Tài liệu electronic finance a new approach to financial sector development pot

online stock brokerages Figures ‘Figure ta: Capital raced by companies in American depositary receots, 1980-2000 Figure 1b: Value traded by companies in American deposiiory receipts, 9

Copyright ©2002

The Intemational Bank for Reconstruction

and Development/ THE WORLD BANK

3816 H Steet, NW

Washington, B.C 20833, US.A

All sights reserved

“Mancactured in the United States of America

First printing March 2002

1234040008

Discussion Papers present results of county analyst or research that are circulated to encourage discussion and comment within the development community: The typescript ofthis paper therefore has not been prepared in accordance with the procedures appropriate to formal printed texts, and the World Bank accept no responsiblity for eros, Some sources ced inthis paper maybe informal documents, that are not ready available

"The findings, interpretations, andl conclusions expressed inthis paper are entirely those ofthe author(s) and sharld not be attibuted in any manner to the World Bank, to its afiliated organizations, oF to

members ofits Board of Executive Directors or the countries they’ epresent The World Bank does not Bunrantee the accuracy of the data included i this publication and accepts no responsiblity for any Consequence oftheir use The boundaries, colors, denominations, and other information shown on any

‘up inthis volume do not imply an the par ofthe Weeld Bank Group any judgment onthe legal status of

An territory or the endorsement or acceptance of sich bourviariee

"The material in this publication is copyrighted The World Bank encourages ssemination of its work and will normally grant permission prompt

‘Permission to photocopy items for internal or personal use, forthe internal or personal use of specific

«liens of for educational classroom use, granted by due World Bank, provided tha the appropriate foe

Is paid dec 10 Copyright Clearance Center, ine, 222 Resewood Drive, Danvers, MA OI323, USA, telephone 978-750-8400, fax 978-750-1170 Please contac the Copyright Clearance Centex before

photocopying items For permission to reprint individual articles or chapters, please fx your rues with complete

{information to the Republication Department, Copyright Clearance Center, fax 978-730-4470, “ll other queries on rights and licenses should be adresse tothe Word Bank atthe addres above or faxed to 202 522-2822

The Recent Past and Possible Future of Electronic Finance 5

E-finance Applications—and Implications for Government 39

Ames

‘Annex 1: Date Sources and Methodology forthe Projectons

‘Annex 2: Recent Reports by inemations! E-inance Working Groups a “

0

7

‘Annex 3: Types of Online Trading Systems

‘Annex 4: Selected Sma Card Project in Emerging Markets and Develoing Counties

‘Annex 5: Selected Enance Examples in Emerging Markets and Develooing Countries 6

ẤN, tei Fac: No pc Fal Sete Deepen?

Table 7-A now paradigm is emerging for franca sector development

Table 8: Progress is being made in creating an enabingregultory environment

Table 9: Efnance regulation has yet to edess some outstonding issues

Table A2-1: Curent e-france hitatves by inemetiona bodes

Table A3-1: Fedincome trading systems

Table A3-2: Major US online stock brokerages

Figures

‘Figure ta: Capital raced by companies in American depositary receots, 1980-2000

Figure 1b: Value traded by companies in American deposiiory receipts, 980-2000

Figure 2: E-banking penetration: actual and projected rates for 2000, 2008, and 2010

‘Figure &:Diferontsonice providers and delivery channels ae combining to create @ new word

of financial services

Boxes

Box 1: Mobile phones: The develooing world’s technological springboard

Box 2: The new wortd of financial service providers:

Box 3: The massive shits in tock markets and exchanges

Box 4: Leaplogging around the globe: Estonia, Republic of Korea, and Brazi!

Box 5: The institutional approach to Francia soctor development

Box 6: Enhancing connectvly in emerging markets by improving telecommunications regulation Box 7: Privacy problems—the role of the puble sector and private solutions:

Box 8: Secuntes regulation, the inemet, and emerging markets

‘Bax 9: Prncjtes for managing isk ontine banking

Box 10: Challenges for market regutation within and across countries

Box 11: Making creative use of existing pubic intrastructure: Post affces

Box 12: Smart cards: A clover way to legptog?

ox 13: Mortgage finance: The impact ofthe Intemet

ox 14: Insurance: Efnanceatle?

Box 15: Einance for smell and medium-size enterprises:

Box 16: Microfinance and e-finence—s vishle match?

Box 17: FitNet: Toward a paperess infrastructure backbone for nancial senices

Foreword

etl nl eis water

see ernst pase tere eho Och a

carve Tomes else bry angie te end uly rear yea Te

‘cred of anal ev ond he

it Theeeteae mained ot

conierendotaredomeing are Alay,

Sewn winded ac te re ‘ng ine pg sone wes Aen

‘Soc enh and ber bt een ip oat alg tied wer spn ee

frm tesco ebro {efomal bork scot Oregons ar

Sra Eni nde Rep Kors pest

tre tacecin edn galy oe tee

eCTmoei phemsuei ve w'eseueox

Tehogeal ates ek ang pone

{sive fc ec fm oft,

Posing tone en acs wih

“non bcs fanny and

Fee The WB is pings ee

fom be sew Svdapee ns mnie oy ‘etn pl ean il tae

‘tage ope wad Hc ev Donen wl hdc ct

seatebetdecenmoicins apes

‘noma nace, ent nad

oupeton te, Teak savy ets hcg adele pow poses

Shaner be iy pss Th wok

ites dacs cdr ny sore eof inteunctnescaline eae mổ

ste secon eld poly cane Maho

‘he foe wil eon ations that en improve the ity Whrugh lower one and inetd

‘empttion) an wilingness of private instinsons tobraden accesso fate services,

"The Hank las abso been ein coves deal vith the implication of finance othe

‘velopment ofthe cpl market, These efforts

‘wl inreasingy be coordinated wit the operations

‘the Intemational Finece Corporatio FC) Ferthemors te Bank sertensive experince in

‘sing and applying ecology in fd and lnvesinent operations sing leveraged nour advisory woke More ere the Bak fos in

‘his promising area wil vole crssdepanmenal

‘nd ultiscpinry aprocheso aes this -heYtheremeronin le recdelcmpelenite

‘As prt thi efor, and tance the algae onthe sons asd by e-finance, Bank

‘Grop aa have rare a nanbe of papers, oe

of which reseed er This pope, nl ters, oth tpi, do ot represent the Word ak

‘Group policies Rao, they have beea developed

to ste drcoson asic he views ofthe

<exclpren community oa be opens ered by Fines fr beter fiancee Cdevcopmen sustained grow td educed poverty “Although many questions ain he nserd, ths paper contest the erate by laying out the pole sues in owe wit be

of pelrinterestopoliymakers involved with Financial repution, bat saul abo be of concer

‘or those more generally nteeted inthe potest

ad impicatos a this phenomenon

‘Cesare Cala

ce Presiden, Financial Sector The Wold Bank

Abstract

tlie banking and brokerage series hs

rethaped the ane ndocape aoe te

“sol Ths paper reviews thse developments nd

‘alyzs ther implications for consumers

fovermeni and Finca sevice provers Fist

TT eviewslhee-ñeenes(0ietglulo la cneqởng

snd ever ackets and projets ifr growth

‘Then tanalyoseinsteesinpct one sacs

fend coropettios nthe fiancial eroe indy

‘Ser ht aseaes how fan, an

[SSS lobia more geen fet nancial stor

olism emerging maces incading the ee foc changes inthe approach wo financial sector development The spe then examines goverment hanging role ia the Branca soto

Su were oppor that fiance offers

‘ours wo leapiog Finally the paper cles {or policymakers td ther nol in finial sector reform in eeging marks dealt inforvation and Web ins on public policy Active elated oe france,

Acknowledgments

as da ona ide iy

Tu ‘inser dni

sy nda ose omega

“ohne iene sh tực mông

{etic ul stg eal

“ears ronan aera en Pos oe ws tho poh many we

Tan pp ema om ema, le ep andl ae Fp

io Ace GC Reg Cne,

Use chil Con Cua Sto Dao,

ix

Karen Fas, Jose Galado, Carle Guniges, Androw Hughes Hale, Pack Honan, Leors lbp Jepe Lael Bruno Lasvin me Max, Doald Mette, Daniel Nol, Mehmet kaya, Anew Proce, Lary Promise Roy Ramos, Betand Rena, Antony Setomero, Serio Schmukle, Andrew Shong Pc Stein Panos Vaan, ab fh Walanson The thors would ie to thank Pal Hole of Commsictions Development Incorporated for

‘sor asistance td Touré Perce ad Rose Vo forcrwil din preparing he mascit re pabicstion

