These days, it’s just about impossible to find a product that isn’t sold over the Internet. A random search by CFO magazine recently uncovered E-tail sites hawking pipe cleaners, arugula seeds, and aglets (those little plastic things on the ends of shoelaces). If you have a PC, a Web browser, and a mouse, you can purchase just about anything on the Internet.
That is, unless you happen to be a chief financial officer. Finance portals — sites that actually help CFOs do their jobs by providing them with analytical tools and allowing them to conduct a variety of financial transactions — are relatively scarce. In fact, despite plenty of hype from vendors, Web-surfing CFOs and treasurers are likely to find more financial sites that are under construction than under way. Take CFOWeb.com, perhaps the most talked about finance portal in cyberspace (see, among others, “Internet Explorers,” eCFO, April). The site, which has received mountains of press, was “launched” in September 1999. But while the site has been up since September, CFOWeb.com’s virtual derivatives and foreign exchange marketplace was still being beta tested as of press time. Similarly, TreasuryPoint.com, a site currently offering an online financial analytical tool, won’t unveil its long-anticipated money market trading platform until the third quarter of the year. EBondTrade.com Inc., which has sold municipal bonds to more than 700 firms since January, has yet to come to market with its newest product, which enables municipalities to buy treasuries and agency bonds online.
And there’s TreasuryConnect. com. In a May interview with CFO, a TreasuryConnect executive variously asserted the auction site for interest-rate and currency swaps was “starting pilot trades tomorrow,” “doing live trades as early as next week — certainly within the next few weeks,” and “live [now], but waiting for client usage.” As of press time, one transaction had been conducted — an interest-rate swap done by Xerox.
Hanging on the Telephone
All this raises the question: What gives? Finance portals would seem to offer huge benefits for CFOs. The most significant, of course, is price. These portal intermediaries can aggregate supply and demand for financial instruments into marketplaces, introduce price transparency, and put the squeeze on spreads traditionally offered by banks — not only efficient from a market perspective, but also convenient. Telephone buyers are limited by the number of phones they can juggle, but a computer screen can display dozens of quotes simultaneously. And quotes that are clicked are far less likely to contain errors than quotes jotted down with a pencil. So if these sites are the answer to a CFO’s Web dreams, why are they all talk and no action?
Mostly, vendors want to be positive they’ve ironed out any glitches before going live. “We are talking about sophisticated technology. This isn’t buying a book online,” explains Bryan C. Keane, senior E-finance analyst at Prudential Securities’s Prudential Volpe Technology Group, in San Francisco. “If you screw something up, you’re finished. A CFO isn’t going to give you a second chance.”