CAMBRDIGE, Mass. — A standard operating procedure for credit unions for decades, collaborative competition–or co-opetition–is finding a new home in a perhaps unexpected arena: big banks.
According to a new report by Forrester Research's Jost Hoppermann, co-opetition on both the regional and global levels are becoming essential components of big banks' long-term growth and information technology expenditure planning.
To stay competitive, Hoppermann argues, co-opetition must be the norm versus exception for these entities.
"Achieving the future state will require close collaboration between business and business technology groups–and not as a one-off occurrence, but as a regular part of the planning process," he said.
To get at the core of how far co-opetition should go–and within what channels–Hoppermann surveyed 15 vendors of telecommunications, network infrastructure, consumer electronics, application infrastructure, IT services and banking application software.
He said he found that successful globalization strategy is contingent on co-opetition. As banks spread to new markets and customers, co-opetition becomes vital to avoid costly pitfalls while simultaneously maintaining a safe banking landscape.
For instance, Hoppermann suggested a pooled database to combat fraud and money laundering, as well as standardization of global finance information, exchange and taxation standards.
Across many functions and channels, Hoppermann said, "Remote back offices will provide a large share of these 24/7 services. And global execution of future business processes will mean that even more of these functions will be located in the world's low-cost labor regions."
Related economic shifts toward countries such as China, India and Russia will force domestic banks toward co-opetition in hopes of adjusting accordingly, the Forrester analysts said in his report.
A byproduct of this shift–combined with increased financial and technical talent concentration in these countries' urban centers–is the strong possibility of what Hoppermann called "infoglut" permeating the banking sector.
Too much makes information quality control imperative for global banks to succeed, he said.
"Firms will have an urgent need to avoid infoglut by determining the quality of a given information source before any analytical deep dive," Hoppermann said.
A global footprint will also produce both more varied (B2B and B2C) customer bases, plus a need for tighter regulation and privacy measures, even more so as cash continues to be phased out in favor of electronic currency. Co-opetition offers a ready means of addressing these variables and with it possibilities for some standardization in soft-footing banking areas, he said.
Despite these realities, Hoppermann said he sees the banking sector continuing its current demarcation line separating consolidation and independent players within service offerings.
"More global banks with more consolidated businesses will nevertheless still use different approaches if they work in different sub-segments of financial services such as retail and investment," he argued.
Independent players, predicts Hoppermann, will continue to exist, as true national banks will be replaced by more niche service providers.
In sum and regardless of market segmentation, the literal bottom line for banks must include sustained co-opetition, the think firm analyst said.
"Achieving the future state will require close collaboration between business and business technology groups–and not as a one-off occurrence, but as a regular part of the planning process," Hoppermann said.
–mrapport@cutimes.com
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