The implications of strategic network management for firm behavior

An understanding of strategic network management and its impact on the sources of competitive advantage for financial institutions is becoming increasingly important as the traditional boundaries for products, firms, and industry sub-divisions change. The repeal of the Glass Steagall Act in the U.S., the emergence of online banking, the recent consolidation movement in banking, and the current economic slowdown are examples of the forces which are altering the landscape and influencing firm behavior. This paper focuses on examining how network-based efficiencies in the physical branch network of commercial banking can be strategically managed to allow for growth of existing capabilities, but at a lower cost. This paper especially emphasizes growth of online banking as a tool for managing over-used or overly expensive physical branch networks, but also discusses the role of acquisitions and cross-equity agreements.