To Message or Not to Message

That is the question for many firms because of complicated tracking and storage concerns surrounding the growing trend.

Millions of people have already caught on to instant messaging, using free downloadable services from the likes of AOL, Yahoo and MSN. But for financial-services firms, this type of messaging can present problems.

Security, scalability, control, interoperability and standards are all major stumbling blocks to the broad adoption of instant messaging within the financial-services community. However, as the industry has seen with e-mail, the proliferation of instant messaging is only going to continue, and firms must be prepared to make sure it's done right.

In response to these issues and the obvious acceptance of instant messaging in the industry, the Financial Services Instant Messaging Association was recently formed. The group aims to tackle the major obstacles hindering enterprise-level instant-messaging adoption and work towards an e-mail scale concept of seamless messaging among participants, regardless of platform.

The FIMA now has about 15 financial-services members including Deutsche Bank, Credit Suisse First Boston, JPMorgan Chase, Lehman Brothers, Merrill Lynch, Morgan Stanley and UBS Warburg.

Search for Standards
One of the main mandates of the group is to promote messaging standards, says Will Meldrum, co-chairperson of the FIMA and vice president, head of strategic investment portfolio at Deutsche Bank.

"The concern is that clients of firms would get to the point where they had lots of different instant-messaging applications on their desktops and they don't want that because desktop real estate is limited and valuable," he says. "Organizations also have concerns that with all of these different systems, the communication would be inhibited."

Meldrum says that the aim of instant messaging is to become as prevalent and useful as e-mail is today, whether the sender and receiver use Lotus Notes, Outlook or any other platform. But he points out that there are more issues surrounding the wide-scale adoption of instant-messaging technologies with security, authentication and presence.

To combat this, Meldrum says the FIMA will work to promote the adoption of standards.

While the group will not endorse one protocol versus another, Meldrum says it wants to make vendors aware of the need for a standard protocol to drive adoption across the industry. And though it may not be in the vendor's best interest to adopt standards and promote interoperability, Meldrum says that users and groups, such as FIMA, will champion the cause and lead the drive toward a standard.

Currently, there are two main standards in the instant-messaging arena: Extensible Messaging and Presence Protocol (XMPP) and Session Initiation Protocol (SIP). Related to SIP is SIP for Instant Messaging and Presence Leveraging Extensions (SIMPLE).

XMPP, which is an open, XML-based protocol is the core of the Jabber Instant Messaging and Presence Technology and is supported by many independent software developers.

SIP SIMPLE's supporters include Microsoft, which supports it in its Windows Messenger service and its future Greenwich service release, and IBM, which supports it in its Lotus SameTime product. The Internet Engineering Task Force (IETF), an international community working to ensure the smooth operation of the Internet and shape the evolution of Internet architecture, currently has working groups focusing on both protocols.

Meldrum says that FIMA hopes to encourage the IETF to get its working groups moving forward on these standards so that one will eventually be adopted. "Whichever protocol comes out of this, a lot of the vendors will wrap their products around that protocol, but I don't know which one it will be," he says.

Security is a Necessity
Security is also a major concern for financial-services firms when implementing enterprise-level instant-messaging services. "Confidentiality is very important in the financial-services area," says Cate Quirk, research analyst in Enabling Technologies at AMR Research. "Information on clients needs to be kept confidential."

She says that there are ways to make instant-messaging platforms more secure for financial-services firms with intrusion detection and monitoring components. But when it comes down to it, Quirk says that IT departments must take control of instant-messaging strategies.

"As far as total control by an IT department, they can completely lock it down and not allow people to download the software or, if they feel it provides a return on investment or a potential investment, there are ways to implement this in a more secure manner," she says.

FIMA's Meldrum points out that communities are very important for financial-services firms deploying instant-messaging platforms. Instant messaging within the financial-services industry is moving away from broad use of commercial platforms and more toward "community-oriented" services that cater specifically to the industry and can have control over the authorization and authentication of users.

These communities rely on directories or address books of participants, where users of various services can find people they wish to message with. Meldrum envisions at least one, if not two or three, large "address books" for the financial-services industry that are hosted, secured and controlled by a single entity.

One example of this type of community is Communicator's Communicator Hub IM Instant Messaging Service that brings together over 50,000 participants at eight major financial firms.

Salomon Smith Barney in particular has deployed the Hub IM service to about 3,000 desktops in its fixed-income division. John Casaudoumecq, managing director and head of global fixed income e-commerce at Salomon, says that about 20 percent of the users are using it on a daily basis. "We're pretty encouraged by that, given it's really just been in the past seven months that it has been deployed," he says.

Casaudoumecq reiterates Meldrum's idea that communities are vital for the financial-services industry. "It's in Salomon's best interest to continue to be supportive of the (Hub IM) application, and the technology, to a finite community that is our customers," he says. "There are all sorts of benefits to the community (such as) security and being able to comply with all the various regulations for storing and archiving."

Overall, he points out that people find value in being a member of a community. "I don't want a tool that everyone has access to for this type of intra-day communication because then my message box would be full of important messages but also many unimportant ones rendering the system less useful," explains Casaudoumecq.

While Communicator has already put the community idea into play, Meldrum points out that Reuters is looking to do the same thing with its new Reuters Messaging Service, which also creates a closed community for participants and relies on a "directory" to manage those participants.

"Whoever is hosting an address book, they might build a bridge then with two more, but users have to belong to one or the other and get charged by them for the service," he says.

Meldrum says that the "address-book host" or the "community" service provider does not necessarily need to be bundled with the instant-messaging service. "You'd want it so an enterprise could choose X instant-messaging provider based on functionality and cost and separately choose a trusted counter party to host their address book," he says. "But they should speak the same language and have the same protocol."

In other words, the community of participants is what is important for financial-services firms. And communities in the financial-services sector can mean a broad group of users across firms, a community within a single firm for internal messaging and/or a combination of the two for external and internal messaging.

Regardless of the community or instant-messaging platform, Gary Reifman, product manager for messaging services at Communicator Inc., says that identity policies and control are increasingly vital in this area. "These are critical control issues and are very important in the event that, say, a compliance person wants to shut someone off or monitor their information, or in the event someone leaves the firm," he adds.

---------------------------
---------------------------

On the Market for Instant Messaging
When looking for an instant-messaging platform, Philip Kaplan, vice president of product management in enterprise-technology services at JPMorgan Chase, says that firms should look at how many people can be supported on a server, how much equipment will be needed to support the environment and other options, such as virtual-meeting technology.

Kaplan's group is in the process of deploying a vendor-supplied platform for internal instant messaging and is live with about 16,000 users, with additional users added on a regular basis.

"We were interested in reliability, something that could scale and something that could work and be integrated with our environment," he says.