1 Frankfurt, 11 th November 2004 Prof. Dr. Wolfgang König E-Finace Lab at the Goethe University Institute for Information Systems Making finance mobile Jan Muntermann Alerting Notifications – Benefits for Mobile Investors Chair of M-Commerce Goethe University Frankfurt

2 E-Finance Lab at the Goethe University Introduction of Mobile Alerting Services Empirical Evidence Suitable Mobile Information Infrastructures Summary & Conclusion Agenda

E-Finance Lab - Prof. Dr. Wolfgang König - Chairman of the Board

E-Finance Lab Partners: Leading Corporations of the Financial Service Sector

E-Finance Lab Focused Research Areas 2004

6 E-Finance Lab at the Goethe University Introduction of Mobile Alerting Services Empirical Evidence Suitable Mobile Information Infrastructures Summary & Conclusion Agenda

7 Introduction Mobile Banking in the past Mobile Banking/Broking were expected to be one of the „killer applications“ for mobile commerce in the past [Durlacher 1999; Ericsson 2001] Problems: Mobile banking solution were mainly reproduction of already existing web-based applications but with fewer functionality. Low bandwidth High communication costs Low functionality

8 Mobile Banking today Problems solved: Fast data services (GPRS/UMTS) Low data transfer costs (e.g. flat rates) More functionality possible (new devices with better displays and browser functionality) New mobile banking applications make use of mobile aspects in order to diversify from existing web-based solutions and to provide additional value.

9 E.g. alerting services: –Minimum balances reached –Deposits made –Trades executed These proactive and “simple” alerting services reduce call center costs up to % (25c vs. $2.77 averaged) [JupiterResearch 2004] But: Existing Mobile Brokerage services are still in a ‘primitive’ state focusing mainly on cost reduction. Are there any mobile brokerage application domains providing addition value (which may generate access to new business segments)?

10 The German Securities Trading Law, §15 (WpHG) regulates that stock price relevant company news have to be published via so-called ad hoc disclosures immediately, e.g: [Ad hoc Disclosure published by Mensch & Maschine AG on :23]

11 These disclosures cause price reactions on the capital market Publication date of the Ad hoc Disclosure: 14:06 CDAX Performance Index N Price reaction seemingly induced by disclosure Mensch & Maschine intraday stock price development on Xetra

12 Introduction Questions: How to prove that mobile alerting services can utilize these price effects?  Can these price effects be proven?  What is the respective time frame?  How can a suitable mobile notification infrastructure be designed?

13 E-Finance Lab at the Goethe University Introduction of Mobile Alerting Services Empirical Evidence Suitable Mobile Information Infrastructures Summary & Conclusion Agenda

14 Price effect analysis Publication date of an ad hoc disclosure: 12:23 Is this potential reaction only a market trend? How does the market perform? CDAX Performance Index Abnormal return* AR 13:00 ~1% r i – 0% r CDAX =1% Potential price reaction (cumulated): ~3% N * corrected by an average abnormal absolute return in a 2nd step

15 Price Effect Significance Significance for abnormal stock returns (AR>0) following company announcements t 1,2 t 3,5 t 6,10 t 11,15 t 16,20 Mean t-Value5.94***2.43*** *** indicates significance on the 1% level (213 observations) Significant abnormal returns can be proven for the first 5 ticks (=price fixings on a minute basis) following the announcement.  A suitable mobile alerting service would have to inform the investor within this timeframe.

16 Price Effect Duration ( After how many minutes are these price effects completed?) Time conversion of the first five price fixings (n=213) minutes percent

17 E-Finance Lab at the Goethe University Introduction of Mobile Alerting Services Empirical Evidence Suitable Mobile Information Infrastructures Summary & Conclusion Agenda

18 Notification Scenario 1.The investor holds stocks of company XY. 2.Company XY publishes an ad hoc disclosure at at 10:23 am. 3.This event causes an alerting notification to be initiated.

19 Notification Infrastructure 1.5 5

20 E-Finance Lab at the Goethe University Introduction of Mobile Alerting Services Empirical Evidence Suitable Mobile Information Infrastructures Summary & Conclusion Agenda

21 Summary & Conclusion The existence of significant short-term price effects following company announcements opens a window of opportunity for non-institutional investors. Appropriate mobile alerting services can provide benefits for investors AND service providers. The push/pull service WAP Push Indication (SI) combines prompt notification delivery and the processing of message meta data (e.g. priority levels).

22 Thank you for paying attention! Prof. Dr. Wolfgang König Jan Muntermann