Financial Service Industry and the Internet
The Internet is a revolutionary power that is opening the floodgates of the financial services industry that have been built over the past 40 years, resulting in the introduction of greater transparency, which will render the intermediary role of brokers and investment banks less valuable. It is now apparent that a more serious challenge to the existing order is the distribution strength of the Internet and the growing importance of retail investors who are directly accessing a greater share of new services and indeed equities without the "traditional" intermediary services of investment banks and brokers. It is clear that the entire landscape of the wholesale financial service industry is being transformed.

The Dot.Com Experience
E-commerce is having a profound affect on all walks of life. The transforming powers of the Internet are still evolving and awaiting full recognition, as is evident by the current teething pains of many Dot.Com businesses. The financial services industry has acknowledged the huge opportunity e-commerce presents and the threat that such a fusion of technologies brings to the status quo. Editors and journalists of major financial and economic newspapers and magazines, continue to highlight the dimensions of the threat and the dilemmas the internet poses to current investment banking business models and (projected) revenues. The past two years has witnessed a steady stream of Dot.Com start-ups introducing online financial services. They systematically chose to target and siphon-off specific investment banking products to the dismay and loss of revenue of the large investment banks. IPOs, M&A, FX, Trade Financing, Bonds and Share Trading, to mention a few, have been introduced and are available online. The range of investment banking products coming online is increasing. Almost all are providing limited stand-alone online products and services. Independent analyst are forecasting that major investment banks will suffer further noticeable erosion in their investment banking activities in the coming months. They project that a small number of the existing single-product, stand-alone online service providers will be taken over by larger investment bank; the others will cease to exist.

Western Financial Services -vs- Emerging Markets
During the past 30 years, large American investment banks aggressively pursued a policy of consolidation and takeovers. European and Japanese banks followed. The purpose is to achieve the desired critical mass of an all-inclusive multi-product, one-stop, financial services 'supermarket'. The Emerging Markets Banks and financial institutions did not experience the qualitative development and expansion achieved by their Western counterparts. Notwithstanding all the talk about the global economy and the global village, the fact remains that from the perspective of the superior Western investment banks and financial institutions, the Emerging Markets have been relegated to being cherry-picked for highly profitable deals and speculative business practices. The governments and financial service industry in the Emerging Markets have always resented these opportunistic intrusions into their markets and accuse Western banks and financial institutions of investment and lending practices that are damaging to their national economies.

The Internet Challenge
Now, the challenge to investment banks and other financial institutions is the revolutionary distribution and placement strength of the Internet. Those essential distribution and placement functions are the hallmark of the investment banking business and the source of its hold over the financial services industry.We anticipate that Internet-based services will gradually replace the laborious and costly tasks of back room (“boiler room“) processing functions. These developments will also usher in fast, reliable and cost-effective Online Auction and Trading activities. The technology is available now. It is bound to open up the whole financial and investment service processes, and when it does, it will no doubt result in the radical transformation of the global investment banking industry. Hence, the current feeling of many that, it is the ability of the Internet to directly service a wider client base that is turning investment banking on its head and will result in making available more fair and cost-effective financial and investment services to the Emerging Markets.