Innovative Banking Challenges in ASEAN-5 Countries and Their Effects on Cost-Income Reduction

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Eric J. Nasution


Marx-Schumpeter-Christensen parallelism posits that the need for prudent innovation management poses business challenges. By contrast, the entrepreneurship cycle holds that disruptive innovation does not pose great challenges. The main issue addressed in this study was what and how innovation challenges were evaluated in order to achieve better banking performance. To answer these questions, secondary data, non-parametric statistics, and the Delphi method of deriving meaning from interviews were utilized. The largest listed banks were surveyed in five Association of Southeast Asian Nations countries, or the ASEAN-5, which includes Indonesia, Malaysia, Philippines, Singapore, and Thailand. The presence of ASEAN financial technology companies, lack of manpower, unbanked populations, and lack of self-efficacy in digital technology challenged development among ASEAN-5 innovative banking institutions. Other findings indicated an association between the ASEAN-5 largest listed banks’ financial performance indicators and cost-income ratio reduction, and revealed that Singapore and Indonesia were the leading regional banking innovators. Recommendations made were that ASEAN banks should continue to pursue the formulation and implementation of sustainable innovation practices to combat ongoing disruptive innovation posed by financial technology companies. They might also be actively engaged in the ASEAN Banking Integration Framework in order to optimize innovative banking.


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