Wall Street Turns to Instant Messaging

[BigBlueBall News]

Information Week

April 8, 2002

Instant messaging finds new use as a fast and secure communications tool.

A consortium of eight Wall Street firms is about to transform the way buyers and sellers of fixed-income securities do business using what, until recently, has been a grassroots technology: instant messaging. Traders who now use E-mail and rows of phones to manage a crush of information will have a new tool that promises even greater speed and efficiency. That is, if communication overload doesn’t make things worse.

Starting this week, CS First Boston, Goldman Sachs, JPMorgan, Lehman Brothers, Merrill Lynch, Morgan Stanley, Salomon Smith Barney, and UBS Warburg will extend an ambitious multicompany instant-messaging network begun last year to 2,000 institutional investor clients. The goals: greater customer convenience, faster communication, and improved efficiency via an archived system that can be audited in case a record of communications is needed.

The deployment is based on Communicator Inc.’s Hub IM instant-messaging service, which securely connects businesses without requiring them to use a common E-mail client or server. The service ties into the Wall Street consortium’s portal, Bond.Hub, which is also hosted by Communicator and links participating dealers’ Web sites. It contains a federated directory that controls access to each firm’s proprietary customer data.

"If clients are going to be communicating with us via instant messaging--and they are--then this fits the bill," says Vic Simone, managing director of E-commerce at Goldman Sachs.

The firms had to strengthen ties among members of the financial trading community and establish trust before putting the instant-messaging system in place. Once assured that their data would be safe, it was easier for dealers to recognize the value of creating electronic communities around their relationships with common customers.

"Your customers deal with your competitors, and they don’t want systems that only allow them to deal with one [company]," says Leo Schlinkert, CEO of Communicator, in White Plains, N.Y. Along with other Communicator executives, Schlinkert worked in the securities industry before starting the company three years ago.

Jim Craige, managing director with Salomon Bros. Asset Management, is a fan of the instant-messaging setup. Craige buys fixed-income securities on behalf of institutional investors, calling salespeople to make purchases or ask questions. What should take a few seconds often takes much longer, he says, as the salesperson on the line rattles on about the previous night’s Knicks loss or tries to convince him to consider a bond issue.

With instant messaging, that doesn’t happen. Having a secure connection to the network of dealers with whom he’s in constant contact lets Craige take care of business faster, which is why he’s pitching its value to the traders, portfolio managers, and analysts in his unit. "It drastically cuts down on the time it takes" to know the status of transactions, he says.

Hub IM makes things so easy for the buyer, Craige adds, it could wind up separating star salespeople from the rest of the pack. The more-successful salespeople could find they’re able to take on more work as a result of instant messaging’s efficiencies. "Three months from now, some of the salespeople could be hawking pencils on the corner," he says.

Centrally managed IM deployments have just begun to take hold in business, says Aberdeen Group analyst Dana Gardner. Much of the momentum is tied to the fact that recent college graduates have developed an affinity for IM. Technology managers have had to balance the realization that instant-messaging is a preferred communication technique of young employees who have concerns about a lack of control over ad hoc tools.

Read the full article at InformationWeek.com

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