Towards Networked Banking - The Impact of IT on the Financial Industry's Value Chain

The main objective of this article is to systematically analyse the impact of IT on financial intermediation and its underlying functions and to discuss how this impact might alter the industry’s value chain. In this context we put forth the thesis, that IT effects the financial services industry in two distinct ways: (1) IT intensifies the different economics underlying brokerage, transformation and clearing & settlement which are the main functional activities residing from financial intermediation. IT thereby enhances the potential value of performing these activities separately. (2) Further, IT facilitates both the disaggregation and subsequent reintegration of activities, which then may be organised in network structures. By introducing the paradigm of networked banking we analyse these structures. In contrast to other theoretical approaches focusing on the temporary character of networks and the ability of companies to switch their partners, we expect the network structures in the financial services industry to be characterised by tightly coupled relationships and a limited number of network members. We conclude our research with some implications regarding the implementation and management of network structures.