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.
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
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.”