MIS 3090:IT for Financial Services

Web-Enabled, Pervasive Brokerage Services

May 14, 2023

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

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“Web-enabled Transformation of the Brokerage Industry”

New business models are emerging as brokerage industry experiments with emerging Internet technologiesInternet 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 virtual24/7 accessFaster, better, cheaperIncreasingly globalIncreasingly wireless, ubiquitousBetter interfaces and integrationBetter networks and databasesIncreasingly knowledgeable users

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Business Model TypesAnalysis 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 TypesInquiry ModelLayered ModelDiscount ModelE-Broker

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Brokerage Models - InquiryA. 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 AmericaDeveloped exclusively for the self-directed investorFocused 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 MBSNot totally newInternet-based MBS is newer versionAttractive 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 DevicesWeb-enabled mobile phones Sony, Motorola, NokiaPDAs Palm, IPAQ, PocketPCTwo-way pagers RIM Blackberry

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MEC Business Models101 brokerage firms in 2002 study

80 did not offer MBSBasic – uniform pricing, vertical platform

SieberNetPreference – uniform pricing, multi-platform

AmeritradeIncentive – multiple pricing, vertical platform

FidelityElastic – multiple pricing, multi-platform support

Schwab, E-TradeN.B.: 25% of wired services supported in MBS

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Schwab Case DiscussionBackground – Key innovationsUse of ITChannel conflicts?Changes in business model?Role of RIAs?Web portals? Enhancements with Web 2.0?

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For Next Class…For Next Class… Read

− FleetBoston case