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

Qun Zhao (), Pei-Hsuan Tsai () and Jin-Long Wang ()
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Qun Zhao: College of Science & Technology, Ningbo University, Ningbo 315211, China
Pei-Hsuan Tsai: Department of Marketing and Logistics Management, National Penghu University of Science and Technology, No. 300, Liuhe Rd., Magong 88046, Taiwan
Jin-Long Wang: Department of Information and Telecommunications Engineering, Ming Chuan University, Taipei 111, Taiwan

Sustainability, 2019, vol. 11, issue 5, 1-29

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.

Keywords: Fintech; service innovation strategy; China’s banking industry; DEMATEL; DANP; modified VIKOR; hybrid MCDM model (search for similar items in EconPapers)
JEL-codes: Q Q0 Q2 Q3 Q5 Q56 O13 (search for similar items in EconPapers)
Date: 2019
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