When something called The Cluetrain Manifesto was first published in April 1999, it created something of a stir. Three Americans – Chris Loc...

When something called The Cluetrain Manifesto was first published in April 1999, it created something of a stir. Three Americans – Chris Locke, Doc Searls and David Weinberger – posted the digital equivalent of Luther’s 95 theses, on the internet, at www.cluetrain.com. Their first premise: “Markets are conversations”. Their sixth: “The Internet is enabling conversations among human beings that were simply not possible in the era of mass media.” Some of their musings come across, particularly after the dotcom bust, as quaint. But the bottom line of their thesis can be summarised in the subtitle of ‘The Cluetrain Manifesto’: “the end of business as usual”. The first reference to Cluetrain I ever saw was in a research document, about the internet, published by Henry Blodget, Merrill Lynch’s now discredited former internet analyst. This is doubly ironic, because reading it impelled me to leave that same firm, which was my employer at the time, in search of pastures new. As we now know, much of the early debate about the internet now looks hysterical after the fact. But much of that early debate remains relevant today, as the internet continues, now more quietly, but steadily, insidiously, and still quickly, to worm its way into every facet of our lives. It may be more difficult now to raise venture funding for ill-conceived dotcom start-ups than it was five years ago, but businesses today ignore the Cluetrain message at their peril. It is perhaps no coincidence that the peak of the dotcom bubble largely coincided with a high water mark in the fortunes of the brokerage and financial services industry. Do not be fooled by record headline earnings more recently at the larger institutions: the business landscape has changed, and technological evolution is part of the reason. As Michael Lewis, the author of ‘Liar’s Poker’, wrote for Bloomberg News as far back as September 1998, the days of the traditional stockbroker are numbered: “No longer is he a necessary cog of capitalism. Every day Americans become more comfortable managing their portfolios without him; every day technologies enabling them to do this improve and cheapen. We are not very far away from the day when the customer’s broker will be exposed for what he is: an intermediate technology.” To an extent, financial services predicated primarily on trust between individuals are fundamentally irreplaceable by technology, though technology can surely allow individual financial workers to benefit from technological leverage of their core competencies (thus driving down costs, and upping the competitive ante). But in many respects, the financial services industry is vulnerable to the digital trends that have swept through so many other sectors of the modern economy. As no less a personage than the chairman of Deutsche Bank, Dr. Rolf Breuer, recently articulated, near-banks and non-banks are a significant competitive threat to the incumbents. The beauty of the web is that corporate size (or rather lack of it) is no barrier to entry. Your brand is ultimately as good or as bad as the look and feel – and subsequently, of course, quality of service offering – delivered through your website. As Google has shown, the internet is still capable of creating extraordinary wealth. Traditional financial firms have so far treated the internet as a black hole for capital and ill-starred projects. Just because the apparent threat from newcomers has abated, traditional financial firms should not be complacent. The next wave of aggressive start-ups, which will surely come, will have the experience of the first wave on their side. Future competition across the banking sector, driven not least by technology, is a certainty.