NW_20010101_en_Crain’s Chicago Business- January 1, 2001_ “VASCO’s key to domestic sales”
After a European debut, an on-line security device form Oakbrook Terrace-based VASCO Data Security International, Inc. is set for its U.S. launch.
More than 5 million of VASCO’s Digipass devices are in use abroad. Now, the company is pitching the product to U.S. banks as a way to offer their customers secure online transactions.
Digipass, a hand-held device, is used in conjunction with a personal computer … When a customer enters a personal identification number, the Digipass applies a unique algorithm to generate a one-time random password for each transaction. The customer then punches that password into the computer …, where it is verified with the same algorithm, allowing the transaction to proceed.
VASCO is pushing to boost its share of the “hardware security token” market, a business dominated by RSA Security Inc. of Bedford, Mass. According to International Data Corp. in Framingham, Mass., RSA had 60% of the $148-million market in 1999, with VASCO a distant second at 13%.
International Data predicts the hardware security business will grow to nearly $950 million by 2004, and estimates the overall online security business will reach $8 billion over the same period.
“There is plenty of space in the market,” says VASCO CEO Mario Houthooft, noting that he top 50 companies in the broader online security industry collectively control just 1% of the hardware market.
Mr. Houthooft predicts a round of mergers as competitors with complementary technology refine their offerings. Eventually, he foresees VASCO’s technology being incorporated into combination mobile phone/hand-held computers that will be used for a range of remote transactions.
Charles Kolodgy, research manager at International Data, agrees: “in the broader market of online security, there are going to be a lot of players coming into the market with a lot of offerings. Then, three years down the road or so, you will start to see consolidation.”
VASCO posted third-quarter revenues of $17.6 million, not far from the $19.4 million recorded for all of 1999. Its revenues from the U.S. market are expected to increase to 35% of its total for 2000, up from 15% in 1999.
VASCO makes a variety of security software programs for corporate clients, but hopes Digipass will be its breakthrough product in the U.S. It recently sold 30,000 of the devices to Charlotte, N.C.- based First union Corp. for use by the bank’s corporate clients.
In Europe, where about a dozen banks have the system for corporate and retail clients, the devices are branded with the institutional logo and given to customers free, or at a nominal charge.