Financial Environment
1.5.4 Financial Environment
E-commerce will present a completely different financial industry. Because the key link and basis of e-commerce smooth development relies on online e-payment, owing to the breakthrough of e-commerce in e-transaction and the presence of various services (e.g. online banks, bank card credit payment network, bank
1 Fundamentals of E-commerce
e-payment system, e-check, and e-cash), e-commerce brings the traditional trade into an entirely new time. The birth of the first world online bank, “Security First Network Bank”, in America Oct., 1995 transformed people’s ideas about transaction in the whole financial banking industry, though it only has 10 employees with the homepage as the business hall, with no building, no location, and cannot compared with citibank with the total asset over $200 billion. In China, extensive exploration of e-finance has been carried out in succession by government and enterprise since the implementation of “Three Goldens projects” and “Golden Series Projects”. The following Fig. 1.16 represents innovative services supplied by finance in e-commerce.
Figure 1.16 Innovative services supplied by finance in e-commerce
1. Financial service in e-commerce era
The development of e-commerce provides wider scope and easier means to obtain information. Product recognition, contract negotiation, and transaction in commerce can be completed by Internet and network software. Moreover, check, counter, insurance, investment, enterprise banking business and family banking business can all be realized by network. Electronic currency of online payment (credit cards, digital cashes etc.) replaces the traditional monetary operation. In addition, competitive factors of financial industry are extended from staff and branch numbers and size to information communication and digital cash etc. That is to say, e-commerce has revolutionary consequences for world economy and finance. Information communication and digital e-currency speed up the breakthrough of finance in space on the one hand and bring difficulty in financial supervision. Therefore, all governments shall lay down financial laws and regulations to specify the rising financial business.
In the field of China’s banks, China Financial Data Communication Network constructed by People’s Bank of China, the initiator and principal commercial banks and financial institutions and National Credit Cards Message Exchanges
Introduction to E-commerce
Center, make full use of the infrastructure of electronic financial system to strengthen payment system of Central Bank so as to establish and perfect payment system of China gradually. In addition, speed up the authorization of cross-bank and cross-areas credit card payment business and automatic exchanging of settlement information as well.
2. Online financial services
Actually, the essence of e-commerce is that move the business happening in offices, markets, banks and administrations in the traditional business to a public media, that is Internet. The business scope of e-commerce is extremely extensive, including chain management, non-local banks, placing orders, purchasing, network marketing, advertisement and even terminal household shopping, among which financial service are represented by.
(1) Online bank The online bank is also called the network bank. It refers to the bank that
provides the following traditional services to clients by making use of Internet: opening an account, closing an account, inquiry, payment of fees, balance of accounts, cross-bank transfer, inside transfer, financial credit, online securities, investment and financing etc., which enables clients to manage safely and conveniently current and time deposit, check, credit cards and personal investments etc. without leaving home. Online bank is, as it was, the virtual counter of bank on the Internet. Online banks can provide enterprises or individual and commercial units the information inquiry, currency payment, savings, settlement, online investment etc., releasing the financial information, terminating the basic cashier’s check, currency market service, credit card, fundamental saving business etc., for instance. It can also provide clients diverse financial services such as information check and personal confidentiality.
Changes brought about by Online bank to banker, user and commercial units mainly embody the following aspects: first, online banks can cut down operation cost and the amount of bank outlets on the one hand, and make consumer enjoy the every-day-24-hour service free from the limits of time and space. Second, the clients of the online banks, including standard PCs and browsers, are easy to maintain. Online e-mails facilitate the communication between clients and banks and members within banks.
(2) Household bank The household bank can provide complete and convenient financial services. A
client can check and manage the information of check, savings, currency market, and deposit account, balance and capital allocation at any time by personal computer or other tools into the online banks. Apart from above, the client can also do the following financing activities by taking advantage of financing software, such as pay the bill on line, pay the checkbook, check account (for instance, trace out all financial affairs by checkbooks, and even keep track of and
1 Fundamentals of E-commerce
make an analysis of the expense), work out financial plans of taxation, expenditure, and savings, and carry out financial capital activities by network.
(3) Online shopping and consumption In e-commerce, it is required that market, manufactures, governmental
administrations (taxation, industry and commerce, customs etc.), banks, and authentification institutions all shall be connected with network so as to form the smooth flow of information and capital. Clients can preview goods, place an order and make the payment in online markets. In addition, they can still book a ticket, go shopping, and enjoy themselves etc.
(4) Financial payment In the traditional payment, there are remittance, paying by check, draft check,
transfer payment. While in e-commerce, there are enterprise credit payment, e-check payment, e-transfer payment, credit authentification payment etc.
(5) Online enterprise financing Online enterprise financing contains the following functions: enterprise group
service—group clients can check balance, transaction information of all enterprise branches, allocate enterprise fund within group, and manage the account by online bank service. Public account real-time remote inquiry— enterprises can check balance and transactions of the public account in real time; online transfer— enterprises can make payment and transfer by Internet; balance of payments declaration—enterprises can make declaration of public inward remittance to Administration of Exchange Control by Internet, which is presently handled by head quarter.
(6) Express service between bank and stock institution “Express service between bank and stock institution”, a kind of service product,
is introduced for the securities dealer to deal with the first, second grade settlement. The express can complete settlement between securities companies and stock exchanges and between securities companies and its sales departments as well.