How Multimedia Tools Made Vanguard A Better Company

Mutual fund company uses Web 2.0 technology to help customers invest better

Almost ten years ago Vanguard's IT team looked at then-emerging multimedia and content sharing tools on the Web and saw a future goldmine for customers.

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The mutual fund company, which holds $1.3 trillion in assets, considers a key part of its value proposition to be educational materials that help customers make better investment choices. Multimedia offered yet another way to keep customers interested in and educated about the financial markets. Meanwhile, pushing content to subscribers' Web browsers could make Vanguard's content easier to access.

By 2006, online multimedia from iTunes to YouTube had exploded in popularity, RSS feeds for subscribing to Web content were proliferating and Vanguard plunged in. The company not only revamped its website, enabling customers to personalize their experience online, but also deployed a platform for delivering multimedia content. To date, Vanguard has posted 73 podcasts and 40 videos. For its efforts, Vanguard is honored with a 2008 CIO 100 Award.

It was an uncommon step for a financial services company, says CIO Paul Heller. He thinks that the materials, which have been downloaded by investors nearly 1 million times, have helped both the company and its customers weather the current economic downturn. Vanguard claims it led the mutual fund industry in cash flow in 2007 with more than $100 billion in new investments into its funds and its mutual fund redemption ratio (a measure showing how many dollars leave Vanguard) at an all-time record low. "I'm convinced that the positive part of this recession is that the technology can still enable people to invest," Heller says, and make them more successful by giving them information.

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Paul Heller, CIO, Vanguard Photo By Steven Vote

Creating Wealth with Multimedia

Vanguard's 5 million customers are a tech-savvy bunch; most clients do their transactions online and have for years. "We were a virtual company before it was cool to be a virtual company," Heller says.

But investors weren't as enamored of the text-based information Vanguard had on its website. Heller and his team planned to give the customers what they wanted, where they wanted it. With the majority of Vanguard's interactions with clients occurring via Vanguard.com, Heller pays close attention to how consumers use the Web. "The trend towards Web 2.0 seemed obvious," he says of new technologies for sharing information and applications online.

Vanguard's own research showed that consumers were beginning to use multimedia formats to access information. Heller says multimedia helps investors learn by making it easier for them to access information. The new technologies make investment information portable, so investors don't have to sit at their computers to get it. "We never would have guessed it when we started, but we are in the top ten list of podcasts on iTunes," Heller says.

Risk of the New

Heller and his team used Adobe Flash for interactive content and video, and the MP3 format for podcasts—pretty standard stuff, to make dowloading easy for customers.. The files are hosted within Vanguard's data centers and through third-party hosting providers. Videos made for viewing by Vanguard employees use multicast protocols, whereas content for clients uses a combination of progressive download and unicast streaming.

Yet the investment wasn't a sure bet. "There was just an initial resistance [among Vanguard executives] that we were going to throw the party and have no one show up," Heller says. However, according to Heller, because multimedia is one of the best ways to put a face on Vanguard, the IT team decided the move was worth the risk.

The IT department piloted several different types of tools for creating multimedia, choosing those that would improve the user experience without requiring customers to download software. Vanguard selected the Adobe Flash player, because it is a "de-facto standard," he says. Both RealNetworks and Windows Media Media Player offered strong alternatives, but users would need to install a player.

Heller says that when it comes to multimedia on the Web, Vanguard won't move to the bleeding edge, but he does want to stay ahead of his industry competitors. To do so, he intends to repurpose what companies such as Amazon.com, Netflix and the New York Times do to develop new ways of delivering information. "They are on the forefront of what's happening with the web," he says, "and it's so exciting."

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Copyright © 2008 IDG Communications, Inc.

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