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Article
Publication date: 17 November 2023

Sepehr Ghazinoory, Meysam Shirkhodaie and Mercedeh Pahlavanian

Fintechs are expected to develop rapidly as technologies that help improve the efficiency of the traditional financial system, but an examination of fintech subbranches shows…

Abstract

Purpose

Fintechs are expected to develop rapidly as technologies that help improve the efficiency of the traditional financial system, but an examination of fintech subbranches shows different behaviors. In some sub-branches, the transition has been accompanied by a higher speed and more success, but in some other sub-branches, the opposite has been observed. The difference in the development of fintech sub-branches and its reasons have been paid less attention. Therefore, this article aims to identify the factors affecting the transition.

Design/methodology/approach

The use of new technologies in financial services at the international level has led to the provision of fast, customized and economical services, and the fact that these services are welcomed by the users has created opportunities for fintech's transition. This qualitative research follows the socio-technical phenomenon of fintech transition through narrative research. For its formulation, the transition process of fintech sub-branches was analyzed based on the multi-level analytical framework and Geels et al.’s transition path theory.

Findings

Transition is a change from one socio-technical regime to another. The findings of the research showed that these changes are influenced by the following factors: provision of infrastructure, the support of industry incumbents from innovative financial services, policy-making, citizen's welcoming, improving the knowledge and expertise of actors, legal adjustments as well as provision of innovative services.

Originality/value

The fintech transition has a special nature because the speed of developments in fintech is high and there is a series of innovations that are continuously replaced by subsequent innovations. Existing models have often focused on the long-term transition of a technology. This article presents a new approach for the analysis of changes in the short term in such a way that, based on the position of the actors in favor of or against the technological changes and institutional changes of the transition, it has analyzed and identified the factors affecting the transition. By focusing on these factors, policymakers can direct the way of fintech transition and help accelerate and facilitate fintech transition.

Details

Journal of Service Theory and Practice, vol. 34 no. 2
Type: Research Article
ISSN: 2055-6225

Keywords

Article
Publication date: 28 August 2023

Abdallah Mrindoko Ally

This paper aims to assess the legal and regulatory framework for mobile banking (M-banking) in Tanzania. The technological development in information and communication…

Abstract

Purpose

This paper aims to assess the legal and regulatory framework for mobile banking (M-banking) in Tanzania. The technological development in information and communication technologies has converted a mobile phone from a simple communication device to a very complex instrument that allows people to perform various digital transactions and extra operations such as web browsing and email reading. Such tremendous developments have brought in place the regime of M-banking. The birth of M-banking has brought legal and institutional challenges that were not anticipated before. It has complicated the traditional role of the telecommunication regulator and financial regulator in the business and caused legal gaps that need to be bridged.

Design/methodology/approach

To disclose the legal gaps and bridge them, the study used doctrinal legal method and comparative study to learn the experience of international legal instruments and policies and laws of other jurisdictions. This paper has evaluated the contribution of international legal instruments and legal frameworks of foreign jurisdictions such as Kenya and the Philippines.

Findings

It has been revealed that the prevailing laws regulating M-banking in Tanzania do not adequately address and bridge the existing legal gaps. There is a need to enact a specific law regulating M-banking and confer such powers to a specific institution to deal with regulatory issues.

Originality/value

This paper stresses the importance of enacting new laws that will offer room for financial inclusion in the digital economy and protect consumers against financial risk. It also intends to act as a catalyst and change agent in policy and legislative development in the M-banking industry. It would also bring special attention to addressing consumer rights, security and risky issues surrounding the M-banking industry. Although several other authors in Tanzania have written in this area, they have not clearly focused on disclosing the existing legal gaps resulting from the convergence of the financial and communication sectors. This paper is therefore trying to offer an extensive discussion on the legislative development in the M-banking industry in Tanzania.

