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COMPETITIVE EFFECTS OF IT INNOVATION ON BANK STRATEGY, 1985-1995

Bernardo Batiz-Lazo

MPRA Paper from University Library of Munich, Germany

Abstract: Through case study research this paper illustrates opportunities presented by IT-based technological change in British retail bank markets (1985-1995). For the managers of the Royal Bank of Scotland IT appeared to lower entry barriers, exit barriers and deliver high sustainability of competitive advantage. The strategic intent behind diversification patterns of the Royal Bank of Scotland suggested competitive considerations were at a premium because unsolicited take-over bids in the early 1980s put pressure on managers to create growth opportunities. Direct Line Insurance was a subsidiary from the Royal Bank of Scotland. Direct Line was also the first retail finance institution to establish a clear competitive advantage based on information technology. The success of Direct Line enabled an increase in the market share of British retail financial services of The Royal Bank of Scotland. Direct Line is a case of planned success that questions the extent to which banks’ competencies must change to master alternative delivery channels. The success of Direct Line also suggested more effective execution than other activities explored by managers of the Royal Bank of Scotland.

Keywords: Financial institutions; technological change; corporate strategy (search for similar items in EconPapers)
JEL-codes: N24 L10 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban, nep-com, nep-cse, nep-his, nep-ino and nep-tid
Date: 2007-09
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