Information technology is to the financial services industry what antibiotics are to modern medicine--only more powerful and far-reaching in the changes exacted on institutions whose reliance on it is as taxing as it is rewarding. The technology revolution is not only redefining how financial products and services are distributed, but also who the industry's leaders areoor will be--as it evolves in Web years.

The possibilities hit me full throttle with the arrival of the August 18th issue of BusinessWeek, a special double issue that featured Silicon Valley's Best and Brightest on its cover. The whole gangoThe Minds that Matterohad assembled for a group shot. Among them: Ellison; Platt; Grove; Jobs; McNealy; Clark (Boy Wonder Andreesen was tossed in for good measure).

One technology icon noticeably absent, if only for geographic reasons: William Gates, commander-in-chief of Microsoft Corp., which, for all intents and purposes, might as well be known as Silicon North. While Gates didn't make the All-Star roster of wunderkinderohe was surely plotting his company's next Internet moveohis flair for churning out "enabling" technology perfectly suited for the financial services marketplace hasn't escaped the attention of anyone with a pulse.

Whether in California's Silicon Valley or Redmond, WA, the message from these techno-giants is the same: Their collective technological innovations are dramatically altering the possibilities and expectations of how financial institutions conduct their businesses; how products and services are distributed electronically; how retail and corporate customers manage, extend and judge their financial relationships; and, from an institutional perspective, who really "owns" the customer relationship. Consider their initial contributions: Netscape's early work to make the Internet a commercially viable space; Hewlett-Packard's ambitious electronic commerce and smart card agenda; Microsoft's massive payments, electronic commerce and Internet push; Intel's chip technology driving the client/server generation; and Sun's Java, a platform-independent programming language that is set to usher in the network computing age.

The rash of initial public offerings among technology companies beginning in 1996 and continuing this year, albeit at a slower pace, says a lot about Wall Street's perception of value and staying power. And, in cases where would-be public companies had generated no revenue, about mind over matter. To investment bankers, the Internet is a virtual gold mine, and it will do nothing but grow in use by and importance to the public and private sectors. And they are right.

What's crucial for financial services players to remember is that Silicon Valley has come to embody all that's possible on the electronic frontier, in banking and commerce. Played right, these technology companies will remain the breeding ground for the financial industry's next-generation market and distribution strategies. Ignoring their speed-of-light developments could be lethal. Holly Sraeel Editor-in-Chief sraeel

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