Banking and innovation : the case of payment systems modernisation in Thailand
This thesis examines the role of banks in influencing innovation and analyses their links to payment systems modernisation. The main argument is that banks are a type of technological institution having the potential to promote innovation, although such roles may be implicit or secondary. This role is investigated in eight chapters. The first three chapters review the major innovation models and progress in payment system. An analytical framework, based on evolutionary and resource-based views, is developed to examine how resources and routines which reflect an organisation's stock of skills, influence innovation, and assist them in sustaining competitive advantage. The following three chapters present the empirical results. In a survey of innovation in the banking industry, research results suggested that although there were relatively high levels of information technology awareness and application, particularly in payment system automation, there remained a moderate level of innovative capabilities among the banks studied. Further analysis through four mini case studies of the largest commercial banks also suggested similar increases in technological investments, but replication rates were also relatively high. Thus, it is argued that such investments may gain, but not sustain, competitive advantage, whereby the latter requires banks to innovate by acquiring, accumulating, and advancing their stock of skills. In this respect, the role of the central bank in creating a conducive environment for innovation is also important which may be seen through its involvement in payment systems modernisation. The final two chapters discuss the policy and research implications. It is argued that central bank policies oriented towards payment system reform, along with new payment product and services development by commercial banks, have come to play an important part in promoting technological innovation in banking. Such roles in reforming rudimentary payment systems have helped strengthen national information infrastructures, especially in emerging market economies, and moreover, have influenced the set-up of a national innovation system in banking which underpins economic development.