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An exploratory study of the financial and non-financial performance impacts of interactions between ecosystem actors of the FinTech revolution
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Date
2022
Authors
Browne, Oliver
Journal Title
Journal ISSN
Volume Title
Publisher
University College Cork
Published Version
Abstract
FinTech is an abbreviation of financial technology, characterised by start-ups and
emerging technologies that have the potential to transform traditional financial
services by making transactions and processes less expensive, more convenient, and
more secure. This thesis conducts three studies on FinTech firms at various corporate
life cycle stages. These studies explore the financial and non-financial impacts of
interactions between incumbents, new entrants, and regulators as key FinTech
ecosystem actors. The first study seeks to understand the barriers to technology
adoption for an incumbent multinational systemically important financial institution.
This study explores emerging financial technologies as a potential solution to issues
of historic myopic investment in information technology. Second, this thesis examines
new FinTech ventures and their decision-making process around accelerator
programmes, exploring whether high-quality ventures choose to participate in
accelerators and their impact on performance and external capital. Third, this thesis
seeks to understand the relationship between board diversity and performance for a
sample of private FinTech firms. Incumbent FS firms encounter legacy information system (LIS) issues and competing
priorities for the provision of internal investment resources. Many incumbents’
labyrinth of legacy systems are prone to lacking documentation, poor data quality and
manual processes. At the same time, routine rigidity persists due to fears of system
downtime affecting core customers. The first study in this thesis describes the design
and development of a novel ontology-based framework to illustrate how ontologies
can interface with existing distributed data sources. The framework is then tested using
a survey instrument and an integrated research model of user satisfaction and technology acceptance. The results reveal a significant reduction in manual processes,
increased data quality, and improved data aggregation from employing the framework.
In contrast to incumbents, new ventures often have limited resources and may seek
external investment to survive. However, private firms face significant competition
for scarce resources and information asymmetries between investors and new entrants.
To reduce information asymmetry, new entrants may seek certification from
accelerators as a signal of venture quality. The second study in this thesis uses a handcollected dataset of 1,253 private UK firms to explore the impact of accelerator
participation on firm performance. This study shows that firms that participate in an
accelerator raise greater amounts of capital than a matched sample of non-accelerator
FinTech firms. However, these firms, in turn, exhibit poorer financial performance.
This finding indicates that accelerators do not attract the highest quality firms, and
high-quality firms may choose to avoid participating in accelerators as a countersignal
of venture quality. In contrast, evidence suggests that regulatory accelerator
participation may signal venture quality. The final study assesses the effect of board characteristics on firm performance in a
sample of 189 UK registered FinTech firms as new ventures may signal quality
through cultivating a large, more diverse, or prestigious board. The final empirical
chapter provides evidence that increased female board representation contributes to
improved performance in early-stage private FinTech firms. Furthermore, more than
half of firms have no female board representation, and only one-in-ten directors are
female. FinTech is characterised by increased start-up activity and innovations that threaten to
disrupt incumbent processes. This thesis contributes to assessing the efficacy of
FinTech firms’ efforts to signal venture quality, the impact of board characteristics on private firm performance, and incumbents’ response to FinTech. This thesis, therefore,
provides significant contributions to the FinTech domain through advancing science
and knowledge. It creates value for those operating accelerator programmes,
incumbent organisations seeking to integrate new financial technologies with legacy
information systems, and for effective governance of FinTech firms towards optimum
performance.
Description
Keywords
FinTech , Big Data , Financial technology , Financial performance , Semantic ontologies
Citation
Browne, O. 2022. An exploratory study of the financial and non-financial performance impacts of interactions between ecosystem actors of the FinTech revolution. PhD Thesis, University College Cork.