VoIP Goes Financial

Voice over Internet Protocol (VoIP) has increased in popularity on the financial services trading floor, with both ING and Merrill Lynch last year upgrading their traditional turrets to IPC’s IQ/MAX VoIP-powered desktops to make live trades.

VoIP, once an iffy proposition due to questions of reliability and security, is now a draw within the financial services industry. ING implemented it in April on company trading floors in New York and Hartford, Conn. Merrill Lynch plans to implement it this year at trading centers in New York and London.

"For a long time, we’ve been building up, watching smaller institutions use [VoIP]," says Brad Bailey, a senior analyst at Aite Group. "We’re at a point where it’s necessary to have voice and data on the same network."

Previously, physical records of transactions were stored at the same location where the trading occurred. Now those records are stored in an IP environment, which eliminates security concerns, cuts real-estate costs, and allows for more accurate record-keeping.
However, VoIP in financial services differs from VoIP in consumer marketplaces. Because VoIP in the financial sector doesn’t go out over the Internet, it’s more secure and flows on a bigger bandwidth.

"From a security point of view, advances have made [VoIP] more attractive," Bailey says. "But I’d say by and large the biggest factor is the nature of electronic trading and the amount of data going back and forth over the network and not having to separate voice from other types of data."