FinTech Challengers and Incumbents’ Responses: A Window into Innovation Management Strategy Modes within Australia’s Financial Services Sector

44 Pages Posted: 23 Oct 2019 Last revised: 31 Oct 2019

See all articles by Martin Gold

Martin Gold

Sydney Business School, University of Wollongong Australia

Paul Ali

University of Melbourne - Law School

Date Written: October 11, 2019

Abstract

FinTech (financial technology) is asserted as a disruptive paradigm with digital technologies driving authentic innovation within the financial services industry. Much attention and hyperbole has been attributed to startup FinTech developers and the potential of applications for consumers of financial products and financial markets. Substantial emphasis has been given to the perceived vulnerabilities of industry incumbents facing disruption from technology-enabled platforms (‘BigTechs’) and entrepreneurial start-ups. However, institutional incumbents command large market franchises and possess deep financial and technical resources. Incumbents also have most to gain from leveraging FinTech developments. As the financial services industry is saturated with information systems, innovative technologies which have the potential to re-configure industry markets and institutional logics, inevitably confront regulatory boundaries. Given intense competition for technological advantage, strategic and corporate activity closely follows FinTech development.

This article examines FinTech within Australia’s financial services sector and offshore. It provides a stringent scientific definition of the FinTech phenomenon, addressing a lacuna within the extant research. Recognising that disruptive FinTech deepens the financial services industry’s core intermediation function, it presents a taxonomy for readily locating innovations within the industry’s value chain, and assessing their transformational potential (and thus, systemic impact). Focusing upon the incumbent’s perspective, this article examines three collaboration strategies using exploratory case studies, to show how Australian financial institutions incorporate and appropriate FinTech innovations. The article discusses insights and suggestions for further research directions relevant to academics, industry participants, and policymakers.

Keywords: FinTech, financial technology, financial services, socio-technological assessment, innovation management, enterprise risk management, exploratory case studies

JEL Classification: G20, K22, L1, L26, L84, M13, N25, O3, O16

Suggested Citation

Gold, Martin and Ali, Paul, FinTech Challengers and Incumbents’ Responses: A Window into Innovation Management Strategy Modes within Australia’s Financial Services Sector (October 11, 2019). Available at SSRN: https://ssrn.com/abstract=3467855

Martin Gold (Contact Author)

Sydney Business School, University of Wollongong Australia ( email )

Level 8, Gateway Building
I Macquarie Place
Sydney, New South Wales 2000
Australia
+61 2 9266 1300 (Phone)

Paul Ali

University of Melbourne - Law School ( email )

University Square
185 Pelham Street, Carlton
Victoria, Victoria 3010
Australia
+61 3 8344 1088 (Phone)
+61 3 8344 5285 (Fax)

HOME PAGE: http://www.law.unimelb.edu.au

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