(FORTUNE Magazine) – Morgan Stanley's merger with Dean Witter is pretty big news all by itself. When the storied investment house that was forced to break off from J.P. Morgan & Co. in 1935 unites with the huge retail brokerage chain that broke free from Sears Roebuck just four years ago--now that's a story. It's got history, drama, potential conflict, and gobs of money, not to mention ample opportunity for business journalists to lob around weird Wall Street terminology like "white shoe," "wirehouse," and "bulge bracket."

But the air of excitement around the deal has to do with much more than just a really big merger between an odd couple of securities firms. To quote the day-after words of usually hyperbole-shy House Banking Committee Chairman Jim Leach: "Yesterday could be the first day of the new financial order." The sentiment is shared by a lot of other people in and around the money business. This could be it, they say. This could be when the old walls come crashing down, when everybody starts buying everybody else, and the whole financial industry becomes...well, what exactly?

In the early 1980s, another period when such apocalyptic visions were in fashion, the answer was simple enough. Prudential bought Bache, American Express bought Shearson, Sears bought Dean Witter, and BankAmerica bought Charles Schwab. The business of money was going to be dominated by "financial supermarkets," and all the mom and pop corner stores had better watch out. It was all terribly compelling. Except it didn't happen. None of the first wave of cross-industry mergers really worked out. More recent ones have--Equitable's acquisition of Donaldson Lufkin & Jenrette and Sanford Weill's commingling of Primerica, Travelers, Commercial Credit, Smith Barney, and Shearson--but they were built not around one-stop shopping but businesses that complement each other's income statements. "I think we found out in the 1980s that you really can't be all things to all people," says Weill, who also initiated the unsuccessful Shearson-American Express merger.

Not surprisingly, Morgan Stanley Chairman Richard Fisher takes pains to stress that his company's big deal has nothing to do with the supermarket craze of yesteryear. Instead, Fisher says, the merger is about giving Morgan Stanley the resources to ensure its place among the top handful of global financiers--following the same path that Merrill Lynch started down 20 years ago. "Everything we're talking about is securities," Fisher says. "The only exception is credit cards." But what an exception that is: The Discover Card and its spinoffs provide about half Dean Witter's net income, which means they'll make up nearly a quarter of the combined company's earnings. Morgan Stanley Dean Witter Discover & Co. may be no supermarket, but neither is it just a securities firm.

So forget supermarkets--but also forget the old distinctions among commercial banks and investment banks and stockbrokers and insurers and consumer finance companies. "If you look at the need that's satisfied by an annuity, a mutual fund, and a CD, it's the same," says Dick Kovacevich, CEO of Norwest, a bank that has been among the most aggressive in blurring the lines between financial sectors. "In the past, three different distribution systems approached the consumer, and the consumer had to pay for all three. Is there a business proposition in delivering to the consumer all three of those products for a third of the cost? You bet." Regulatory barriers that kept the financial industries fat and separate started to weaken in the 1970s and have been crumbling ever since. The biggest one left is the Glass-Steagall Act, which bans commercial banks from underwriting securities--and with the help of Leach and new rulings by the Fed, it may soon meet its demise.

This means more competition, innovation, and mergers. Beyond that, those who have learned from the financial history of the past two decades tend to avoid predictions. Ask Weill what Wall Street will look like in five years, and his answer is: "Different."

--Justin Fox