Search results

Business Model Analysis is acquiring increasing visibility in the European banking regulatory framework, following the European Banking Authority guidelines on common procedures and methodologies for the supervisory review and evaluation process (SREP), developed to assess business and strategic risks (EBA, 2014, 2015a, 2015b, 2015c). Starting from a selected literature review, in the paper, the authors analyse business models set up by financial intermediaries, bank and non-banks, for the distribution of investment services, first by comparing European niche players with European banking global players, and second, comparing European niche players among themselves to understand the evolution of business models for the distribution of investment services at European level. The research is supported by the Baffi–Carefin Research Centre at the Bocconi University (Italy), in collaboration with ANASF, the Italian Association of Financial Advisors (Italy).

The authors consider a sample of European financial players from 2009 to 2014. The authors’ focus is on France, Germany, Italy, The Netherlands, Spain and the UK; overall the authors’ handmade data set is based on 162 annual reports. The authors follow two main questions: Do the niche players, as they are focused on the distribution of investment services, have an upper limit to profitability, compared to the global players, as risk-takers in many financial areas? How is the business model of niche players changing, facing increasing competition and regulatory pressures?

Answering the first research question, the highest net profitability is found in the niche players group; the global players, as risk-takers, achieve lower remuneration, in contrast with the risk premium theory. The results were assessed over a limited period, however, deemed in line with the company’s strategic planning horizon. Answering the second research question, the authors focus on the case of niche players, using a cluster analysis. The authors identify three different business models: most dynamic niche players, which combine investment services, insurance and welfare services, achieving the highest margins and stability; players mainly focused on asset management, whose key vulnerability is the degree of open architecture, especially in light of future MiFID 2 implementation; and players mainly focused on the creation of well-structured on-line platforms, which offer also brokerage services, thereby reducing their marginality and potentially increasing their business risk.

Despite the limited time series, the authors’ research gives some inputs for those interested in deepening the business model analysis focus on the distribution of investment services and the business and strategic risk assessment, both for the global banks and the niche players (banks and non-banks).

The authors’ results could be of some interest during the strategic assessment of global banks and niche players, both adopting an internal perspective or an external one, as regulator.

By giving some specific insights into the assessment and comparison of business and strategic risks among global and niche players, the authors’ research provides the basis for further research in the field of the distribution of investment services.

The originality mainly regards the business model risk perspective and the focus of the authors’ analysis: the distribution of investment services. This sector, unlike the asset management, does not have an easily recognisable group of comparables at European level, all the European countries analysed have very different business models. This research avails of an original database, that is unique to Europe.

While extant entry theory has long prescribed a niche approach for new ventures, a preponderance of empirical research has found that broad strategies may be the key to new venture success. This study examines the difference between entry theory and empirical evidence by considering the moderating impact of initial financial resources on the effectiveness of venture strategy. Examining new, independent firms at the point of inception, we find that initial financial resources moderate the relationship between strategic breadth and performance, implying that the returns to a broad initial strategy increase with the level of initial capital. Contrary to popular niche prescriptions for new ventures, we did not find support for the belief that firms with low initial financial resources should pursue niche strategies and suggest that it may be time to re-examine theory on the nature of the relationship between entry strategies and performance.

The purpose of this paper is to detail the findings of a study to determine the viability of Islamic banking as a niche for the Labuan International Offshore Financial Center (IOFC). Labuan was declared an IOFC by the Malaysian Government in 1990, with the goal of developing it as a financial “supermarket” offering a wide range of offshore financial products specializing in Islamic finance.

The paper employs the mail survey method to ensure the anonymity of the respondents and the whole population of banks are used, which enables the researchers to ignore the problems of bias in the sampling. Data collected from the survey are analyzed using descriptive statistics, mean, standard deviation, and frequency counts.

The results of the survey indicate that Labuan offshore bankers do not have a clear notion of Islamic banking principles and practices. The results also show that most of the offshore banks do not have officers and staff who are conversant with Islamic banking. Nevertheless, conventional offshore banks are willing to train their officers in Islamic banking skills and participate in future Islamic deals. The findings also indicate that Islamic banking is a viable niche for the Labuan IOFC. However, the results also show that Labuan does not have competitive advantages over Bahrain and London, currently the leading Islamic finance centers in the world.

There are three major limitations of this paper. These limitations are further explained in the conclusion's part.

There are three major implications of these findings. First, the authorities ought to enhance the knowledge and expertise of the conventional offshore bankers by facilitating training in Islamic banking skills. Acquisition of such knowledge and skills would encourage them to participate in future Islamic banking deals. Second, the industry and the authorities responsible for the IOFC have to be both innovative and creative. In order to convince conventional offshore bankers that Islamic banking is a viable alternative to conventional banking the products and services offered must be seen as value added. A creative tax regime should have a substantial impact in terms of increased profit margin or reduced cost on the part of the offshore banks. Third, improving the physical infrastructure and overcoming the geographical location disadvantage of Labuan should become the priority of the authorities overseeing the development of Labuan as an IOFC.

The paper provides fresh results on the viability of Islamic banking operations in Labuan IOFC.

The purpose of this study is to define FinTech, differentiating it from financial technology and use the definition to develop an industry framework.

Using the existing literature on FinTech and incorporating these contributions into a traditional financial structure, characteristics are outlined and placed into a framework that describes the FinTech industry.

