IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v11y2019i5p1419-d211879.html
   My bibliography  Save this article

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

Author

Listed:
  • 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)

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.

Suggested Citation

  • Qun Zhao & Pei-Hsuan Tsai & Jin-Long Wang, 2019. "Improving Financial Service Innovation Strategies for Enhancing China’s Banking Industry Competitive Advantage during the Fintech Revolution: A Hybrid MCDM Model," Sustainability, MDPI, vol. 11(5), pages 1-29, March.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:5:p:1419-:d:211879
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/11/5/1419/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/11/5/1419/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Pei-Hsuan Tsai & Chin-Tsai Lin, 2018. "How Should National Museums Create Competitive Advantage Following Changes in the Global Economic Environment?," Sustainability, MDPI, vol. 10(10), pages 1-20, October.
    2. Faridah Djellal & Faïz Gallouj, 1999. "Services and the search for relevant innovation indicators: a review of national and international surveys," Science and Public Policy, Oxford University Press, vol. 26(4), pages 218-232, August.
    3. Opricovic, Serafim & Tzeng, Gwo-Hshiung, 2007. "Extended VIKOR method in comparison with outranking methods," European Journal of Operational Research, Elsevier, vol. 178(2), pages 514-529, April.
    4. P. L. Yu, 1973. "A Class of Solutions for Group Decision Problems," Management Science, INFORMS, vol. 19(8), pages 936-946, April.
    5. Gudiel Pineda, Pedro Jose & Liou, James J.H. & Hsu, Chao-Che & Chuang, Yen-Ching, 2018. "An integrated MCDM model for improving airline operational and financial performance," Journal of Air Transport Management, Elsevier, vol. 68(C), pages 103-117.
    6. Joe Tidd & Frank M Hull (ed.), 2003. "Service Innovation:Organizational Responses to Technological Opportunities & Market Imperatives," World Scientific Books, World Scientific Publishing Co. Pte. Ltd., number p294.
    7. Chen, Shih-Hsin & Lin, Wei-Ting, 2018. "Analyzing determinants for promoting emerging technology through intermediaries by using a DANP-based MCDA framework," Technological Forecasting and Social Change, Elsevier, vol. 131(C), pages 94-110.
    8. Raghuram G. Rajan & Luigi Zingales, 2001. "The Influence of the Financial Revolution on the Nature of Firms," American Economic Review, American Economic Association, vol. 91(2), pages 206-211, May.
    9. Lee, In & Shin, Yong Jae, 2018. "Fintech: Ecosystem, business models, investment decisions, and challenges," Business Horizons, Elsevier, vol. 61(1), pages 35-46.
    10. Nicolai J. Foss & Keld Laursen & Torben Pedersen, 2011. "Linking Customer Interaction and Innovation: The Mediating Role of New Organizational Practices," Organization Science, INFORMS, vol. 22(4), pages 980-999, August.
    11. Gordon Burtch & Anindya Ghose & Sunil Wattal, 2013. "An Empirical Examination of the Antecedents and Consequences of Contribution Patterns in Crowd-Funded Markets," Information Systems Research, INFORMS, vol. 24(3), pages 499-519, September.
    12. Carayannis, Elias G. & Ferreira, João J.M. & Jalali, Marjan S. & Ferreira, Fernando A.F., 2018. "MCDA in knowledge-based economies: Methodological developments and real world applications," Technological Forecasting and Social Change, Elsevier, vol. 131(C), pages 1-3.
    13. Gallouj, Faiz, 2002. "Innovation in services and the attendant old and new myths," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 31(2), pages 137-154.
    14. Opricovic, Serafim & Tzeng, Gwo-Hshiung, 2004. "Compromise solution by MCDM methods: A comparative analysis of VIKOR and TOPSIS," European Journal of Operational Research, Elsevier, vol. 156(2), pages 445-455, July.
    15. Liu, Chih-Hsing Sam & Chou, Sheng-Fang, 2016. "Tourism strategy development and facilitation of integrative processes among brand equity, marketing and motivation," Tourism Management, Elsevier, vol. 54(C), pages 298-308.
