Bank 1 and Bank 2 are considering entering a compatibility agreement that would permit the users of each bank’s automated teller machines (ATMs) access to the other bank’s ATMs. Bank 1 has a network of branches and ATMs extending from the U.S. to Mexico. Bank 1’s 12 million customers currently have access only to the 10,000 ATMs solely owned by the company on the U.S. While Bank 2’s core account holders are
Bank 1 and Bank 2 are considering entering a compatibility agreement that would permit the users of each bank’s automated teller machines (ATMs) access to the other bank’s ATMs. Bank 1 has a network of branches and ATMs extending from the U.S. to Mexico. Bank 1’s 12 million customers currently have access only to the 10,000 ATMs solely owned by the company on the U.S. While Bank 2’s core account holders are located in Mexico and southwestern portion of the United States, the company is expanding across the United States. Bank 2 has 15 million customers who can use any of its 14,000 ATMs.
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Using the idea of network externalities, describe how such an agreement between Bank 1 and Bank 2 would benefit consumers.
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What is the business rationale for such a strategy between Bank 1 and Bank 2?
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We know that
A memorandum of expertise among BANK 1 and BANK 2 to permit ATM customers of every financial institution to get entry to ATMs from some other financial institution will permit 12 million BANK 1 clients to get entry to 14,000 ATMs and connect with debts 15 million BANK 2 clients besides.
BANK 1`s ten thousand ATM below the supermegacelebrity community community.  Similarly, 15 BANK 2 clients can get entry to as much as ten thousand ATMs and connect with 12 Million 1 Bank BANK debts out of 14000 BANK 2 ATMs below the supermegacelebrity community community. As BANK 1 has 10,000 ATMs at an Eastern price from CONNECUT to FLRDA and BANK 2 has 14000 ATMs at the West Coast and Southwest UntdSts with the idea to amplify the ATM community at the East Coast. their clients are each BANK 1 and BANK. 2 can be challenge to an growth withinside the quantity and quantity of operations throughout the east and west seashorelines of UntdSts. This will create an instantaneous and oblique outside community. In phrases of particular outside factors, the price of every unit of offerings supplied will growth with growing community size.
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