FinTech is a specific type of Financial Technology, defined as technology used to provide financial markets a financial product or financial service, characterized by sophisticated technology relative to existing technology in that market. Firms that primarily use FinTech are classified as FinTech firms. Using these definitions, the paper provides a structure for the FinTech industry, classifying each type of FinTech firm by FinTech characteristics.

Research that would inform the economic importance of FinTech would be served with an increased understanding of FinTech firms and the FinTech industry.

This paper contributes by defining FinTech and developing a comprehensive framework to describe the emerging FinTech industry.

The case discusses Islamic Banking Principles and Products (Banking), Business Strategy for Niche Markets (Strategic Management) and Segmentation and Marketing Strategy (Marketing Management).

Undergraduate Graduate Training – Executives at junior level.

This case is about the dilemma faced by Azhar Mehmud, a newly recruited Marketing Manager, Islamic Products (MMIP) in Bank Islam on six-month probation. Prior to Bank Islam, Azhar had an MBA degree from the UK and about 15 years of experience of business development in a multi-national bank in Indonesia. Looking at his experience, he was awarded to promote Islamic banking (IB) products in Malaysia where the competition was very intense. After his interactions with customers for about six to seven months, he prepared a report for his boss, General Manager, Consumer Banking (GMCB). In this report, he had summarized the challenges of marketing IB products in a market meant for conventional banking. When he presented the report to GMCB, he met with unfavorable reactions. GMCB was not convinced that IB products had any competition from conventional banking. He gave Azhar one additional month to either revise his thinking or quit the organization.

The expected learning outcomes are as follows: to enhance the awareness of IB products, principles and differences from the conventional banking products; to introduce the concept of business strategies for niche markets; to make students realize the importance of segmentation in view of niche market like IB.

Teaching notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.

Presents an empirical stuRecently, banks have found themselves facing more aggressive competition, uncertainty and unlimited opportunities. No bank can offer all products/services and be the best/leading bank for all customers. They are forced to find a new basis for competition. A bank must examine its strengths and opportunities and take a competitive position in the competitive marketplace. Discusses some strategic issues related to bank positioning. A number of ways in which distinctive positions can be developed and maintained have been identified. A well‐integrated application of technology and staff through operations that respond to customer needs encourage customers to use a whole range of banking products/services rather than just a few. It also helps to build loyalty by creating deeper and fuller customer relationships. Surveys how a bank has been selected and perceived from the point of view of its customers in relation to its competitors in that marketplace. Reveals that in Sweden, there is no single leading bank in all financial areas, but there are a number of leaders: a leader in terms of deposit base, a leader in terms of loans outstanding base, a largest bank in terms of assets, and a niche leader bank. Shows that functional quality is a more important factor than traditional marketing activities. As expected, convenience of location, price and advertising had a minor impact on bank selection.

Interorganizational partner selection decisions are plagued with uncertainty. When making partnering decisions, firms strive to answer two questions: does the prospective partner have resources which can be used to generate value in the relationship; and will the partner be willing to actively share these resources and cooperate in good faith? Answers to these questions help reduce three types of uncertainty – partner capability uncertainty, partner competitiveness uncertainty and partner reliability uncertainty. For a relationship to benefit both partners, they have to possess complimentary resources of comparable quality, avoid explicit competition as well as be willing to engage in the cooperative behaviors within the confines of their relationship. In this paper, we examine the importance of prospective partners’ characteristics (differences in size, status and specialization) as well as their network characteristics (existence of a common partner and membership in the same clique) to the formation and longevity of their social relationships, as these characteristics reduce firms’ value generation and partner reliability uncertainty.

The purpose of this study is to highlight the key challenges and opportunities that lie with some of the alternative avenues/tools to promote financial access to MSME in India.

Initially, the study discusses the scope of various alternative avenues/tools for MSME financing along with traditional bank SME credits, highlighting some of the factors that will boost the high performance and growth of MSME in future.

There is a dominance of domestic banks in the MSME financing over cross-border banks in India. The study finds several opportunities lie in the MSME financing for the banks and other alternative avenues/tools: friendly government policies and improving the legal system make the business environment suitable for MSME financing business. There are several obstacles like discrete presence of clients, high operating cost and low profitability, lack of proper risk management and low literacy rate that make MSME financing difficult for the SME finance business. Active government initiatives and other supporting factors will act as the game changer and promoter for the banks and other alternative avenues/tools for MSME financing.

The paper is original and brings out some valuable findings that will help the SME business clients to choose alternative access to finance.

Banking has traditionally operated in a relatively stable environment for decades. However, today the industry is facing dramatically aggressive competition in a new deregulated environment. Positioning is an attempt to distinguish the bank from its competitors along real dimensions in order to be the most preferred bank for a certain market segment or prospect. A key way to build a strong competitive position is through @ management, IT and product/service quality and differentiation. Evaluation of the relationship between quality, and positioning requires an understanding and examination of the elements of service quality relative to the operations strategy. The main objectives of this study are to develop theoretically and empirically an understanding of the relationship between service quality and bank strategic positioning. The present research surveyed how Swedish commercial banks have been selected and perceived from the point of view of their customers in relation to their competitors in the marketplace.

How does environmental uncertainty affect the process of starting new hybrid organizations? Our comparative analysis of the formation of two “green” banks – with hybrid goals linked to banking and environmental logics – reveals that shifts in their strategic orientations resulted from attempts to align uncertain and changing resource environments with the composition and goals of the organizations’ top leadership. While the initial idea and goals of the founders were similar, the organizations they established ended up with divergent strategic orientations and senior leadership groups.