Open Innovation in the Financial Services Sector - A global literature review

Patrick Edmund Schueffel,Ioan-Iustin Vadana

doi:10.24840/2183-0606_003.001_0005

Abstract

Despite the fact that it could help to overcome the current global financial crisis, the concept of open innovation is only very scarcely applied in the financial services sector. This international literature review covering the past decade provides an overview of the relevant body of literature on this topic. Two questions represent the starting point of this work: (1) Why is open innovation so scarcely applied in the banking, wealth management and insurance industries? and (2) Should the financial services sector use open innovation more widely? Our findings show that various organizational factors as well as monetary reasons prevent financial services companies from applying open innovation processes. Yet, by taking into account the potential benefits that the concept of open innovation may yield, this approach should indeed be applied more widely in the financial services industry.

Highlights

IntroductionConcepts such as open innovation (Chesbrough, 2003, 2011; Martovoy, Mention and Torkkeli, 2012; Mention and Martovoy, 2013), co-creation (Athanassopoulou and Johne, 2002; Bell and Loane, 2010; Hienerth, von Hippel and Berg Jensen, 2013; Martovoy and Dos Santos, 2012), and user-centered innovation (Athanassopoulou and Johne, 2002; Bátiz-Lazo and Woldesenbet, 2006; Bell and Loane, 2010; Jayawardhena and Foley, 2000; Oliveira and von Hippel, 2011) have raised the attention of scientists and practitioners alike, in various areas of economic activity
Investigating why open innovation is so scarcely applied in the banking and insurance sector and whether financial services firms could benefit from applying it more widely, this paper attempts to shed light on problems that are of both highly practical as well as theoretical nature
Compared to other industry sectors innovation processes are in general less pronounced in the financial services industry (Akamavi, 2005; Gerstlberger et al, 2010; KPMG, 2007; Rehder and Levi, 2011)

Summary

Introduction

Concepts such as open innovation (Chesbrough, 2003, 2011; Martovoy, Mention and Torkkeli, 2012; Mention and Martovoy, 2013), co-creation (Athanassopoulou and Johne, 2002; Bell and Loane, 2010; Hienerth, von Hippel and Berg Jensen, 2013; Martovoy and Dos Santos, 2012), and user-centered innovation (Athanassopoulou and Johne, 2002; Bátiz-Lazo and Woldesenbet, 2006; Bell and Loane, 2010; Jayawardhena and Foley, 2000; Oliveira and von Hippel, 2011) have raised the attention of scientists and practitioners alike, in various areas of economic activity. One major factor in this change process is the improvement of Internet technology that resulted in the Web 2.0 (O'Reilly, 2004) This technological enhancement that facilitates the collaboration between organizations and their environments across the globe resulted in a reduced length of the product and service life cycle (Fasnacht, 2009). This “paradigm shift” (Bell and Loane, 2010, p.214) brought along by Web 2.0 (Bell and Loane, 2010; O'Reilly, 2004) introduced entirely new possibilities to the concept of open innovation (Chesbrough, 2003). Gerstlberger, Kreuzkamp and da Mota Pedrosa (2010) further highlighted the fact that the ISSN 2183-0606 http://creativecommons.org/licenses/by/3.0

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