Magazine article Mortgage Banking

Electronic Commerce

Magazine article Mortgage Banking

Electronic Commerce

Article excerpt

In last month's column, we provided a brief introduction to the basic concepts of the Internet. This month we turn to the use of the Internet as a vehicle for electronic commerce (E-commerce).

I define electronic commerce as the sale of goods or services substantially enabled through the exchange of information in the form of computer technology. This means that at least two parties in the supplier-producer-customer value chain are connected electronically. The world of electronic commerce includes such familiar applications as funds transfer, payment clearinghouses, on-line subscription services, home banking and now the Internet. E-commerce has been primarily a business-to-business phenomenon, largely because of the cost of establishing connectivity. Now the Net changes those economics.

The Net is not for everyone - some people love it, others don't see what all the hoopla is about. One's reaction to the Net, and more fundamentally the ability to exploit it as a means of commerce, will largely depend upon how well a firm can understand the culture of the Net.

Multimedia paradigm. The model for a Web page is the video game, with its bright colors, eye-catching graphics, video and audio. It is fundamentally interactive, expecting input and responding in interesting and sometimes quirky ways. However, there has to be a balance, since excessive use of graphics can slow response times, especially for home users with slower modems.

Interaction also can be phased. Instead of completing the entire 1003, the user can complete and send sections, so that the information about property can be assessed separately from that on income or assets and liabilities. The interaction should provide lots of choices and should encourage return visits.

Connectedness. The Web is about connectedness, not in a sequential or hierarchical form but in the way many scientists now believe the brain organizes data - in a complex neural network. The Web can create instant, virtual communities of people engaged around a particular topic. Thus, a number of lawyers may set up a discussion group about an aspect of real estate law. Similarly, a mortgage company might bring together managers, consultants, academics, investor representatives or others to discuss a development in mortgage securities. Some of these virtual communities may evolve into markets - particularly for information services.

Serendipity. The term "surfing" the Net is instructive - an ocean of information is out there. At any given time, we are only experiencing a small piece of it, where our board touches the water. However, move one foot slightly and tip the board surface, and we're suddenly off in a different direction.

One of the exciting things about the Web is that it encourages this sense of serendipity, or unexpected discovery. We can enter even very staid subjects and be taken to places we would never expect. Some may delight and interest us, others may bore or shock us. We have to be prepared for the unexpected. An enormous ocean of data is out there, but not necessarily a clear path to get where you want to go.

Nonjudgmental. The Web is nondiscriminatory in both the good and bad senses of that word. It prevents us from having too narrow a scope and missing important connections we would not have thought of. It also can result in pointless sidetrack excursions into avenues that offer little value. …

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