Improving Financial Service Innovation Strategies for Enhancing China’s Banking Industry Competitive Advantage during the Fintech Revolution: A Hybrid MCDM Model

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.

Does Technological Innovation Drive Corporate Sustainability? Empirical Evidence for the European Financial Industry in Catching-Up and Central and Eastern Europe Countries

“…Our results also contribute to the sustainability literature [4,9,38] by extending knowledge on those institutionally-different countries of CEE, giving response to the different claims of further research on innovation in catching-up countries [14], especially in the financial industry [12] and on sustainability [12,49] where research is scant or even inexistent. In addition, our results add more evidence to sustainability-oriented innovation that can also be utilized in other industries such as manufacturing [35] and also contribute to general sustainability-dedicated studies in the financial industry [71]).…”

“…These results confirm extant literature and contribute by providing a different innovation capability-based framework and ample and robust empirical support through CIS data. Thus, our study does contribute to the innovation and sustainability intersection in the financial industry [1,11,38]) in CEE countries [12]. According to these results, the hypothesis is confirmed and this study's core message is that best in class innovators are also best performers of corporate sustainability, despite observing that the financial industry in CEEC is poorly connected to sustainability.…”

“…We also added other control variables, such as R&D_INTERNAL, which captures a firm's investment in in-house research and development. In addition, as other studies indicated (e.g., [16,38]), external sources of knowledge capture the open innovation activity. Furthermore, other variables count as controls for the type of innovation (whether radical or not, RADICAL variable).…”

“…The answer is yes: innovation is the leverage that permits not only the creation of new value and innovative performance but is also directly and positively related to improved sustainability dimensions and other sustainability-oriented measures, such as CSR. In the particular case of the financial industry (e.g., [29,38]), the relationship between innovation and sustainability is said to be positive, albeit to the best of our knowledge there are only two studies, so further research is required. As stated by Forcadell et al [1], innovation can improve corporate sustainability on many fronts, such as new digital requirements, customer demand and also financial performance.…”

Waste Reduction for Green Service Supply Chain—the Case Study of a Payment Service Provider in Iran

“…In this case, the interrelation between the services to enhance the production is the main objective. In 2019, Zhao et al used customer centricity, service efficiency enhancement, reduced credit risk, and the development of scenario finance as criteria in a study to improve "Financial Service Innovation Strategies" for improving China's Banking Industry [33]; nevertheless, the main goal of the authors was creating competitive advantage. Also, Raut et al focused on banking service and introduced 32 criteria for sustainability in the banking industry [34].…”