Disruptive innovation in Financial Technology : case study of three FinTech areas and reactions of Luxembourgish retail banks

Details

Supervisors

Gailly, Benoît

Faculty

Louvain School of Management
Louvain School of Management

Degree label

Master [120] en Ingénieur de gestion
Master [120] en sciences de gestion

Abstract

In modern society, and especially after the recent crisis in the European area, there have been major changes in the functioning of the financial services sector. Developing new services that meet consumer needs of convenience, security, trust and design seem to be more important than ever. As the banking and finance industry might have lost significant legitimacy due to their failures in the past, FinTech, also known as financial technology, is providing an alternative to classical retail banking as we know it because they use new innovative technologies to rethink the banking services offered to personal and commercial consumers across the globe. The traditional banking industry is facing important decisions they have to make, in the light of the newly arisen alternatives from FinTech companies and startups. The purpose of this thesis is to analyze disruptive innovation in Financial Technology using a case study of three specific areas, namely Crowdfunding, Robo-Advisory and Mobile Peer-to-Peer (P2P) Payments. We evaluated whether these three areas can be considered as disruptive innovations and how the Luxembourgish retail banks are reacting to these innovations. Comparing these reactions with a theoretical framework, we also analyzed if a theoretical pattern is observable. We did so by using Christensen’s theory of disruptive innovations and apply it to the three FinTech areas in a case study. Then, we applied an incumbent reaction framework of Charitou & Markides (2003) and compared it to the reaction of Luxembourgish retail banks, using the data we collected from industry experts in exploratory qualitative interviews.