Financial Collaborative Trading Networks

Abstract

This paper reviews the growth of the online business-to-business marketplaces and proposes that intense competition between and among horizontal hubs and vertical exchanges will lead to consolidation. Financial collaborative trading networks (CTNs) would follow as a consequence. CTNs allow collaboration among providers to ensure that customers receive only the best service from network members. To become best-of-breed in their core services, many financial institutions will outsource their non-core services to business service providers (BSPs). BSPs focus on providing best-of-breed back- and middle-office management, freeing institutions to focus on meeting client needs. The ability to outsource will significantly lower barriers to entry into this industry. Consequently, most large financial institutions will find themselves competing with many new financial services industry entrants.