The State of E-finance and E-Payments in the World Charles Goldfinger UNCTAD Geneva, October 23, 2001

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The State of E-finance and E-Payments in the
World Charles Goldfinger UNCTADGeneva,
October 23, 2001
www.gefma.com
www.fininter.net
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Finance and Internet

• Cyberfinance
• Financial services is the domain where Internet
  impact has been the strongest

E-commerce market share (in of total turnover)
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Cyberfinance

• Ubiqutuous reach

Financial markets
Wholesale banking
Asset management
RetailBanking
Insurance
Financial Data
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Cyberfinance

• New networks

B2B banking
E-markets
Asset management
E-Banking
Riskmanagement
Financial Portals
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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

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Cyberfinance

• Global phenomenon

E-finance penetration (end 1999)
Source World Bank, 2001
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Cyberfinance

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

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E-paymentsconventional 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

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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 !

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E-payments second wave

• B2C
• Diversity of approaches
• Loyalty
• P2P
• Most successful
• - Paypal
• EBPP
• Wholesale systems
• Core initiative
• SWIFTNET

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Financial business services

• Electronic trade finance
• Bolero
• TradeCard
• High potential
• Early days
• Credit information and management
• Dun and Bradstreet
• _at_ratings
• High barriers to entry
• Incumbents dominate
• Innovative approaches

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E-payments

• Radical value shift

Traditional payment services Internet
Closed network Open network
Private infrastructure Public infrastructure
Bundled security Unbundled security
Mono-industry Cross-industry
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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

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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