Banks Decide That Increasing Chat Security Might Be a Good Thing

Moneybox
A blog about business and economics.
Aug. 4 2014 11:38 AM

Banks Decide That Increasing Chat Security Might Be a Good Thing

120340342-trader-john-w-panin-of-jnk-securites-corp-works-on-the
Ugh! Shouldn't have sent that on IM.

Photo by Stan Honda/AFP/Getty Images

Big banks have finally decided to upgrade their chat services from the Bloomberg terminal standard. Wall Street firms led by Goldman Sachs are looking to buy a stake in Perzo, a free instant messaging service, according to a report in Reuters. Other banks considering the investment include Morgan Stanley, JPMorgan Chase, Bank of America, Deutsche Bank, HSBC, and BlackRock.

Perzo markets itself as, above all, a secure communications platform. It allows for "off the record" and "private" messaging, and encrypts all exchanges end-to-end. (Should you have any doubts about Perzo's emphasis on security, take a look at the giant image of a safe that serves as the background on its website.) Chat has long been a staple at financial institutions, where traders use it to make snap decisions with sales staff and underwriters rely on it to communicate with investors.

Advertisement

If banks did invest in and adopt Perzo, it would likely become an alternative or replacement to the chat function in the $20,000-a-year Bloomberg terminal that is used by most people in finance. Banks have sought to get clear of Bloomberg messaging before—at Goldman, the project launched in 2013 under the nickname "Babel." But banks have struggled to escape a program that is so entrenched in the industry; the Bloomberg system has an estimated 320,000 users in its directory.

Inertia aside, it's certainly about time that Goldman and its peers looked into overhauling their chat functions. Tensions developed between banks and Bloomberg last spring after it came out that Bloomberg News journalists had essentially reverse-engineered the terminals to spy on high-profile clients for reporting purposes. Indiscreet instant messages have also been key to documenting the LIBOR scandal, earning banks fines from regulators, and revealing some classic Wall Street vulgarity.

Late last year, it seemed that banks had had enough with the trials and tribulations of chat. Barclays, Citigroup, and Royal Bank of Scotland placed bans on certain types of chat rooms and other firms considered taking similar steps. In January, Goldman indicated that it might bar traders from person-to-person messaging over Bloomberg, Yahoo, AOL, and other third-party chat services. It's unclear if buying a stake in Perzo could ever eliminate those kind of risks. But in the eyes of banks, abandoning chat altogether might not be a feasible option.

Alison Griswold is a Slate staff writer covering business and economics.

TODAY IN SLATE

Justice Ginsburg’s Crucial Dissent in the Texas Voter ID Case

The Jarring Experience of Watching White Americans Speak Frankly About Race

How Facebook’s New Feature Could Come in Handy During a Disaster

The Most Ingenious Teaching Device Ever Invented

Sprawl, Decadence, and Environmental Ruin in Nevada

View From Chicago

You Should Be Able to Sell Your Kidney

Or at least trade it for something.

Space: The Next Generation

An All-Female Mission to Mars

As a NASA guinea pig, I verified that women would be cheaper to launch than men.

Terrorism, Immigration, and Ebola Are Combining Into a Supercluster of Anxiety

The Legal Loophole That Allows Microsoft to Seize Assets and Shut Down Companies

  News & Politics
Jurisprudence
Oct. 19 2014 1:05 PM Dawn Patrol Justice Ruth Bader Ginsburg’s critically important 5 a.m. wake-up call on voting rights.
  Business
Business Insider
Oct. 19 2014 11:40 AM Pot-Infused Halloween Candy Is a Worry in Colorado
  Life
Outward
Oct. 17 2014 5:26 PM Judge Begrudgingly Strikes Down Wyoming’s Gay Marriage Ban
  Double X
The XX Factor
Oct. 17 2014 4:23 PM A Former FBI Agent On Why It’s So Hard to Prosecute Gamergate Trolls
  Slate Plus
Slate Picks
Oct. 17 2014 1:33 PM What Happened at Slate This Week?  Senior editor David Haglund shares what intrigued him at the magazine. 
  Arts
Behold
Oct. 19 2014 4:33 PM Building Family Relationships in and out of Juvenile Detention Centers
  Technology
Future Tense
Oct. 17 2014 6:05 PM There Is No Better Use For Drones Than Star Wars Reenactments
  Health & Science
Space: The Next Generation
Oct. 19 2014 11:45 PM An All-Female Mission to Mars As a NASA guinea pig, I verified that women would be cheaper to launch than men.
  Sports
Sports Nut
Oct. 16 2014 2:03 PM Oh What a Relief It Is How the rise of the bullpen has changed baseball.