BEN MATTLIN
WINDOWS IN FINANCIAL SERVICES, Summer 2007
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Software Boosts Wall Street Use of IM and Group Chat

By Ben Mattlin

IM and group chat have several distinct advantages over the telephone and e-mail. They don’t interrupt the way a ringing phone does, and messages don’t pile up as they do in e-mail inboxes.

“Instant messaging is a lot faster than e-mailing, and it allows you to see who is online and who isn’t at any given time, which e-mail doesn’t. The telephone, on the other hand, can disrupt your workflow,” explained Graham Lawlor, program manager of instant messaging at Deutsche Bank, and chairman of the Financial Services Instant Messaging Association (FIMA), an industry group.


On Wall Street, where fast-paced communication has always been a way of life, these communication methods are carving out a niche for themselves.

Instant messaging works only for one-to-one communications. Group chat, on the other hand, enables instant communications among any number of people. “Group chat typically enters financial services institutions through their foreign exchange desks, where it’s the most effective way of sharing the daily trade book from one region of the world to the next,” said Lawlor. “Then other parts of the business find it useful for, say, distributing research and ongoing information about trades, deals and other market activity.”

When UBS wanted to get away from the old-fashioned “squawk box” and improve communication and collaboration among its global squad of traders, it found an ideal solution in Parlano’s MindAlign.

Parlano, a Microsoft Gold Certified Partner, designed MindAlign to fit the needs of financial services firms. It’s an instant messaging (IM) and persistent-group-chat solution that can handle the large volumes and other requirements. Britain’s Standard Chartered Bank, another Parlano customer, rejected solutions based on UNIX, Linux, Oracle and Solaris as too costly. MindAlign, however, runs on the Microsoft Windows Server System infrastructure software. With some 30,000 employees spread across 500 offices in more than 50 countries, Standard Chartered wanted a “best-of-breed application on a best-of-breed operating system,” said Anthony Hodge, dealing services regional senior at the diversified banking concern.

Whether urgent market data, buy and sell opinions, news updates, research or other data, the information must be exchanged quickly and to a broad group of participants to seize opportunities ahead of the competition. “The communication has to happen in real-time, coordinating multiple functional areas and spanning locations around the world,” said Jeff Schultz, Parlano’s senior vice president of worldwide marketing.

To coordinate this rapid and vast exchange, MindAlign is tailored to fit each customer’s structure and operations. Before deployment, Parlano works with clients to define their likely topics of discussion. It then sets up discrete “channels” or chat rooms which “correspond to key subject areas, such as specific market sectors, countries, commodities, customers or individual securities,” said Schultz. “News, ideas, decisions, research reports or whatever can be posted to the proper channels.”

The different channels appear on a computer monitor. Users can easily scan the information flow, including how many new messages are unread and where people are posting the most, and then click on areas of particular interest.

For Lawlor, who did not endorse one vendor or brand over another, that kind of understanding of what’s important to users is critical. (Lawlor didn’t reveal if Deutsche Bank was actually a MindAlign user, though he acknowledged that Parlano has “a significant market share in financial services.”) What distinguishes one product from another starts with how closely the vendor follows the users’ workflow.

“Does he or she understand the specific requirements of financial services organizations?” Lawlor stressed. “When I log on, I should be able to see all the channels I’m a member of and rapidly tell where conversation is occurring and if there are urgent messages I might have missed. The display should immediately draw my attention to where it needs to be.”

To avoid overwhelming users with too much information all at once, MindAlign continuously sorts out where the information flow is heaviest. Participants can quickly zero in on urgent items without having to sort through chatter. At the same time, research analysts can distribute reports to readers around the world with a simple mouse click and receive instantaneous reactions and questions. They can send answers promptly, and the answers are
available for all participants to read and learn from so the analyst doesn’t have to re-answer the same question over and over again.

New information stays posted on the channel so that anyone who isn’t online at the time can retrieve it later. This means an item posted first thing in the morning in London can be picked up by colleagues in New York when they get to their desks five hours later.

Defining specific channels is key, but MindAlign also employs “filters” which allow users to mark certain words, terms and phrases as especially important. When those items come up in any channel to which the user is subscribed, he or she is notified immediately. The system even stores filter notifications for later review. “When a particular stock or currency is mentioned in any of my channels, I won’t miss it,” Schultz explained.