Details

International Journal of Law and Management, vol. 66 no. 1
Type: Research Article
ISSN: 1754-243X

Keywords

Article
Publication date: 29 January 2024

Bhavna Mahadew

The purpose of this paper is to assess the current legal framework on money laundering control in the insurance sector. Essentially, this examination is premised on the…

Abstract

Purpose

The purpose of this paper is to assess the current legal framework on money laundering control in the insurance sector. Essentially, this examination is premised on the interrogation of whether it is still appropriate for Mauritius to apply such stringent, opaque and unyielding Anti-Money Laundering/Combating Financing of Terrorism norms and rules on general insurance when developed nations such as the UK and Singapore have done away with them for a more effective combat against money laundering. It would also be assessed why the financial services commission (FSC) is not able to draw inspiration from its British and Singaporean counterparts in fighting money laundering more effectively.

Design/methodology/approach

This paper uses the doctrinal legal research methodology which is colloquially described as “black-letter law” approach. It is backed up by a contextual legal analysis that is based on an analysis of relevant legal provisions. It relies ground experience from the insurance industry through the experience of the authors. A comparative approach is used with Singapore and the UK as case studies given that there are significant commonalities to the Mauritian jurisdiction as well as useful differences.

Findings

It is observed that a move towards a de-regulation of the legal framework on money laundering in the insurance sector with a more relaxed approach is more effective for the Mauritian insurance sector. Evidence is drawn from the Singaporean and British models. A re-structuring of the FSC of Mauritius is also warranted for such an approach to be adopted.

Originality/value

This paper is among the first academic contribution that proposes a de-regulation and the adoption of a relaxed approach of and by the Mauritian Insurance Industry for a more effective combat against money laundering. It serves as a legal foundational basis for further research in this direction.

Details

International Journal of Law and Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1754-243X

Keywords

Article
Publication date: 9 January 2024

Jia Qi, Swarn Chatterjee, Sheri Worthy, Keith Herndon and Bartosz Wojdynski

Emerging literature on fintech has shown that consumers have been slow to adopt fintech-based products and services. However, limited literature is available regarding the factors…

Abstract

Purpose

Emerging literature on fintech has shown that consumers have been slow to adopt fintech-based products and services. However, limited literature is available regarding the factors associated with consumers' adoption of these products and services. This study aims to investigate the factors that are associated with consumer adoption of fintech-based products and services.

Design/methodology/approach

Data on the usage and perception of smartphone financial apps by US residents ages 18–70 was collected in the fall of 2020. Based on the Extended Post-Acceptance Model (EPAM) framework, Structural Equation Modeling and Confirmatory Factor Analysis were applied to inspect how financial capability, perceived security and perceived usefulness affect fintech adoption.

Findings

Fintech proficiency, investment risk tolerance and perceived safety are positively associated with the frequency of fintech application use upon adoption. Consumers are more likely to feel safer if they are more financially capable and technologically proficient. Consumers with higher risk tolerance tend to believe fintech apps are safe to use. Consumers with higher fintech proficiency are more likely to recognize the usefulness of fintech services.

Originality/value

The study introduces a revised EPAM framework with antecedent factors, fintech proficiency and risk tolerance to investigate the factors associated with consumer adoption of fintech-based products and services. The key findings of this study validate the EPAM in the American context. Additionally, this research is among the first to have confirmed the direct relationship between perceived security and fintech adoption. The results have practical implications for existing fintech companies, banks and financial institutions, policymakers and financial advisory practices considering adopting fintech-based services for their clients.

Details

International Journal of Bank Marketing, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0265-2323

Keywords

Article
Publication date: 4 July 2023

Oussama Saoula, Muhammad Farrukh Abid, Munawar Javed Ahmad, Amjad Shamim, Ataul Karim Patwary and Maha Mohammed Yusr

It is widely evident that trust and commitment are important pillars for strengthening the relationship between financial service firms and their customers. However, it has not…

Abstract

Purpose

It is widely evident that trust and commitment are important pillars for strengthening the relationship between financial service firms and their customers. However, it has not been explored how the service quality, perceived cost and role of agents are important for financial service firms. To overcome this gap, this study aims to investigate the role of service quality, perceived cost and the role of agents as the commitment–trust factors in the financial insurance service (Takaful) in Malaysia, enhancing customer satisfaction.