    16. Faïz Gallouj, 2002. "Innovation in services and the attendant myths," Post-Print halshs-00006854, HAL.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Laura Studen & Victor Tiberius, 2020. "Social Media, Quo Vadis? Prospective Development and Implications," Future Internet, MDPI, vol. 12(9), pages 1-22, August.
    2. Horim Kim & Jaeyoung Kim & Kyungmyung Jang & Jaemin Han, 2020. "Are the Blockchain-Based Patents Sustainable for Increasing Firm Value?," Sustainability, MDPI, vol. 12(5), pages 1-17, February.
    3. Guan, Chao & Yu, Bo & Bi, Sheng, 2021. "A novel profit cutting mechanism for Chinese Banks: Theory and Multi-dimensional evidence," The North American Journal of Economics and Finance, Elsevier, vol. 58(C).
    4. Yi Wang & Yafei Yang & Zhaoxiang Qin & Yefei Yang & Jun Li, 2023. "A Literature Review on the Application of Digital Technology in Achieving Green Supply Chain Management," Sustainability, MDPI, vol. 15(11), pages 1-18, May.
    5. Pei-Hsuan Tsai & Chih-Jou Chen & Ho-Chin Yang, 2021. "Using Porter’s Diamond Model to Assess the Competitiveness of Taiwan’s Solar Photovoltaic Industry," SAGE Open, , vol. 11(1), pages 21582440209, January.
    6. Tsai, Pei-Hsuan, 2020. "Strategic evaluation criteria to assess competitiveness of the service industry in Taiwan," Journal of Policy Modeling, Elsevier, vol. 42(6), pages 1287-1309.
    7. Shuping Li & Xinghua Liu & Chongren Wang, 2020. "The Influence of Internet Finance on the Sustainable Development of the Financial Ecosystem in China," Sustainability, MDPI, vol. 12(6), pages 1-15, March.
    8. Tsai, Pei-Hsuan & Chen, Chih-Jou, 2021. "Entertainment in retailing: Challenges and opportunities in the TV game console industry," Journal of Retailing and Consumer Services, Elsevier, vol. 60(C).
    9. Ali Aghazadeh Ardebili & Elio Padoano & Najmeh Rahmani, 2020. "Waste Reduction for Green Service Supply Chain—the Case Study of a Payment Service Provider in Iran," Sustainability, MDPI, vol. 12(5), pages 1-22, February.
    10. Santoso Wibowo & Lakshmi Grandhi & Srimannarayana Grandhi & Marilyn Wells, 2022. "A Fuzzy Multicriteria Group Decision Making Approach for Evaluating and Selecting Fintech Projects," Mathematics, MDPI, vol. 10(2), pages 1-14, January.
    11. Francisco Javier Forcadell & Elisa Aracil & Fernando Úbeda, 2019. "The Influence of Innovation on Corporate Sustainability in the International Banking Industry," Sustainability, MDPI, vol. 11(11), pages 1-15, June.
    12. Tsai, Pei-Hsuan & Lin, Guan-Yi & Zheng, Yu-Lin & Chen, Yi-Chong & Chen, Pao-Zhen & Su, Zheng-Cheng, 2020. "Exploring the effect of Starbucks' green marketing on consumers' purchase decisions from consumers’ perspective," Journal of Retailing and Consumer Services, Elsevier, vol. 56(C).
    13. Pei-Hsuan Tsai & Chih-Jou Chen & Jia-Wei Tang, 2021. "Key Factors Influencing Talent Retention and Turnover in Convenience Stores: A Comparison of Managers’ and Employees’ Perspectives," SAGE Open, , vol. 11(4), pages 21582440211, December.
    14. Fengsheng Chien & Chia-Nan Wang & Ka Yin Chau & Van Thanh Nguyen & Viet Tinh Nguyen, 2021. "Sustainability in the Business Sector: A Fuzzy Multicriteria Decision-Making Model for Financial Leasing Company Selection of the Vietnamese SMEs," SAGE Open, , vol. 11(3), pages 21582440211, July.
    15. Haiyang Shang & Fang Su & Serhat Yüksel & Hasan Dinçer, 2021. "Identifying the Strategic Priorities of the Technical Factors for the Sustainable Low Carbon Industry Based on Macroeconomic Conditions," SAGE Open, , vol. 11(2), pages 21582440211, May.
