Implications of e-commerce for banking and finance

The aim of the paper is to show that e-commerce holds the potential to transform banking and financial systems. There are three aspects in which e-commerce can affect banking and finance. First, banks and financial firms can use the technology and business practice of e-commerce to market their products to the customers. Second, e-commerce provides a business opportunity for banks to offer new products and services to serve the needs of e-commerce. Third, the new business environment associated with e-commerce provides opportunity for institutional innovations in banking and finance, which can help to lay a sounder foundation for the international financial system. The paper focuses on the second and third aspects. The second and third aspects have a precedent in the history of banking. If history can serve as a reliable guide, then it is likely that e-commerce can act as an enabling factor to transform banking and finance in a radical manner