Impacts of E-Commerce and Enhanced Information Endowments on Financial Services: A Quantitative Analysis of Transparency, Differential Pricing, and Disintermediation

Posted: 8 Mar 2003

See all articles by Eric Clemons

Eric Clemons

University of Pennsylvania - Operations & Information Management Department

Lorin M. Hitt

University of Pennsylvania - Operations & Information Management Department

Bin Gu

Arizona State University (ASU) - Department of Information Systems

Matt E. Thatcher

University of Arizona - Department of Management Information Systems

Bruce W. Weber

City University of New York (CUNY) - Baruch College

Abstract

Some implications of e-Commerce financial services firms are becoming clear. The web drives transparency, and increases the information endowment of all market participants. It is harder to manipulate customers' behavior, or to overcharge them. Transparency drives differential pricing. Not all customers can or should be charged the same prices. Transparency reduces the viability of cross-subsidies between customers can or between products. The differential pricing enabled by the web transforms distribution channels, and enables direct distribution and alternative forms of distribution. Some intermediateraries may be bypassed altogether, while others may rapidly lose their best, most profitable, and previously most loyal customers.

Keywords: Net-based financial services, transparency, pricing, bypass and disintermediation

Suggested Citation

Clemons, Eric K. and Hitt, Lorin M. and Gu, Bin and Thatcher, Matt E. and Weber, Bruce W., Impacts of E-Commerce and Enhanced Information Endowments on Financial Services: A Quantitative Analysis of Transparency, Differential Pricing, and Disintermediation. Journal of Financial Services Research, Vol. 22, No. 1 & 2, August/October 2002. Available at SSRN: https://ssrn.com/abstract=382948

Eric K. Clemons (Contact Author)

University of Pennsylvania - Operations & Information Management Department ( email )

Philadelphia, PA 19104
United States
215-898-7747 (Phone)
215-573-8757 (Fax)

HOME PAGE: http://www.wharton.upenn.edu/faculty/clemons.html

Lorin M. Hitt

University of Pennsylvania - Operations & Information Management Department ( email )

571 Jon M. Huntsman Hall
Philadelphia, PA 19104
United States
215-898-7730 (Phone)
215-898-3664 (Fax)

Bin Gu

Arizona State University (ASU) - Department of Information Systems ( email )

Tempe, AZ
United States

Matt E. Thatcher

University of Arizona - Department of Management Information Systems

AZ
United States

Bruce W. Weber

City University of New York (CUNY) - Baruch College

17 Lexington Avenue
New York, NY 10010
United States

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