Some of the most accomplished and respected of on-line entrepreneurs have described the Internet as the ultimate destroyer of sales agents, brokers, middlemen, and anything else that could remotely be described as an intermediary. The idea gained so much currency that the word "disintermediation" - a term that once carried weight only in banking, and in the most unpleasant way - crept into the vocabulary of the digerati.
Travel and real estate agents, booksellers, and many other types of retailers seemed at risk, as keyboard-pounding consumers would use the World Wide Web to hunt for the best deals directly from the source of supply. If that logic held for bankers, the historical form of disintermediation - runoffs of deposits whenever customers could get higher yields elsewhere - would seem tame by comparison. Their recent proliferation of Web sites could hardly be expected to stem the loss of market share to other types of companies that have at least kept pace with the technology, and in some cases done better.
Call it reconsideration, or call it backlash. Web wisdom has turned 180 degrees. The Internet, many credible observers are saying, will require more and different types of intermediaries.
"The conventional wisdom - that the Internet will destroy intermediaries, third parties, banks, and the like - is bogus," said Scott Cook, chairman of Intuit Inc.
The man behind the popular Quicken financial management software for personal computers said people will need help making sense of the Web and getting what they want. That creates demand for intermediaries.
Some bankers may fear that Intuit and other companies like it want to gain control of the banks' customer relationships, especially as they evolve in electronic directions that lend themselves to a software interface. Many bankers don't buy Mr. Cook's pitch that he needs them as allies to assemble a comprehensive financial service package that will preserve their trusted status in the consumer's mind.
But Mr. Cook is not alone in talking about the need for "new intermediaries," with opportunities that financial institutions seem quite capable of seizing.
Forrester Research Inc. of Cambridge, Mass., has an acronym for them: ITBs, or Internet transaction brokers. These entities would charge fees for bringing buyers and sellers together, but would have no direct interest in or ownership of the given product.
"Buyers need help finding the right goods, and sellers need customers brought to them," said Paul Callahan, group director at Forrester who wrote a report on Internet transaction brokers.
"Most payment and shipping systems are not connected to the Web," he pointed out. "And the few that are Web-enabled are not compatible with each other. ITBs are needed to knit these services together."
He described these agents as acting on the consumer's behalf, smoothing out complexities and obstacles to order entry, delivery, and payment. It would all appear seamless when viewed through the PC screen.
"Once all these services are under one tent, ITBs will give buyers and sellers matchmaking services and a level of trust otherwise not available on the Internet today," Mr. Callahan said. "They will make electronic commerce more convenient for all parties in a transaction and provide relief from systems integration headaches."
"The value of the Web is not just information and transactions - it's also making better decisions," Mr. Cook said at the Bank Marketing Association annual conference in September. He suggested that the on-line world offers opportunities not just for product sales, but for value-added services that will prevent financial products from falling prey to commoditization.
"It is wrong to think this will mean the elimination of layers," he said. "It will go in the opposite direction. Intermediaries, electronic channels, third parties will flourish.
"Intermediaries exist only if they add value that is greater than the cost . . . In physical commerce, it is hard to add that value. On the Net, costs are so low that the value/cost ratio can be very high. The number of parties playing different roles grows, not shrinks."
Mr. Cook said bankers should have learned the value of third parties from their credit card experience: "If each bank had to do its own processing and software, costs would be immense." The solution was to turn to "a small number of firms doing a ton of work."
On the contemporary Web, he added, the Amazon book-ordering service "performs an important intermediary role for publishers."
Whatever form the intermediaries - or ITBs - take, Mr. Callahan at Forrester admonishes bankers to embrace them, lest they get in the middle of those vaunted customer relationships.
"ITBs will be a boon for companies that find new opportunities to handle cash, credit, loans, and payments on the ITBs' sites," the researcher said. "Financial institutions can leverage their existing clearing, settlement, and processing skills if they can provide these services in real Web time."
James C. Kwock, on-line transaction services director for AT&T EasyCommerce, a specialist in "Web-hosting services" for businesses, does not count the banks out. In fact, he sees many needs to be filled in financial services, order processing, computer services, and telecommunications as electronic commerce grows over the next five to 10 years.
Banks, though, have the wherewithal to "become service, even Web- hosting, providers," Mr. Kwock said. "You can't underestimate the trust factor. Banks are also in the best position to provide new payment mechanisms beyond credit cards."
