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Chat, IM & Videotape

MIAMI - Automated e-mail response and routing. Voice and other biometric signature prints. E-statements. Virtual signatures. Co-browsers and personal Web pages. Wireless access, voice recognition and artificial intelligence. Videoconferences with big-name portfolio managers for wealthy investors, and chat rooms and instant messages for the masses.

To hear the technologies fund companies are employing at the National Investment Company Services Association 21st Annual Operations conference here late last month, one could conclude the otherwise staid, conservative mutual fund industry is becoming downright cutting edge.

Fidelity Investments is using collaborative technologies for its service reps, enabling them to access an intranet along with investors. Meanwhile, the firm is videoconferencing with high-net-worth investors at branch office kiosks, said Dan Sullivan, Fidelity VP, contact center technology.

And instant messaging, or IM, is becoming increasingly popular among fund companies, particularly as many are opening overseas service centers (see MFMN 2/24/03) where the written word can overcome any language or accent barriers, Sullivan said.

"IM will become [even] more applicable as wireless grows in popularity," said Phil Stump, a systems officer with DST Systems of Kansas City, Mo.

OppenheimerFunds turned to an advanced phone system that combines DTMF, or Dual Tone Multi-Frequency automated touch-tone, and IVR, or integrated voice response, to increase its phone automation rates by 15%, saving $2 million annually, said Regina Schmidt, senior product marketing manager of voice-recognition at Nuance of Menlo Park, Calif.

Automated phone systems can resolve investor questions for as little as 20 to 35 cents, whereas a live representative can cost $6.17 over the phone or $9.53 via e-mail, Schmidt said, citing data from Forrester Research, Cambridge, Mass.

The next step beyond a menu of voice recognition is an artificial intelligence system that can handle a variety of freestyle questions and recognize a voice print to replace a PIN, or personal identification number, Schmidt maintained.

Automated e-mail routing and responses also are becoming popular among fund companies, DST's Stump said. But rather than sending out an e-mail "blast" to selling partners or even to investors, it's important to gather more than e-mail addresses, Stump said. "Know more about them and then decide how you are going to e-mail them," he said.

Advanced contact management systems, or customer relationship management (CRM) tools are going to become increasingly important as "calls taken at call centers become increasingly complex," Stump said. Likewise, funds are going to need "reliable rules-based engines answering most questions from the web," he said.

Instant Trades

With the Securities Industry Association of Washington postponing the settlement of trades within the next business day, known as T+1, until June 2005, straight-through processing (STP) has taken center stage. Firms that deal in equities have made great strides in STP, but fixed-income, repos, asset servicing and reference data still have a long way to go, said Genevy Dimitrion, VP, product development and global market initiatives, Deutsche Bank of New York.

"Getting utilities matching in T+3 [the current trade-settlement cycle of three days], in a central matching environment would get people a long way there," said Rick Borelli, a principal with the investment management business advisory services group at Deloitte & Touche of New York.

Electronic Buy-In a Bust

One area where fund companies have failed to make great strides, but are still plugging away, is in electronic delivery.

The telephone is still the preferred method of communication with financial service companies for the majority, 27%, of investors, Schmidt said , citing figures from Datamonitor of New York. Mail or fax was the next most popular, for 5%, followed by Internet and e-mail, for 4%.

"Cost savings from electronic delivery haven't met expectations. Only 3% to 5% of investors have opted in for electronic delivery, and rates have plateaued there," said Bob Griffin, director of client services at Fidelity. "It's been more difficult than we thought."

Of the millions of shareholders that Fidelity serves, only 100,000 are registered Internet users, and of these, only 10,000 are active, Griffin said. Still, acquainting investors with electronic delivery is worth the effort, particularly as physical documents are 10 times the cost of electronic ones.

Copyright 2003 Thomson Media Inc. All Rights Reserved.