Wall Street & Technology is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.


12:49 PM
Connect Directly

Turn Up the Volume on VoIP

Financial-services firms are jumping on the VoIP bandwagon, motivated by cost savings and technology advances. But quality is still a concern.

Paul Halco, vice president of network services for The Northern Trust Company, is evaluating Voice over Internet Protocol (VoIP) technology for the enterprise. Like many financial-services companies, Northern would like to put its voice and data traffic over the same IP-based network.

So last year Halco installed test phones from the big-three suppliers of VoIP phones-Avaya, Cisco Systems and Nortel Networks-to get hands-on experience.

After conducting some trials, Halco, who oversees telecommunications for the Chicago-based financial-services institution, says, "I don't see the reliability being where the traditional phone is, and that's a concern of mine. If there weren't some cost savings, it would be really hard to justify," he adds.

Nevertheless, in 2004, Halco expects to move forward with small offices that are networked by dedicated voice lines. Halco would like to use VoIP to put voice traffic over the data lines and get rid of the voice lines. Rather than scrap their traditional, public-circuit-switch-based phone technology, financial firms are continuing to evaluate VoIP and roll out pilots in different buildings or nontrading environments.

"Next year I just think is going to be continued relatively moderate growth progression, the driver being cost savings as enterprises become more comfortable with the quality of service," predicts Mike Haney, a senior analyst at research firm Celent Communications.

Last Thanksgiving, State Street went live with the IQMX trading turrets, which are integrated with native VoIP from IPC Information Systems Inc., for a buy- and sell-side fixed-income floor. However, the IPC network is not connected to State Street's corporate network even though the trading turrets are performing "rock solid," says Jason Gregerman, vice president, State Street Global Markets and Security Finance Technology. "They [IPC] use VoIP for the distribution of [streaming] video and voice to the end user's turret position from their core system."

In the future, when State Street plugs the IPC system into its backbone, it will give the firm the flexibility to plug in turrets anywhere in the company and get access to all voice and data. "I can move people the same day; I don't need to pull cables," says Gregerman. If a trader travels to other offices around the world or works from home, the turret is connected to all his customers and to people he talks to via intercom as if the trader were sitting in Boston.

Beyond 2004, "the end vision is one network that's IP-based that can handle data, voice and all the different ways we communicate with each other," says Haney, who lists audio-visual data, e-mail, instant messaging, video conferencing and file transfer flowing over one network. But before firms switch to VoIP, other factors may determine the pace of adoption. "There's accounting issues, budget issues, mind-set issues and behavior," says Haney. Firms may wait until their legacy technology has fully depreciated and is written off their books. And before they make the leap, firms must be confident that VoIP meets their expectations around quality of service.

"In the past, when you said VoIP, it meant delay, latency, bad voice quality," says Stefan Karapetkov, group manager of desktop management at Siemens Information and Communications Networks. "Now it's the first time that VoIP can be associated with better voice quality than the traditional voice-telephone network.


Future Speak

Early this year, Fidelity Investments will launch a pilot in Web collaboration, letting online customers use VoIP to speak to customer-service reps, while the reps use highlighting tools to point to the Web page the investor is looking at. "It can be more convenient. You're actually talking right through your computer," says Steven Elterich, president of Fidelity eBusiness. Customers will need a desktop or notebook running the Windows operating system (VoIP is built in), a microphone, speakers and broadband Internet access to handle voice and data. "I think Web collaboration will drive VoIP," says Elterich, who estimates that 25 percent of Fidelity's online customers will use VoIP. Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio

Register for Wall Street & Technology Newsletters
Exclusive: Inside the GETCO Execution Services Trading Floor
Exclusive: Inside the GETCO Execution Services Trading Floor
Advanced Trading takes you on an exclusive tour of the New York trading floor of GETCO Execution Services, the solutions arm of GETCO.