Having been rocked by the Sept. 11 attacks, financial-services companies are finding that videoconferencing technologies are crucial to their new reality. Not only do videoconferencing applications offer an alternative to travel, but as financial firms in lower Manhattan consider spreading their staffs among multiple locations to avoid the kind of tragedy that devastated bond trader Cantor Fitzgerald, they're planning to make video links a more important part of their business culture.

At the same time, some financial firms have discovered that videoconferencing doesn't have to involve getting access to conference rooms and coordinating disparate schedules. Instead, they're using networked, video-to-the-desktop technology from companies such as Avistar Communications, Polycom, and First Virtual Communications. Avistar reports that demand for, and use of, its software--a PC-based application that operates like video instant messaging and runs over ISDN lines or IP networks--has risen since the attacks. VP John Carlson says one financial-service customer's usage shot up 160% in September, and the company is receiving a growing number of inquiries from prospects.

Jim Mahoney, VP of operations at SG Cowen Securities Corp., says that since the sell-side brokerage firm deployed Avistar in May, the software has effectively supplanted traditional videoconferencing as the video tool of choice among the 84 employees who have Avistar installed on their desktops. Mahoney says the system, which costs between $2,000 and $4,000 per seat, lets execs, researchers, and traders visit each other's offices virtually, regardless of location, and that he's seen a spike in usage since the attacks. "The next step is to link it directly to our clients," he says.

As the technological wrinkles of developing widespread video over IP are ironed out, Avistar and its competitors could see a much richer market for their products, Yankee Group analyst Joe Gagan says. He expects the growth of video over IP to be accompanied by stiffer competition, but he says companies such as Avistar will be at an advantage because of their experience with real-world deployments.