At the 1964 World's Fair in New York, crowds marveled at the AT&T Picturephone, an innovation promising face-to-face conversations over a video screen.
"I was there," recalled Christine Hartman, research director, VoP Markets at Probe Group, Cedar Knolls, N.J. "I've been waiting for this for 40 years."
Although the clamoring crowds may have to wait a bit longer, investment banks and institutional investors are starting to follow through on the promise of two-way video communications. One reason is that bandwidth has become more available and affordable than ever before.
Still, bandwidth hasn't yet become ubiquitous. "You've got this glut at the core, but these thin straws at the edge," said Hartman. "But when you're talking about an enterprise, especially a larger enterprise, that edge problem starts to go away."
In the financial community, large enterprises-including the investment banking arms of JP Morgan Chase and Deutsche Bank-have begun to adopt the new technology for both internal and external communications.
"A company like Deutsche Bank has got thousands of seats," said John Carlson, vice president of marketing at Avistar, based in Redwood Shores, Calif. "They've started talking to their clients in the system as well."
Avistar has modeled its service as an instant-messaging network having as its core feature "presence detection." Each person logged onto the network can make his or her online presence known to everyone else on the network.
"It helps create the virtual team, such that you can distribute operations," said Carlson. "You can have people in New Jersey, or upstate New York, Manhattan, London-all interconnected."
"The physical barriers kind of just melt away," he added.
With a video camera on every desk, the potential applications go beyond simply chatting with colleagues. More productive uses might include recording the morning meeting in New York for later viewing by bankers in other time zones; creating video e-mails by research analysts that go first to a compliance officer, and then to the buy-side community; and perhaps even a way to enforce the employee dress code.
Indeed, video functions have been integrated into the Siebel CRM application used by many banks. This allows the sales force to speak face-to-face with video-enabled clients, and then share the details of the call with colleagues using a video message rather than e-mail.
Also, given the recent spate of embarrassing, subpoenaed e-mail messages that have appeared in The Wall Street Journal and on regulators' desks, the fact that video communication leaves few electronic traces might account for the sudden popularity of internal video networks.
Not that traders are now free to harangue research analysts via video. "We have a very extensive reporting capability, so all of those calls are logged," said Carlson. "We know who called who, and for how long, and so on."
For communications with buy-side clients outside of the bank, the audio portion of the call is recorded. To that end, Avistar has worked with IPC and Syntegra, the leading manufacturers of trading turrets, to integrate video technology into existing compliance platforms.
Nevertheless, it wouldn't take a particularly devious mind to figure out a way to abuse the system. The recent scandals show the way.
"On the one hand, people were saying, 'Buy, buy, buy!' and on the other hand they were giving the thumbs down-'Sell, sell, sell!'" said Carlson. "Now if you're on video, you could be saying, 'This is a great buy,' while you've got your thumb down."
The potential for abuse is an unavoidable side-effect to an increasingly necessary technology, said Carlson, "barring recording every video conversation that's going on."
Although storage has become relatively inexpensive, regulators haven't yet required global banks to archive every communication that occurs during the course of doing business.
Other videoconferencing technology providers in the financial services industry include Polycom, which recently installed its solution for China Construction Bank (see BS&T, Feb. 2003), and WebEx, which serves Bank of Tokyo and the Chicago Board of Trade.
With Internet Protocol (IP) telephony becoming increasingly affordable and technologically viable, videoconferencing and countless other data-driven applications have the potential to become an accepted part of the business technology landscape.
"The IP PBX is steadily gaining momentum and, in the not too distant future, will enter the business mainstream," said Hartman of Probe Research. "Thus, while IP PBXs are still in the early-adoption phase, many corporate customers have implemented or at least are contemplating a limited deployment."
The spread of video should come as welcome news to telecom equipment manufacturers, computer makers, and telecom network operators alike, not to mention their lenders and investors. It may even herald increased demand for hair gel, neckties and nose jobs.