MSC Trustgate.com Sdn Bhd is a player in the online certification and authentication space. The company was founded in 2001 by Multimedia Development Corp (MDeC). It struggled in the early years and suffered embarrassment when it was revealed that its chief research officer, a high-profile signing, had falsified his credentials. That was a low point in the company back in 2005.

In 2007, MDeC sold the company to the management team led by CEO Mohd Roslee who subsequently invited Julius See and Bistamam Siru to come in as investors. Bistamam, a former CEO of a multinational corporation in the telecommunications industry, had ended his career as a respected senior member of the Malaysian Communications and Multimedia Commission. Julius See was an entrepreneur.

On coming in, the duo immediately focused on the mobile space and on key activities to improve earnings and cash flow and streamline expenses.
They created a holding company called Trustgate Bhd that would spearhead the mobile push. They moved away from the typical certificate authority (CA) business, which was still small then and developed related businesses, that is in the mobile space that would help sell more digital certificates. They tell us more in the following Q&A.

MSC Trustgate has been losing money for years. What compelled you to take over the company and how much did this involve?
Our major objective is to develop the SignCharge mobile ecosystem for secure and trusted mobile transactions, especially online financial services. We have identified that a certification authority plays a crucial role in meeting this objective.
When we took over, Trustgate was turning around and there was a competent team led by our CEO, who was already working on several projects that would turn the company around.

What did you do in the first year to turn things around? Is the business model the same?
We focused on key activities that would improve earnings and cash flow and streamline expenses. From day one, we had a plan to move away from the typical CA business, which is still small, and develop related businesses that would help us sell more digital certificates. The first move was getting into the managed PKI (public key infrastructure) business, which meant seeking opportunities further upstream. The other, and perhaps more compelling reason, was for us to initiate a mobile payments business. We were in a good position to work with existing clients of Trustgate, namely the banks and mobile operators in the country.

Your back-end infrastructure cost RM14 million. Was this all in place before you took over? What exactly does this infrastructure entail and why is it so expensive?
As a trusted third-party security provider, it is vital to have reliable and trusted infrastructure to provide the highest level of confidence to our clients, especially the government and financial institutions.
As a CA, we are required under our affiliate agreement with VeriSign and our regulator MCMC to maintain strict international standards in our systems and carry out specific functions to ensure effective authentication, identification and integrity in all electronic transactions. We maintain a datacentre and disaster recovery centre. Our operations are subject to annual audits by the regulator and our principal. Such systems and capabilities don’t come without an expensive price tag.

More and more people in Malaysia are using Internet banking but the growth of e-commerce is slow. Are security concerns the key barrier?
The lack of consumer confidence is the No 1 reason for the slow uptake of e-commerce, revolving around the two main issues of trust and security. Transacting parties need to be confident about each other’s identity and be sure they are protected from cyber threats. The existence of online scams, fraud and identity theft — which have been highlighted in the press — certainly don’t help to inspire public confidence. The truth is there are solutions today that can provide such confidence to consumers and online businesses but are not being used due to cost and lack of economies of scale.

For example, the cost of security at a gated and guarded community is more affordable than providing such security to a single home. Similarly, the best online security is possible and affordable for every organisation if the cost can be shared by a large number of users. This way, every consumer interest can be well protected and confidence will rise. We believe that an ecosystem can address this issue with cross-industry participation and regulatory support.

Most people are still not familiar with digital certificates and their relevance to online purchases. How do you try to build an ecosystem that will support e-commerce?
It is a fact that digital certificates and public key infrastructure have been difficult for the man in the street to comprehend. The complexity has been the main reason for the slow adoption of PKI over the years, despite the fact that its security and legitimacy are highly regarded in the industry. However, it is now possible to offer digital certificates to the masses without the complexity. Mobile signatures only require the user to read and digitally sign with a single signing PIN, similar to the conventional way of signing. It is as simple as reading and replying an SMS.

Digital signing over the mobile phone provides added convenience to the user as the mobile phone is indispensable and integral to today’s lifestyle.
Building an ecosystem means getting all stakeholders to agree to use the system and adhere to common standards. This is of course very challenging and we have been at it for the past two years. Fortunately, the industry players have finally acknowledged the value of an ecosystem.
Our mission is to marry secure transaction methods with innovative business models that will eventually persuade stakeholders to join us in bringing about an ecosystem for commerce, banking and government.

You are now turning your attention to the mobile space. Why do you think there is a market there?
The mobile lifestyle today transcends everything. Being able to do everything and get everything, such as news, entertainment, Internet and emails while on the go is becoming a must for people. It follows that their home, office and classroom will increasingly be put on the mobile platform. We believe mobile transactions are a part of it.

When technology became available for us to put digital signatures on SIM cards, it opened up an opportunity for alternative means of authenticating a person in e-commerce or e-banking. It matched perfectly out-of-band two-factor authentication requirements for enhanced and water-tight security.
Will this be a case of you supplying VeriSign issued certificates for the mobile space too?
For mobile, we have developed our own MyTRUST mobile digital certificates. This is a result of our tireless efforts in developing home-grown technology that meets international standards, thus reducing our dependence on imported solutions.

Who are you targeting in the mobile space and how will this work for the end-user?
We are targeting anyone who finds it convenient and cost effective to transact, sign and pay securely and confidently via their mobile phone.
The mobile space is ubiquitous and caters for all groups. Within the mobile space, we want to build an infrastructure that allows users to sign and charge payments to their existing accounts. We are an open system where all application service providers are free to connect to our SignCharge platform and utilise our mobile authentication, signing and payment services to provide innovative services to consumers.

What value proposition do you bring to the table for mobile telcos? What about banks?
Our key mission is to develop a trusted ecosystem for secure financial transactions by bridging mobile operators and banks, where interoperability is an important factor.
As partners in this mission, both banks and mobile operators will complement each other and be able to increase the value of their services to their respective customers. In the ecosystem we are building, both mobile operators and banks can co-exist without any impact on their current business. In the final analysis, banks and mobile operators can focus on what they do best.

What role do you think Bank Negara Malaysia can play here?
The regulators can play a pivotal role in ensuring orderly growth and hasten the move into electronic commerce and banking. They can help by playing a bigger role than just creating awareness and advising the public about scams and how to avoid them. Their regulatory initiatives can actively influence the industry to collaborate in developing the ecosystem.
Our philosophy is to do more with less. This is an opportunity for Malaysia to finally commit towards building a cashless society.

This article appeared in netv@lue2.0, the technology section of The Edge Malaysia, Issue 755, May 17-23 2009