The most important component for building a rewards-driven, cooperative commerce business model is a clearing house technology platform.  In fact, without some form of transactional, and informational clearing house or centralized "hub" with governing business rules, it is impossible to unite competing businesses…which is a core tenant of this model.  

 

Look at a couple of historical examples of how “coopetition” in banking, real estate and vacation resorts grew into huge interdependent industries using different types of clearing house platforms.

 

Example 1:  Banking

The loyalty rewards industry today faces challenges that are similar to banks of the late 19th and early 20th centuries.  At that time, banks in the US were typically local businesses set up to support the town they were in.  They kept assets like gold and silver in their vaults as collateral for loans and certain paper bank notes that were accepted and used in local commerce.   Most of their business was with customers who had accounts at the same bank. As businesses grew and commerce expanded to other towns and cities, banks had to either set up branches or form alliances with other banks in accordance with loans and deposit terms and rules for settling transactions.  

 

Unfortunately, “by 1860 more than 10,000 different bank notes circulated throughout the country. Commerce suffered as a result. Counterfeiting was epidemic. Hundreds of banks failed. Throughout the country there was an insistent demand for a uniform national currency acceptable anywhere without risk.  In response, Congress passed the National Currency Act in 1863. In 1864, President Lincoln signed a revision of that law, the National Bank Act. These laws established a new system of national banks and a new government agency headed by a Comptroller of the Currency. The Comptroller's job was to organize and supervise the new banking system through regulations and periodic examinations”. (Wikipedia)

 

Establishing a common currency and regulations were key to upgrading the fractured banking system.  Over time, this financial system became more uniform in handling checks and balances and it grew and adopted efficiencies as technology evolved over time.  Fast forward to one generation ago.  Again, according to Wikipedia, “in the late 1960s a group of banks in California envisioned a replacement for check payments.  This led to the first automated clearing house in 1972, operated by the Federal Reserve Bank of San Francisco.  The first ACH systems operated on a gross settlement basis, requiring banks to hold deposits to cover each ACH transaction.”  

 

By establishing a clearing house processing platform, banks can now reconcile transactions from competing banks every day around the world.  The clearing house technology was a foundational catalyst that helped transform local banking into the global banking industry it is today.  

 

Example 2:  Real Estate

Another good example of the importance and value of a clearing house platform is the way Multiple Listing Services (MLS) unified and grew the real estate industry.  Multiple listing, in one form or another, dates back into the nineteenth century.

 

The first Boards of Realtors® were established as “Real Estate Exchanges.” On certain appointed days, the Members of a Board of Realtors® gathered at the Board offices and “exchanged” information about their listings…Shortly after the end of the nineteenth century, the term “multiple listing” was in use.   These intermittent localized meetings to share listing information were a popular way to sell properties.  

 

They had a Board that defined rules for the exchanges, and everyone agreed to follow those rules so they could participate.  Thus in the late 1800’s the MLS was founded on a fundamental principle that's unique to organized real estate: “Help me sell my inventory and I'll help you sell yours.”   And just like banking, as technology advanced so did the business of buying and selling real estate.

 

Today, buyers do not need to be from the same area and brokers do not need to go to meetings to know what is for sale. Thanks to the advent of computers and the internet, “today, through more than 800 MLSs, brokers share information on properties they have listed and invite other brokers to cooperate in their sale in exchange for compensation if they produce the buyer. Sellers benefit by increased exposure to their property. Buyers benefit because they can obtain information about all MLS-listed properties while working with only one broker.”  (Wikipedia)

 

MLS technology platforms are subscription-based information hubs or private databases where property listings are available to all registered brokers.  MLSs empower cooperative competition.  They level the playing field so that the smallest brokerage in town can compete with the biggest multi-state firm. Buyers and sellers can work with the professional of their choice, confident that they have access to the largest pool of properties for sale in the marketplace.   Hence, as an information clearing house, MLSs have created a great deal more value and market reach. This information clearing house helped establish the connectivity that spawned today’s global real estate industry.

 

Example 3:  Vacation Resorts

And finally, look at how vacation resorts functioned in the 1970’s.  It was a dog-eat-dog environment.  Resort owners paid a lot of money to get a prospect to come look at their resort.  A lot of money was spent on advertising and marketing.  Resorts were super competitive and smaller companies were going out of business.  Just like traditional loyalty programs today, resorts operated in a closed-loop ecosystem.  Everyone competed for the same vacation customers with discounts and perks…but they could only cut prices so far and offer so many amenities before it became unprofitable and an untenable business model.

 

During this downward trajectory, an enterprising young man who owned several small resorts in California came up with a plan to share the “rights to use” his resorts with other smaller resort owners.  In the end, he convinced 27 other struggling resort owners to agree to a specific set of rules that allowed a customer who had a vacation reserved at their “home” resort to use that time at another resort in the “network” (which at the time was tracked on Rolodex cards).  This time-sharing concept of competing resorts agreeing to reciprocate the “rights to use” their properties under an “open-loop” concept grew in popularity.  Customers had a much larger selection of resorts and amenities to choose from and resort owners promoted their vacation offerings to a much larger pool of consumers.  This model is a great example of how coopetition eventually created a larger and more profitable multi-billion-dollar vacation resort industry.  ​​