MIS 3090: IT for Financial Services

							       MIS 3090:
IT for Financial Services


Web-Enabled, Pervasive
 Brokerage Services


     August 6, 2012
Source Articles…
  “Web-enabled Transformation of the
  Brokerage Industry”
     CACM 2002
  “Emerging Business Models for Mobile
  Brokerage Services”
     CACM 2004



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August 6, 2012   3/20
“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

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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

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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



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Business Model Types
  Inquiry Model
  Layered Model
  Discount Model
  E-Broker




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




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




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




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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



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“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?


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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


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



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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

                              August 6, 2012           15/20
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?

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For Next Class…
 Read
  −   FleetBoston case




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