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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… . “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

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  1. MIS 3090:IT for Financial Services Web-Enabled, Pervasive Brokerage Services July 31, 2014

  2. Source Articles… • “Web-enabled Transformation of the Brokerage Industry” • CACM 2002 • “Emerging Business Models for Mobile Brokerage Services” • CACM 2004

  3. “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

  4. 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

  5. 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

  6. Business Model Types • Inquiry Model • Layered Model • Discount Model • E-Broker

  7. Brokerage Models - Inquiry • A. G. Edwards type • Click and mortar • Designed for account management and hands-off users • No on-line trading

  8. Brokerage Models - Layered • ML, Goldman, Morgan- Stanly • Click and mortar • Alternative service options (see ML case) • Strengths? Weaknesses?

  9. Brokerage Models - Discount • Schwab, CSFBdirect, Fidelity, TD Waterhouse • Click and mortar • Provide resources to clients • Disintermediate brokers • Discount commissions

  10. 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

  11. “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?

  12. 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

  13. Mobile Devices • Web-enabled mobile phones • Sony, Motorola, Nokia • PDAs • Palm, IPAQ, PocketPC • Two-way pagers • RIM Blackberry

  14. 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

  15. 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?

  16. For Next Class… • Read • FleetBoston case

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