Design/methodology/approach

The study follows a quantitative design in which primary data was collected using a survey instrument. The measurement instrument was adapted from the previous research, and data were collected from 264 customers of the Takaful financial service organizations in Malaysia. The data were analyzed using variance-based structural equational modeling in Smart-PLS software.

Findings

This research has revealed several useful insights that demonstrate a significant impact on service quality, perceived cost and the agents’ role in forging close relationships with their customers. Corporate image has a moderating role in relationships and has significantly impacted takaful insurance companies. The results imply that regardless of the corporate image of the financial service organizations, customers are concerned about the prices and the quality of the agents’ services.

Research limitations/implications

In this study, only the predictors such as service quality, perceived costs and agents’ roles as trust–commitment factors were examined to determine customer satisfaction. Other investigations are highly recommended, such as value co-creation in takaful, takaful customer experience and takaful trust. This study offers insights to takaful insurance companies on how to keep up a positive corporate image, which will boost their trust–commitment factors and ultimately increase customer satisfaction.

Originality/value

By presenting commitment–trust factors and company image in an identifiable framework, the current study has expanded the discussion on takaful financial insurance services. The methodology is developed and rigorously tested to gauge customer satisfaction in takaful financial service organizations’ context.

Details

Journal of Islamic Marketing, vol. 15 no. 2
Type: Research Article
ISSN: 1759-0833

Keywords

Article
Publication date: 5 July 2023

Brinda Sampat, Emmanuel Mogaji and Nguyen Phong Nguyen

FinTech offers numerous prospects for significant enhancements and fundamental changes in financial services. However, along with the myriad of benefits, it also has the…

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Abstract

Purpose

FinTech offers numerous prospects for significant enhancements and fundamental changes in financial services. However, along with the myriad of benefits, it also has the potential to induce risks to individuals, organisations and society. This study focuses on understanding FinTech developers’ perspective of the dark side of FinTech.

Design/methodology/approach

This study conducted semi-structured interviews with 23 Nigerian FinTech developers using an exploratory, inductive methodology The data were transcribed and then thematically analysed using NVivo.

Findings

Three themes – customer vulnerability, technical inability and regulatory irresponsibility – arose from the thematic analysis. The poor existing technological infrastructure, data management challenges, limited access to data and smartphone adoption pose challenges to a speedy integration of FinTech in the country, making customers vulnerable. The lack of privacy control leads to ethical issues. The lack of skilled developers and the brain drain of good developers present additional obstacles to the development of FinTech in Nigeria.

Research limitations/implications

FinTech operation in a developing country differs from that in developed countries with better technological infrastructure and institutional acceptance. This study recognises that basic banking operations through FinTech are still not well adopted, necessitating the need to be more open-minded about the global practicalities of FinTech.

Practical implications

FinTech managers, banks and policymakers can ethically collect consumer data that can help influence customer credit decisions, product development and recommendations using the mobile app and transaction history. There should be strict penalties on FinTech for selling customers’ data, sending unsolicited messages or gaining unnecessary access to the customer’s contact list. FinTech can offer to educate consumers about their financial management skills.

Originality/value

Whereas other studies have focused on the positive aspects of FinTech to understand client perceptions, this study offers new insights into the dark side of FinTech by analysing the viewpoints of FinTech developers. Furthermore, the study is based in Nigeria, an emerging economy adopting FinTech, adding a new dimension to the body of knowledge.

