A leading financier has challenged universities to split into domestic and international divisions to exploit their multimedia expertise.

Ewan Brown, executive director of the Noble Grossart merchant bank and honorary professor in accountancy and finance at Heriot-Watt University, speaking at the Glasgow University/Sedgwick Business Breakfast Forum, said it was increasingly clear that Scotland's future did not lie in manufacturing but in harnessing brainpower to develop and commercialise intellectual property.

He said Scottish universities should "grab the initiative" in developing multimedia education. Otherwise the coming broadband networks could be used against them via teaching and research institutions from other countries marketing their own material.

"The risk, I believe, is that Scotland could be virtually wiped out in terms of tertiary educational development," Professor Brown said. "Our leading researchers and teachers who have international reputations will then become mere supporting contributors to multimedia packages being developed by, say, Berkeley, for international distribution - where Berkeley make the millions and the Scottish-based academic gets a relative pittance for his or her contribution."

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Professor Brown also warned of a progressive loss of local academic jobs if education processes and products came direct through the high-speed networks from outside Scotland. He said that universities should consider splitting into two divisions, with a traditional, "domestic" part where teaching methods would not necessarily change much in the short term, and a new area of multimedia teaching and communication, capable of international exploitation.

This should be backed by radical management change, with much smaller boards of senior university management and two or three able lay members who would meet much more more regularly than present courts to take key decisions.

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"From my own observation, the present senate and court system in the old universities is out of date and inefficient," he said.

He said universities should also capitalise on Scotland's "short and informal lines of communication" to leading politicians, civil servants, business leaders, etc.