Kristin R. MoyerFrank Schlier here. Now may be a good time for large regional banks that didn’t get tied up in CDOs and other derivatives to tear out a page from Sun Tzu’s play book:
The smaller army can defeat the larger by attacking small pieces.
Case in point, I met with a large regional bank in Europe recently that told me they are investing in IT because they feel it is a good way to level the playing field with large global banks. Their philosophy is that large global banks should have gained advantage by economies of scale, but they didn’t. They just acquired and operated as is.
In this environment, IT can now be a field leveler.
For example, MSRB (mid-sized regional bank) is nowhere near as large as TBGB (too big global bank). But, MSRB it is larger than (TBGB’s) local retail operations. So, MSRB can get economies of scale by leveraging a reusable infrastructure developed in the Nordics in the bank’s new retail operations in Estonia.
Category: Uncategorized Tags: banking and investment services, cdos, economies of scale, europe, IT, m&a, regional banks, reusable infrastructure, sun tzu
1 response so far ↓
1 Mary Knox October 23, 2008 at 10:50 am
This comes back to the issue of defining an organization logically instead of based on its legal status. I first came across this issue years ago when we surveyed banks based on the FDIC list. In some cases, banks that were part of bank holding companies opoerated independently; in other cases, all the banks in a holding company operated as a single entity. So for the purposes of technology acquisition and operation, there were fewer banks than the FDIC listed because each bank was listed individually.
Its the same thing in reverse in silo’d firms. Even though they are big on paper, if they are highly silo’d, for almost all intents and purposes they are multiple, instead of single, firms and fail to achieve the synergies and efficiencies that can come with scale.