Banking on Innovation

by Khiaonarong, Tanai; Liebenau, Jonathan

• ISBN13: 9783790823325
• ISBN10: 3790823325
• Format: Hardcover
• Copyright: 2009-07-01
• Publisher: Physica Verlag

Summary

Innovation in banking should be directed at improving the infrastructure that fosters efficient financial services and international trade. In this work, innovation theory is used to show how modern payment systems have transformed the technology of banking and facilitated changes in the strategy and structure of financial services organisations. Design, implementation and dissemination of payment systems are described and the analysis of their costs and benefits is combined with case studies of banks undergoing change. By studying firm capabilities, competencies, and resources, the approach is extended to services in general and linked to the ability of firms to compete and promote national economies. Payment systems vary and advanced and developing economies face obstacles in their legal and technical infrastructure, and maturity of banks. By adopting an international perspective, the book offers a unique comparative analysis that shows what kind of investments are likely to be effective.

Table of Contents

Introduction	p. 1
Payment Systems: An Innovation Perspective	p. 7
Models of Innovation	p. 8
The Linear Model	p. 8
The Diffusion Model	p. 9
The Innovation Dynamics Model	p. 10
Teece's Model	p. 11
The People Perspective	p. 11
The Profit Chain	p. 12
The Services Model	p. 13
The Developing Country Model	p. 13
Evolutionary and Resource-Based Models	p. 15
Evolutionary Perspectives	p. 15
Schumpeter	p. 15
Freeman	p. 16
Lundvall	p. 17
Nelson and Winter	p. 18
Resource-Based Perspectives	p. 20
Comparison of Views	p. 21
Analytical Framework	p. 23
Types of Resources-Routines	p. 23
IT Resources	p. 24
Source of Innovation	p. 26
Strategic Approaches to Payment Efficiency and Innovation	p. 29
The Minimalist Approach: Australia, Canada, Finland, United Kingdom	p. 30
Australia	p. 31
Canada	p. 32
Finland	p. 34
United Kingdom	p. 35
The Competitive Approach: United States	p. 36
The Public Service Approach: Thailand	p. 38
Comparison of Strategic Approaches	p. 45
The Role of the Central Bank in Promoting Innovation	p. 48
Technological Innovations	p. 48
Regulatory Innovations	p. 50
Financial Innovations	p. 51
Key Policy Issues	p. 52
The Analysis of Payment Systems Efficiency	p. 55
Analytical Frameworks	p. 56
The Risk-Cost Frontier Framework	p. 56
The Settlement Delay-Liquidity Usage Framework	p. 57
The Economies of Scale Framework	p. 58
The Product Life-Cycle Framework	p. 59
Payment Systems Efficiency Studies	p. 60
Use of Payment Instruments and Implications on Efficiency	p. 62
Cash Transactions	p. 62
Cashless Transactions	p. 68
A Model of Payment Instrument Use	p. 70
Financial Services Infrastructure and X-Efficiency	p. 74
Implications on Payment Systems Efficiency	p. 78
Pricing of Central Bank Payment Services	p. 80
Pricing Method and Payment Transactions	p. 80
Fees and Central Bank Services	p. 84
Costs and Revenue	p. 86
A Model for Estimating Scale Economies in Large-Value Payment Systems	p. 90
Key Issues	p. 95
Policy Recommendations	p. 96
The Diffusion of Payment Innovations	p. 101
Cross-Country Use of Cash and Electronic Payments	p. 103
Alternative Indicator of Cash Use	p. 106
Costs of Using Different Payment Instruments	p. 109
Bank Payment Costs	p. 109
Retailer Expense of Accepting Different Payment Instruments	p. 110
Estimating the Number of Cash Transactions	p. 111
Projecting Shares of Electronic and Cash Payments in Asia	p. 112
Share of Electronic Payments in Non-Cash Transactions	p. 113
Share of Cash Payments in Consumption	p. 114
Capability Development: The Banking Sector	p. 117
Innovation in the Banking Sector	p. 119
Payment Automation	p. 124
Payment Routines	p. 126
Innovative Capabilities	p. 128
Indicators of Innovation	p. 129
Sources of Information	p. 130
Sources of Learning	p. 131
Sources of Technological Capabilities	p. 135
Interpreting the Survey	p. 137
Replication of Technology	p. 137
Replication of Payment Systems	p. 140
Replication of Skills	p. 142
Capability Development: Commercial Banks	p. 145
Siam Commercial Bank	p. 145
The First Thai Bank	p. 145
Role of IT	p. 146
IT Development Plans	p. 147
Bank Automation and Innovation	p. 148
Sources of Innovation	p. 149
Bangkok Bank	p. 151
Thailand's Largest Bank	p. 151
Role of IT	p. 152
Pioneer in Re-engineering	p. 153
Sources of Innovation	p. 154
Kasikornbank	p. 157
Catalyst of Bank Re-engineering	p. 157
Role of IT	p. 157
Sources of Innovation	p. 159
Krung Thai Bank	p. 162
Innovative State Bank	p. 162
Role of IT	p. 162
Sources of Innovation	p. 164
Lessons Learned	p. 165
Banking Leadership	p. 166
Role of Skilled Staff	p. 166
Role of Re-engineering	p. 168
Role of IT	p. 169
Replication of Resources	p. 170
Future Challenges	p. 173
References	p. 177
Index	p. 189
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