Competitive Advantage, Online Brokerage and IT: Evidences from Italian and German Companies

Retail banking is rapidly driven by the use of innovative technologies. This is especially true for direct brokers that rely on the fast execution of stock market transactions via electronic distribution channels. Based on the framework of the resource based view we evaluate the contribution of front-end applications, middleware systems and back-end technologies to competitive advantage of direct brokers. Consistent with literature reviewed concerning IT as source of competitive advantage and IT-related competitive advantage in banking we find little potential for sustainable competitive advantage, even in the IT driven industry of direct brokerage. Given the present state of technologies employed, back-end systems reveal the highest potential for competitive advantage. We doubt, though, that it is of a sustainable nature. The findings presented rest on a case evaluation of the German and Italian brokers. This research in progress provides the formulation of hypotheses that are the basis for a more detailed research incorporating the more mature American direct brokers and investigating dynamic capabilities for continuous IT innovation, that might be source of sustainable competitive advantage.