Group Name: E-tailers
Meeting Open Time: 12:30-2:30
Date: 22-apr-2008
Place: university premises
Present: all
Absent: none
AGENDA ITEM HEADING: ELECTRONIC FINANCIAL INDUSTRY ANALYSIS

Electronic financial services, whether delivered online or through other remoteMechanisms, have spread quickly in recent years. Despite differences across countries—including such factors as the readiness of telecommunications infrastructure and thequality of regulations—there is much commonality and convergence in the spread of e-finance. The spread of online banking services has been more varied across countries.Spurred by the entry of new providers from outside the financial sector, however, manyfinancial service providers are now offering e-finance services
By 2005 online banking could account for 50 percent of the market for banking servicesin industrial countries, up from 9 percent today, and for 10 percent in majo developingcountries, up from 1 percent. With better connectivity, online banking in developingcountries could rise even further, to 20 percent by 2005. Similarly, in industrial countriesthe share of online brokerage could rise from 28 to 80 percent, and in developingcountries from 2 to 15 percent. With a better business and enabling environment, theshare of online brokerage in developing countries could even hit 40 percent by 2005.
E-FINANCE IS DRAMATICALLY CHANGING THE STRUCTURE AND NATURE OF FINANCIAL SERVICES
E-finance will lead to much lower costs and greater competition in financial servicesthrough both new entry from outside today’s financial sector and greater competitionamong incumbent financial service providers. These developments will force banks tolower fees and commissions because providing e-finance is much cheaper thanproviding traditional financial services. As a result incumbent financial institutionswill likely experience a sharp decline in revenue. Internet and related technologies are more than just new delivery channels—they area completely different way of providing financial services. Using data miningtechniques, for example, providers can tailor products without much human input andat very low cost. They can also better stratify their customer base and allowconsumers to build preference profiles online—enabling far more personalizedpricing of financial services and much more effective identification of credit risks.The Internet also allows new financial service providers to compete more effectivelyfor customers. All these forces are delivering large benefits to consumers of financialservices at the retail and commercial levels
Technological advances are also changing the face of the financial services industry.New providers are emerging within and across countries, including online banks,online brokerages, and companies that allow consumers to compare financial servicessuch as mortgage loans and insurance policies. Nonfinancial entities are also enteringthe market, including telecommunication and utility companies that offer paymentand other services. Vertically integrated financial service companies are growingRapidly and creating synergies by combining brand names, distribution networks and financial service productions.