    16. Francisca Sempere-Ripoll & Sofia Estelles-Miguel & Ronald Rojas-Alvarado & Jose-Luis Hervas-Oliver, 2020. "Does Technological Innovation Drive Corporate Sustainability? Empirical Evidence for the European Financial Industry in Catching-Up and Central and Eastern Europe Countries," Sustainability, MDPI, vol. 12(6), pages 1-19, March.
    17. Mashaal A. M. Saif & Nazimah Hussin & Maizaitulaidawati Md Husin & Ayed Alwadain & Ayon Chakraborty, 2022. "Determinants of the Intention to Adopt Digital-Only Banks in Malaysia: The Extension of Environmental Concern," Sustainability, MDPI, vol. 14(17), pages 1-32, September.
    18. Wen-Kuo Chen & Venkateswarlu Nalluri & Man-Li Lin & Ching-Torng Lin, 2021. "Identifying Decisive Socio-Political Sustainability Barriers in the Supply Chain of Banking Sector in India: Causality Analysis Using ISM and MICMAC," Mathematics, MDPI, vol. 9(3), pages 1-23, January.
    19. Nien-Ping Chen & Kao-Yi Shen & Chiung-Ju Liang, 2021. "Hybrid Decision Model for Evaluating Blockchain Business Strategy: A Bank’s Perspective," Sustainability, MDPI, vol. 13(11), pages 1-22, May.
    20. Vineet Paliwal & Shalini Chandra & Suneel Sharma, 2020. "Blockchain Technology for Sustainable Supply Chain Management: A Systematic Literature Review and a Classification Framework," Sustainability, MDPI, vol. 12(18), pages 1-39, September.
    21. Ekaterina A. Potapova & Maxim O. Iskoskov & Natalia V. Mukhanova, 2022. "The Impact of Digitalization on Performance Indicators of Russian Commercial Banks in 2021," JRFM, MDPI, vol. 15(10), pages 1-20, October.
    22. Qi Jun & Hasan Dinçer & Serhat Yüksel, 2021. "Stochastic hybrid decision‐making based on interval type 2 fuzzy sets for measuring the innovation capacities of financial institutions," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(1), pages 573-593, January.
    23. Do-Hyung Park, 2019. "Virtuality Changes Consumer Preference: The Effect of Transaction Virtuality as Psychological Distance on Consumer Purchase Behavior," Sustainability, MDPI, vol. 11(23), pages 1-16, November.
    24. Arthur Jin Lin & Hai-Yen Chang, 2019. "Business Sustainability Performance Evaluation for Taiwanese Banks—A Hybrid Multiple-Criteria Decision-Making Approach," Sustainability, MDPI, vol. 11(8), pages 1-26, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chen, Lisa Y. & Wang, Tien-Chin, 2009. "Optimizing partners' choice in IS/IT outsourcing projects: The strategic decision of fuzzy VIKOR," International Journal of Production Economics, Elsevier, vol. 120(1), pages 233-242, July.
    2. Serafim Opricovic, 2009. "A Compromise Solution in Water Resources Planning," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 23(8), pages 1549-1561, June.
    3. Tsai, Pei-Hsuan & Kao, Ya-Ling & Kuo, Szu-Yu, 2023. "Exploring the critical factors influencing the outlying island talent recruitment and selection evaluation model: Empirical evidence from Penghu, Taiwan," Evaluation and Program Planning, Elsevier, vol. 99(C).
    4. Tsai, Pei-Hsuan & Lin, Guan-Yi & Zheng, Yu-Lin & Chen, Yi-Chong & Chen, Pao-Zhen & Su, Zheng-Cheng, 2020. "Exploring the effect of Starbucks' green marketing on consumers' purchase decisions from consumers’ perspective," Journal of Retailing and Consumer Services, Elsevier, vol. 56(C).
    5. Pei-Hsuan Tsai & Chih-Jou Chen & Ho-Chin Yang, 2021. "Using Porter’s Diamond Model to Assess the Competitiveness of Taiwan’s Solar Photovoltaic Industry," SAGE Open, , vol. 11(1), pages 21582440209, January.
    6. Tsai, Pei-Hsuan, 2020. "Strategic evaluation criteria to assess competitiveness of the service industry in Taiwan," Journal of Policy Modeling, Elsevier, vol. 42(6), pages 1287-1309.