Executive Summary

Electronic finance is spreading

quickly

"Electronic Fanci servies, whether delivered

clin or though ater ete mechani Pave

Spread icy in recent years Despite fences

‘Sens countries ining sch fos the

‘enter lornameatonsifatactare apd

‘he quality of regions heres ch

‘commonality dl convergence inthe spread fe

Finance

finance penerton vr by typeof serie

Mos alee have Been borage arts, where

‘nine vading is becemig the no Increased

‘onnecsvity as also accelerted the migration of

secu trang apt ising by emerging

rks toa few glob fanciers, with

fapial bed oltre by emerging makes

inecasing dramatically sine the eat 1990s This

shits esuled is greater tegration an

‘ermatet inks Constidation ial ecang it

Key ile ard tock oie faptons such es

sty, clearing of trades nd real pyment and

‘ental secures deposi,

“The pend of nine banking services bs been

more ato’ arse cous Sprred by the ety

‘of aew providers rom oti the Financial eter,

Ihowever many Fiancal servce provides now

ering efnaee services

„and shows enormous potential

Hy 2008 online barking could accout S0

percent of he mat is indus counties sp from 9 peecent oy and foe 10 pee im

merging maths, up frm 1 peer Wi eter

sonnet) oni banking in rein markets

ol ieee farther 0 20 percent by 205,

‘Sila, i sndosriaeoutes the share of ening

'okengr co ác Rom 28 80 peren, and in

merging kts fom 2 15 percent With

beter sien ardent enone the hare

sonlite bokerge i eres market col ven

‘at 4 percent by 208

TA hese averages hie bi erences,

zpending on whether acontyspeetaion rte

tn ready passed acta even Node

‘crunis for example, nlite barking could each

‘eal 80 percent by 200, while UX and US

pctetete would appeeach ju 0 percent For

‘line boterge, penetration ate in Neri

oues cou it 90 percent

E-finance is dramatically changing the structure and nature of financial services

1 Esnane wil ead to much ower costs sd

‘gente canpdiioain fmareh services through bth nes ety fom outside today & Financial sector and greater competion anon, incumbent fine serice providers These

<dveopments wl force banks ower Fes land eommisvons erase providing eines

‘much cheaper tha proving atonal Franca nerves Arent oumbort, finances wil kel experience shar dec in event

sere and cated ecologies ar mor than jst new delivery taael they are 8

Completely dren way of providing Hania senicet Ung đa ningeebrigte or

———

‘noch manip and a ery low es Tey alo beter ray dr estar fos at slow consuner to bul preference profiles

nl embling fr mre personalized pricing

‘of anil eves and much more effecve

‘denifetono eet ks The ltr ls9 alice new ial sevice providers 0 compete more elstivel for canomers Al

‘has foe ar delivering age beefs

‘toruers of incl series theta and Smmenil lende

‘= Technologist advances ae als changing tbe {ace afte nancial services inst, New [roiders are emerging within and arcs

‘Sours, icing ont ans, oie

‘wokerges and companies ta allow cemsuers to crpare ian series sen S2 nongsee lens and insurarce polices Nonfinanal ein ar lo entering the snare, plug teleconmasieton rd

‘ly companies tha fer payment adhe serves Verily integrated Fnac ove

‘Companies are rowing apy nd resting

‘Synergies by combining brand nantes, ‘irbton newer, and antl service precio

a-ring sjtems fr eques, xed income,

nd foreign exchange se coset id tng global: Treding moving toward

"leetone patos ot ed 8n locaien

"letonic mading and communication

FT g1

etwedo hay lowerglthecof sĩ tung ed

allow for beter pie dtermietion

5 Thelntcret and other ecological adances

ae srk esonomes of ele nthe

poction of financial services, Lower sale

{eonomic ve increased empeion,

tally among fap services that can

sal be unbundled and coremodticed through

stonation inching bil payment series,

‘notgage las, strane, and oven ade

technolo Competition farther freed by

Secining pont cos I om, newark

elites exited by Financial Services

‘Sctas payment services, tring stems 3b

_xchanes endo bape competion,

Underdeveloped financial

systems can exploit opportunities

for leapfrogging

“Th effet of Fie ae none to nusta

outies and advanced emerging maths, For

Sonic wth nlendeveloped acl tems =

Finance offers opportunities leatog- Suck

syste ed doa had job allocating rescues

{ni hav igh etermedtion cos, problems with

acl costs om bak eeaptalizatons Fr sich

‘oats, nance canbe a evel and

‘viene ndcatesta thilarting to app In

‘a clectoni cas an other sar cướ er,

saving af payne sees leu-neene'

‘atm acing net ares who oe

‘Sonor evn fave formal bank scours, Other

‘oun: Bar, Estonia, Repco Keres

sigs that efinace cane nodcedguchy

‘vst wre basi feat tocar wake E>

Finance wil ao allow Hasna series be

“livre sch cours fom oor, providing

the adional epee of testonlhaology

dil ovenigh

But realizing the gains will require

‘changing public policies toward

financial services

“The most pessing poly imes moive the

rabling regulary eavioeat oes ‘ijt re cede i ppreasies to

Isleormunvations, sound

Infstre fr electors tansctions,

ination st pac, ad cota eforcement,

Jn ation, eps shoul be taken to inimize aks for cansumes und investor, js presi regulon, and improve ts performance of

f= Inter ransacton hi csulg measee

Jn caes where movie approaches pc sndpovie partenlips wl be neces For example, goverment tions ae needed ot

‘pa framework for dig sures

‘slo, hve wil tea acd to exablish secure

‘puters for ceriieation an umber of folurionsivaving the pete og pubic Sectors ill be possible Finally there willbe a seed oars the challenges of enorng

——— ——

‘abuse wo bonehmad eeetrooi security

¬

12 Tafa i good enough nance will

‘xen the reach of financial inition an

‘piel mares Goveraents will sed 0

‘view the nfermation ad pivacy pics in light ofthe new possiblities

‘become moe ipa wih and actose bores, bt new Ledbveloay my also Bp Site coma enforsment problem Most

‘ules wil have to beset at the lal ee

2 Managing risks wil Become moze portato protect consumes ad investor singe can lnersselang-sanfi§ risks soch as heft an Ihc of privacy aswell x crete new ones

“Thus more raps s nected on keer lose, elation, ad information, The Tne starting co provide solitons, with Fin sting an certsaon agents, agrestors, sand vendors f eur and privacy bardvare tte software on bal of ensues investors,

or financial services icing depos

‘= Tomake nancial markers and intone work bate more emphasis shuld be placed

‘on competition plcy and clear ules for

rake

and adjusting government's role in

the financial sector

Goverment inervenion nthe cil aot

has eerly hd poor esas Goverment

meri of banks ears neal ctor

evelopment and nese the rk f Fania

‘ns fs to reach underdog fen

Fator are captured by pial ters act

focus fea eos

intervention cure te pvt eer

a provide nancial series even when

‘cou snail secoris weak Maret

‘ater wb es iy bce new

tcchology ill make information more

cul aval and wih eat roma,

thigher uty Ths wl pet ancl

Services tebe provided more widely and

sake mats ode ks ad act more

plete ecg the ne for goverment

1 Dutthere wil ibe scope for goverment

ation beyond seing he enahing

‘venent Av strt goverment cold

improve he way it shares information (ch a

etelted informatio, jet pena

thon Semay Š)

states) An sống infarcts sich Pow fice networks, can provide aces to intoe service

‘2 Government ol onchange fandaently

‘thts need for det roviion nares

‘ch as banking sevies,housngFnnes,

"are, soohenk nancial senieee (Getrng, easing), stro ce, re Finance smal and media siete lending, and ever mrolendng.Inall thse sent more efcen delivery of sevice ean cieve soving, cat oss and expand aces

‘With the petal offence, Bowever, come some provisos Fi e-finance ors

"mang oipefuie bi no pace, Moet

‘ofthe Bnei, cha widening ccs naan} Serves, canbe ealzed aly ieomplementary

‘efor are mae in communication inasracie, Scot, consact enforcement corpo

.8evemaoce and ober arent, Second hit ape overs variety af ses, cach of which requires fuer research and analysis (fen rip) Finally a8 with any pew

‘Phenomenon, efmance aes age data problems

50 the daa preset Bere mst be viewed with

“non More eff are nwo develop #

‘consent methodology for mening emcee suchas Intrenet and relned base dta

ne finance,

The Recent Past and Possible Future of

Electronic Finance

hie section adressen several questions: To

‘win event have ecg! advances in

Tiana services spread, ad what ithe

caren’ penaaton of finance in industrial

ourtieand emerging markets? What re

consegi ly rates 20s cous ao wat

even as api migrated offshore! What the

frowth pote for enance? And what ects

tl e-ffance have onthe wold nancial services

‘nds panclryon the revenues of olsy £

‘nancial aan

E-finance has spread quickly ina

diverse range of countries

Aho hers bese sme rence in he

technology set, eccony contin

tumfommồe prction and tery oF rai

serves Econ Haan eee whether

Atvered ont rtivough ther rere

‘mechani, ve seagull een jen

‘As with ary new phenome, data oneiance

‘reco collet and even det compre

"no cousiesvl seo For example,

-anlvt he ben doebnel fự bế neesmenenl fit concept a Inet pencaion and ete

nance series) Ths th son be ney

‘ith cation

‘Using rious sources, able {shows the ext

of eeronc baking nd brokerage services inky india eoutis a emerging abel Thee

sigan variation, wit cierenes nt ay

tae each eur ovel of development fa

‘ome curr, nds wel as devon

cdeeteie delivery of faci services rei in is infancy, Meni, ter eum have seen

‘api pneton of finance n Smee este

seus fr more th ome offic

awaclon lntome cmening leo, th e be

{Caech Republi Republic af Koes and Meni,

nance penetation ho igh rxoợe are

“The ievidenee of onverzece in eine

senwv stiee Degfe rotutol daahanogex

(Gtch a eater eeeonmnistions nasa)

