Abstract
The recent emergence and rapid growth of new financial services by financial technology (Fintech) companies have driven banking institutions towards operational innovation in order to gain sustainable competitive advantage. This study aims to conduct an in-depth investigation of the banking sector in response to the challenges brought by Fintech startups. Based on the service innovation theory, we propose a novel hybrid multiple criteria decision-making method (MCDM) to evaluate service innovation strategies for improving the sustainability of China’s banking industry during the Fintech revolution. A six-dimensional model comprising 20 sub-criteria is constructed and both the decision making trial and evaluation laboratory (DEMATEL) technique and DEMATEL-based analytic network process (DANP) are used to explore interrelationships among the indices and their related weights. Finally, the modified VIšekriterijumsko KOmpromisno Rangiranje (VIKOR) method is employed to evaluate performance gaps in the four major types of commercial banks in China—state-owned, joint-stock, city commercial banks, and other credit cooperatives—in the field of service innovation. The improvement priorities, ranked from highest to lowest, are new business partners, new service concepts, organizational innovation, technological innovation, new customer interactions, and new revenue models. These results will provide strategies for the sustainable development of China’s banking industry and the implementation of changes in response to the impact of the Fintech revolution.
Highlights
Recent advances in information technology (IT) have led to the rapid development of new and innovative financial services called financial technology (Fintech)
According to the 2015 annual report released by Klynved Peat Marwick Goerdeler (KPMG) [8], there are more than 2000 Fintech companies worldwide, and most of the top 100 global Fintech companies are from China and the United States
Schumpeter [30] was the first to propose the concept of innovation in that innovation significantly impacts productivity and competitiveness
Summary
Recent advances in information technology (IT) have led to the rapid development of new and innovative financial services called financial technology (Fintech). Fintech is a portmanteau that combines “finance” and “technology” and involves the integration of finance and emerging technologies such as cloud computing, big data, and artificial intelligence (AI) [1] This combination provides users with more innovative financial services including mobile payments, crowdfunding, peer to peer (P2P) lending, insurance, and wealth management [2,3,4,5]. Governments across the world are actively encouraging a new financial paradigm [3] and these initiatives have resulted in the establishment of numerous Fintech companies (e.g., Kabbage, LendingClub, OnDeck, Apple Pay, Ant Financial, and JD Finance) They are usually non-financial institutions but provide innovative financial services [6]. Following the rapid growth of these Fintech giants, China has become one of the largest Fintech markets in the world, with investments in the Fintech sector accounting for more than USD 8 billion in 2016 [9]
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