Global investment firms, from traditional asset managers to hedge funds, have been quick to recognize that the adoption of collaborative communication technology can improve productivity and financial performance. However, as financial institutions continue to install a whole host of services currently available on the market, there are notable challenges that the implementation and convergence of these technologies presents. Get it right, and the company stands to benefit from the multitude of services and technologies that can enhance the trading environment; get it wrong, and the institution quickly loses competitive advantage, amidst a series of increasingly disparate and complex technologies.

However, while these new collaboration tools offer significant rewards, there are challenges associated with their use. The technologies required for true collaboration - including instant messaging, video conferencing and voice communications - often operate independently from one another, utilizing separate networked technology that necessitate numerous management and servicing requirements. This has ongoing cost and time implications. Therefore, the adoption of a unified communications approach that encompasses the use and interaction of voice, IM, video and application sharing over one platform, is expected to become a key objective for financial institutions that are looking to develop an efficient trading environment in the future.

According to the latest industry research, the use of Unified Communications is a trend that is set to escalate. A report issued by Aite Group in May 2007, which encapsulates the opinions of traders from North America and the UK, and represents both the sell-side and the buy-side, finds that while financial services technology continues to progress, there is still some way to go in terms of how a broad portfolio of technologies can be effectively integrated into a trading environment.

Indeed, one of the most pertinent findings to come out of the report is the growing demand from within the business to address this collaboration challenge. The survey found that voice and instant messaging tools are being used in tandem to support the entire life-cycle of a trade in today's trading environment especially for pre- and post-trade activity within heavily electronic markets, as well as actual trading in the hybrid market. Close to 60% of respondents indicated that voice is very important during trading with almost as much importance placed on instant messaging. Video conferencing followed in third. This is a clear demonstration that the demand to integrate traditionally disparate technologies is being driven directly from the trading floor, with new technologies being utilized alongside more traditional forms of communication.

In addition, it was interesting to note that demand for collaborative technology was not something that had a purely internal focus. Approximately 80% of survey respondents identified that integration across the different communication tools has already become much more critical to maintaining relationships with clients and counterparties. Therefore, while demand has initially been championed within the business, financial institutions must recognize that improved external collaboration is a key benefit to future industry success in the move towards a fully integrated trading environment.

Phil Mottram, Managing Director, Trading Systems, BT Global Financial Services, 212-807-4843; email: phil.mottram@bt.com; web: www.bt.com/gfs.