Transforming the scope of the bank through fintechs: toward a modularized network governance. Issue 1 (8th December 2021) - Łasak, Piotr
Abstract : Purpose: The aim of this paper is to develop a theoretical framework of the transformation of the bank's scope driven by fintechs. Design/methodology/approach: The conceptual foundations for a comprehensive transformation of the bank governance through financial technologies (fintechs) are underexplored. In order to develop such foundations, the authors adopt transaction cost economics (TCE), the concepts of external enablers and a modular organizational design, as well as a systematic literature review. Findings: The results point to three scenarios of the banks' scope, depending on the adopted technological mechanisms and related effects that change the characteristics of organizational activities, justifying new bank boundaries. The most advanced application of fintechs results in a modularized network scenario leading to the emergence of financial ecosystems. Research limitations/implications: The proposed micro-perspective of decisional rules in an individual organization is unique in the current literature that predominantly focuses on the banking sector at large. The identified scenarios are valuable for solid theoretical and empirical grounding and can be further exploited in decision simulations and empirical studies. Practical implications: The proposed theoretical framework points to the rationales and consequences of adopted technologies for the boundaries of a bank organization. Originality/value: This paper provides three contributions to the literature on technology-driven transformations of organizations with a focus on banks. First, the authors elaborate a theoretical framework for establishing the bank's boundaries in response to the expansion of financial technologies. Second, the authors add to the knowledge accumulation in the area of organizational transformations based on the ICT adoption, in particular, to the literature on the modular organizational design. Third, the authors contribute to the decision-maker practice by proposing the alternative options of banks' scope transformed through fintechs.