E-Finance Lab - Cluster 1

(For a detailed description of the cluster's activities, click here.
To see a list of publications, click here.)

The financial service industry is on the verge of a dramatic [r]evolution. Legacy value chains are broken up due to increasing competition and therefore resulting cost pressure. The major aim is to show how to rearrange traditional existing value chains to adjust to the changed conditions. Exploiting economies of scale and economies of scope effects while concentrating on the core competencies sets a new focus to reduce costs and generate new value. Hence, the E-Finance Lab will have a significant impact on the research community, amongst others documented in high-quality research papers. Further, we will communicate our extensive topical expertise and publish our research findings at conferences and in journals. Additionally, we will offer “advanced trainings“ to interested professionals and industry experts.

Honorary members of the council of the E-Finance Lab:
Roland Koch, Prime Minister of Hesse
Petra Roth, Mayor of Frankfurt a.M.
Peter Benz, Mayor of Darmstadt

Cluster 1:
The ultimate goal of the research of Cluster 1 is to develop building blocks to a unified model of sourcing dynamics in the financial industry. The challenge is to incorporate the diverse system dynamics and interests of all involved market participants and success factors such as economies of scale and scope, and to develop methods to align the information systems infrastructure and its services to business needs.
Based on first findings of applying our models and supported by the inconclusive results of large parts of the literature on sourcing success factors, the sourcing dynamics determining sustainable success appear to be too complex to just look at a singular factor. Primary business dynamics decisive for success or failure comprise the IT strategy and capabilities, governance and risk structures, and the competitive environment of the outsourcer and the vendor. For example, a huge financial institution outsourcing its IT services to a major vendor may well substantially tip the market structure towards a monopoly, weakening the outsourcer’s re-negotiating power after the first bid period. But choosing a smaller vendor might result in less economies of scale. Another trade-off that some historic outsourcing projects have ignored is that outsourcing might enable a firm to utilize another’s scale of operations, but at the same losing scope effects.