Empowerment of Grassroots Consumers: A Revelatory Case of a Chinese Fintech Innovation

Abstract

The recent emergence of financial technology (fintech) innovations offers a promising resolution to financial exclusion via mechanisms that empower financially underprivileged individuals to gain access rights in the traditional financial industry. However, academic research has provided little guidance on how to strategize the IT-enabled empowerment mechanisms for fintech innovations to realize both business success and financial inclusion. In this study, we conduct an in-depth revelatory case study on a novel Chinese fintech innovation, Yu’E Bao, a bellwether for the dramatic transformation of China’s financial industry through the successful empowerment of a large population of financially underprivileged individuals (i.e., “grassroots consumers,” translated from “cao gen” in Chinese). Through our systematic qualitative analysis of news articles collected since the product launch, we derive a two-stage theoretical model, examined through the lens of empowerment, and unravel the mechanisms underlying fintech innovation’s empowerment process on grassroots investment consumers. Most importantly, we elucidate a duality of empowerment through which the catalyst for Yu’E Bao’s success becomes an impediment to Yu’E Bao’s further development. Our study contributes to the literature on information technology-enabled empowerment, empowerment, and fintech. We also elucidate critical implications for various stakeholders, such as governments, policy makers, fintech practitioners, and product designers.