Impact and effects of innovations in the financial industry in Germany

An empirical analysis

Masterarbeit , 2021 , 94 Seiten , Note: 1,0

BWL - Investition und Finanzierung

The internet and digitalization tremendously affected many economic sectors, and both take increasingly influence over the financial services industry in Germany. New founded start-up companies, so-called FinTechs, connect innovative technologies with financial products and services and attack established players of the financial industry. While the Fintech industry constitutes a new dynamic and short-living market environment, the innovative strengths of new market entrants put pressure on financial service companies and banks in Germany. To assess the importance and impact of FinTechs on the financial industry and economy in Germany, a comprehensive amount of data including market size and market structure is needed. Particularly against the background of associated chances and risks of growing FinTech industry, an examination of the market size and impact is of tremendous importance to examine the innovative potential of FinTech business models. Low interest rates and risky business models in the aftermath of the financial crisis proved a lack of innovative thinking of banks and financial service companies in Germany. Indeed, FinTechs tend to have a stronger focus on customer needs thus closing existing market gaps better than traditional banks. Undoubtedly, this observation manifests in corporate finance when traditional banks neglect small and medium enterprises as potential clients. Particularly in market niches, FinTechs establish digital marketplaces connecting customers and facilitating the consumption of core banking products and services. Recently, the European Union announced that existing market entry barriers for FinTech start-ups would be dispelled. After the enacting of Basel II and Basel III Schindele and Szczesny (2015) analyse that core banking activities such as e. g. credit lending for small and medium enterprises became less profitable and partly even unprofitable for banks. While Dorfleitner and Hornuf (2016) confirm that notion, they highlight that the promotion of FinTech start-ups is constrained with risks but to judge the chances and risks of collaborations between FinTechs and established banks. Indeed, sufficient research is required to investigate the FinTech market in Germany and to examine how financial innovations and digitalization can help incumbents.

Inhaltsverzeichnis (Table of Contents)

• 1 Introduction
  • 1.1 Abstract
  • 1.2 Research Method and Questions
  • 1.3 Research Approach and Limitations of the Study
• 2 Literature Review
  • 2.1 Definition of Banking
  • 2.2 The German Banking System
  • 2.3 Types of Banks
  • 2.4 Definition of FinTech and background
  • 2.5 Modern and open banking
• 3 Methodology
  • 3.1 Research methodology and justification of approach
  • 3.2 Data collection and analysis
  • 3.3 Technique of data collection, verification, and limitations
  • 3.4 Philosophy of the research
• 4 Theoretical Framework
  • 4.1 Definition and Management of Innovation
  • 4.2 Innovation Culture and Strategy
  • 4.2 The innovation process and framework requirements
  • 4.4 Fintech Business Models
    • 4.4.1 Crowdfunding, -investing and -lending
    • 4.4.2 Credit, Factoring and Payments
    • 4.4.3 Investment and banking
    • 4.4.4. Robo-Advice and Associated Services
  • 4.5 Impact and effects of regulatory and environmental changes on FinTechs
  • 4.6 Comparison of FinTech and Banking Business Models
• 5 Research Study
  • 5.1 Conceptual Framework
  • 5.2 Study Design and Questions
  • 5.3 Key findings of collaborations between FinTechs and banks
    • 5.3.1 Hypothesis 1: Banks facilitate the market entry of FinTech start-ups
    • 5.3.2 Hypothesis 2: A) FinTech start-ups with high financial funds apply for proper banking licenses rather than initializing own collaborations and B) banks increase FinTech's profits
    • 5.3.3 Hypothesis 3: Incumbents facilitate FinTech start-ups the development of new products and services
  • 5.4 Enablers of cooperation between FinTech and market incumbents
    • 5.4.1 Summary of key results
    • 5.4.2 Practical Example: Design Thinking as instrument to foster innovation in banking

Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)

This thesis examines the impact and effects of innovation within the financial industry in Germany, with a particular focus on FinTechs. The study aims to identify how FinTechs are changing the traditional banking landscape and explore the nature of collaborations between FinTech start-ups and established banks. The research uses empirical data and a theoretical framework to analyze the key drivers and challenges of this evolving ecosystem.

• Impact of FinTechs on the German banking landscape
• Collaborations between FinTechs and traditional banks
• Enablers and challenges of FinTech innovation
• The role of regulation and environmental factors on FinTech development
• Comparison of FinTech and banking business models

Zusammenfassung der Kapitel (Chapter Summaries)

• Chapter 1 provides an overview of the research topic, outlining the study's objectives, research questions, and methodology. It also addresses the limitations of the study.
• Chapter 2 reviews existing literature on banking, the German banking system, FinTech, and open banking. It defines key concepts and provides background information on the industry.
• Chapter 3 details the research methodology employed in the study, including data collection, analysis, and the philosophy underlying the research approach.
• Chapter 4 explores the theoretical framework, defining innovation and its management, examining innovation culture and strategy, and analyzing the innovation process. This chapter also delves into FinTech business models, examining various types and their impact on the financial industry.
• Chapter 5 presents the research study, outlining the conceptual framework, study design, and key findings. It examines hypotheses about the relationship between FinTechs and banks and explores enablers of cooperation between the two sectors. This chapter also includes a practical example of design thinking as a tool for innovation in banking.

Schlüsselwörter (Keywords)

This study focuses on the intersection of financial innovation, FinTech, and the German banking industry. It examines the impact of FinTechs on the traditional banking landscape, analyzing collaborations between FinTech startups and established banks. Key concepts include innovation management, business models, regulatory impact, and the use of design thinking to foster innovation.

• Hochschule: University of Warwick (Warwick Manufacturing Group)
• Note: 1,0
• Autor: Master of Arts Tobias Brinkmann (Autor:in)
• Erscheinungsjahr: 2021
• Seiten: 94
• Katalognummer: V1165296
• ISBN (PDF): 9783346573223
• ISBN (Buch): 9783346573230
• Sprache: Englisch
• Schlagworte: FinTech, Innovation