When i use a machine which has never visited my online banking web site i get asked for additional authentification. then, if i go back a second time to the online banking site i dont get asked the additional authentification...i deleted all cookies in IE and relogged onto my online banking site fully expecting to be asked the authentification questions again. to my surprise i was not asked. doesnt this lead one to believe the bank is doing some kind of pc tagging which doesnt involve cookies?
This is a pretty common type of authentication used by banks.
Say you're accessing your bank website via example-isp.com. The first time you're there, you'll be asked for your password, as well as additional authentication. Once you've passed, the bank knows that user "thatisvaliant" is authenticated to access the site via example-isp.com.
In the future, it won't ask for extra authentication (beyond your password) when you're access the site via example-isp.com. If you try to access the bank via another-isp.com, the bank will go through the same routine again.
So to summarize, what the bank's identifying is your ISP and/or netblock, based on your IP address. Obviously not every user at your ISP is you, which is why the bank still asks you for your password.
Have you ever had a credit card company call to verify that things are OK when you use a credit card in a different country? Same concept.