Mis Project

Abstract

 While better technology may result in improved information processing, it might also lead to low-cost or even free access to information through, for example, informational spillovers. In the context of credit screening, we show that better access to information decreases interest rates and the returns from screening. However, an improved ability to process information increases interest rates and bank profits. Hence predictions regarding financial claims' pricing hinge on the overall effect ascribed to technological progress. Our results generalize to other financial markets where informational asymmetries drive profitability, such as insurance and securities markets.

GENERAL

This report focuses on the relationship between

technology and change, both past and

future, in the financial service industry. The

roles of technology as both a motivator and

a facilitator of change are analyzed. Other

agents of change are considered only to the extent

that they help define the market for new

technology or its impact.

Advancing information and communication

technologies are key factors that have

changed the nature of financial services: the

ways in which they are created, delivered,

priced, received, and used. Relationships between

and among users and providers of financial

services are changing.

FUTURE ROADMAP

Influence of Technology

* The financial service industry of the future

will be quite different.

* The established trend

of increasingly heavy dependence on technology

for delivering services will continue.

* Services will be provided by a wide variety of institutions.

* Barring a major restructuring of

the wholesale side of the financial service industry,

small financial service firms will be

able to obtain access to the technologies they

will require to remain viable.

* Although relatively

few firms are likely to provide service

nationwide, it is likely that the existence of a

large number of small,...