e-Innovation and financial services

The Internet, a classic Schumpeterian innovation, has profoundly altered our lives and influenced the ways we do business. It is now widely accepted by policy makers, scholars, and enterprises that the Internet and related information technologies are the key drivers for economic development and their growth deserves particular attention. Financial industry is among the most capable of exploiting innovation in technology, because its products and services are generally intangible information that does not require physical delivery and can be digitalized and distributed via Internet to customers (Wright, 2002). During this "e" revolution, there are two main changes in banks. One change is that banks have modified their business strategy to reorganize and redesign their financial products and business process around the Internet. Another change is that the performance of banks is improved by reducing transaction and production costs, and increasing work efficiency. Lately, the emergence and diffusion of the advanced wireless communication technology and the rise in popularity of mobile devices enable banks provide products and services from a wired network to a wireless network, which brings the mobile banking services. The contribution of this dissertation is better understanding of these two changes (i.e. the impact of the Internet on organization structure and firm performance) among banks and the factors that influencing the adoption of the mobile banking. The dissertation has three parts. The first part is case study of two banks. I seek to explore organization structure change under the impact of the Internet. I find that firms' internal hierarchy is reduced, standardization is deepened, and external partnership is increased. But firm size and specialization has no significant change. The second part is an empirical test of the effect of the Internet on bank performance. By collecting and examining data in Japanese market, I conclude that Internet adoption improves bank profitability primarily through increased revenues from commission and fees income, non-interest income, as well as the reduction of non-interest expense and general & administrative expense. The third part is conceptual paper introducing the idea of mobile banking and exploring the factors that influencing its adoption in a multilevel (i.e. at the enabling environment level; at the national and industry level and at the individual level; at the individual level).