Details

International Journal of Bank Marketing, vol. 42 no. 1
Type: Research Article
ISSN: 0265-2323

Keywords

Article
Publication date: 2 February 2024

Sara Ebrahim Mohsen, Allam Hamdan and Haneen Mohammad Shoaib

Integrating artificial intelligence (AI) into various industries, including the financial sector, has transformed them. This paper aims to examine the influence of integrating AI…

Abstract

Purpose

Integrating artificial intelligence (AI) into various industries, including the financial sector, has transformed them. This paper aims to examine the influence of integrating AI, including machine learning, process automation, predictive analytics and chatbots, on financial institutions and explores its various aspects and areas. The study aims to determine the impact of AI integration on financial services, products and customer experience.

Design/methodology/approach

The research study uses quantitative and qualitative methods, as well as secondary data analysis. It investigates four AI subfields: machine learning, process automation, predictive analytics and chatbots.

Findings

The research findings indicate that integrating AI, particularly in machine learning and chatbot subfields, holds promise and high strategic potential for financial institutions. These subfields can contribute significantly to enhancing financial services and customer experience. However, the significance of predictive analytics integration and process automation is relatively lower. Although these subfields retain their usefulness, they might necessitate alternative workflows and tools that incorporate human involvement. Overall, AI integration minimizes human interactions and errors in financial institutions.

Originality/value

The research study contributes original insights by exploring the specific subfields of AI within the financial industry and assessing their strategic significance. It provides recommendations for financial institutions to adopt AI integration partially in multiple phases, measure and evaluate the impact of the transformation and structure internal units and expertise to strategize adoption and change.

Details

Journal of Financial Reporting and Accounting, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1985-2517

Keywords

Article
Publication date: 3 November 2022

Bharti Kumari, Jaspreet Kaur and Sanjeev Swami

A crucial contemporary policy question for financial service organizations of being resilient across the globe calls for rethinking and renovating by adopting and adapting to the…

Abstract

Purpose

A crucial contemporary policy question for financial service organizations of being resilient across the globe calls for rethinking and renovating by adopting and adapting to the technologies of artificial intelligence (AI). The purpose of this study is to propose a policy framework for adoption of AI in the finance sector by exploring the driving factors through systems approach.

Design/methodology/approach

Based on literature review and discussions with experts from both industry and academia, nine enablers were shortlisted, which were used in the questionnaire survey to determine ranks of enablers. Further, the study developed the interpretive structural model (ISM) with the help of experts.

Findings

The ISM digraph developed with the help of the experts, resulted in the enablers like anticipated profitability, contactless solutions, credit risk management and software vendor support as dependent factors and stood at the top of the ISM. On the other hand, factors like availability of the data, technical infrastructure and funds are the most driving factors, which lie on the bottom of the ISM.

Research limitations/implications

The study provides implications and policy recommendations for the practicing managers and government agencies approaching the digital transformation towards the adoption of AI in the finance ecosystem.

Originality/value

The paper uses the systems approach for the development of the ISM of the enabling factors for the adoption of AI technology. On the basis of the results, the study proposes a policy framework to accelerate the functioning of the finance ecosystem with AI technology.

Details

Journal of Science and Technology Policy Management, vol. 15 no. 2
Type: Research Article
ISSN: 2053-4620

Keywords

Article
Publication date: 7 March 2023

Divya Verma and Yashika Chakarwarty

Nowadays, the competition is not only emerging from within the banking sector, but nonbanking companies like nonbanking financial companies (NBFCs) and FinTech are also growing in…

Abstract

Purpose

Nowadays, the competition is not only emerging from within the banking sector, but nonbanking companies like nonbanking financial companies (NBFCs) and FinTech are also growing in size and numbers, offering innovative financial products and services, giving a stiff competition to Indian banks. Thus, this study aims to investigate whether competition from within and outside the banking sector enhances or reduces the financial stability of the banking industry.

Design/methodology/approach

The study uses Herfindahl–Hirschman index to measure market share and Z score to measure financial stability. The study further examines the role of NBFCs and FinTech companies in impacting the financial stability by introducing variables like innovation, cybercrimes, systemically important institutions, etc. Thereafter, panel regression has been applied.

