RSS FeedBy M. Isi Eromosele
In the capital markets sector, business models are evolving, blurring the distinction between financial market sectors and creating new opportunities for growth through innovation. Old value chains are fast becoming a single integrated value web.
The escalating level of interaction and the increase number of services being offered add a whole new dimension to the complexities and opportunities in the financial markets.
Investors want to view their entire financial picture in one place. They want to trade multiple products internationally, 24 hours a day in real time.
Asset managers are accessing exchanges directly or establishing their own. Broker-dealers are locking in clients through electronic channels, setting up proprietary trading networks across products and geography.
The Internet is eroding the differences among products and delivery mechanisms. In the old segregated world, each institution saw only a piece of the activity, Today, e-traders have the full picture, forging alliances with home equity providers and billing aggregators, creating a community of interconnected players supporting a single customer.
Convergence among financial services is being driven by investor demand for integrated wealth management. Financial institutions’ modernization will enable full integration of all financial services.
Influence Of The Internet
The Internet is a revolutionary communications technology driving a global financial transformation. In capital markets, it has changed the way business is being conducted globally. It offers more options than ever before for business-to-customer (B2C) and business-to-business (B2B) information sharing.
One of the most significant effects of the Internet is that it has dramatically enhanced the efficient matching of buyers and sellers in the global economy.
The fundamental dynamics of the marketplace - origination, execution, distribution, credit and regulation - are all affected by the Internet.
Issuers and investors are connected directly via Internet IPOs. Alternative Trading Systems (ATSs) and Electronic Clearing Networks (ECNs) are facilitating trading between investors in the secondary market.
Capital markets intermediaries - investment banks, broker-dealers and exchanges - are all looking for solutions to the challenges created by the Internet, which is accelerating convergence, consolidation and globalization.
Traditional industry players are repositioning themselves and are competing and/or forming alliances with new players, such as brokers and electronic communications networks (ECNs). And non-financial services companies are entering the capital markets area as new financial intermediaries.
Global Investment Management
Never before has the investment management industry been more globally focused - due in large part to emerging capital markets, pension reform, tremendous advances in technology and increasing deregulation. It is no longer enough to focus the terms, attributes or distribution strategies of a company’s products and services on just one market.
More sophisticated investors and delivery channels - particularly Web-based ones - are driving the need for comprehensive customer service.
Domestic markets are opening up to foreign investors and investment managers, creating the need for global distribution and compliance systems that respond to sovereign and regulatory requirements.
And industry leaders are re-evaluating their product and marketing strategies to create new opportunities and competitive advantages.
Capital markets are in the midst of a global, systemic restructuring. Communications and technology have enabled individual financial markets to link together, creating one global market.
Retail and institutional investors have been empowered, and are taking a more active role in their investments through the use of Internet channels, electronic communications networks (ECNs) and alternative trading systems (ATS). Both buy-side and sell-side firms are busy streamlining and automating processes to better serve their customer base, manage risk, decrease errors and improve their return on investment.
Firms and exchanges are searching for more efficient mechanisms to internally cross their buy and sell orders with fast financial instruments, in order to reduce transaction costs associated with trading on the public exchanges and increase transparency.
Competitive pressure is high to use new Internet technologies and embrace new Internet values, shifting the balance of power away from middlemen to the institutional buyer.
As regulations and business models change, major exchanges will have to fight for business growth against newer, more nimble competitors.
M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance
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