Online Banking and Brokerage
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Questions and Answers

What was the outcome of the early innovators in online brokerage, such as E*Trade?

  • They merged with online banking firms to expand their services.
  • They stopped providing online brokerage services altogether.
  • They were displaced by established brokerages, such as Fidelity and Schwab. (correct)
  • They became the leading market share holders in online brokerage.
  • What percentage of U.S. Internet users utilize online banking?

  • Two-thirds (correct)
  • One-half
  • One-third
  • Three-quarters
  • Which of the following online banking pioneers is no longer in existence?

  • Yahoo!Finance
  • NetBank and Wingspan (correct)
  • E*Trade
  • Fidelity
  • What is a characteristic of multi-channel firms in the financial services industry?

    <p>They have lower online customer acquisition costs. (D)</p> Signup and view all the answers

    What is a limitation of pure online financial service firms?

    <p>They are unable to provide all services that require face-to-face interaction. (B)</p> Signup and view all the answers

    What is an example of a financial portal?

    <p>MSN Money (B)</p> Signup and view all the answers

    What percentage of economic activity is attributed to the service sector?

    <p>75% (D)</p> Signup and view all the answers

    What is a characteristic of service industries?

    <p>Knowledge- and information-intense (B)</p> Signup and view all the answers

    Which of the following is NOT a major service industry group?

    <p>Manufacturing (D)</p> Signup and view all the answers

    What is a trend observed in online financial consumer behavior?

    <p>Increase in mobile device usage (D)</p> Signup and view all the answers

    What is a feature of online financial services?

    <p>Personalization and customization (A)</p> Signup and view all the answers

    What is a common activity of online consumers using financial services sites?

    <p>Checking balances (B)</p> Signup and view all the answers

    What has transformed banking and financial services?

    <p>E-commerce (D)</p> Signup and view all the answers

    What do experienced online consumers of financial services move on to?

    <p>More complex financial services (D)</p> Signup and view all the answers

    What was the primary objective of early entrants in the online mortgage industry?

    <p>To simplify and speed up the mortgage value chain (B)</p> Signup and view all the answers

    What type of online mortgage vendors exist today?

    <p>Established online banks, brokerages, and lending organizations, traditional mortgage vendors, and pure online mortgage firms (D)</p> Signup and view all the answers

    What is the primary benefit of online term life insurance?

    <p>Lowered search costs (B)</p> Signup and view all the answers

    Why has the online insurance industry not transformed the way insurance is purchased?

    <p>Due to the complexity of the process (A)</p> Signup and view all the answers

    What is the primary impact of online real estate services?

    <p>Influencing offline purchasing decisions (C)</p> Signup and view all the answers

    What is the main limitation of online real estate services?

    <p>Impossible to complete property transactions online (B)</p> Signup and view all the answers

    What has been the result of the increased availability of information in the online real estate industry?

    <p>No impact on the industry value chain (D)</p> Signup and view all the answers

    What is a key feature of online real estate services?

    <p>Online loan calculators and research material (A)</p> Signup and view all the answers

    Study Notes

    Online Banking and Brokerage

    • Online banking was pioneered by NetBank and Wingspan, but they are no longer in existence.
    • Established brand-name national banks have taken the lead in market share.
    • Two-thirds of U.S. internet users use online banking.
    • Early innovators in online brokerage, such as E*Trade, have been displaced by established brokerages like Fidelity and Schwab.

    Multi-channel vs. Pure Online Financial Service Firms

    • Online consumers prefer multi-channel firms with physical presence.
    • Multi-channel firms are growing faster than pure online firms and have lower online customer acquisition costs.
    • Pure online firms cannot provide all services that require face-to-face interaction.

    Financial Portals and Account Aggregators

    • Financial portals offer comparison shopping services, independent financial advice, and financial planning, and generate revenue from advertising, referrals, and subscriptions.
    • Examples of financial portals include Yahoo!Finance, Quicken.com, and MSN Money.
    • Account aggregation pulls together all of a customer's financial data at a personalized website, but raises privacy concerns.
    • Example of an account aggregator is Yodlee.

    The Service Sector: Offline and Online

    • The service sector is the largest and most rapidly expanding part of economies of advanced industrial nations.
    • It concerns performing tasks in and around households, business firms, and institutions.
    • The service sector employs 4 out of 5 U.S. workers and accounts for 75% of economic activity.

    Service Industries

    • Major service industry groups include finance, insurance, real estate, travel, professional services, business services, health services, and educational services.

    Service Industries Characteristics

    • Service industries are knowledge- and information-intense, making them suited to e-commerce applications.
    • They offer personalization and customization, with varying levels depending on the type of service.
    • Service industries can be categorized into transaction brokers and hands-on service providers.

    Online Financial Services

    • E-commerce has transformed banking and financial services, with major institutions deploying online services.
    • Most online consumers use financial services sites to check balances, pay bills, and perform more complex financial services.
    • The number of people using mobile devices for financial services is surging.

    Online Mortgage and Lending Services

    • Early entrants in online mortgage services aimed to simplify and speed up the mortgage value chain.
    • There are three types of online mortgage vendors: established online banks, brokerages, and lending organizations, traditional mortgage vendors, and pure online mortgage firms.
    • The online mortgage industry has not transformed the process of obtaining a mortgage due to complexity.

    Online Insurance Services

    • Online term life insurance has lowered search costs, increased price comparison, and lowered prices.
    • Most insurance is not purchased online, but rather online services influence offline purchasing decisions.
    • Online insurance services are geared towards product information, search, price discovery, and online quotes.

    Online Real Estate Services

    • The early vision of online real estate services was to disintermediate the complex industry.
    • However, the main impact is influencing offline purchases through online property listings, loan calculators, research, and reference materials, with mobile apps increasing.
    • Despite the revolution in available information, there has not been a revolution in the industry value chain.

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    Description

    This quiz covers the history and current state of online banking and brokerage, including pioneers NetBank and Wingspan, and the market share of established brand-name national banks.

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