Mis 3090 it for financial services
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MIS 3090: IT for Financial Services. Web-Enabled, Pervasive Brokerage Services. July 31, 2014. Source Articles…. “Web-enabled Transformation of the Brokerage Industry” CACM 2002 “Emerging Business Models for Mobile Brokerage Services” CACM 2004.

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Mis 3090 it for financial services

MIS 3090:IT for Financial Services

Web-Enabled, Pervasive Brokerage Services

July 31, 2014


Source articles

Source Articles…

  • “Web-enabled Transformation of the Brokerage Industry”

    • CACM 2002

  • “Emerging Business Models for Mobile Brokerage Services”

    • CACM 2004


Web enabled transformation of the brokerage industry

“Web-enabled Transformation of the Brokerage Industry”

  • New business models are emerging as brokerage industry experiments with emerging Internet technologies

  • Internet and deregulation are main agents of industry change

    • Information dissemination

    • Interactivity

    • Mass customization

    • Collaboration

    • Transactional support

    • Application and information integration


General trends in industry

General Trends in Industry

  • Increasingly virtual

  • 24/7 access

  • Faster, better, cheaper

  • Increasingly global

  • Increasingly wireless, ubiquitous

  • Better interfaces and integration

  • Better networks and databases

  • Increasingly knowledgeable users


Business model types

Business Model Types

  • Analysis of 179 firms including brokerages

    • 73 firms didn’t offer online brokerage services

    • 67 Internet and full-service brokerages

    • Study showed 4 distinct business models

      • 3 click and mortar, 1 click-only


Business model types1

Business Model Types

  • Inquiry Model

  • Layered Model

  • Discount Model

  • E-Broker


Brokerage models inquiry

Brokerage Models - Inquiry

  • A. G. Edwards type

    • Click and mortar

    • Designed for account management and hands-off users

    • No on-line trading


Brokerage models layered

Brokerage Models - Layered

  • ML, Goldman, Morgan- Stanly

    • Click and mortar

    • Alternative service options (see ML case)

    • Strengths? Weaknesses?


Brokerage models discount

Brokerage Models - Discount

  • Schwab, CSFBdirect, Fidelity, TD Waterhouse

    • Click and mortar

    • Provide resources to clients

    • Disintermediate brokers

    • Discount commissions


Brokerage models e broker

Brokerage Models – E-Broker

  • Click only – Ameritrade, Datek, E-Trade, Free-trade, Brokerage America

  • Developed exclusively for the self-directed investor

  • Focused on fast and inexpensive trade execution


Emerging business models for mobile brokerage services mbs

“Emerging Business Models for Mobile Brokerage Services (MBS)”

  • Business models focused specifically on mobile arena (MEC)

    • Major trend in society

    • Convergence of web and wireless technologies

    • Extending conventional Web-based services with MEC to spawn a new wave of innovation

    • Brokerage firms struggling to differentiate themselves

    • What are the new business models?


Wireless trading or mbs

Wireless trading or MBS

  • Not totally new

  • Internet-based MBS is newer version

  • Attractive because of

    • Ubiquity

    • Localization – very new

    • Wireless trends??

  • Challenges include:

    • Requires additional components

      • Mobile gateway, wireless transport, wireless apps, mobile devices…too many competing standards


Mobile devices

Mobile Devices

  • Web-enabled mobile phones

    • Sony, Motorola, Nokia

  • PDAs

    • Palm, IPAQ, PocketPC

  • Two-way pagers

    • RIM Blackberry


Mec business models

MEC Business Models

  • 101 brokerage firms in 2002 study

    • 80 did not offer MBS

  • Basic – uniform pricing, vertical platform

    • SieberNet

  • Preference – uniform pricing, multi-platform

    • Ameritrade

  • Incentive – multiple pricing, vertical platform

    • Fidelity

  • Elastic – multiple pricing, multi-platform support

    • Schwab, E-Trade

      N.B.: 25% of wired services supported in MBS


Schwab case discussion

Schwab Case Discussion

  • Background – Key innovations

  • Use of IT

  • Channel conflicts?

  • Changes in business model?

  • Role of RIAs?

  • Web portals?

    • Enhancements with Web 2.0?


For next class

For Next Class…

  • Read

    • FleetBoston case


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