Traditional banks against fintech startups: a field investigation of a regional bank in Indonesia

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This research examines the way in which traditional banks are competing against the emerging fintech startups. This study identifies driving factors and uniqueness that illustrate the peculiar characteristics of incumbents, analyzes their internal readiness and capabilities, and examines their strategic response against fintech startups. In doing so, this paper examines Small Town Bank (STB)1, a regional bank in Indonesia, regarding its ability to innovate. Data are obtained from primary sources through internal and external questionnaires, as well as secondary data. The results of the study indicate that, in general, the bank already has a reasonably good innovation readiness, but there are several aspects that need to be noted, namely: optimization of current services, consolidation, and internal restructuration. Concurrently, while fintech has a very broad and massive technical and managerial impact, it does not mean that incumbent banks and traditional financial services cannot compete.

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    • Table 1. External and internal analysis instruments
    • Table 2. Respondent demographic profile
    • Table 3. Respondent demographic profile
    • Table 4. Demographic profile of STB customer respondents
    • Table 5. Rotated component matrix
    • Table 6. Correlation matrix
    • Table 7. Gap analysis between expectations and perceptions
    • Table 8. Gap analysis between expectations and weighted perceptions
    • Table 9. Number of STB networks (September 2018)
    • Table 10. Descriptive information of STB internal
    • Table 11. Internal readiness analysis
    • Table 12. Analysis of mean internal readiness
    • Table 13. Analysis of “Do not know” internal readiness