Lawlor pointed out that a good system must support what could be thousands of users per channel at a time. “Not every product can handle that,” he cautioned. Interoperability is a crucial priority, too – that is, can the system work with other manufacturers’ technology? “You need the ability to contact your clients and counterparties at other companies which may use a different system,” Lawlor asserted.

MindAlign works seamlessly with its brand-name counterparts such as AOL, Yahoo! and MSN chat software, which is essential for firms that do business with smaller brokerages that depend on these better-known competitors.

Another requirement for Lawlor: The system should allow for Web-based instant messaging with customers. “Many companies want to enhance their Web presence so that, if a customer is looking at a page that describes a particular stock, bond or other instrument, the customer can click a link to chat with a trader or salesperson,” he said.

This, too, is a feature Parlano offers.

Security and privacy are also big concerns. MindAlign uses a “highly secure encryption capability” that works with the customer’s own identity management protocol, said Schultz. Moreover, to meet compliance regulations, MindAlign can be set up with customized internal virtual walls to prevent communications between certain groups such as the mergers and acquisitions team and traders, which is prohibited by law. Further, it bars one-on-one chats and secret messaging so “nothing inappropriate can happen,” Schultz added.

In addition, MindAlign supports compliance vendors such as Symantec’s IMlogic, which monitors, secures and archives instant-messaging traffic for later review. “We can do a permanent log of what was said on every channel and who was active at the time, which is important from a legal perspective, in case the firm’s communications are ever audited,” said Schultz.

For many users, introducing IM and chat capabilities isn’t a big adjustment. Most readily understand how to post messages and where to look to keep up with relevant developments. “On the trading floors of any sell-side firm or major broker/dealer, you’ll likely find people running at least two different instant messaging systems and sometimes as many as five at once,” said Lawlor.

The learning curve is surprisingly fast. At UBS, the financial services arm of German banking giant UBS AG, trade flows with one corporate client jumped 500 percent within three months of launching MindAlign. At last count, some 35,000 UBS professionals posted more than 80 million messages per month on 20,000 chat channels. “We have MindAlign channels for virtually every topic discussed at UBS,” said UBS’ Scot Lynch, a managing director.

Nevertheless, Parlano visits every user after installation to answer questions and make sure the application works smoothly. “Some folks are very specific about how their monitors are arranged. They want e-mail in one location, a news feed in another and MindAlign in a third. We hand-hold until everything is up and running as they want it,” said Schultz.

Of course, glitches can and do occur. Parlano maintains substantial support operations and works with customers’ own tech teams to keep it running smoothly. “We don’t host the system,” Schultz said. “It’s installed on the customer’s premises.”

The costs of MindAlign vary, largely depending on the size and scope of the deployment, but typically come to several hundred dollars per user, plus a small annual maintenance fee. “It can add up to a hefty purchase, but it’s much less than having a Bloomberg terminal, which runs in the thousands per user every month,” observed Schultz. “But there’s a solid return on the investment.”

That return could come in the form of improved productivity, reduced redundancy thanks to streamlined communications, or the unveiling of opportunities that would have been missed otherwise. The proof is in the technology’s ballooning popularity – and not just among financial organizations. IT professionals use MindAlign to coordinate responses to system failures, for example. “If a server is down, they can manage the crisis more effectively over a chat system than by sending e-mail to one another,” asserted Schultz. “MindAlign is being used in cases we did not anticipate early on.”

In February Parlano launched a mobile version that can run on Blackberry, Windows Mobile and Palm Treo handheld devices. Parlano recommends users choose a manageable subset of channels to display on their portable devices’ smaller screens. Filters remain active, however, so if a key word or phrase comes up on any channel, even if it’s not actively visible on the mobile device, the device can ring, flash or vibrate.

Other enhancements and improvements are underway. For instance, MindAlign will soon be capable of interacting with video- and Web-based conferencing and other telecommunications applications. It is fully integrated with Microsoft LCS. “Once you have a group of professionals organized around important topics, it’s a natural extension to initiate a Web conference with charts and graphics or just a conference call,” said Schultz.

From Lawlor’s perspective, for businesses that are heavily dependent on the speedy flow of information and ideas, instant messaging and chat can give users a leg up on the competition. “You can see the value of this technology just by the amount of investment that’s already gone into it,” said Lawlor. “The productivity gains for all concerned are incalculable.”

2007 Windows in Financial Services

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