Do Digital Technologies Have the Power to Disrupt Commercial Banking?

Abstract

The hypothesis guiding this paper is if digital technologies have the power to alter the commercial banks' set-up and the way they provide their services. This would suggest that the new types of (traditional) banking services and the new type of (traditional) banking service providers have emerged in the market. The paper describes the commercial banking services, the set-up commercial banks operate in and the changes occurring in the market triggered by financial technology (the FinTech firms). When researching the effects of financial technology, the paper focuses on the trends in the market and the efficiencies the new services are responsible for. The new service providers have shown that they are meeting the demands of the consumers/clients that banks have not, such as crowdfunding, or battling financial inclusion. The grand issue surrounding the FinTech sector is the lack of applicable regulatory environment. Challenges the regulators are faced with when designing the regulation applicable to the financial technology are the speed the services are evolving with and choosing the right moment to place regulation. The lack of adequate regulation leaves customers/clients unprotected. Nevertheless, the FinTech sector is growing rapidly. Indications in the market suggest the FinTech firms are leading the way the commercial banking sector will follow.

The Determinants of PayTech’s Success in the Mobile Payment Market—The Case of BLIK

“…Analyzing determinants of BLIK success factors from the perspective of a business model defined as the architecture of a firm and its network of stakeholders established for creating, delivering, and developing value for customers to generate profitable and sustainable market competitive performance will contribute to the open innovation theory in the field of organisational innovations, as well as developing research on the business model concepts. In our research, we have decided to focus on the macroeconomic environment, technological infrastructure, legislative framework, and socio-demographic conditions for the development of financial innovations in the Polish retail payment market, which is consistent with the determinants of payment innovations presented in previous research (e.g., Szpringer 2016;Harasim and Mitręga-Niestrój 2018;Golubić 2019;Polasik et al 2020). In this way, the retail payment market landscape is characterized by comparing the situation in 2014 (a year before the implementation of BLIK) and 2018 (covering the most recent data).…”

“…Following the list of success factors for payments innovations presented by (Polasik et al 2020;Szpringer 2016;Harasim and Mitręga-Niestrój 2018;Golubić 2019;Hernández-Murillo et al 2010), we have analyzed the most important determinants related to the macroeconomic environment, technological infrastructure, legislative framework, and socio-demographic conditions for the development of financial innovations in the Polish payment market. The analysis of market data confirmed the general tendency towards digitalization of payments instruments, which is consistent with findings discussed by the Bank for International Settlements (BIS 2020, https://stats.bis.org/statx/toc/CPMI.html, accessed on 8 July 2021).…”

Fintech Innovations in the Financial Service Industry

“…Financial crisis resulted in shortage of money and made many businesses struggle to obtain credit. Fintech recognized discrepancies in the market and designed a new method of funding/crediting (Golubić 2019). Various other innovative techniques were introduced by fintech in financing operations leading to a reduction in credit shortage around the world.…”

“…Fintech payments serve people across various income levels and transaction values vary accordingly (Teja 2017). The reason for the adoption of digital payment systems by customers depends on many factors, which influence the success rate of fintech payment models (Eka Putri et al 2019;Golubić 2019). The development of innovative technologies has made transactions amazingly fast and easy and results in the development of innovative methods of practicing prevailing functions digitally (Dermaku 2018;Vanatta 2018).…”

“…The disruptive nature of fintech has led to a transformation in business model innovations that has brought regulatory concerns worldwide, as stringent rules existing for incumbent financial institutions are not enough to deal with fintech complexities (Kumail Abbas Rizvi et al 2018). Several other published papers explaining this concern are (Adriana and Dhewantoa 2018;Arner et al 2017;Bruckner 2018;Das and Ali 2020;Golubić 2019;Gomber et al 2018;Lin 2019;Yoon and Jun 2019).…”