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The State of E-finance and E-Payments in the World Charles Goldfinger UNCTAD Geneva, October 23, 2001. www.gefma.com. www.fininter.net. Finance and Internet. Cyberfinance Financial services is the domain where Internet impact has been the strongest. E-commerce market share

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  1. The State of E-finance and E-Payments in the WorldCharles GoldfingerUNCTADGeneva, October 23, 2001 www.gefma.com www.fininter.net

  2. Finance and Internet • Cyberfinance Financial services is the domain where Internet impact has been the strongest E-commerce market share (in % of total turnover)

  3. Cyberfinance • Ubiqutuous reach Financial markets Wholesale banking Asset management RetailBanking Insurance Financial Data

  4. Cyberfinance • New networks B2B banking E-markets Asset management E-Banking Riskmanagement Financial Portals

  5. Cyberfinance dynamics • Internet banking and Internet securities trading • The tale of the turtle and the hare • Internet securities trading • Fast start and hard landing • Pure Internet play successful - E-Trade • Internet banking • Slow start and steady progress • No salvation outside “click and mortar” model - Nordea - Bradesco

  6. Cyberfinance • Global phenomenon E-finance penetration (end 1999) Source: World Bank, 2001

  7. Cyberfinance • Global phenomenon • …with significant local differences • Success stories • Internet banking • Korea • Brazil • India • Internet brokerage • Korea • Mexico

  8. E-payments:conventional wisdom and reality • Conventional wisdom • “Electronic commerce will not take off without robust and secure payment infrastructure and systems” • “E-payment is a killer application” • Reality • Electronic commerce HAS taken off • There is NO robust and secure payment infrastructure • E-payment is NOT a killer application

  9. E-payments: first wave • Road kills and hard slogs • Digicash • Kleline • CyberCash • SET • Cyber-comm • Principal lessons • Critical success factors • Consumer behaviour and attitudes • …NOT technological wizardry • Limited room for new entrants • Respect the incumbents !

  10. Value Interoperable Cross company Applications Messages Standards Content Based Processing Secure Cross company Communication Flow Priorities Closed User Groups Non Repudiation SecureIP Network Service Levels PKI security Transport protocols Traffic Priority Network Security Common IP network IP Connectivity InterActFileAct swiftML Standards SWIFT IPNetwork E-payments: second wave • B2C • Diversity of approaches • Loyalty • P2P • Most successful - Paypal • EBPP • Wholesale systems • Core initiative • SWIFTNET

  11. Financial business services • Electronic trade finance • Bolero • TradeCard High potential Early days • Credit information and management • Dun and Bradstreet • @ratings High barriers to entry Incumbents dominate Innovative approaches

  12. E-payments • Radical value shift

  13. Cyberfinance • Lessons of experience • Four common misconceptions • Cost reduction potential • Iceberg costs • Ease of implementation • Complexity • Revolutionary impact • Systemic evolution • Disintermediation • Growing demand for intermediation • Leapfrogging potential • Selective • Complex framework conditions

  14. Mobiles Internet Smart Card Cyberfinance • Lessons of experience • E-finance is only beginning • Blurring boundaries • Finance Technology • Information Transaction • Financial institutions Technology provides • Technological integration imperative All finance is becoming e-finance

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