ltd mere sdvese domi nd poy Ter, inet ac series rnc lait

merpng markets in nds coos or

‘ren mote popular ores olin aing i

‘ey a weep Bri as inthe Unie

‘Shes Soc dings suggest that aon the lobe

efinace fy en onic and for

"tong incentive move france provides,

‘king services may sil be ited these

us, bat e-nace oles an oppor ta xpd acces

‘Althogh onlne-ony banking fas bon ss scent than wen cpt, wih several oline-

ly asks rnning ito deus, ween tanks are staring to fer ian eviews lectoneally The that fret eta ase taney banks to fer finance ranging hom best Tilly tegrated ters services Sped and oer Factors ialoncing thi shit ary wi an ineifin se ciroaneanee bu is tend

as accelerated reel in Earpe at the United Ses Furst Lang ad Nee 200; Soman Seth Barney 1999} Ths eastomer of acumen tas incor markets coud soon migrate to e-nance as wel

fiance has de dhe retest zo in secures nes especialy om the ret i, here online aig bas aul taken age marke Share Aboot 28 percent of kere service re

ra provided online in indus covics, and

‘Sharer ae alo high in some emerging marc The rap aceptance of -nance in cries marks pal reflect the tchraogy-drven nate af thee ares andthe ease with which camer can fitch broker: Moreover, the fw crt of Fnedcing standslone and integrated okerge services have permite rp growth arouse twee The api spread aio sess hat he technology ofe-brskerag is 3 inrdce ond make 1 uses, ad thes redaction ae guy ing psd on to conser

(Other e-nanee prods, so seme, ave seen various peetaton ras some counrie(Denar the Neher Nore)

‘money peetraton, «measure byte numb of lemial is st which payments can be made by cards, quit high se Tae 1 In hese cours eds have complemen or replaced existing financial services A stumbling Bock greater peotation as ben standards and seme extent eurtyarangerents Coues with mre we end to be sale, suggssting tat it has ben easier

to dace sandats for earoney Ba nrg unin nk of standard nd rit aes

‘en not allowed ord vaca etch on, AS

‘anand ar beng Sean seca arangements

{6 etal Face: New Appa 9 Fuca Soo Dape?

‘Claw pms Scns sept ne hy Disa, Den ene ma cae tiny Femet cavemen cp ety emt ter ac ng

‘mgt ena set pl oe ean get em ae See Saline aren

enhanc, e-cards ond athe forms payments

‘be puting resco tanks Income om

payment services around the woe

Connectivity is also on the rise

Around the word consumer and cours are

troreninaly geting omni Adenood cours

Fie the Units Sts len in terisof e

peconag ofthe popultion atoms personal

urge and has Ieterel acess able 2) The

deny of Tern services alo highest nthe

tot advanced couric, Anas these counties,

[Nord source standout wit igh connec

popalaiy of mobi poss, wich ae used by

nos oid of fe peolet Filan and

‘Nery ood tines in Sveden, Connectivity

ener đsliee vi incor though her are

ceptions, For example, Portugal hs os

oper owserhp and Keres sigh

owt scan tough ble pes yet

the two cous pe capes icome ar quite

Sia (i 1999 Poruplswas SUL368 and

Keres sas 9878),

Tn oaay cous copes has been

tnd 1998 the oceatage of people owning

poral compe in some isi eons

ross aot ope Inasample of developing

eecaoniesosrechip jnped 130 aeeen xhet

from a lower tase Ieesed connective at

Timed ie aaced emerging arkets trisale'

becoming important in some othe words lest,

develope counts Ais Olin for exp,

2 rowing eterat vider in Ac (ouside South

‘te) eset lsommmistions being

ded by new ecology, sts as mobile phones

‘sth nreasingl large ands (Bs 1, "Tess new echologies to allo

cours wo eupig in conaeti, hey lo open

ew chanel for diving eiaac vic I

on 0 Nord cous, cous sachs

Cambodia, Malesia abd Poland ar seeing

Financia sevice providers se mabe phooes

diver nail trices Around te wr

tons Ken (Ch) np he United Ker

tắc hoi Sie, Th Svening eerie were

‘Mexia, Senegal, Sinan, Veta, am ins

TheRet Pa Do Dàn of Eines 7

connectivity iting farther enhanced by pid improvereus i teecommanicaions regulon Sti rany emerging marets require substantia

‘efor sk elton tenance the enabling

“vrata alow he priate sect tadelier Trancnlteniees

Capital raising and securities trading are migrating abroad

Tesrology hx lo dive the lage mean of catalina securities ding nteatonl frail emer The share of capital ied abroad

td ted for as Don rt ary,

‘pevly in emerging market Pqu exp

‘ahd erations (hough Amer depostory

‘esi junpd fom es tan $5 lion i 1990 {ey S90 in 300047 a) Tis ed

os ech azo yan even shryernerese inoffore trading with otore rang x

Mobile phones: The developing world's technological springboard

`9 08 do 9 Thi trrag Xi set at ln en tn as on ad

ga sen naa he ôm enaem Đngey

‘Sctonanrancnten 5n Scvaeinevamyastcaverdldessvasi sia roost Tem ơn

soon oeomngi rene seca na Erte currents (laze Pe Pears sate ea ran lcm se recpre ras (Oe, Pn fas supe Sur uorgean aie lorena Ta

‘Peet salaconrannats ‘Src no penn star ook

"ine eg aot py Ne pss of lepongg ng ipnes he se cess

‘ner sao 4 Em 02c twenseusssee nEmmers bra gow Thợ m2 kưangciượn Do cae

‘ant din wars ban ton

‘iepne wns ert ore

‘Sroned inane she 2 {ors te wi spn ‘ofr anian ann era poe tangy wt be ia

‘oranoeeaestenes Sve nay capa ee

\Seneg tm nor en Cantos row suyanes ằ~= a wh

‘areas

8 conc Fear: New Appa Facil Secor Devopa?

TheRevat Pt an Pile iro tice 9

American depository receipts reaching mere thin $1 offshore spit, and fftore ting American tllon sn 200 (Figur 18), 200th tp six Sept esi rom these cues ole

‘emerging markets ems of capital raised SIN0 len By 2000 soot 19 percent of ding

‘Ageing, rac, China, Ii, Korea, at merging market scutes was curing ashore Mexico else more tha 0 billion in (Table),

= Capital raised by companies In American depository receipts, 1980-2000,

10) xcs Fas:ANew Apc Fn Seer Dc?

This migration has general ed to gains for

bos ser and ives, Ist ave sen Mgher

ries and increased iui for hei scutes

‘And with emote accesso global wading systems,

‘nmol nd india investor ean 0

‘excete their aes onthe patos with he Best

Pres and execution

Efinance has enormous potential—

especialy in a supportive environment

“The pid growth fe fiance reflect the expansion

pte of era products and serves with

etwork extemal sch ay elecommunicatons

{nd some anil eves (Fut, Lang, ad Nalle

2000) Peneaton for these prods and services tends to aeserate once a market has reached tial mas This rc mas and sbsequent {owt sof similar ares makes Most Shalt expt finance exhibit this sae pater of market penetration by Forester Research, JupiterResearch, ahd (se ongoing aralyss DhaMonio

‘So wha determines when a county resshes cst mas of penetration? A variety of|

‘ctor including the quality of county $ teecommunsatonsiafastctr le appraeh

to regulation, in he demand for and supply of

‘efnace services (Sachs 2000), rs to0 ca to

fully expla the determinant fehesee

peetation Neverthe, in counes whee

finance pentation has eached level Da shuld

lead to fale growth te level of coment and

the quality ofthe busines environment apes o

plan the point of tkeof, This xeesvmenti

based om inp regression analysis using

onrctvity atte huis enone es he

xplantery variables al akeof fr emine banking

rth dependent variable (ce Annex I) The higher

{stheleel of comectvig the eaiera country

reaches the point a which nln banking can be

¬—

“This elatonship indicates when couries can

cape shar ince in ont banking (Tble 9),

Forerampl, Fane cin expect pi growth by

2003, and Portugal by 2004 Rusia, by contrat

‘vl not reach the ake ot fr one bang

i206, sia reltonship bls forthe

penetration feline rang, excep brokerage

ype todepend ot jst on connectivity bu also

‘ntbburres envionment

Using th acta pert aco yeu

for 19 industrial courte with extensive «Banos

penetion spose wo project nance

ene era provp of enering markets (sng the rypcal pera ison alr ekeo,

“Thee projections inate hl by 2005 a verge

of 0 percent of banking services willbe rovided

‘lini the dail counts and 1 pete

inthe emerging makes up from 9 percent

tnd percent in 200) The change wil be ven

tore raat or enline brokerage: na

‘erage of 28 percent to 8 percent inthe indi

canes an rom 2 percent 18 pace the

egg markets?

