Finance Gets the Message

Instant messaging has emerged as an essential application in the financial services industry, where brokers and underwriters have come to rely on the technology to stay in touch with customers and each other.

Without knowing it, UBS AG got the message a long time ago. Way back in 1995, Swiss Bank Corp., which would later merge to form UBS, began to adopt instant messaging technology, setting in place a road map of adoption that keeps the financial services company in the forefront of the IM pack. Now the company, which is based in Zurich and Basel, Switzerland, is preparing for a corporatewide upgrade that early next year will enhance IM services for nearly 20,000 internal and external users.

Once a novelty and always a favorite of young technophiles, not to mention the everlasting bane of the distraction-prone, IM has emerged as an essential application in the financial services industry, where brokers and underwriters have come to rely on the technology to stay in touch with customers and each other in an industry where information moves markets and timing is everything.

"Financial services is the industry that has the most leading-edge usage of IM, followed by insurance, technology services and business consulting," said Robert Mahowald, an analyst at market research company IDC, in Framingham, Mass. Small companies as well as large ones such as UBS are attracted to the technology. "The instant part of instant messaging is a very good draw for this industry. Everybody is working at light speed. Customers would much rather do IM than send an e-mail," said Galel Fajardo, CIO at Roth Capital Partners LLC, in Newport Beach, Calif. "We use BlackBerrys. But they still are not fast enough for our clients, who want instant communications."

Seeking to promote the adoption of standards and interoperability, several IT pros at financial services companies have banded together in a user group called the Financial Services Instant Messaging Association, or FIMA .

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While they encourage standards adoption among vendors, many of those same IT managers are seeking to exert greater control over IM deployments at their companies so that communications are reliable, secure and archived for compliance with Securities and Exchange Commission guidelines as well as laws such as the Sarbanes-Oxley Act.

"Chat today is where e-mail was 15 to 20 years ago," said Phil Freeborn, CIO at UBS Investment Bank, a unit of UBS. Freeborn and Amanda Jones, instant messaging business analyst at UBS IB, have been steering the 65 million messages per month that course through the UBS system in the direction of knowledge management, applying filtering technology and integrating IM with other applications. Jones is in charge of the pilot of Parlano Inc.s MindAlign 6.2, which is expected to lead to a complete rollout by early next year.

Freeborn traces UBS use of IM back to 1995, when Swiss Bank had a large installed base of NeXT Computer Inc. computers and developed its own chat program for them. When the bank migrated to Windows NT in 1997, it started using a new chat application it called Interchange. "Thats when it really took off," said Freeborn. Next came a client chat system for financial exchange, which gave clients access to the companys sales force and analysts. In 2000, the company realized its own creation had commercial applicability and spun off a unit with eight employees. The product was called MindAlign, and the company came to be called Parlano. UBS sold its investment in 2001.

UBS effort to turn its MindAlign IM system into a knowledge management tool centers on the softwares persistent group chat feature. "Its a great KM tool, and we may integrate with other KM tools and scrape information out of the tools. Group chat is itself a KM tool," said Freeborn in Stamford, Conn.

Messaging as knowledge management at UBS also relies on the use of filtering technology. "Users have so many channels—in some cases, 200—they cant keep track of them all," said Freeborn.

Jones explained that by creating a filter channel, a user can indicate by keyword the stocks he or she wants to watch in a single filter channel.

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