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Money is information. As the fastest adopters of new information technologies, the financial sector has helped to drive multiple waves of change across all industries. Information dissemination has always been at its most advanced in financial applications, with market data screens making their way into both institutions and clients from the 1970s. The commercial implementation of many other new technologies, from the Internet to grid computing to biometrics and beyond, is being driven by the financial industry.
The current vanguard of change in business technology is centered on collaboration. The architecture of business technologies has fundamentally changed over the last five years. This has been epitomized by the development of XML (eXtensible Markup Language) and web services. XML has provided a foundation for easy exchange of formatted information between systems. Web services build on XML to enable applications running on different systems to be integrated. These twin standard technologies, along with numerous related developments, have created an environment in which any systems, applications, or workflow can be integrated into a seamless whole. The latest Internet technologies allow browser-based applications to embody the same functionality as software run on local PCs or corporate servers.
At the same time, the deeper knowledge specialization required in an intensely competitive business environment means that professionals must work with others to achieve outcomes. These pressures not only change how work is done inside organizations, but increasingly means that collaboration outside company boundaries is essential. This collaboration can be with financial market counterparts, clients, and even competitors.
For financial institutions, the rise of collaborative technologies poses both opportunities and challenges. The promise is one of bringing together the expertise found in large, distributed organizations to create highly efficient yet differentiated outcomes and processes. Firms can effectively lock-in their clients by creating high-value collaborative outcomes that cannot be copied by competitors. Risks can be assessed and managed more effectively, helping to optimize capital allocation across the firm.
However these rewards are not easily gleaned. Regulation and compliance issues block initiatives, security concerns are paramount, and the reality is that collaborative behaviors are needed to complement the enabling technologies. This does not mean that financial institutions can ignore the potential of collaboration. Rather it means that the ability to overcome these challenges, and implement and participate effectively in collaboration initiatives, will become increasingly central to gaining competitive advantage and maximizing profitability.
Markets and real-time collaboration
There were two groups that stood out as the first to use instant messaging (IM) to communicate faster and more effectively with their peers: teenage girls and bond traders. For traders and salespeople in fast-moving markets, in which enhanced information flows could result in better timing and more profitable trades, there was no question about immediately taking up this useful tool. Soon traders across most US financial markets were using IM to exchange information with their peers and clients, with many having multiple IM windows open on their desktops in order to keep information flowing swiftly in all directions.
However what was good for individual traders was not necessarily implemented in a way that worked well for organizations. Regulation requiring audit trails on all communication meant that the public IM platforms such as AOL, Yahoo!, and MSN that were adopted by traders were not acceptable in their raw form. US regulators have led the way in requiring all external communication to be captured and stored. Other jurisdictions are following suit, and most institutions globally see it is imperative to manage IM usage closely. However the technologies and processes are now in place so that IM can be considered robust and secure in a financial industry environment. Interoperability issues remain, though recent progress on this front is promising.
The real power of real-time collaboration is still to unfold. The distinguishing and most valuable aspect of IM as a communication medium is its presence functionality. This enables users to know whether other people, including colleagues, clients, and counterparts, are currently available to communicate. This presence function is now becoming embedded into richer communication forms such as videoconferencing, web conferencing, collaborative analytics, and other emerging communication tools.
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