The formation of a virtual global bank

Banks are undergoing dramatic changes to their organization structures, operations and information systems. The banking market is also developing because information technology (IT) is enabling the banks' business customers to create new forms of organization and trade, and there is a clear trend towards the globalisation of markets and competition. Banks are responding in a variety of ways, each of which is designed to increase their ability to act internationally and more quickly. In this paper the international payments and foreign exchange markets are analysed and a case study of an international bank is presented. The traditional methods of foreign exchange dealing and subsequent payment transfer using the Society for World-wide International Funds Transfer (SWIFT) are coming under close scrutiny, and new and better ways of operating are being devised. This paper describes one approach to redesigning the international payments process. It describes the partnership strategy which is being implemented by a large international bank in cooperation with a number of regional banks, resulting in the creation of a virtual global bank. An outline is given of the evolution of the strategy, showing how a vision of the way transactions should be carried out has enabled the bank to combine its various internal strengths and develop its market network. The virtual bank system and its implementation are presented, and issues of organizational and market network change are considered. Finally the results are compared with network theory and the inter-relationships between strategy, network structure and IT are analysed. © 1996 Operational Research Society Ltd. All rights reserved.