3. Fintech and the Digital Transformation of the Banking Landscape

Financial technology (or fintech) has received global attention as the challenging technology (the technology that has potential to revolutionize the banking industry) that would empower firms to compete effectively in the twenty-first century. This chapter analyzes the diffusion of fintech-based innovations in the banking industry through the lens of systemic innovation. This research attempts to fill a significant gap in the empirical literature on the systemic characteristics of innovation. Systemic innovation is one where the benefits of an innovation increase disproportionately with the use and diffusion of the innovation among users, and where most of the benefits are external to the particular innovator of the product or process and accrue to a wide range of users and uses. The development of systemic innovation models provides insight into the relations between the complexity of the innovation and the capabilities of innovators in managing fintech-based innovations. The systemic innovation model can be used as a dynamic tool to track the progress and pattern of fintech diffusion. The analysis shows that systemic characteristics are the outcome of interactions between the complexity and the capabilities of innovators in managing fintech-based innovations. The findings have shown that the diffusion of fintech-based innovations has different levels of systemic characteristics which would influence the process of technology diffusion. The COVID-19 pandemic acts as a catalyst in transforming the banking landscape whereby the development of crypto super apps has pushed further bank disintermediation.