—

countries depending on wheter they have reached

‘tcl mas ln Norte counties ontn aking

illo fom a average of 20 percent in 2000 to

‘ely 0 poet in 2008 (igure 2) And in Sweden

inetd wil jump fom 88 perce 094

eco Butta aly penetration into wl ise

fo at perent 0 2 percent, eens the

cour hasnt yt chev eric mas

Sor emering nates ifr to hese in Table

Sens fe ftom age si fee

TheRece Puta eile Fae of tei Fe 17

finance Bt by 2010 tight, nd e-banking Penetration i aly could exceed 70 erent E-finncepeciaton could grow even ter

‘tte environment or itimproves ga? also shown he remlw of sition nich eset im emerging mikes ise to about the evel of tay slomestranked industrial county ating of 6 Wah bee eonmetviy te entation of nln banking in mos smeging

‘haket could ie to about 2 percent by 2003, snd elie brokerage could increase to about

‘Operon With amore conducive environs,

‘nance penetation road the world could has

‘more than undp for banking, Fm 7 percent in

1999030 perce in 205, and atmos debe fr

‘brokerage om 28 pocen 45 percent, Financial institutions should anticipate lower revenues Using ne elon nem entail pide finan eves tower at nb Fr inition il sx reste n ter ros ess they on giely move thr bisa oie a eat operating ons fo tevls rian hoe othe new ttt Leaders among ince in opting

re technology wil call te inceanbets Tough cheaper beter eres Lower evens for incumbents could pose problems in cote were iar stations have been aber em competion an where rach etwork ave high eos,

"The ks revenues and pois wil depend on the spestofpenarton, becom aang of proving ean, andthe tity of numbers 0 jst The magia costs fiance ae rch Inert hse of atonal delivery tame, seach tansaction costing ew cats Compare wil tors fo tama task tranches ad 00 stom lr machines Aiioush hr ar sigifcat pont cos, nthe ‘neu em the eto ering hk secs ine wl be ch lower teat as Towa in todays mos ner advanced Banks, sch as Sm inSmeden, Asa rest magn for banking services

‘alla o 16 ereenage pos (he average

‘oan 197386 Nowe eons or la?

Masini Gane cme agi Stas he ere preg os,

12 rion Fac A New Arachne Devoe?

TheReswfheandfosliefeeeofHeteecpaeee Tổ

banking penetration: actual and projected rates for 2000, 2006, and 2010

V4 creo Hae Nw Apt Fins See Deepen?

Because todays most Internet active banks

have not complied thir ransormaton oe

fiance, their cutest cou srt might be bigher

‘han ter longren srctre Thus a magi of 1.6

prrenage pans may overeat the aging!

‘oss of providing e-fiane serves Bu recent

‘npeslenee shows hat bak ey need oly on 8

wicks and lick approach ht invlves higher

‘marina ont ha st the clicks part Besse

"Na cous hae seen the most finance, te

ut cos strc maybe oa ndeatve of

fal elcroni nancial eniee provision Sil,

"Nardie Dụch si eibr birkei5veltedine

finance are ning big cts in batehes ad aft

(GvergesRisBark 200, and fare cost

‘redactions ae Hey

“Tess margins and th above pojestions for

con entation rts wold en imply tha for

tanks in indus cous, bank ins wilt

rp from an average of23 percentage ots in

1997 to about 20 percents point in 2005 Table

') Margie would x iy in emerging

marke fom 4 perentge pont 1997 39

Percentage points la 2005, But same counties

‘rou sce more dramatic changes In Denmark

tank gins could drop by eal hl by 205,

tnd in Swedes ad the United ites margins could

Slide noe tan a quae By 2010 the detines

‘would be even shape, wit expecially big drop ia

‘ral, Denmark, Poland, Russian Federation, South

‘Ae, Thailand Trkey ad the United Stas

For brokerage evemes changes wal le

rama alent everywhere Dee peacaion

har ben ft and cose savings lage The

projections ere assume athe costs af eine Irokenige ar jst 25 percent of reditional cox, ich ssl Ts than th op in commisions Tnrrsdcew te he United Sites sine online

‘wokerage was nonce As elie bokerge procends, commission revenues 2 eer ou cline by

of abot 2 in many cous With higher

‘coanetvity and exromed ate share of ak

‘set, brokerage evens in snus ouicn

‘ol fl ro 0 erent 0.08 percent by 2005 din emerging makes fe 0.19 percent o

013 si

‘The jected decline in revenses wit not be limited banking and brokerage Many other financial serves payment, uring act maragerent, personal nancial advice colds hilar declines when they become sete ore

‘mpetiion frm esinance More gener he threat of exey hs probsbly lowered the aket

‘luc ofcimet hanks ote nei service providers, suggesting ha markets are expecting lower profits

Ta largest in counties uch as No cours where efinnce has already ached eral level nthe medium ru the impact oul be genet in

‘outs eh es efficient Francia services at fave sor itl ence to dete Miraton and cost Arences ate bth key tobe higher i sich rakes ane e-finane comes ostresm In Braz

nd Turkey, for example ark margins aren

‘nore than 7 percentage oits ich eps lin he spread ofe-fance nd te psn for new eazy by einnce providers

‘The Ric Patan Poi Feo Een Fee 15

proving fal nu đưa lắm Thanh đugngcmmx titarogỹ

murs va Thị vươn ve:

‘The new world of nancial service providers

Fan ees eon en aghast

cdc Su ga can be must ne

Front an aan oa tm eho ra aS ras ns righ

es ov ar tn ae arches) 29 acm

‘anja pcre wh arcs

(ete ree ove es eres een

‘Spin sano a a Pe) eee espe ‘ih ort ce lr eon anode omen

‘eves Thar ccs corto: by woe

Kẻ ———

‘ysl on oer ase dees ner,

“Sromns sre nme aa ares Fa

ota smita be tne en os

{sdtenca sce companies Para anes sarge

{ftearcal sein pods ten oe ea tee ba

nhan toc Sen tre bgold05 ưene tru:

‘erera Tn nae eal’ ers esc

TẾ sen onan wl wr a 8

Ines Sanaa Orion sen! last

‘erga en enrages Peet Tap

‘rc Tera ah aren Pyà s=eune sats

(ecm neato car oes

Besa tera ov neva rae

‘a fr wari, chon 0 ota man di

‘Sn no taal en pos tan, xo eat aes ana sen pov ugh

Frise swat adorn pode ove sien —— er

apegsos cornet ts sowing comune

‘cre nega rs erg cote ‘rar mice porn ” aon aap:

Sages Sony eon tel ances ty

eres racer scr a wee Solured rege erst rosa pees anx Dues Sg) Foal che scaled omganes ‘fete coool eae auc

Frcncolnsses ane caren pence

“antl secs bes gabs bans Cayeus, Das Bek intr oat ancl sees ene Tan; arecrce Stevto de reepdlen si bien, “#2Regfeoieireccugi

nantes hse S9 renee seœcxzdenn oust 2 ahetsoie-emelgan £rex/sareri Renin camatase recone dey Har Lech [EH80C, tr oanp, ety aoe arg at conars S808 ver wee a nie {jens poieonge ye ecrrmnestors consis ‘Slaven te sesso lage eortesiomas Slane ees pyran ee ses, aston

‘aco arya re tng aces nd ai emo ana sens eerie ExongesRee

‘esate co, este TB an Teme Inenmgy sr rarcal een reeled ko

‘otro alta manana gom tors geno bt armen wer ce rn fe Cartas meats aan

ốc

‘ests corr Such produ a aod ah

‘peas rca even eee res — Seon nas go oneal wa read

‘nse varices ts Specs

‘ana gg “Ser, pe Se cn oe etn se erga 23 SI Coc,

‘eh canned nuentoendnbsyl vat: an pete a

18 exci AN pothole Deepen

Jeans and insurance pois) Nonfnncial For example, companies asoited with

tis are alo entering the make, inching porals America Online, Yaoo!, Miroso) and {elecommurications and uiliy companies that major elecommunicaons compies (Deutsche fer payment and other sevies ough eit Telecom, Telefonica are developing stateic stibton networks and cistomerreationships relationships and ownership inks with major

‘Toreap the benefits of the new technology, and aun sevice companies, bank (sch asthe inresponse to this ew etry, banks, insurance ‘Bank of East Ai with Yaoo!), and each ter companies, andthe ieee Sari wo deliver (Celefosica nd eos) tthe sme ine, many financial services electronically sling op ‘major nancial nsttatons (Golden Sachs,

In-house online ectvites or completly new (Chase, Merl Lynch, Moran Stanley) are

‘eure ck ital bak tart owner of romiing Inter statape

"Thos nancial sevice re moving aay ‘Ani goods producing companies ar taking

from brick-and-mortar delivery channels to 2 seatage of bak dtebtion networks

multe of electronic and other chancs, with (Cllrs witha variety of onsamer cated poral and agregtor:ofering ew deviation carpanizs) These developments are changing {td adverisementchanels for nancial services the compettv landscape for financial services

‘erally inegrated Granil sevice companies and will eatinc to erode the fanchise value

are growing rapidly and erating synergies by of finacial sevice provides that are inefficient

‘combining brand names, dstibuton networks, or do not adopt compte busines mals

nd service production (Figure 3) (Gee Figure3)

