Short answer

Prioritize partnership strategies with fintech innovators in emerging markets, focusing on co-creation and ecosystem development rather than solely on competitive differentiation.

Field
Innovation & Markets
Source
Econstor (Econstor) (2017)
Method
Exploratory study
Evidence
Moderate effect

In emerging markets, financial institutions are more likely to collaborate with fintech companies rather than view them solely as disruptive threats, due to a nascent fintech sector and significant market entry barriers. This innovation & markets research insight is drawn from a 2017 study published in Econstor (Econstor). Using Exploratory study, researchers explored how this design variable affects real-world outcomes. The key design takeaway: Prioritize partnership strategies with fintech innovators in emerging markets, focusing on co-creation and ecosystem development rather than solely on competitive differentiation.

Study
Innovation & MarketsHigh ImpactModerate effect

Fintech Collaboration Outperforms Disruption in Emerging Markets

In emerging markets, financial institutions are more likely to collaborate with fintech companies rather than view them solely as disruptive threats, due to a nascent fintech sector and significant market entry barriers.

Econstor (Econstor) · 2017

01

Key Findings

  • 01The fintech sector in the MENA region is nascent but shows potential for disruption in specific product and customer segments.
  • 02Regulatory, structural, and cultural obstacles hinder widespread fintech adoption.
  • 03Incumbents' primary strategy is bank-fintech collaboration, which is contrary to traditional disruptive innovation theory.
  • 04A framework for a collaborative financial services platform embedded in a broader ecosystem is proposed.
02

Application

Design takeaway

Prioritize partnership strategies with fintech innovators in emerging markets, focusing on co-creation and ecosystem development rather than solely on competitive differentiation.

How to apply

When designing a new financial service for an emerging market, research potential fintech partners and explore opportunities for joint ventures or integrated service offerings.

Project actions

  • 01When researching a new market, consider the existing ecosystem and potential for collaboration.
  • 02Analyze regulatory and cultural factors that might influence the adoption of new technologies.
03

Method & Evidence

AimTo investigate how financial services industry participants perceive the effect of digital disruption and explore strategies adopted by incumbents in the face of potential disruption from fintech challengers in emerging markets.
MethodExploratory study
ProcedureStakeholders from the financial ecosystem in the Middle East and North Africa (MENA) were interviewed to gather perceptions on fintech disruption and incumbent strategies.
ContextFinancial services industry in emerging markets (MENA region)

Variables

IVPerceived disruptive potential of fintech, market entry barriers (regulatory, structural, cultural)
DVIncumbent strategy (collaboration vs. competition)
CVFinancial services industry participants, emerging market context (MENA)
04

Strengths & Limitations

Strengths

  • +Focuses on the unique context of emerging markets, which is often overlooked in disruptive innovation literature.
  • +Provides a practical strategic insight (collaboration) that challenges established theories.

Limitations

The findings are specific to the MENA region and may not apply to all emerging markets due to differing economic, regulatory, and cultural landscapes.

Reliability & validity

The exploratory nature of the study and focus on a specific region might limit generalizability. Findings are based on stakeholder perceptions, which can be subjective. Further quantitative research would be needed to establish stronger reliability and validity.

Think critically

To what extent do the 'regulatory, structural, and cultural obstacles' identified in the MENA region generalize to other emerging markets, and how might these differences necessitate alternative incumbent strategies?

05

Design Principles

"In nascent markets with significant entry barriers, collaborative innovation can accelerate value creation and market penetration more effectively than direct disruption."

Understanding how incumbents perceive and respond to new technological entrants is crucial for strategizing market entry and product development. This insight suggests that fostering partnerships, rather than solely focusing on competitive strategies, can be a more effective approach in these specific contexts.

06

What This Means for Your Design

In places like the Middle East and North Africa, new financial technology (fintech) isn't causing huge problems for old banks yet. Instead of fighting it, banks are choosing to work with fintech companies. This is because it's hard for fintech to take off there due to rules and culture, and working together helps everyone innovate faster.

How to use in your project

  • 1.Use this study to justify a collaborative approach in your design strategy for a new product in an emerging market.
  • 2.Reference the findings to explain why direct competition might not be the most effective strategy.
07

Add to My Project

08

Quick Cite

Paragraph starter

This research highlights that in emerging markets like the MENA region, the perceived threat of fintech disruption is tempered by the sector's nascent stage and significant market entry barriers. Consequently, incumbent financial institutions are strategically opting for collaboration with fintech firms over direct competition. This approach, which diverges from conventional disruptive innovation theory, suggests that fostering partnerships and building integrated platforms can be a more effective pathway to value creation and innovation in these specific contexts.

09

Source

Econstor (Econstor)

The Promise of Fintech in Emerging Markets : Not as Disruptive

journal · 2017

View source

Questions About This Research

What does the research say about fintech collaboration outperforms disruption in emerging markets?
Prioritize partnership strategies with fintech innovators in emerging markets, focusing on co-creation and ecosystem development rather than solely on competitive differentiation. Evidence: Econstor (Econstor) (2017).
Why does "Fintech Collaboration Outperforms Disruption in Emerging Markets" matter for design?
Understanding how incumbents perceive and respond to new technological entrants is crucial for strategizing market entry and product development. This insight suggests that fostering partnerships, rather than solely focusing on competitive strategies, can be a more effective approach in these specific contexts.
How can designers apply this research?
Prioritize partnership strategies with fintech innovators in emerging markets, focusing on co-creation and ecosystem development rather than solely on competitive differentiation.
What were the main findings?
The fintech sector in the MENA region is nascent but shows potential for disruption in specific product and customer segments.. Regulatory, structural, and cultural obstacles hinder widespread fintech adoption.. Incumbents' primary strategy is bank-fintech collaboration, which is contrary to traditional disruptive innovation theory.. A framework for a collaborative financial services platform embedded in a broader ecosystem is proposed.
What research method was used?
Exploratory study.
How strong is the evidence?
Evidence strength is rated Moderate effect, based on a 2017 journal from Econstor (Econstor).
What should I do differently in my next project?
When designing a new financial service for an emerging market, research potential fintech partners and explore opportunities for joint ventures or integrated service offerings.
What are the limitations?
The study is exploratory and focused on a specific region (MENA), limiting generalizability to all emerging markets.