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Internet portals dedicated to retail investing abound, while electronic trading systems have attracted institutions investing in equities, bonds, and derivative products. Corporate treasurers and portfolio managers will now also benefit from electronic markets that enable them to filter their investment choices and ease their decision making. At the same time, investment banks are devoting a large portion of their technology spending to electronic commerce, recognizing its importance to their future. Integral's CFOWeb.com provides a solution for both the investors and banks. They will reap the benefits of Integral's early entry into e-commerce for this market, but at the same time face substantial obstacles in getting there.
Although investors will profit from the advantages of multiple providers, access to inexpensive analytics, and market transparency, they must overcome their sensitivities to placing large transactions online. In addition, the scope of financial products initially offered by providers includes complex swaps and currencies, where traditional brokers and banks have valued expertise, discouraging investors from online investing. TowerGroup believes that these corporate treasurers will adopt the CFOWeb.com technology slowly before committing to its use on a large scale.
Investment banks gain quick access to Internet distribution targeted at a specific market segment. This is an invaluable tool for many small and midsize banks that typically lag their larger competitors in this area. Similarly, investment banks that have committed large amounts of financing to electronic commerce will not participate as readily.
Integral's CFOWeb.com is an innovative product in a very progressive market. While it will predictably encounter the typical obstacles faced by early entrants and "dot coms," such as credibility and Web site traffic, the industry will steadily become more comfortable with its benefits.
Additional Information
Highlights
CFOWeb.com enables chief financial officers, treasurers, and portfolio managers to manage their derivatives portfolios on the Internet by providing access to market data, news, risk analysis, and the ability to trade electronically with banks and securities dealers.
CFOWeb.com utilizes a library of internal finance analytics that allow users to generate, at no cost to members (who must register, but do not pay fees), calculations for fair market valuations, interest rate and volatility term structures, and value-at-risk sensitivities.
The greatest benefit of CFOWeb.com for investors will be the increase it provides in the market’s transparency.
As the initial entrant into this market, CFOWeb benefits from the low cost of participation, the popularity of online retail investing, and the success of community sites both inside and outside financial services.
Participating in CFOWeb.com enables providers to augment their existing e-commerce sites or to leverage CFOWeb.com as a supplemental e-commerce alternative.
The base revenue model consists of generating fees from four distinct areas: monthly subscriptions, transaction processing for each trade passed through the system, advertising from providers of financial products and services, and sales of software to providers for their connection to CFOWeb.com.
CFOWeb.com’s primary challenge will be acquiring the confidence of corporations and investment banks that Integral is capable of effectively managing the operation.
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