Journal of Financial Services Research

, Volume 22, Issue 1, pp 73-90

First online:

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

  • Eric K. ClemonsAffiliated withThe Wharton School, University of Pennsylvania Email author 
  • , Lorin M. HittAffiliated withThe Wharton School, University of Pennsylvania
  • , Bin GuAffiliated withThe Wharton School, University of Pennsylvania
  • , Matt E. ThatcherAffiliated withUniversity of Arizona
  • , Bruce W. WeberAffiliated withBaruch College, City University of New YorkBoston College

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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.

Net-based financial services transparency pricing bypass and disintermediation.