A payment solutions company learned that one of its prominent business partners was about to purchase one of its chief competitors, resulting in one of the most significant threats in the company’s 30-year history. Could they maintain a relationship with a partner who was also a competitor? Was there an opportunity to redesign the business model for mutual benefit? What was the best approach to ensure survival?
As a new threat loomed in the distance, Lynn Shaw, President and CEO of Dublin Payment Solutions, knew she had to reevaluate her company’s relationship with one prominent business partner. “Have you heard the latest news from Fintech Futures?” she asked her leadership team during a recent strategy session (see Exhibit 1). The question was rhetorical, and she quickly followed with a compelling statement, “U.S. Bank is preparing to sell Elan Financial Services, and Fiserv is favored to win the bid.” The silence in the boardroom was unnerving as the implications of one of their largest competitors being acquired by a primary partner started to sink in.
Shaw fully understood that her clients relied heavily on Dublin to provide financial solutions aligned with digital experiences. Fiserv was one of her largest partners in the Financial Technology (fintech) industry; they also partnered heavily with fintech FIS. Both organizations provided payment processing platforms, electronic banking, mobile banking, application programming interfaces (APIs), loyalty platforms, and fraud detection neural networks. Eighty percent of Dublin’s client base utilized one or more of these technologies.
Fiserv’s acquisition of Elan Financial represented one of the most significant threats Dublin had encountered in its 30-year history. The notion of an adversary also being a friend was counterintuitive, but not uncommon in the payments industry. Payment and financial technology rivals often teamed up for mutual financial gain. If Fiserv acquired Elan Financial, how could Dublin mitigate the risk of a critical business partner becoming a competitor? As an aggregate provider of credit, debit, merchant, and accounts receivable solutions to over 3,000 financial institutions across the country, Dublin was well-known in the financial sector for their quality, expertise, and experience. Was “coopetition” with Fiserv and Elan a viable option?
Shaw asked her team to create a multifaceted action plan to address this new threat. She wanted to know if Dublin could maintain a relationship with a partner who was also a competitor. Was there an opportunity to redesign the business model for mutual benefit? What was the best approach to ensure survival? Shaw knew her response to this threat would impact Dublin for years to come. Partner to frenemy in less than sixty seconds.
Authors: Robert Bermudez, Joshua Korlin, Damon Moorer, Mary Shamma & Sandi Wallace
Link: https://doi.org/10.28945/4330
Bermudez, R., Korlin, J., Moorer, D., Shamma, M. and Wallace, S. (2019). Frenemies in business: Partner or competitor? Muma Case Review 4(12). 1-24. https://doi.org/10.28945/4330