Prometheus was a titan, known as a friend and benefactor to humans, son of Lapetus and Clymene and brother to Epimetheus. Prometheus tricked Zeus and the gods into eating bare bones instead of good meat. Zeus became mad at Prometheus. Prometheus’ punishment was that fire was to be withheld from mortals. That didn’t seem to faze Prometheus, so he stole the fire and gave it to the humans
In addition, Prometheus did not tell Zeus the prophecy that one of Zeus’ sons will overthrow him. In punishment, Zeus commanded that Prometheus be chained for eternity in the Caucasus. There, an eagle would eat his liver, and each day the liver would be renewed. So the punishment was endless, until Hercules finally killed the bird.
The fire, which Prometheus gave to humans, was the sparkle for a revolutionary change in human lives and gave birth to unnumbered human achievements that led to the prodigious civilization of today.
Similarly, during the past thirty years, the financial sector experiences revolutionary changes, and it is not an overstatement to say that the fire of these changes is the digitization of information and the evolutionary development of information and communication technologies (ICT)
One of the most profound consequences of the ongoing information revolution is its impact on how economic values are created and extracted. Moore’s Law of ever cheaper and more powerful computing and the Metcalfe’s Law on the exponential increase of the utility of an expanding network ensure that we are only at the start of this revolution.
In economic terms, the new information infrastructure redefines the relationships between buyer, seller and middleman, allowing new ways of accessing and tapping information and price arrangements. Most importantly, information about a service or a product may be separated from the service or product itself.
Financial services are pure information business. For a long time, banks and other financial institutions controlled access to financial trading places and determined to a great extend the shape of products sold. They continue to do so. Nevertheless, a remarkable process of market opening is taking place, moving quickly from the fringes of finance to its core. Universal access to information is at the core of the transformation of the financial industry. The Internet and the emerging ICT opened the existing infrastructure -the financial markets’ information feeds- to everybody and transformed the industry. In the past, brokers for example had unique access to trades and financial advice and sold them both, dearly. With the democratization of both, discount brokers offer straight trades for rock bottom prices and a wide range of websites and online communities offer -paid for or for free- advice and market information.
The Internet allowed a breed of new entrants to grab a slice of the lucrative personal finance market. For a long time access to the financial markets was limited to large financial institutions. Individuals had to go through these often very pricey intermediaries to do their trades. That has changed. E*Trade, Ameritrade and many other on line brokers, for example, changed the way individuals handle their financial assets. Today these sites offer the private investor everything he needs to properly access the markets and build up an investment portfolio. The private punters are on equal terms with their cousins from the large banks present on the stock exchange. So, the times when securities physically changed hands are long gone. Today, a stroke of a key makes money go around the world instantaneously.
Moreover, there is a market trend in retail banking, away from the seller’s market to a buyer’s market. Customers increasingly value quality of service, sound advice on financial matters, a custom-tailored product and in addition, they are well informed. The retail customers expect a tailored solution for all their financial needs rather than simply buying a financial product.
At the same time, deregulation opened the financial sector for competition from unexpected corners: Department stores, software companies, insurance firms and automotive manufacturers grabbed parts of the retail banking market.
This development, coupled with decreasing customer loyalty and new on-line possibilities offered mainly by the Internet, makes the routine business of financial service providers look very similar, and the palette of products of different firms look increasingly identical. The Internet and the ITC have turned their retail products into a commodity and changed radically, the value chains and systems, previously existed in the traditional financial market.
Mobile communication is poised to be the next technology to revolutionize the delivery of financial services. The enormous world wide growth of mobile telephony during the past decade indicates that cellular phone, rather than PC, will be the digital terminal of choice of the future for accessing electronic banking and commerce services. The low cost and increased processing power of mobile phones as well as the spread of telecommunication and IT networks make mobile banking services more cost effective than other financial services delivery channels. Furthermore, the merge of the wireless world with the web seems to dramatically influence the existing business models, to abolish further the existing value chains and systems and to transform the business structures into flexible and fluid relationships, especially within the framework of m-commerce. [The term m-commerce defines the use of telecommunication mainly technologies, in combination or not with the Internet, for the delivery of services, which improve and multiply both the communication between organizations, customers, marketing and sales channels]
So, clearly, no retail bank can afford to ignore the potential of mobile technology as a major channel for financial services
The emerging electronic marketplaces offer revenues and profits to specialized intermediaries. The technical and institutional barriers, high information cost, lacking of transparency and security flaws – distinctive features of the Internet at the moment-provide a lucrative field for intermediation and in some cases even re-intermediation. As a result established intermediaries diversify and build web subsidiaries and a new set of players emerge: the entry barriers for mobile commerce are low and global visibility allows even highly specialized business to generate sufficient revenues. New players often show better understanding and use of new technology, while traditional players face the challenge of preventing their past from becoming a burden, which limits their flexibility, agility and understanding of the medium.
In the new era of intermediation, the huge business structures of the past decades –organizations that were based on economies of scale and central based mechanisms of control and planning- are not any more able to deal with the challenges of the new highly competitive business environment, that demands effectiveness and efficiency.
A series of formal and informal relationships have been shaped, giving the organization, the necessary consistency. The Information technology is the primary driving force that helps an organization to exploit its sources and capabilities efficiently. The new century, will be commanded by people who will have a deep knowledge of ICT, a good understanding of social networks and the insight to track down the best way of source management.