.—

Trading systems are consolidating

‘and going global—fowering costs and

increasing efficiency

Drive by advances communications techoly

train str cotoldofng ad cong gi

“Trang s moving twa letra plato ot

‘oa locaton, Nanda compete ar tae

in Turi, Cooseto for example bi an

‘yuemshae lowered the tanacon ont of

‘ling and tow or er pie dteriation

ects leon excused tein

‘eciges nip low chance of ket,

‘raisin, Thee anges mone pst

ăn mgheu tạ adn yet converted to eecroie

trading ach she Unite Sats than in thowe

"ve ccctunc tổng lu Ber he no sh 8

Europe) Te new tectnology sho allows for mich

case ros ber tanga ver ie for

intemurhtnasing sso

ting rer on cute stock exchange,

‘ich have reponded wth mergers sa alancen

Because many exchanges are seaelsing

rganienton, che presses for change aly net sưc ơn within tint, Rather

"hờ come fom ers and inventors wh want to

19

pay slr commision, eft ads more

‘icy, and muni anonym ple orders (ex

For several reasons, competition is increasing

‘Sater economies of sale The inerrant be etal advances ave srk exami of eal inte provision of fant erie The man al sevice ill Ses oo marty, bens ags dbus of ered History egies obi s ereit-corg model for mediuesize le ving lr_gelenes tcl compete aatags Foros od owever, economies of sale ave Become wall aun the fed cosas wth ening

‘seul borower ess hn 100,00) have dopped Snes

Salle sale economies have increased competion pc among Hap sss than casi be untae an commodined through somaton These pyro Twokerage vise, mgs fiat, ant Timed nia opal ota and no uigue rely

‘The massive shits in stock markets and exchanges

owen ir ay aan sor

‘macs a ated Tee argon ee aera

‘anger a nel mbes ara 629} sanacirs

‘Seva eto tga vag wee ar

cage eat ears Tee tors have ede

‘rer peta oso he pol Sorrel ‘Ghia seg aonriy Ensen ormnvaton

‘arts ion tr ar ater "agus

Seapine cmp eat aes hưng ‘Sano teers san aa ear

haste ter atrn ang son arbi lupe

‘eso sn sete os spams Fr

fren ots a acne ne ke

Sedonerlt ronan rans bs amc

‘tare: The sonar ong yen

{oars nen te 2 oon acy ochre ‘mon at er evento oane—ae

Tgeng teorrgaronno4imlpmiafeeltrug

temas Ey ston ttm sch he

aw Yor Sas Ese acme ben fe caret

Sm uc hse conte roses ane ae 0y ese nase hy Doug ye Te Inyo tanger ara cooe ees Inc mepos ren onsale rai care ergo spinors er es conmrab rep ancers) crt eames nase eps een Stents Gomes Pee wctge merge Sous Eaves jt verses angers een Nas vú st cages ACs 9 Kong [Ohi nen Sey to se change Spare Snir aged cae Fre aes A Bean Yen Se Scare eset ater s2 S, Tee So care egg Sa Exteel Spx nage Tae Sot Eran, Bea, Sir Paso nơi Eosrma vú B=mmag tre M eynn Sự TecrveliiEoetBec" re treskirlee

Ia voszfgt norton poset gon mat oven ana nba ope ma

120 sree Pane AN Apo Fc er Dect

Lower transition costs substan increase

competition for rviders and ut oss or

coesuen To retain maker share, ole

brokerages have ben forced orally resrctre

the way they deliver sence Commissions sn

{ees fl fom an average of $53 rade in erly

1096 0 S16 in mi-1998 and by mi 200 sore

online brokerages had lowered thst commissions

to zero Eeevone communication network

commissions, now $0.05 trade, re contig

‘ofall Bares o en tase on ownership of

py Belltes are disppearing, and incumbent

Institutions ae beng forced o merge o in some

cases to demuialize wo havea hance of remaining

able

Shrinking up-tont costs and

‘changing enty Barrars

Web-based financial services iy the Intra

communication standard by combining a Wed

browse dsplay standard and a Web server asthe acess point to huc-end operational stems Asa

‘ult crneselling of produ becomes easier td Economies of sope increase

Ta the pas suk costs were important ty tare inthe nani series indo Examples

‘funk cots ince branch networks, owl

‘shout lel borers, acceso payne sem Tvanding avanages involving large up-front advertising expenses, perception of size and safe, long-laing casiomer relationships, snd substantia

‘ton invent a echology But snk tts ine becoming les important, partly because

‘leetonie delivery modes doo ely oa batch nude Table 6)

‘Athe same time, pew en bares ae being created hough aoverebvantagen, Once anew

ave dne inthe United State) Serves sick at

tEdEra ungasd erersand so loe+ sài cẻ

‘xh ow evel of eon and

require relasonsip capital, a cerain ie and

‘brand name compete fetely Bu ise

services ny few obo net extras

nae intexsngy sje o global competion

‘The cope fra contessable mht then depends

‘onthe sizeof the market inte aueberof

Francia stone vole unSeraitng

‘ba opering onal bass reset very

dierent compoiiv evzearen than woah

few players smal marke! (ty, less han

stein)

Hoher network eteratties

Although dining economies of cl, neressing

‘tundutzation and cotton, ad fling

‘prot estes compton, hic ned ot

‘othe cae frsrvices tat exhibit network

‘extenalitfcn A ian service exibisnatwork

“xtemaites ifthe vale of the sri ees

We the numer of re parpnts sig i

Payment senses, for example, have desreasng

scones of sti, ow oot cos ond easy

‘Sommodiaton Bu payment services ae bet

{linge netvoit cwemili, becsee he vale of

fecttoni payment service largely depends onthe

‘degres to which ers adopt a common stad

“The Ban sence power that manages

rene th common standard willed op wih 2

Teed Wada Sones 2F

large share ofthe market, dsressng compton Sula characters on long systems and sxchingesiradomal or BZ}, nail port tndoa esse extent 10 e-embis (ee TASK 6 Emerging markets have new

‘opportunities to leapfrog Most ofthe dsession above eft crete

‘advanced ind cous ach des ot aes the possi of eptogeing Bu seven egg ares show ht e-fnace penetration

an proceed nich fr tan sid bythe preceding analysis Baal Estonia, and Kore ave ready enoved beyond levels pected othe Basis oftheir caent connectivity ab bine

avizoten! Box

“The divert in these hoe counties levels of Aevlopmert wah er apt incomes angi fom 53.800 10.00, suggest thế lopfogingk posible forma ei counis aswell rene hat what per toe dsavantges, sich ht

‘poor facia services and weak financial lnastacre, actualy aecsente the moe 5e Finance tas in ecritin marks, where rid

‘migntionofbore fas pay bec respons lo

‘tek ret insert ad por corpse ovemance, many consumer could ove auc) nace deiverd in put fom et locaton Bat epiogsing will aos emerse

spontaneity eguie changes pois {Sefirancel sector development

LCeaptrogging around the globe: Estonia, Repubile of Korea, and Brazil

Sa ma sia pages natn

‘temo thomson oops eran ‘Rinepepe reer streams wereyes 26 t5

Son pew oe rson ro ue 9 moe eve

Irasiton mn Spacetime erdznce

‘canara tn fa Eoas sent

Cre unis cue nastan 8 moet

‘rsccnnrus heer cota na woe Soeahe renin te hg me catetartwoystowning nos

‘noma tanta depen ioe si,

som 0m athe ens tes somone ae mrsprol0s or sone nda

on 220012 ana men Gre ed as {fou fmaadersron — endear To ruson been leans yw at ahs eee Koes ots 2 tora comp rear ha ae eb are oun ras aget nds

‘sapien ark hoon in ron ac 70 aa ot ar arg ane

"hens lanes try ong rssen

Thường Km

2

Changes Needed in Financial Sector Policies

he reset pte and ite potenti how

I that efloane could ler arg gain to

Fancast tates The pte is especialy

lage fr courbes Inking wel acting

fet Finca systems with wie access, But

‘Schovng the fl gains of einanee requires

‘hanging the model fo financial scr

—

Many questions nee io be aes Ae there

now beter ays of baling a obs eins

financier ai provides wid aces toa

‘broder set of conser of iam reves?

Whos pbc paises bes cate teh a process?

Will some rina soi wes te ess

importa? Hove will areas of emphasis dir by the

level of devekpment of x ents fisasiat

seco? Which policy reseritons are more

inpotat for eounc with beter services ad

sds sees an whch ar more pei or

‘outics with nied facial farce std

lie ono well-antoning Fae ye nal

‘ses wr policy chanac shoul be ude wav

neces rik a allo fo the greatest gine?

‘And wat policy chang ave counties lady

made inrapoms to france?

Moving from an insttutfonal to a

functional approach

The attinal approach ofa sector

evelopment as ben tno witha

avy sso deehoping corer! ni

Box’) Te ito approach seeing being ener dil cries bythe

fonctional approach (Moon 1998) tat

Approach acarvin te bused ino he

‘eri into with ir en prodtin

Sucre, at scsi sociated with any

Patel pe of fim insti,

The range of anton ering sna

series ha alo oad wth ss pasion

‘ome bks ancl service provider

Thi age inact conlomaeor

increasingly ops ents i ares sc ot

Sominodtzton offal pod smI hogfons

Ì denghne le polis twa Haan ator

evelopment in india counties

aps tecnologia change an the terme ae

nhhing he Reclol an.euek ean for

"able 7 sumnaanacs ho the new parigm sites fro caret approaches Fac sctr evelopment wi th lst clara showing asa of

‘eran arom isemational working poss {Ge also Anaoe 2) The changes pie piy oe ofdevelpment of 9 entry» inanca svt To really benefit fo fiance, cerping markets wil

developed nea systns tat already tase Sephisionted senses, wide acess, ich af the Snasrucre suppor e-iaance, ad mh Innovative e Grane aledy esuias pubic

‘The institutional approach to fnanctal sector development

ert eps as ae nan se Secrmet eters on cape

‘rasocon anes monogenean {Commer tars at pisses mre

‘oman lan te fn rao nied Sac guen rocoto Fert ade roa pct et remaangtsareteretdgrm ng2o t2) aspen aetna arg tates a ory Tan cơn tan mu To trzxen vo tone cag ms rans tascam arn tgs oval epee an

‘trating tps dren Int staan nes neste, Seckersuna) ede ans art

‘Seno ob pv tap an wr

24 ces amex: AN Aypresh Fn Sac Deo?

