UK investment banks use unregulated instant messaging, research warns

UK-based investment banks could be putting themselves and investors at risk by allowing staff to use unregulated Instant...

UK-based investment banks could be putting themselves and investors at risk by allowing staff to use unregulated Instant Messaging (IM) networks to exchange information, according to a survey from Vanson Bourne Research.

The survey, which questioned the IT departments in 50 leading UK corporate and investment banks, revealed that around half of companies admit that use of IM networks are widespread within their organisations and that important transactions are being made via free IM networks such as AOL, MSN and Yahoo.

According to the survey, which was commissioned by messaging specialist FaceTime Communications, nearly half of companies are certain that employees are using IM.  One in 10 companies does not know for sure because IM is available for free.

Despite the fact that 60% of institutions admit that traders and brokers are the main users of IM, two out of the top three IM networks used are public ones such as MSN and Yahoo.

In addition, the survey said that 77% of companies believe IM will replace the use of e-mail in some cases, while half of businesses that have IM concede that business and personal use are intertwined.

Originally, IM was used on a social basis by web users but with most companies now providing always-on internet access, personal and professional communications take place together via e-mail, SMS and IM, said Kevin Withnall, director at Vanson Bourne Research. 

"Instant Messaging has developed into a serious business application within the financial community, which is now used alongside the phone and e-mail for front-office communications," he said.

In the US, financial institutions are required by law to audit and track all electronic messages, explicitly including IM.  Bodies such as the Securities and Exchange Commission, National Association of Securities Dealers, and legislation such as the Sarbanes-Oxley Act are all increasing the regulatory burden on financial institutions. 

In the UK, the Financial Services Association is less prescriptive, but companies need to be sure IM is not being used as a conduit to break other regulations or policies. 

"Monitoring of e-mail is now corporate policy for most institutions, but regulatory pressure does not yet seem to have extended to IM conversations that happen on free, public networks," said Withnall.

Last October, information services giant Reuters launched its own IM service in an attempt to regulate the use of the technology within its business.

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