Umecorp Seeks To Integrate Voice Systems In Trading

In an effort to exploit what it perceives as a maturing technology, California-based artificial intelligence specialist Umecorp is seeking business as an integrator of voice recognition technology (VRT) for financial trading applications. Umecorp's Engineering Services Division currently has pilot installations of VRT at a number of user sites.

Umecorp, formed in 1979, specializes in expert systems. Last year the company set up its Engineering Services Division for the sole purpose of providing systems integration services for VRT in financial trading.

Voice recognition technology has long been bubbling under as a possible application for trading. So far, most progress has been in the area of deal capture, whereby trade details are entered into a position-keeping system by a trader's or clerk's voice.

Voice recognition technology accepts spoken input from a microphone or telephone and samples the analog input to generate digital signatures for each word (TST, Jan. 24, 1988). It compares these inputs against a database of like signatures and interprets each utterance as either data or a command when a match with the database is made.

Traders and industry technologists have been wary of voice recognition technology. They say the financial industry's need for accuracy, combined with the noisy atmosphere of the trading room or floor, makes effective use of the technology difficult.

To date, the most visible application of VRT has been at Shearson Lehman Brothers Inc., where it is used to capture some trades in high-volume fixed-income securities including short-term Treasury securities. Shearson uses voice recognition technology from Verbex Voice Systems Inc.

According to Adithya Padala, president and chief executive officer of Umecorp, the company is convinced that voice recognition technology is now mature enough to meet the requirements of the financial trading industry. That maturity, combined with the belief that a client's return on investment in voice recognition technology would be high, led to the creation of the Engineering Services Division.

Umecorp sees two primary areas of benefit to be derived from voice recognition technology. The first, tangible benefit comes from the streamlining of the back office, according to James Freeman, director of marketing and trading technologies. Voice recognition technology can be used in the back office for entering trade details from deal tickets. Or it can eliminate the need for clerks to enter manually trade details scrawled on a trader's notepad, by generating inputs from the trader's voice.

The second, less tangible benefit is derived from increased trader efficiency. Voice recognition technology, Freeman says, can free a trader from clerical tasks, leaving him to trade without hindrance.

Umecorp's role as a systems integrator for VRT entails assessment of a prospective customer's requirements. Umecorp decides whether voice technology can be applied to applications used by the firm. Umecorp then determines how voice recognition technology may be best applied given the noise level, acoustics and other human factors.

"We take various technologies," says Padala, "see which technology fits a particular application, and in that application see where voice makes most sense... We don't focus on any one vendor. Our goal here is not to sell boxes.

"When we created this division, we took a hard look at all the vendors," says Padala, "and also called a number of their clients to make sure that the technology was sound. We were basically betting on other people's technology."

Among the main vendors of voice recognition technology are Tarzana, Cal.-based Speed Systems Inc.; Newton, Mass.-based Dragon Systems; Morristown, N.J.-based Verbex; and Texas Instruments.

Neither Padala nor Freeman will identify current pilot users of voice recognitions systems Umecorp has supplied. They say, however, that existing pilots and others currently being installed include applications at exchanges, firms and brokers. Among the applications are back- and front-office deal-capture systems for trading firms and similar systems for exchanges, Freeman says.

One broker/dealer, Freeman adds, is driving workstations entirely from voice. Freeman says the system gives a trader "the ability to navigate among screens from his analytics to his news screens to his position monitor, without ever touching a keyboard."

Down the road, Umecorp sees other applications from higher technology voice recognition systems developed by the Defense Department. For example, Padala points to the possible use of throat microphones to eliminate the problem of background noise.

"There's no reason for the microphone to listen to the noise your ear is hearing," he says. "This is not something we're planning to do next week, but the concept of throat mikes would make background noise irrelevant. Defense has used this to try to capture what you say at the throat rather than through a simple microphone."

Freeman: "A throat mike measures the way your larynx moves. We've talked to exchange floors where the noise levels are beyond extreme, up around 100 decibels for large parts of the trading day. Even the most sophisticated voice recognition processor has trouble dealing with that kind of noise."