curve

The banks involved in the pilot weren't necessarily well-versed in the use of digital certificates, but they were willing to give it a try. "It isn't a technology that most of them are familiar with, but they've picked it up fairly quickly," Shontell said. Even so, "it takes a lot of time and effort and training to get people familiar with what needs to be done."

Particularly with the initial test group, the DOB and CyberTrust worked very closely to train users in the processes of applying for and picking up certification as well as actually working with the in-house software application. In concert with the ITD and the Department of Consumer Affairs, the DOB just completed a handbook that walks institutions through the process.

As the certificate authority chosen for the pilot, CyberTrust is in charge of matching private and public keys, which encrypt data and ensure the validity of the sender, to banks participating in the program. But the commonwealth, not CyberTrust, is responsible for authenticating, or pre-approving, its business partners, said Daniel Greenwood, the deputy executive counsel for the Massachusetts ITD who is actively involved in national online transaction standards efforts. That pre-approval process wasn't particularly time-consuming for the few banks using the pilot but could quickly escalate if digital certificates were to be used on a more widespread basis, he said.

Toward that end, the commonwealth would like one day to be able to issue multiple-use certificates to certain parties, allowing them to use the same certificate to transact several kinds of business with various state agencies. Such a plan would increase the payback the state gains from online transactions and also would simplify such transactions for banks and other participating institutions, according to Greenwood.

As pleased as he is thus far with the DOB interest-rate pilot, Greenwood doesn't see digital certificates as the single answer to the question of online security. Indeed, the ITD has made it a goal to match the right technology to the right transaction. "The digital certificate adds overhead, but it's appropriate in [the] banking [pilot] to use a certificate authority" where authentication is required, he said. "Other applications could use just a password, or signature dynamics, which cryptographically binds an electronic signature with a document."

For example, another state program that lets drivers renew vehicle registrations and pay traffic fines online requires confidentiality but not the same levels of user authentication as the DOB pilot. Therefore, that system uses a Secure Socket Layer-encrypted connection, which is nearly transparent to end users.

As aware as Greenwood is of the legal, personal-privacy and standards issues that have yet to be resolved regarding security online (he has testified before Congress on the topic), he is adamant that states not wait for every wrinkle to be ironed out before proceeding. "The push should be to enable transactions that are ripe to be digitized right now. The [early] main focus should be on applications that raise no serious policy issues but still allow you to gain experience with the technology and develop a policy as you go along."

Sticky Issues

For the short term, at least, those applications are likely to come from governments' business partners rather than individual citizens, he said. "With business [transactions], you don't get into the sticky issues" of personal privacy vs. public information.

For his part, Wright thinks Massachusetts' strategy is right on the money. "If you stand around waiting for someone to give you complete legislative and legal approval, you're going to be standing around for a long time," he pointed out. "There are transactions you can do today that are not difficult and offer a real service to the community. This is a subject that's here and now today."

Tracy Mayor is a Beverly, Mass.-based free-lance writer specializing in information technology. She can be reached at [email protected]


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