Abstract
This paper explores the most recent Fintech (financial technology) phenomenon from an ecosystem perspective. Differentiated from the earlier Fintech evolution led by traditional financial institutions, “cross-sector” Fintech that operates at the intersection of financial services and information technology disrupts existing business models of banks while creating novel ecosystem dynamics. This study explores the Fintech ecosystem composition to understand better business model innovation based on underlying ecosystem dynamics while focusing on the specific role of cross-sector actors. These actors have escaped scrutiny despite being mature and experienced and having strong resource bases. Adopting a comparative case study method by considering the China-based Alibaba Group and Tencent, the study’s findings indicate that novel business model developments based on strong technological expertise and scale-based resources by cross-sector Fintech render a functional perspective on fast-developing Fintech industry less practical. Apart from cross-sector Fintech, investors constitute a new dimension in the conceptualization of the Fintech ecosystem. Overall, the interconnectedness of the cross-sector Fintech beyond the Fintech sectors drives the fuzzy boundaries between ecosystems, established business models, terminology definitions, ecosystem actors’ roles and relationships, which appear to become more heterogeneous and changeable over time. The study contributes to the scant literature on Fintech ecosystems and their sustainable development.
Highlights
The intrusion of digital technology into financial services, commonly referred to as financial technology (Fintech), has triggered significant growth in new business models and unprecedented changes in the finance sector [1,2]
The purpose of this study was to explore the position of cross-sector Fintech in the Fintech ecosystem domain to better understand its drive, business model innovation, and development
The findings show that the Fintech ecosystem continues to evolve due to the dynamic changing of player structures
Summary
The intrusion of digital technology into financial services, commonly referred to as financial technology (Fintech), has triggered significant growth in new business models and unprecedented changes in the finance sector [1,2]. Fintech has been deemed important as a key driver for financial development, inclusion, social stability and integrity, and consequential sustainable development through building an infrastructure for an innovative digital financial ecosystem [6]. Innovation is a perpetuating part of Fintech’s nature base, on product-focused logic in financial services [3] and on building a Fintech ecosystem including customer-oriented logic [6,7]. Fintech contributed to major improvements in efficiency and customer orientation by cooperating with traditional incumbents, but they embarked more recently to differentiate themselves from traditional financial firms with personalized niche services, data-driven solutions, an innovative culture, and a nimble organization [12]. Fintech differs from traditional financial innovation but fundamentally is disruptive in terms of the financial system and other infrastructures, which in turn impacts the sustainability of economic development as well as societal aspects [16]
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