Abstract
This paper introduces the concept of modularity in financial services, discusses how new value chains are created and addresses emerging opportunities for innovative business models in the digital economy. We argue that innovation occurred in the banking sector despite the lagging adoption of new operational practices but due to technology drive for new ways to provide services. Banking innovation is commonly a matter of case facilitation vs. lock-in, in which the systemic effects of balancing delay vs. fast progress requires business model choices. In the banking sector, where there is little power stability among stakeholders, asymmetrical periods of dynamism are triggered by the modernization of the systems [13]. The main argument of this paper is that we can use models of modularity and network integration to improve our understanding of sustainable emerging banking practices. This is fundamental when establishing the potential contribution of this sector to digital economy models.
Highlights
The banking sector was one of the first adopters of computers for fast processing of back office operations and many repetitive tasks in the sector
The changes involved in the adaptation of mobile banking with secure electronic transfers, digital signatures and other emergent services required new procedures based on modularity [33] and integration
There are tradeoffs between stable systems and the drift that modularity facilitates as it moves between design and spontaneity
Summary
The banking sector was one of the first adopters of computers for fast processing of back office operations and many repetitive tasks in the sector. This is still largely the case, increasingly these services are changing They are transferred to networks and cloud services where the processing of transactions has benefitted from the emergence of intermediary markets based on digital technologies that allow some commercial functions to be split into modules that can be integrated to create new services. New ways to utilize the integration of physical networks, data, and digital services have become apparent through this emergent modularity usage of the network architecture They were based on components that were not previously considered relevant to banking, including social networking and local distribution networks for payments [29]. We describe what the requirements are for these new approaches and their significance for business models
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