    7. S. Meysam Mousavi & Fariborz Jolai & Reza Tavakkoli-Moghaddam, 2013. "A Fuzzy Stochastic Multi-Attribute Group Decision-Making Approach for Selection Problems," Group Decision and Negotiation, Springer, vol. 22(2), pages 207-233, March.
    8. Shu-Kung Hu & James J. H. Liou & Ming-Tsang Lu & Yen-Ching Chuang & Gwo-Hshiung Tzeng, 2018. "Improving NFC Technology Promotion for Creating the Sustainable Education Environment by Using a Hybrid Modified MADM Model," Sustainability, MDPI, vol. 10(5), pages 1-24, April.
    9. Bilbao-Terol, Amelia & Arenas-Parra, Mar & Cañal-Fernández, Verónica & Antomil-Ibias, José, 2014. "Using TOPSIS for assessing the sustainability of government bond funds," Omega, Elsevier, vol. 49(C), pages 1-17.
    10. Kaya, Tolga & Kahraman, Cengiz, 2010. "Multicriteria renewable energy planning using an integrated fuzzy VIKOR & AHP methodology: The case of Istanbul," Energy, Elsevier, vol. 35(6), pages 2517-2527.
    11. Başak Bulut Karageyik & Şule Şahin, 2017. "Determination of the Optimal Retention Level Based on Different Measures," JRFM, MDPI, vol. 10(1), pages 1-21, January.
    12. Chunguang Bai & Behnam Fahimnia & Joseph Sarkis, 2017. "Sustainable transport fleet appraisal using a hybrid multi-objective decision making approach," Annals of Operations Research, Springer, vol. 250(2), pages 309-340, March.
    13. Gudiel Pineda, Pedro Jose & Liou, James J.H. & Hsu, Chao-Che & Chuang, Yen-Ching, 2018. "An integrated MCDM model for improving airline operational and financial performance," Journal of Air Transport Management, Elsevier, vol. 68(C), pages 103-117.
    14. Amir Hossein Salimi & Amir Noori & Hossein Bonakdari & Jafar Masoompour Samakosh & Ehsan Sharifi & Mohammadreza Hassanvand & Baharam Gharabaghi & Mehdi Agharazi, 2020. "Exploring the Role of Advertising Types on Improving the Water Consumption Behavior: An Application of Integrated Fuzzy AHP and Fuzzy VIKOR Method," Sustainability, MDPI, vol. 12(3), pages 1-33, February.
    15. Kao-Yi Shen, 2017. "Compromise between Short- and Long-Term Financial Sustainability: A Hybrid Model for Supporting R&D Decisions," Sustainability, MDPI, vol. 9(3), pages 1-17, March.
    16. Wu, Hung-Yi & Lin, Yi-Kuei & Chang, Chi-Hsiang, 2011. "Performance evaluation of extension education centers in universities based on the balanced scorecard," Evaluation and Program Planning, Elsevier, vol. 34(1), pages 37-50, February.
    17. Yu-Sheng Kao & Kazumitsu Nawata & Chi-Yo Huang, 2019. "Evaluating the Performance of Systemic Innovation Problems of the IoT in Manufacturing Industries by Novel MCDM Methods," Sustainability, MDPI, vol. 11(18), pages 1-33, September.
    18. Gwo-Hshiung Tzeng & Chi-Yo Huang, 2012. "Combined DEMATEL technique with hybrid MCDM methods for creating the aspired intelligent global manufacturing & logistics systems," Annals of Operations Research, Springer, vol. 197(1), pages 159-190, August.
    19. Ming-Tsang Lu & Gwo-Hshiung Tzeng & Hilary Cheng & Chih-Cheng Hsu, 2015. "Exploring mobile banking services for user behavior in intention adoption: using new hybrid MADM model," Service Business, Springer;Pan-Pacific Business Association, vol. 9(3), pages 541-565, September.
    20. Francesco Bogliacino & Mario Pianta, 2016. "The Pavitt Taxonomy, revisited: patterns of innovation in manufacturing and services," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 33(2), pages 153-180, August.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:11:y:2019:i:5:p:1419-:d:211879. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.