ABSTRACT
Information has always played a very important role in financial intermediation. An important function of financial intermediaries is, for instance, overcoming asymmetric information problems. Another is the transformation of funds in space and time. Both these functions require banks to process information efficiently. It is therefore not surprising that the information technology revolution has brought some profound changes to the financial sector. Marketplaces have become disembodied, as for example the electronic stock market NASDAQ. More recently, the emergence of electronic communication networks (ECNs) has created virtual marketplaces. More areas of banking have been touched by IT. Backoffice operations, for example, can now be located at some distance in lower cost areas.