‘A.new paradigm is emerging for financial sector development

NI

di; sử mg so eae, aly mas,

ose estes ya rn per

Fema al gout aera

gen azlolcrmadngsa enabting elton,

Esvrnment minnizing Fisk fo eons Tabcommunications

‘aves, ad insttatons, nd improving the ‘eecommanicaton elation or bat ied perfomance of markets especial in erms of and nonfied Hiner key ae lcimMne, *

fermpition pois In adn, he ee af

As noted, nie ins are proving new

‘pporunitis in developing counties nung ìn

‘Tomot resin Ac, Chia nd many lens

<eveloped Asian courses suchas Camboxin

Regulation mun patie post an clepraph

‘aiminisratos, improve liening of compestive

peat eae mandatory itrconnection and

‘nbundle pblc switch tephone nates,

implement independent reultory Bos, a

inplezen proper pricing reultons (ot 9

Improving acces telecommanication or

lager orion of th population is especially

Jmporantin emerging marks,

‘Blectonc securty and intastuctre

Both peoviers and consumers of enance view

security 6 a constant and a concer Seis

‘peratonal iss and potential bits are

ssosided ii secur breaetes inthe ranfer

‘of fands or isrstons andthe ata he of

‘deacon information oer the Iteret Fut,

‘Glaeser, and Kellerann 201), In respons,

ncrypton techniques and varius protocol (cue

Socket ier Financ Interchange Extended

language) have ben developed bythe private

hangs Nk i Fai Scer Pies 25

sector, but eidene on intason suse that those may ote cent Acta peetration into tanks are understated because ofthe damaging implietion fr banks repustions For the whole et of cu arangements thas the so-called public Ky infarct 0

‘work four functions must be present auction Usowane he parties when xchansins

infomation, ner messages canes be changed huring wansisaion).somcpdaion (agzcements anet be ater denied), and conidial (tessagescanot be ead or copied by urahoied ter) Authentication has en perhaps the most tious

‘One approach o improving authencaton that Isbeiagenployedis he use of public and pate Keys Authors wil ave to addon tre in issues in designing ucountry s public hey

` focunathoried access oF trpeing with enmputer ystems nd Websites peat akin to thon for ter erie Second, proper

Cerifation process encoded fr public and private bes, a are scare stems fr storing sich keys snd adequate cross cerifation fer pvt key

Enhancing connectivity in emerging markets by improving telecommunications regulation

erst an be race ra cirbniondf

‘carrito oe

12 esampntve beter em 15 opin asec mtb reaper rd

226 cise sce Aer Apso Fail Sec Deep

providers This ca ino single pubic

rfcaton authority bu seed at veal

ures are succes operting mle priate

‘nd pai ponies” Tha gerne! 3) need

‘eset minintim autbercaon oe cecaon

Stats whe presen inceatves fo private

folisions Regulation shoud be exile enough 0

Sllowforcsaive use of new technologies (sch 2¢

—

Information and pracy

Eefinnace mes it sero manage cst and

to cataiee products For crampl, a aan!

Inston ed wih an incre eve provider

‘an use information ule frm acisiomer

‘Web eo fer theestrer so rail

rodit Bat such eft nus respect peoples

‘Sexe for privacy and conde information

tout peso oasis ca inereainghy fe

teens a property ight tat people ca voluntary

‘ar with thers That prope right mast De

‘feat dete though nermation ad privacy

—

‘Sich standards shoud adress our iss

orice coe, ase and secu, Indiv

ut be even aie of wha sfomtion i eng

‘led op ow itis eg nse They reed 0 Be

pve choice of whether wallow such collection

‘ne the information has bon celle, to

provider of such information mus have acces 0

racy tana wil ily regi priate

sector ations, but thee ace a Be ask by

foverent pray momen wi a across

ours (Bax 7) Moreover, pavacy an seo)

tas should ot Become aes othe developnent

5 Cercioe stories cin be pores penis

(rac hain) cos pons IGT oN ke rat panies

1 Noncl Ent ot fiat seve proves

‘tems Tie certo rbery mabe

fac ky by ating tw ei ha

Sly nen The tl a oft ceeon

thr sn he aio inlay

‘Sepubeky nuance pre prover: Bat

‘Nr Dosh Bank, Bale Chase Cigouy,

‘fence, Ths general sxrecy a, long vi,

‘the sates sah as Bank sere aw, oe Tenml be aig fot onlyepative ba also postive ei infration, As the nero expan, Sandan for iformation and pivcy wll

‘Snarintan ster enced mcr! Corpus angus nese aes rand

Se dan ceoonn tgướn ngnơenBg cranes gona tearing?

‘raat rte! sos Sony ae Irma aeoamen a aren hoo tate pac cores yeoman Egan nas rd mah re corerbeava winger ero preston ces Ihara ors ie rete au ore tao aon oes

‘etneonpcs wn Ed sar areata wr” enon eens ao

‘i Se ane Ec nn ve eo,

“nem na eozisa bị rodythn,

oi outa any ss ee Now

‘oper costs pa, BEY on Sanyo pte sarere nb cs Ss nny

‘ose cy covenants hn hes (accent pn fron Ta

‘Stata con) yon cures ‘Sigg er pny trong Ere rer on

‘essen nen angio rear

‘Sooo trong case coen een each Ferner on ras ween a sean Ot

‘Soha ohce ans ote ‘Srounen out ore tenn

Contact enforcement

Por ent enfovcement hinders Gran and

commer reins ofthe deivery chon Bet

ret ecology ea over he csf earact

‘enifeatiog ad enforcement The fleet nreses

{he mont and speed of rnb information rd

am aly ink dapat sources of norman It

an ai or example nthe asoration sed

Mfceney of estes With ital sigatres

‘etitk assersientcan be mae sh er an

‘more efficent In addon, the nee apd gata

Finacial service provision allow fr collared

{oars extend fom ect loeton E-Reace

vl hs ke cron bode dispute reson and

nrc enforcement more import The Nosh

‘Amaia Pie Tinde Agree (NAFTA) and EU

experiences rode wel examples of ow to

res thee ee

"Techno cat help enforce contac diel

‘When frectosing because of te men For

example a lender can se remote eves shat off

Sd ack down leased car Tecnology no allows

fates methods of exsutingpefaton oft

sen interet in cllteral na demaeriied

‘vtenment, Pease dbases can Be inked

‘ict Finally sat ears nd ctor mapas

‘ads tchaaogy to hyper many standard

‘otc enforcer! mectanis, which nay

‘explain thei populaity in Af

‘Financial and marke intastucture

Laws and systems are aerial emt of aac

infasretre As noted efnance wil all Tor

tre Rocioal ae an sans, approach

to finmeial etor develope This implies,

ha the ws even Riana contrac wll

become mre porta than he as governing ints that operate nthe Financ str

Urs on sce nsactons and api ket

‘ealigs, for example, wll become more portant

an nw commercial bas ad sane

companies

"To date the pac of new technologie has

been mont pronaunced in wholesale and secures

markers, bat gains ar alo bacoming evden

real market In Estonia end Finan, fr example,

‘any rn nail wanactioneare done

‘stromal, god ecology nfiarctre has

becomes Key Final Heking Grail vie

proviees ormereboady enti front

SSslora in emer png mae to comin with

(Cong Nein Fam Se Plies 27

‘nore sophisticated technology willow hem benefit witht having to invest inexpensive sete ad demanding oversight ste lock

‘maken sale emerging makes, for example,

ou be inked and icgsted with thse larger market

Progress to date

‘recent suey 23 counts, including 15 merging markets, shows that ew hve adresse llth aspects thse hey teas for eveatng xabling enviroment Fable 8 Bat progress

‘eng made many aes, ap over

‘ine tt il allow the hl benefits fe Rane Dig signature nw, or eampl, ae being induced aay cures, oe bed os

‘model ws promulgated byte Unites Nations

‘Commission on aeration Trade Law AUNCTTRAL) Privacy and confides swe als being adjusted A while all ese reas {important progres inal of then at

‘rsconiton for fine some ous wth

‘erie underdeveloped faecal nfmstevciee (ekofclewing, auto sdelemenl mangement weak pymcnt ste), developing

‘cromniston and pic hey nite can

be suficent tallow the impor of many Fanci services ad ceed frm of frail

‘nesses Minimizing risks for consumers, investors, and institutions fiance ca create necks, wheter athe evel

fa fine! service of feed at he rea or tole eve or a the eel fa nisin olocng hese Zk wi roe ates

“oan more on se elo, proton, id deaton fr consumers and ists wll 25

TH mangenet by provider of rnc series A the ns wil pod the asia san nceasingy la vel

ance ls eal fer reining pproaches tpeleublrepialon and sues elt to txteing the finances et (Caen,

‘ines, nd Kingbil 200 The seo pint

‘scape ipo is any emerging markets tive tron extosve sy tte slncing Sortnin nancal wait wi logerna Incetes wl be challenging daring his si in the frm of and approach to retltion si

—

(2B aime AN Asch oF Sc Deep?

