Electronic commerce in the financial services sector

Abstract

According to the Concise Oxford Dictionary (8th edition), a phenomenon is "a remarkable person or thing ... ". On this basis, it seems more than reasonable (perhaps even an understatement), to suggest that electronic commerce is a phenomenon. Its importance and development have been described by one observer - Hon. Dr Fenech Adami ( 1999) - as " ... the most significant phenomenon to have erupted in the global economic arena during the last decade. The unprecedented rate and scale of change that e-commerce has brought about in the way enterprises and nations do business with each other, mark<i it as one of the most important challenges we face on the brink of this new millennium". Another observer - Dr Michael Frendo (1999, p.61) - highlighted its significance in remarking that "E-commerce is changing our lives, how we interact, how we carry out business in our professional capacity and as consumers". Its estimate of potential growth - "By 2005, business conducted over the Internet - e-commerce - could be worth over US$1,000bn" (Fasken 1999, p.37) - indicates the hefty activity expected in this area of business. The growth which electronic commerce is experiencing, together with the benefits and potential that it offers, has attracted the attention of operators in many markets - not least financial service providers, some of whom have already started offering their services und products by way of the world wide web. This 'phenomenon' is creating both potential for development and also some challenges. As demonstrated by a recent comment from IOSCO (1998, p.1), "Internet technology ls profoundly affecting the evolution of financial services activities. Issuers and financial service providers increasingly sell securities or provide financial services on the Internet".