Banking on Innovation (eBook)

Acknowledgments 6
Preface 7
Contents 9
Abbreviations 12
Chapter 1 Introduction 15
Chapter 2 Payment Systems: An Innovation Perspective 20
2.1 Models of Innovation 21
2.1.1 The Linear Model 21
2.1.2 The Diffusion Model 22
2.1.3 The Innovation Dynamics Model 23
2.1.4 Teece’s Model 24
2.1.5 The People Perspective 24
2.1.6 The Profit Chain 25
2.1.7 The Services Model 26
2.1.8 The Developing Country Model 26
2.2 Evolutionary and Resource-Based Models 28
2.2.1 Evolutionary Perspectives 28
2.2.2 Schumpeter 28
2.2.3 Freeman 29
2.2.4 Lundvall 30
2.2.5 Nelson and Winter 31
2.3 Resource-Based Perspectives 33
2.4 Comparison of Views 34
2.5 Analytical Framework 36
2.5.1 Types of Resources-Routines 36
2.5.2 IT Resources 37
2.5.3 Source of Innovation 39
Chapter 3 Strategic Approaches to Payment Efficiency and Innovation 41
3.1 The Minimalist Approach: Australia, Canada, Finland, United Kingdom 42
3.1.1 Australia 43
3.1.2 Canada 44
3.1.3 Finland 46
3.1.4 United Kingdom 47
3.2 The Competitive Approach: United States 48
3.3 The Public Service Approach: Thailand 50
3.4 Comparison of Strategic Approaches 57
3.5 The Role of the Central Bank in Promoting Innovation 60
3.5.1 Technological Innovations 60
3.5.2 Regulatory Innovations 62
3.5.3 Financial Innovations 63
3.5.4 Key Policy Issues 64
Chapter 4 The Analysis of Payment Systems Efficiency 66
4.1 Analytical Frameworks 67
4.1.1 The Risk-Cost Frontier Framework 67
4.1.2 The Settlement Delay-Liquidity Usage Framework 68
4.1.3 The Economies of Scale Framework 69
4.1.4 The Product Life-Cycle Framework 70
4.1.5 Payment Systems Efficiency Studies 71
4.2 Use of Payment Instruments and Implications on Efficiency 73
4.2.1 Cash Transactions 73
4.2.2 Cashless Transactions 79
4.2.3 A Model of Payment Instrument Use 81
4.2.4 Financial Services Infrastructure and X-Efficiency 85
4.2.5 Implications on Payment Systems Efficiency 89
4.3 Pricing of Central Bank Payment Services 91
4.3.1 Pricing Method and Payment Transactions 91
4.3.2 Fees and Central Bank Services 95
4.3.3 Costs and Revenue 97
4.3.4 A Model for Estimating Scale Economies in Large-Value Payment Systems 101
4.3.5 Key Issues 106
4.3.6 Policy Recommendations 107
Chapter 5 The Diffusion of Payment Innovations 111
5.1 Cross-Country Use of Cash and Electronic Payments 113
5.1.1 Alternative Indicator of Cash Use 116
5.2 Costs of Using Different Payment Instruments 119
5.2.1 Bank Payment Costs 119
5.2.2 Retailer Expense of Accepting Different Payment Instruments 120
5.2.3 Estimating the Number of Cash Transactions 121
5.3 Projecting Shares of Electronic and Cash Payments in Asia 122
5.3.1 Share of Electronic Payments in Non-Cash Transactions 123
5.3.2 Share of Cash Payments in Consumption 124
Chapter 6 Capability Development: The Banking Sector 127
6.1 Innovation in the Banking Sector 129
6.2 Payment Automation 134
6.3 Payment Routines 136
6.4 Innovative Capabilities 138
6.4.1 Indicators of Innovation 139
6.4.2 Sources of Information 140
6.4.3 Sources of Learning 141
6.4.4 Sources of Technological Capabilities 145
6.5 Interpreting the Survey 147
6.5.1 Replication of Technology 147
6.5.2 Replication of Payment Systems 150
6.5.3 Replication of Skills 152
Chapter 7 Capability Development: Commercial Banks 155
7.1 Siam Commercial Bank 155
7.1.1 The First Thai Bank 155
7.1.2 Role of IT 156
7.1.3 IT Development Plans 157
7.1.4 Bank Automation and Innovation 158
7.1.5 Sources of Innovation 159
7.2 Bangkok Bank 161
7.2.1 Thailand’s Largest Bank 161
7.2.2 Role of IT 162
7.2.3 Pioneer in Re-engineering 163
7.2.4 Sources of Innovation 164
7.3 Kasikornbank 167
7.3.1 Catalyst of Bank Re-engineering 167
7.3.2 Role of IT 167
7.3.3 Sources of Innovation 169
7.4 Krung Thai Bank 172
7.4.1 Innovative State Bank 172
7.4.2 Role of IT 172
7.4.3 Sources of Innovation 174
7.5 Lessons Learned 175
7.5.1 Banking Leadership 176
7.5.2 Role of Skilled Staff 176
7.5.3 Role of Re-engineering 178
7.5.4 Role of IT 179
7.5.5 Replication of Resources 180
Chapter 8 Future Challenges 183
References 187
Index 199