E Stoop ao, Pee

posto straiyestomers tough cectonie ‘usoner eatoship management and snake tear for autores enor existing "atthe same tne, ccholoical developments

‘usiomize Financial services These developments regulations protecting estomers because electonic

‘tetra or consumer, For example Dud wails are assured ad nee sevice

Infomation fee an elie bank account euld be prover can be eed to provide information 1

tuthoites Forhernore, many companies ae

tlle nae apes tha enable conse 0

Search for and compare alert prects eed

‘the teret cating search cots rt

‘empowering emsumess

Policy Scans mist eft he choices of

consumers andthe incentives of fnaneial sevice

rider and Inmet service ot eptcaton

fortwo provides The hey policy tp willbe to

rope inerese dla and greater

no

fered over the fleet Beer privacy td

security standards wl lo hep cones

le are lio nocd that it the scape for

confit of nteret within fincas ad

tetwecn nar nstitone and terete

Fie For example, lis maybe need on ros

seling products win awe! stations

‘Government aya ned ay the ality

fan service providers fo services contacted

‘ut atch as ltermet banking stare at

‘commended bythe Flesonc Banking Group of

‘he Dae Conmite on Banking Super isn

Eianc ean mote ely vale out

fru bef ae ther boss hing rat

somsumers an ninging onthe concen and

te of enact, Actos sch a the development

of a eyberforee (ass becoming common ang

Secunteseplators) can lp ed ou! he ort

“fenders ard send clea signals Bat thee will

‘emai severe mien goverment i fo

prevent misuse, making csclsere more neesary

(Gee Anex 2 for lượmdimal working group effets

Indhiarea) Ths i ah hgh th ood for

nore extensive conser ction which coal

Provided hugh esate priate pbc

arr

‘vestor protection

Ac with consume rset, sues eating 12

inves protectin and eduction wl ke on ach

‘rater importance Reese ne sks are frais Ina more global nổ iecronie voi, Pesta alo monitor neering

Fepuoy and supevsny approaches ad

‘loonie wil fave opt ch reser

“phason close, the quo nermtion,

‘he ining and esse of mail aration, the

‘etntions and ablpatons of vest airs

‘nd neapere, and povemance and confit, Mich

‘pester emphasis il als acd tbe paced on

Chg Nake Fame Seca Pes 29

coin pal nd eas etinens ©

“copa n crs-orer eats enfloemest Sndsohamonzng gl abso eet

‘iacmetrled sere acto coe

tư TE intce ar ao led ange of gestion: 4nhoglomenee te may no led

‘ive det ive evn Mania Ser Lins betnen pr tere ever

‘revi (SP), lcornmnctos td soe ‘ryan serie companies and

‘pein ono ater oe coming ere

“hanhon bo ley núc ew ike May porta {Inert serie providers fr exami uc

‘cctv like wih onc eric Wil hove nk reno? yr ter orson rs Shoul nota or Inet ec provide lle care fr Icon cutest to decrone taka a

‘raat olin orig? And,

‘nde ota fms ef cre eyo? When ol nde fie bennett ones neering bt rte ncetvs may be

‘lene! treed alae wrvces How can

‘ecto nial pb ofrings Sows be propery eu aa super? 0) nd rand Sima eompiatos ntl new aise when

‘avrg borders on inset adic And ‘tone me fn kon onr by on Teer nly providing forum ad when ea lon nics et frances

‘Maing? Cana prt tne allow aves by ‘era ancl erie vie? Box Bote

‘oe ofthe gine pee deveane od Sore of wich ave been ony te Tneretug ÔngnirofSeoelie

Conmintons (ce Anne} ond th mguido;

ee

Prudential equation and the safely not (Of panicle shor- imptne in pret regulation are change ede 0 prevent the new Fish posed ty enace Mach of te wok on sth sks ocing in interationsl forums sich the lectonie Basking Group ofthe Basel Commitee

‘on Boning Supervision (Box 9), bpotat aks

"ewe by the group ae eneratonal rks sted

‘ote erased use of technology meudng the reve relaee on cate vendo egal and Fenton ks ad confit at maybe lnoduced by the lctoni diver of fina

LG”

‘Securities regulation, the Internet, and emerging markets

Seng bee roel ằằ yeah nds gt cite

Const ss ude cen as mac

‘irri een eo rer2E reneTcps ‘ee on means reson eat,

memes) noma ves ta saengih

emma eps er et a

Pon ann rata or et ens

Fou tot oto org oes Doon

rar ec a tn yy

sss be oni lcs ay od saat ee

‘Saitama rina cee, aces

{hen cecrnaty idee corere bt oaise 8 5m Em) mìneocboo nhe naenbieles

‘ero cuneate then es "ornate Shoe ern Pee matte soe

Sons pray od ey hay cee

‘Scepter enor bean

‘Saino neocon amine were re pater ts sere ba

‘pope crane tobe ea

‘any cvs wees ee eo a

Seon gabcresto en Sao rare

Fanon ances satan ara es

Commmicsere nee muerte sane

‘roe oben rit oa ot tes ‘tecxaemnd mS ton

‘erste ww a ear The ean

‘gedaan con ceo nh

Sanh ntanycenaon eet ano

cut us se anon ta can bee Suet Magra ae aeration ‘ir ge scr aes

Ea roe rt eager nase us cf ees rts orf ergs ees ay

‘ue sgt tv ch ager (Pie atl ont corns pasar er ha Farchalenany Soon sonar ee rsa Fro Conpatrg rato, verse sie resis ‘ray pot corpeas are cori atat Pe carte aie epioy cng tt aratcarng canary tara yng Te bn re

‘Steen renee as at oe epee inten seve pose Reva Revamp or r3

— (arm sti eng can cor tnt ase sunt stg ncn ein ton sath canbe swe ne ue atin ota Began dose cr Yar Aas ene ers masa som neu TS ret Steptoe sur eres guns ponte a ee bntargerseeg scares, sne angen ae

‘sng ta sentra ‘eens a ae ry ae base ne

‘scar opie toca bey my la gi

‘eae tera ay yen, heen De" ei orgs at rn na tic feng PO" Isaporisn omnes Sim een mae acs oer tae aay pa

‘Sel pace pes sex poeta cera ae, ctor crane eso a ah Faas dceng gob sada nàn re mu

‘Sema anstoece a enon sg eet some

servoe, Monto ths is ar tte ba =

fare aes thes

Forth inure, ulations rlrngodscoste

and cning of tfoatin and to governace and

oof wil become mote ptnt ae the

‘rtoral approach wo tank sapervison sd

‘equi, Ths si wil be crompanied by aks

lof reduces praia for existing nacal

"helhdloo: sen uhÖ uy lo song tac, Bạt

finan cou sharply acceler the op

profs s tbe Becton Banking Group as

"eee sates and busines hs a ne of he

Some aspects pdt rpuaion te coming more importa, wil ters may ood to evened ia new Ligh, pticalaly a ene mafvet Thờ epecaly tục lúc Fin sec si nụ đeine ret inl polices on epost, leer of lst ros fit, at overnite nthe payments ssc athe

‘wholesale level andthe xa coins under

So Inthe past the ned ra Finacial seer safety set asocated prvi regulations Superson hs ase from he ned 0 et

<epostaking institions deren rom her

Changes Net FcScor tier 31

Principles tor managing rsk in onfne banking

Arce Ec ang Ga a Pa a

{Srna bart ipower aes aye

‘pesto ang oe xec

‘Sponsor stnas oon poor shnesaeg ‘etoraeret ices enn curses

* Gretmumosmtunesnagecronn Tam eb areata oe

‘pai eal x magne

s+ MaSamsaolsewwthavrd0rdpow, perenne Conga wehbe corup netr mragg eve esoroe

che amon sos

1 Stgatton of aes erate rns enced (Stone rman cats neta

Sons aves eens

1 Proper sberston marr foe in Sater tae, co apna Me

‘Sopra ones snp crore bot fac rca yaa catoes enc

1 Grarausti Sean nee ra kn aan er etetng temscens cow

saree 5v veveeertreiae® al ets cunerpe, ne, re im ii

| Coonan esrtiany and vay eastome nraton eons tose

‘+ Bons cons and contgnecy panto nay

‘te evaaly systema ad vrvens Perseus teeta bain sens ras ete

15 Inet sponse pang, ae gn rs ‘Suse nga mara an vse aber

“heo reeeteletE- la cưng gư

‘orl sas a eg apse fe ang Suna sees

1 llc superar Bak ces ed tse Sons mercy satis ots ea cnt, nd coger oteg

connie age an fom hanks spi oe in the

Dayrcis syste But tank are no loeer he oly

“estat providing deposi ike serves, ah

‘many subarea depos vs ene

‘nthe payers side, barks have Beso ls

speci caine mul fread rot bok

hows offer payer sevice and cheapie

ogee is enabling he utr develope of

nan providers of payment series ws ne

‘Schoology(e-aanses,sored ale cand,

nat cas oie pent anions

Hslanes om sored valve card can ply be

transfor without đưệnH eahing eponitory

‘anton (Oerbeg and Thomsen 1998), “These develope aise the question of

which yet seroe should fl under eplsory

tothe payments system Deisions about which

emt sevice eps mang lo

poriculaly if the regulation spade as

‘Srposed a comsumer potion ese, Hecate Tralenlal elation implies a the series are Senerelby the safe) pet Since the new types of Sorts eed fo earetily evaluate where to daw {he line nd be cognznt of posible is the line over ime deo pies and other ress Authors shouldbe especially wary of

