Investment banks lead the charge on Instant Messaging

I opened Living Networks with the examples of Macromedia using blogging to get messages out to its developer community, and the institutional bond market on Wall Street using instant messaging to enhance information flows. Stowe Boyd has written a very interesting piece on financial markets instant messaging (IM) in his publication Message, looking at some of the drivers of adoption, and incorporating an interview with the co-chair of the Financial Services Instant Messaging Association (FIMA).

There are a whole suite of interesting issues here. One is simply how the investment banks have become enormously more collaborative over the last five years, largely as a result of technology drivers. When I speak about how very high levels of collaboration are becoming mainstream in business today—even in intensely competitive industries—one of the most convincing examples to many is how the notoriously aggressive investment banking community is now working closely together on a whole variety of issues.

A key interest for me in the adoption of instant messaging is how it changes buy-side – sell-side (client-supplier) relationships. The commoditization of information and research means that increasingly the value to fund managers of interacting with financial market salespeople is in “knowledge-based” interactions, in which they gain highly relevant knoweldge and perspectives that integrate into their portfolio decision-making, rather than generic information. A good example of this is CSFB’s Locus product, that enables salespeople and fund managers to look at the same analytics screen on possible trades, and to jointly play with assumptions to make them relevant to the client’s portfolios, and provide a basis for useful discussion of risk and return parameters. Thomson Financial—having bought WorldStreet just in time for me to update the coverage in my book—has integrated it into its Connect product, which provides a peer-to-peer XML-based platform for customization and filtering of content delivery. All of these new tools shift the client-supplier relationship, and force the development of new skills, processes, and strategies for the investment banks.

Another interesting angle is that while SMS has played a major role in changing interpersonal communication in Europe and Asia, IM has played a similar role in the US. IM still has low adoption outside the US, just as SMS is only picking up in America now. Different levels of familiarity with these emerging communication technologies affect how they are being integrated into business applications. However all around the world, it’s good to see that investment bankers are leading the charge in taking instant messaging out from teenage girls’ bedrooms into the world of business.