At the Intersection of Fintech and Strategy: Case Studies of the Competitive Strategies of Fintech Platforms

Abstract

In recent years, digital technologies have been applied to generate fintech innovations in the form of new services and business models within the global financial sector. But in spite of the global proliferation of fintech start-ups, market estimates put the failure rate of these new fintech platforms at roughly 90%. The high mortality rate suggests two possibilities. First, there may be a lack of knowledge on the appropriate strategies to adopt. Second, the traditional prescriptions for strategy may be less relevant in the context of fintech platforms. The objective of my thesis is to lay the groundwork for future research by first ascertaining either or both of these possibilities based on what is currently known. To this end, I first present a comprehensive review of the fintech literature, which found that there is a relative paucity of research on fintech strategies and important limitations associated with the existing works. I constructed a research agenda consisting of several open questions based on my analysis to provide directions for future research in this area. Next, building on this research agenda, I addressed the research question “How do competitive strategies influence the performance of successful fintech platforms?”, and explored if distinct strategies are required for different types of fintech platforms with a case study of four market-leading fintech platforms in China. Finally, I investigated if different strategies would be required at different points along a fintech platform’s development trajectory. Based on a case study of Ppdai.com, one of the world’s largest online lending platforms, I developed a process model that sheds light on the underlying mechanisms of this phenomenon. Overall, my thesis demonstrates that the competitive strategies employed have to be contingent on the nature of fintech services provided by the platform, and reveals that the strategies have to evolve over time with the development of the platform.