The financial services sector has seen dramatic technological innovations in the last several years associated with the “fintech revolution.” Major changes have taken place in channel management, credit card rewards marketing, cryptocurrency, and wealth management, and have influenced consumers’ banking behavior in different ways. As a consequence, there has been a growing demand for banks to rethink their business models and operations to adapt to the changing consumer behavior and counter the competitive pressure from other banks and non-bank players. In this dissertation, I study consumer behavior related to different aspects of financial innovation by addressing research questions that are motivated by theory-focused research literature and managerial considerations in business practice. I seek to understand how technology is reshaping financial services, and how financial institutions can leverage big data analytics to create deep insights about consumer behavior for decision support.
The first essay studies credit card-based partnerships between banks and retailers. I test a number of hypotheses that assess the indirect effects related to the impacts of credit card programs in my research setting. I use publicly-available data, together with proprietary data from a large financial institution, to examine the impact of card-based promotions on consumer behavior and merchant performance. The results show that such promotions create positive indirect effects, leading to increased purchases from customers of other banks, in addition to the bank running the promotion. Card-based promotions are further associated with increased customer traffic and purchase transactions by the bank’s customers at its merchant partners, but the positive effects are moderated by competitive offers provided by rival banks. I analyze discount price elasticity of demand, and the varying promotional effects among the merchant and customer segments. This research creates insights that banks can leverage to optimize their card-based reward programs, and paves the way forward related to strengthening credit card merchant partnerships.
The second essay emphasizes the importance of investigating bank branch net-work changes, including branch openings and closures, and their impacts on customers’ omni-channel banking behavior. I find that branch openings create customer awareness and lead to synergetic increases in transactions across channels, and branch closures result in a migration pattern from alternative channels to online banking due to the joint effects of negative perceptions and substitution. While this migration pattern is favorable for banks, it remains only a short-term effect and may be reversed when the last branch closes. Meanwhile, online users, as revealed in my segmentation analysis, are disloyal and tend to decrease transactions through the online channel after branch closures. This essay contributes to studies on multi-channel services in the IS and Management literature, and provides strategic implications on branch network restructuring in omni-channel financial services.
In the third essay, I draw on social contagion theory and a spatiotemporal perspective to explore the global penetration of bitcoin, and how security events have been influential in this process. This essay uses transaction data from Mt.Gox, one of the largest bitcoin exchange platforms in the world before its bankruptcy in 2014, and other publicly-available data sources for county-level information. The time and country of bitcoin transactions offer an ideal data structure for spatial panel econometric analysis. The results suggest that the global penetration of bitcoin is jointly influenced by the economy, technology and regulatory situation of a country. And news about the occurrence of security incidents related to the cryptocurrency has a negative impact in its cross-country diffusion. This study contributes to the literature on the diffusion of emerging financial technologies, as well as business practices at the early stage of the development of a digital currency.
GENG Dan is the fifth year PhD student in Singapore Management University, advised by Prof Robert Kauffman. She received her Bachelor's degree from Southwestern University of Finance and Economics, and visited Carnegie Mellon University as an exchange student in 2014.
Her research interest lies in Financial Information Systems and Technology. She works on areas including omni-channel retail banking operations, credit card-based partnerships, and global penetration of cryptocurrencies. She is particularly interested in business problems characterised by extensive use of IT, and seek to produce useful insights on customer behaviour and valuable managerial implications for financial institutions that pursue competitive advantage and a leading brand image for technological innovation in the financial services industry.
