The latest research from TowerGroup predicts that Web 2.0 technologies, such as wikis, podcasts and blogs, will dramatically change the kinds of software used by securities firms and promote greater collaboration and participation both internally and in client-facing applications.
Securities firms will use Web 2.0 technology, along with its offspring Enterprise 2.0, to develop new tools for client interaction as well as for investment research and information distribution.
Data gathering and distribution is a key area for Web 2.0 development, says TowerGroup, with some firms seeing blogs as valuable a source of information as any traditional media outlet.
Matt Nelson, senior analyst in the TowerGroup Investment Management practice, says: "Enhancing a company's current data repository tools with a wiki or blogging platform can greatly improve the quality, timeliness, and collective power of the data, as well as reduce corporate e-mail volumes, improve customer satisfaction and retention rates, and improve time to market with new products."
TowerGroup says there is also an opportunity for investment managers to use Web 2.0 technology to develop applications for risk and analytics, performance and attribution and portfolio accounting.
Although it doesn't expect securities firms to develop social networking capabilities within client portals, TowerGroup says the usability and functionality of these channels can be enhanced with Web 2.0 technology.
But TowerGroup warns that regulatory compliance represents a major challenge to the take-up of the technology, given that Web 2.0 tools are designed to break down walls and to allow freeform collaboration.
"Within securities firms, certain walls must be maintained between units or laws are broken," says Nelson. "TowerGroup recommends that a standardised platform for collaboration be developed and championed by the firm, with actual collaboration occurring in segmented silos based on functional teams."
Reseach group Gartner said last year that banks should use Web 2.0 applications to improve cross-enterprise collaboration and deliver personalised information to clients.
But research released last month by IT specialist Conchango found that many of UK's major retail banks and building societies have been scared off from implementing Web 2.0 applications by fears over possible brand damage.