Financial Institution Advantage and the Optimization of Information Processing

Chapter 8A Strategy for Optimizing the Information Processing Complex

The goal of this book is not to describe an ideal state for any particular aspect of any business process within an actual financial institution. Rather, its goal is to suggest a prioritization of certain capabilities as critical strategic core competencies, to provide some thoughts about better (if not best) practices, and to suggest a set of perspectives and some mechanisms for self-evaluation. In other words, how does an institution evaluate its information processing capability and take practical steps toward improving it?

In this chapter we consider how a financial institution can develop a strategy for managing the evolution of its production function—emphasizing the desired relationship between data accumulation, data processing capabilities, and physical information assets—that aligns with some predetermined strategic goals related to how the institution seeks to define itself and how it can create a competitive advantage. Of course, the potential exists for designing strategies to pursue both of these goals simultaneously. So-called boutique, or niche, shops often do precisely this: They envision some specific competitively advantaged capabilities and orient the firm's business model toward developing, protecting, and exploiting these specific advantages. This model works. For larger, more complex institutions, adopting a strategy for more than one of these goals simultaneously may not be feasible, ...