Brokerages step out of stodgy past into electronic future

Regulatory, security issues surmounted

While necessarily cautious with other people's money, brokerage firms know that conservatism should not preclude the use of essential new technologies that can help both their clients and themselves. Technologies like the Internet help brokerages manage information and communicate with clients better than ever.

Scudder Kemper (www.scudder.com), for example, understood that it had to transform itself from a traditional mutual fund firm to an online one.

"Statistics backed this decision," said Jeaneen Terrio, assistant VP at Scudder Kemper. "We were well aware that more than 16 million U.S. adult Web users managed their investments online in 1998, which increased by approximately 8 million in 1997. Furthermore, 39% of people who go online also invest in mutual funds.

"With the proper system," Terrio continued, "we knew that we could better serve the individual needs of our clients by properly and securely managing the content that we were creating, accumulating and delivering over the Web."

The global investment management business of Zurich Financial Services Group, Scudder Kemper manages more than $245 billion in assets. The brokerage company wanted a robust system that could manage behind-the-scenes content to improve customer service and sharpen competitive edge. That content consisted of all financial information pertinent to online investments from customer profiles and queries, as well as individual content, such as text and graphics files stored in native format. It also included information from external financial tools, portfolios and calculators.

What Scudder Kemper envisioned was a content-intensive site that could adapt to each investor's needs and interests by automatically supplying users with updates on areas of the site that they had previously visited.

"The idea was to create a one-on-one dialog with customers by creating a personalized, dynamic online experience," said Terrio.

That goal has been achieved, according to Scudder Kemper, through the "Financial Concierge," which uses natural language interpretation to allow users to enter questions as if they are speaking to an investor information representative. Users can ask, for example, "How do I qualify for an IRA?"

The backbone of the Web site--www.scudder.com--consists of Documentum (www. documentum.com) and Art Technology Group (ATG, www.atg-dynamo.com). Documentum's Enterprise Document Management System (EDMS) handles the knowledge management component. The content management system is critical from an E-commerce infrastructure perspective, because everything is stored there.

ATG's Dynamo Relationship Commerce suite--an E-commerce solution designed to manage online relationships--selects, targets and delivers personalized content that is managed in EDMS, as well as feeds from Reuters, Lipper and several back-end databases.

"Because Web content management is a primary business driver for Global 200 customers," said Terrio, "EDMS enables us to create, reuse and distribute critical content that helps investors derive maximum value from Scudder's products."

Scudder Kemper is pleased with the new system, according to Terrio, because it has improved information flow through content management and personalization capabilities, enhancing customer service.

"Customers feel they are getting personal attention, which builds trust between us," Terrio said.

Wheat First Union Bank

Strict rules from the Securities and Exchange Commission (SEC) and National Association of Securities Dealers (NASD) have always governed customer correspondence at brokerage firms to prevent such activities as stock hyping, insider trading, market manipulation and the passage of confidential information. In addition, firms must archive all business-related communications for three years.

It is not surprising then that brokerages have had among the lowest access to E-mail among professionals in the country. Because of regulatory concerns, many firms weren't even offering E-mail to their employees because they couldn't control outgoing information. The only option was a compliance officer who had to look at every outgoing E-mail.

To address the growing need to manage electronic communication within the boundaries set by regulators, Wheat First Union (www.wheatfirst.com) began to search for a solution that would allow the large brokerage firm to move forward at a reasonable cost.

"We wanted a solution that was relatively simple to roll out to our 130 branches," said Bob Carpenter, project manager for Wheat First Union, "and that would quickly enable our financial consultants to have direct Internet E-mail communications with their clients."

Prior to implementation of Assentor from SRA International (www.sra.com), 1,700 financial consultants and sales assistants had to send all E-mail messages (going outside the firm) to a branch manager for his or her review. Managers were forced to read those messages and manually record and store the documents.

Using Assentor's linguistics-based natural language pattern-matching engine and compliance patterns, messages are passed on through to their designated recipients unless they contain questionable content, in which case they are flagged and routed to human reviewers for further scrutiny.

"We can easily determine what kind of mail is being sent and received and what percentage are being quarantined and why," said Carpenter. "Managers now read only a fraction of what was required before the rollout. The labor savings alone justify the cost of the software. Time spent on monitoring and archiving E-mail can now be devoted to more productive activities."