Encrypted wireless service targets financial institutions

In vast rural stretches of the nation, point-to-point wireless communication is sometimes a cost-effective alternative to land-line links for businesses. ERF Wireless, a service provider based in League City, Texas, is creating its own niche: broadband wireless for banks that must use encryption to meet regulatory requirements.

“We built our own Triple-DES encryption for this because in banking regulation, the concern is about someone breaking into a wireless network,” says Dean Cubley, chairman of ERF Wireless, which provides wireless links to a half-dozen financial institutions and over 100 of their offices, mainly in Louisiana, Missouri and Texas.

ERF Wireless not only provides the multimegabit point-to-point wireless service monitored round-the-clock, but also manages a custom key-encryption system that requires trusted individuals to authorize periodic private-key changes using biometric authentication.

“We call this BankNet and we lease this as a service to customers,” says Cubley, noting the hardware-based system also connects banks to the Federal Reserve for packet transmission.

Cubley acknowledges that the company, which went public in 2004 and has been investing in wireless companies, is still struggling to be profitable, though he anticipates the tide will turn this year.

Financial institutions in rural areas with low population density say they’re heartened to find cost-effective alternatives to land lines. But state and federal regulators won’t allow banks to use point-to-point wireless unless there’s an approved encryption system in place, says Brent Courrege, chief operations officer at Jeff Davis Bank, based in Jennings, La., with over $460 million in bank assets.

“We had to get not just the Federal Deposit Insurance Corp. but local regulators involved with this,” says Courrege, who adds that it took a couple of years to win the necessary regulatory approvals to permit the bank to use the ERF wireless turnkey system in lieu of land lines.

“We then took our traditional land-line connections -- fractional T-1 and others -- and abandoned those to go with wireless,” says Courrege. He adds that the bank, which makes use of 10Mbps of wireless bandwidth to connect its 16 locations, is saving hundreds of thousands of dollars over land lines from BellSouth.

But is the broadband encrypted wireless as reliable as land-line communications in stormy weather?

Hurricane Rita, which smashed into the Gulf Coast in September 2005, did blow over some wireless towers but service was restored in just over a week, says Courrege. Point-to-point wireless in general has been only slightly more susceptible to weather than land line, he says. “There might be a little more downtime, but it’s rare. The cost savings in bandwidth is significant.”