US bank follows HSBC by issuing security devices to business customers

US banking giant Citibank has followed in the footsteps of HSBC by issuing security tokens to online business account holders.

The Vasco two-factor authentication tokens will be issued to the bank's CitiBusiness Online customers in the US, who are predominately small to medium sized businesses.

Last month HSBC announced that it would issue tokens made by the same IT security firm to 180,000 UK business users to try and reduce the risk of online fraud, resulting from phishing, keylogging trojan software and computer hackers.

Citibank is one of the first US banks to take similar steps, with other American financial services firms opting for different approaches, such as PassMark a technology used by Bank of America and Alliance & Leicester in the UK.

'By offering this technology to our clients, our message is clear: We will continue to look for innovative ways to enhance protection for our clients and their financial assets,' said Jorge Bermudez, chief executive officer of Citigroup's commercial business group.

'While this initiative involves a sizeable technology investment on our part, it is indicative of the type of effort Citigroup makes every day to keep our clients assets safe.'

When logging on to the internet banking service Citibank customers will be asked to verify themselves using something they know, such as a password and also an object they physically have – in this case the Vasco device, which generates a unique passcode.

Following a growth in identity theft and other phishing scams, America's Federal Financial Institutions Examination Council has issued guidance saying all internet banks must authenticate customers more strongly.