‘vending depos earners 0 new deposit

‘bette bea the oor bar mgliedions

‘ne stan Silas, authorities have wo desi wheter

‘hd io, nha form Inmet cote oly fans hae access othe panels syste, a sheratve providers of payment services ave 12

‘ea hog Banks Resting acess he

"nhe system to banks allows incumbent banks {o preserve a coe pt of heir Fanci vale

82 ern Fase: A New App Fai Sst Dect

Allowing diet enty by nontans and gonna

panies (elecom and tity companies, ker)

-viTnehee he Tanelis vi of banks ad ik

‘ecm over sal ưng lines between

financial and poaiancal compres This could

snhuge the safety at even ify deta

Redesigning the sft net al the more

gent ease a the ks ht wil erie be

exe inthe sort ra ater an being eed

Fanci services have bone more compe, vi:

increasingly lured datinetona between prado

and intetlone and Between the Snancia ad

‘oofnaneil ompanis providing these eves AS

Financ service provider expand tei actin,

the eft nt could be extended nonbankng

tvs of finns ervce providers oles

iis are changed Goveraments may end up

{aking on mach Inge ange of aks mos of

‘her unrelated t any economic sons ora public

safer nt in he Fst place

Progress to dete

For the moat pat ier fie approach 0

regulon nd supervision bas bees adopted for

‘inane, Ameng comics with sphisited

Fennel stems, most rgiler ad ®ugenieoo:

djeenets to aes eran have been

Pecanea Table), These counties already have

fod Fanci services, and mst income groups

Fave acces tot eat tase racial evn, Aba

rel esinance penetration x progres ay

Sesotho hig row ak ving arisen tn

sere comtrien dicta at bei ae,

‘ord vale cards ar ing reputed nd res for

‘ain banking ar being toed some cases

‘ules ae being toned wih eran

Sandan blpngt dein itemationl Beat

‘rctices But as Tale 8 shows even insta

hunts have nol neesaly aed al he

Tél vue hav lo tte a plese

spproachreguling fiance providers whieh

‘ean tht ne risks ea rise For example, ome ‘ures hve tse spel lelation and

‘lated operational eerie for onlin nk, Many

fave yeto review theres applying ©

infomedaies sock pra that play a et

inde ole n prviding Fane series

Many counties done have aden lw and

repulition to aden pombe eit th aise

fhrogh Incoc- bed feings of erie

relate series, varying fom use of electronic bulletin ards online order outing by portal fo

sm lected sow in tbe content ofan

‘lee debt offing Moreover, ew couaties hae elified whether suas of aris forms oF

‘gust depos or mlipupos cards willbe gienaveed Po orc with wolodorlapel im] stems finance offers the ppt ealate {he development of safety net and th asec _prientl framework mor cael In sich oun many financial secs ea come font

‘onan, whic boo ot all under public Safety net Furthermore, ash eons Fens services, and asoited persion end peuetial

‘regulon framework, can be iporte freign -walinuioal na service conglomerate can ner or deler servic emtely a end at hat bee increasing worldwide (Golders Dages a inney 199)

wl save not only seree ta esas bas fiscal resores Many governments hae found ical to cred signal hl they wl ba -wfiancliegiulone Butañh len enghaje tts anda bigger vole or frien poe

‘offic ervies, governments may fn it ease toe lous save vale ical resources al improve the allan of sours

‘Of core, mechanisms ae sil eeded Yo enue

‘that nancial services are inpored only fom

‘ond syste an to ink ks aig fo inks

‘vce femal oslieoms aninonfisncii compas ill some countries have inplementad

‘eultons that ould sym the development of Fane Some india coutre, for exams,

‘ave Ite the entablisment of oline Banks to exiting tanks, uppesing the inovaion nd Compton Dat come wih ow Financ service providers Access othe ge ae trnafer yom Ean be aoter bare fo nt fer nlp serve

‘roids Inthe Earopean Union money can be [sued eectromially ony by tmdioal ced inion anda sew ype of credit atten lowe asm cetroni nied ney ination (ELM, But ELMS fice tour prea

"atidloneon tiết nefmefe hi mạ bamper thosprend fe finance a tinereases th cost of tty fo new ancl ervioe providers,

Changes Neat ins Seer Pais 93

Improving the performance of markets

Aithough ths ote casi fo cen and access rhts as sown the migraonabeoad of

trading and isting by corporations fom emerging

tarts hey do ot ececarly unton pope

Inemergng makets poory defined and enforced

competion pots aen combine with weak

‘corporate goverance and highly concentrated

‘ownership and wealth Yet effective competition polices and pood corporate govemunce are

‘sei achive the gins from efinance tha

‘ome with inreasedeiiency competition, ad érebiliy Emerging markets lio habe Stein risks of loca markets becoming fr es

34 coc aan: New ru Fl Ser Deepest

guid and more subject ise dealing Competton policy

“Moreover e-nance and increased connectivity can As noted, recent changes are making Sania

‘rakes of mae rapmenaon ap velit services mor ike ther goods td services td

‘And across orders, hee isa ced to harmonize financial markets more Ike nonfinancal makes

‘maket ndardsandpeactices How can these Technology ie leading o specialization in the

evelopment of separate markets, pricy

‘wboesle markets ile rom ther Finacial

rset

“These developments make competion poley

fac Financnvervices ore este At he rime

time the speed and associated ewes oF

‘ectoeloglinovation in iran evice

provision ar increasingly becoming function of

the degree to wich entry by new ents financial

‘nd nonfinanciaisllowed.Thise making

eonpetitonpbey more important bt a ted,

ko ass hsues for te extension of he nell

Sector safety se

‘Compation ese equiv defining 2 product

ats ke Bt ti geting harder to precisely

‘eine nancial products nd thei artes Many

‘eadtorally onfnancal services ar taking on

‘hraceric of finncal contacts, The ceaton of

‘ash eoivalents derivative markets i wether nd

` -#eivelvecoomclsetlelincehdefy

clseifealen mo đinctcalegoje of finn oe

‘oofnancil seve, The continuum fiom cath

(pote) stored vl cards bate

rangers corti ot st cath mobs,

‘bat alo along many eter dinesions, makes i

Ito precy define the concep of payment

services even depot

Tis dius eel to dein ent barins

for services that canot be wel defined Moreover,

imarke sizes are changing Charges in delivery

‘odes for tal Birarll sever ae wring

“hy tamiss tr man Financial series tha were

‘ones lea, making adtonl measures of market

‘concenation meanings Ax noe, many mares

have gone global, making more iil to

scopapiclly define markets In eure och

Neve Zealand din some Latin American ea

sce European count, banks aot

foemore thant third of cal market

‘With makes ging wb, oot nd

nonguenity bavi lave Deore more ipo

for fiance serices, The ability f Eecigm

finanea nstittions wo provide Muna srvies

‘ona global basis canbe hampered by ierenes

inns (sch a iba scree lw and in

ow thy customer provisions related

‘money lederng a ra, egultion, sd

conventions abalone th imporaace

‘oftuch rca ares Beene hey can

hinder competion But such lifeenees ar not

angst Fen Sec Pen 35,

«ay lo measure ikly ob hammonze inthe Shor rn,

Eric techniques maybe the ont yt testa markets contest, bait lb iit

to find bust made for ti, Sil, lobat ket fal fora lal faeesk or competion policy,

‘or at eat for nrered eordinnion smog cunts competion policies Furermore, ens dereat nde are ole othe production and diver of finncia services, Trguio within and Tag contiet ST lay ovr how they define and ase violations of

may terome imports fo competition policy becuse can create hava ane etc mas eached nd market parcpet wll ve xương teenfactlọigemaløe he cuemhliics tnd the asnited ents, Markets involving etre ctemaliie wsmmml rulalon ensure acces mm 20c weeemes (Nesheg 1997, Spim and

‘san 1999; Sins and Stave 1998) As noted, network eniraies ae especially important

ea ụch tr men service pd iain yan (cee Table 6,

For example, alomated tle machine (ATM) stern the United States started a sal piste Proprietary stems then standardized and, oer {enka ep tonal wit resin sens

‘compltv concer, Inna continental European counts ith enced karin stems, snglerationwidenerwoeks with adeuate cess cevelped: But in some cout eto

nd to frce more open aces on theseneworks regulate pricing lice, iit exclsivily

“0=smele to overcome frsemower advantages ‘Simin, governments ray ned eee ble access on ther nctwork ervces, tang

‘stems, nd elecworic communication actors,

‘Andis soe coca goverenents oy have we

pc when network eters ae ft 0 Intmaliz, 5 when abasic ecology must be

‘shown ob echnolgialy feasible Fer example, tộc Imenet Bay not hat se Hee mượt kya 00t enlypeteetme hước,

'Anhodiet ave generally allowed makes a ctos to proceed wih ite estan, with nity 8 nancial services by aoninancial ene and tatepc lance between rani ahd onfnacil enttes Entry by nonfina