MIS 3090: IT for Financial Services Web-Enabled, Pervasive Brokerage Services March 12, 2016

2/20 Source Articles… “Web-enabled Transformation of the Brokerage Industry” CACM 2002 “Emerging Business Models for Mobile Brokerage Services” CACM 2004

March 12, 20163/20

March 12, 20164/20 “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

March 12, 20165/20 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

March 12, 20166/20 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

March 12, 20167/20 Business Model Types Inquiry Model Layered Model Discount Model E-Broker

March 12, 20168/20 Brokerage Models - Inquiry A. G. Edwards type Click and mortar Designed for account management and hands-off users No on-line trading

March 12, 20169/20 Brokerage Models - Layered ML, Goldman, Morgan- Stanly Click and mortar Alternative service options (see ML case) Strengths? Weaknesses?

March 12, /20 Brokerage Models - Discount Schwab, CSFBdirect, Fidelity, TD Waterhouse Click and mortar Provide resources to clients Disintermediate brokers Discount commissions

March 12, /20 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

March 12, /20 “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?

March 12, /20 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

March 12, /20 Mobile Devices Web-enabled mobile phones Sony, Motorola, Nokia PDAs Palm, IPAQ, PocketPC Two-way pagers RIM Blackberry

March 12, /20 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

March 12, /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?

March 12, /20 For Next Class…  Read − FleetBoston case