Users as Service Innovators: The Case of Banking Services

13 Pages Posted: 25 Aug 2009 Last revised: 10 Jul 2022

See all articles by Pedro Oliveira

Pedro Oliveira

Copenhagen Business School; Nova School of Business and Economics

Eric A. von Hippel

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Date Written: May 4, 2011

Abstract

Many services can be self-provided. An individual user or a user firm can, for example, choose to do its own accounting – choose to self-provide that service – instead of hiring an accounting firm to provide it. Since users can ‘serve themselves’ in many cases, it is reasonable to suspect that they can also innovate with respect to the services they self-provide – possibly without the assistance of service providers.
In this paper, we conduct the first quantitative exploration of the importance of services innovation by users, focusing on the field of commercial and retail banking services. We find that 55% of today’s computerized commercial banking services were first developed and implemented by non-bank firms for their own use, and 44% of today’s computerized retail banking services were first developed and implemented by individual service users rather than by commercial financial service providers. Manual precursors to these services – manual procedures that carried out functions similar to computerized services in our sample – were almost always developed by users as self-services.
Our empirical findings differ significantly from prevalent producer-centered views of service development. We speculate that the patterns we have observed in banking with respect to the major role of users in service development will prove to be quite general. If so, this will be an important matter: on the order of 75% of GDP in advanced economies today is derived from services. We discuss the implications of our findings for research and practice in service development.

Keywords: Service innovation; service development; user innovation

Suggested Citation

Oliveira, Pedro and von Hippel, Eric, Users as Service Innovators: The Case of Banking Services (May 4, 2011). Research Policy, Available at SSRN: https://ssrn.com/abstract=1460751 or http://dx.doi.org/10.2139/ssrn.1460751

Pedro Oliveira

Copenhagen Business School ( email )

Department of Strategy and Innovation (SI)
Kilen, Kilevej 14, K.2.71
Frederiksberg, DK - 2000
Denmark

Nova School of Business and Economics ( email )

Campus de Carcavelos
Rua da Holanda, 1
Carcavelos, 2775-405
Portugal

Eric Von Hippel (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

E62-455
Cambridge, MA 02142
United States
617-253-7155 (Phone)
617-253-2660 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
2,242
Abstract Views
18,579
rank
9,914
PlumX Metrics