Findings

Empirical results show a positive relation of market share with financial stability, implying that increased competition in the Indian banking industry erodes the market power, adversely affecting the profit margins which encourages banks to take more risk and which may impact financial stability. The study shows a positive impact of innovation on financial stability which implies that the competition is acting as an enabler for banks. The authors find a negative relation of systemic important NBFCs with financial stability. The authors observe a negative association of cybercrimes with financial stability, reflecting that competition emerging from FinTech sector has exposed banks to new risks.

Research limitations/implications

The policymakers should make sure that the competition of banks with other financial institutions, such as FinTech sector, remains healthy; otherwise, it can jeopardize the entire financial system. It is for the policymakers to define a boundary for FinTech sector, as the development of this sector has exposed the banking industry to new kinds of risks potential to create financial instability. The banks should do a comprehensive check on the company to which it is granting loans, and the government should amend laws. Though big banks have huge potential, consolidations can pose challenges at a macroeconomic level.

Originality/value

FinTech firms are a new entrant in the financial world which are providing immense competition to the banking sector, and thus radically changing the entire financial system. Therefore, it is extremely vital to study and explore the role of NBFCs and the FinTech industry as the main variable to analyze bank competition, which to the best of the authors’ knowledge is completely missing in the previous studies.

Details

Competitiveness Review: An International Business Journal , vol. 34 no. 2
Type: Research Article
ISSN: 1059-5422

Keywords

Article
Publication date: 19 January 2024

Navid Bahmani and Atefeh Yazdanparast

With the goal of helping consumers bounce back from the financial challenges they faced as a result of the COVID-19 pandemic, many firms developed and announced consumer-targeted…

Abstract

Purpose

With the goal of helping consumers bounce back from the financial challenges they faced as a result of the COVID-19 pandemic, many firms developed and announced consumer-targeted resiliency programs (e.g. Walgreens waived delivery fees, Associated Bank allowed deferred mortgage payments). However, there is a paucity of research examining the unique features of these programs, and whether firms' investors (the first external stakeholder group to provide them with feedback regarding their strategies) were receptive to these programs during a period of time in which firms themselves were suffering financially. Drawing on resilience theory and stakeholder theory, the present research incorporates an event study of consumer-targeted resiliency program announcements to understand their financial implications for firms, and to learn whether firms witnessed different financial effects as a result of firm- and program-specific factors.

Design/methodology/approach

This study referred to business news publications and newswire services to collect a comprehensive list of consumer-targeted resiliency programs announced by publicly traded U.S. firms during the pandemic. The resulting dataset consisted of 145 announcements made during the period of February–June 2020. An event study was conducted in order to precisely measure the main effect of consumer-targeted resiliency programs on firm value, as manifested through abnormal stock returns. Finally, a moderation analysis (regression) was conducted to uncover whether firm characteristics or specific features of firms' consumer-targeted resiliency programs lead certain firms to witness stronger financial effects than others.

Findings

The main effect of consumer-targeted resiliency programs on firm value was found to be positive – a 1.9% increase on average. The moderation analysis finds that non-financial firms were rewarded more positively than financial firms (e.g. banks and credit card companies). In addition, financial aid (i.e. allowing customers to defer their payments to a firm for its products/services, versus a reduction in the price of a product/service or offering it for free or giving cash back to customers) and temporal characteristics (i.e. an offer being framed as limited-time, vs being indefinite or for the foreseeable future) are not found to have a moderating effect.

Originality/value

This theory-driven empirical study uncovers practical implications for managers of firms interested in whether investing in corporate social responsibility during times of crisis is a wise allocation of resources. Any form of financial aid for consumers, regardless of temporal limitations, is received positively by investors.

Details

International Journal of Bank Marketing, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0265-2323

Keywords

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