Bank 'Co-Opetition' Can Be A Good Thing

Banks should seek more opportunities to share services when appropriate, some say.

After conducting "the traditional build vs. buy analysis," O'Connor said State Street came to the realization that building an in-house solution was not economically feasible. After issuing a traditional RFP and eliciting many vendor responses, one proposal that came in was from Citi. Mulling over Citi's proposal "made us reflect on our roles in the industry." Eventually, State Street determined Citi's was the best proposal, and signed an agreement, which would see State Street use the CitiDirect online corporate banking system.

Of course, the integration did not go entirely smoothly, both O'Connor and Carney noted, as two institutions with valuable proprietary data and in some competition with one another. For one, the CitiDirect platform "had to be customized to our business," noted O'Connor. This entailed not just making sure the customer-facing branding was always that of State Street, but be tweaked to serve the specific needs of State Street and its customers. There was also the requirement that State Street customer data remain private and secure.

For Citi, there were also "things that kept us up at night," said Carney. For one, "we were not always in the white-labeling business" he says, and the bank did not generally have experience as a technology services or business process outsourcing provider.

But so far, things have gone smoothly, O'Connor reported. It's been less than a year since State Street has converted all its legacy platforms to the new online banking platform, she said, and no great issues have arisen.

Ultimately, said Carney to key to successful bank co-opetition is to "explore opportunities to co-operate and collaborate rather than duplicate on investments which don’t provide a compelling differentiation."

Bryan Yurcan is associate editor for Bank Systems and Technology. He has worked in various editorial capacities for newspapers and magazines for the past 8 years. After beginning his career as a municipal and courts reporter for daily newspapers in upstate New York, Bryan has ... View Full Bio

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