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E-commerce is exploding, and finincial sector players are leading the wave of growth in Internet-based buskness transactions. The rise of E-commerce is bringing fundamental change to the way financial institutions operate. This Special Report examines these trends and takes a look at the changes ahead.
Paul Rudolph sees no reason to mince words, even with Japanese bankers. "Banking is essential; banks are not," he recently admonished a group of blue-chip Japanese bank chiefs gathered in Hawaii to learn a Western lesson in survival strategy.
Today global banking can be accomplished readily through IE-commerce, says Rudolph, president of electronic business for EDS, in Plano, Texas. While some bankers previously may have presumed the need for a fleet of full branches to consummate their potential for business, many retail banks are "getting their channel strategies right-through phone Web, and automatic I teller mand automatic teller machines-providing 24-hour, anyplace, anytime service to cus- 'qq tomers around the world," says Bill Bound, the global leader for E-commerce consulting at PricewaterhouseCoopers in London. "So they've got to have an intranet and the Internet as a basic building bloc," he says.
Indeed, financial sector players, also including investment banks, insurers, and other service providers, are leading the E-commerce wave. "Over the past year or so, there has been an explosion of the Internet with a tremendous rise in volume and transaction capability, bringing existing products and services to a new channel, the non-brick-and-mortar electronic Internet channel," says Paul Loftus, IBM's general manager of E-commerce solutions for the financial sector, in White Plains, New York. "The fourth quarter [1998] rewrote a lot of the [Intemet growth] studies, particularly by the effect that on-line shopping and commerce had around the holiday season. What we saw in the fourth quarter was a kind of an early adopter-legitimizer phase, when a lot of people who had been kicking tires and visiting sites [finally] started to buy," he says. "Everybody we talk to is trying to compile data on the fourth quarter now for release at the beginning of the second quarter this year," he adds.
In a survey conducted during the recent World Economic Forum, PricewaterhouseCoopers found that while a third of the respondents now derive no business revenue from the Internet, a...