What is the Net?
The biggest utility of the Net is that it is the cheapest connector around, it connects businesses to consumers and vice versa. Such connectivity enables easy distribution for all intangible products or products with no logistical issues. The nature of financial services thanks to dematerialisation has made it the sweet spot of e-commerce, but unfortunately, most people perceive the Net as just another distribution medium. The Net goes beyond... while it has caused many busts, the recent crash in the stock markets could have actually been averted through the use of the Net. Imagine a situation where the retail investor is able to manage his portfolio in real-time, the broker member is able to manage the organisation's portfolio in real-time and at the individual customer level through connectivity between the broker's mother terminal, his branch, the customer and the exchange. Historically, most broker members either use their family friend status to manage their risk, where they put pressure via the wife ifthe husband is not paying or the large ones manage risk at the branch level. The recent crash has shown, both of the above do not work. We have come a long way from the open outcry system, in those days the aforementioned systems would have worked. Now with the domination of screen-based trading and with e-trading becoming increasing popular, stock trading has become a retail game.

The number of investors involved has gown exponentially thus the result of the stock market mayhem is huge. The recent story in `India Today', proves without doubt that the retail investor still does not know a thing about the markets and the profit makers are those who have an access to `walls with ears'. In such a scenario, technology led risk management is probably the only thing that can save the `retail investor' and the `normal broker'.

In comes the Internet. A medium, which enables you to stay connected, monitor positions real time and act real time. When an HFCL, hits the downward circuit for four consecutive days, one needs to act promptly to save thyself. Use the global connector, the Net, connect all branches and all customers and manage them, the guy on the street will probably then survive. Financial services operations need to marry technology to their core operations to survive.

The need of the hour is national brokers with financial muscle, which prevents them from going down easily. But these guys are also exposing themselves to a lot of risk, thanks to the large number of customers, whose management can no longer be human based. The survivors in the financial services space are going to be the technology adopters for not only distribution but also back office management. Charles Schwab has more than 2000 people in its technology team, Citi makes huge investments in technology every year.

Technology led operations will be more scalable, robust and safe. And I am sure; the retail investor will now check the tech savviness of his financial services provider, before starting business. Technology, will separate the men from the boys, it already has, and the men will become leaders by looking at the Net as an enabler rather than a distributor only. Long live the Net.

The author is chief marketing officer at indiabulls.com