Banking Ecosystems: Identification Latent Innovation Opportunities Increasing Their Long-Term Competitiveness Based on a Model the Technological Increment

Round 1

Reviewer 1 Report

 

Dear author,

Thank you for allowing me to read this document.

The reading of your work is interesting however, to make your work easier to follow I would suggest that you make the following modification

A.           The structure of your paper

The Structure of your paper needs to be reworked. Many elements of section 3 need to appear in section 2 about the data and the method.

B. The presentation of the hypothesis

The presentation of the hypothesises needs to be reworked. We discover the concrete formulation of the hypothesis when you reject or accept them. The formulation needs to be made more explicit before that.

C.  You propose a nice literature review. Maybe you can add the following references allowing you to distinguish the differences between the impact on an ecosystem coming from firms and those are more general to specific policies

Beaudry C., Burger-Helmchen T., Cohendet P. 2022, Innovation policies and practices within innovation ecosystems, Routledge.

I hope my comments sound helpful to you

Best,

Author Response

Dear reviewer!

 Let us express our gratitude for the great work you have done in reviewing. Following your comments and recommendations, we have significantly improved the manuscript and are pleased with the results. Below we describe how we have worked through your comments, for which we are grateful (your numbering has been retained).

A. About the structure of your paper

Authors: Thank you for this recommendation. Just like the reviewer, considering this recommendation important, we acted in accordance with it and moved the description of the content of these methods to the materials and methods section.

B. The presentation of the hypothesis

Authors: Thank you for this recommendation. We followed your recommendation and made adjustments to the hypotheses.

C. You propose a nice literature review.

Authors: The authors are grateful for the reminder of the work C. Beaudry, T. Burger-Helmchen, P. Cohendet. We gratefully supplemented the text with a brief review of the positions of these authors and included this work in the references.

With gratitude for the work done and useful comments and suggestions,

The authors.

Reviewer 2 Report

1. What is the main question addressed by the research?

The main research goal is to explore the essence and development prospects of banking ecosystems and create a model for the establishment of additional innovative and technological advantages for banking ecosystems, allowing the bank to create conditions for long-term competitive advantages. 

The goal is quite ambitious, but it is not accomplished properly. The literature review on ecosystems is very detailed and comprehensive though more focus on banking ecosystems (especially in a digital context) is needed. As the title suggests, latent innovation opportunities for increasing bank competitiveness should be identified as a research result. Unfortunately, this remained just an intention. Nothing is written about the model of technological increment and its role for banking ecosystems development.

 

2. Do you consider the topic original or relevant to the field? Does it address a specific gap in the field?

The topic is original and relevant to the field but as I mentioned the research itself was focused on performance measurement using common economic indicators such as revenues and assets. 

 

3. What does it add to the subject area compared with other published material?

I am very glad the authors wrote this article. It is a well-written, needed, and useful comparative study of the performance of 8 leading companies – 4 banks having own ecosystem and 4 ecosystem leaders.

4. What specific improvements should the authors consider regarding the methodology? What further controls should be considered?

Research methodology is based on the methods of comparative analysis, cluster analysis, regression analysis and the DEA method. These methods are applied in a logical and systematic way, but they reveal only market performance of selected companies and confirm some obvious economic relationships between profit (as dependent variable) and revenues and assets (as independent variables). Data visualization is perfect. The results from statistical analyses are scientifically sound, but they reflect different research situation. 

 

5. Are the conclusions consistent with the evidence and arguments presented and do they address the main question posed?

The result of the paper as stated by the authors should be “… a model of technological increment occurs which formed during the functioning of the banking ecosystem has been developed; the author established that the orchestration of the ecosystem by the bank creates opportunities for the formation of new profit centers due to the formation's greater number of innovative technologies and possibility to dispose the intellectual property.” In fact, the goal wasn’t achieved. The conclusions are not related to the evidence and arguments presented. 

 

6. Are the references appropriate?

The references are appropriate. 

7. Please include any additional comments on the tables and figures.

It should be clarified if there is one author (as it is written in the abstract) or authors because both forms are used in the text.

Comments for author File: Comments.pdf

Author Response

Dear Reviewer!

The authors thank you for the great work done on the article. We also thank you for your kindness and understanding of our ideas. Thanks to your comments, we noticed that we did not make the necessary accents everywhere and realized that some points needed to be clarified and did it according to the text. Accordingly, we have adjusted and improvements to the manuscript.

 1. What is the main question addressed by the research?

The main research goal is to explore the essence and development prospects of banking ecosystems and create a model for the establishment of additional innovative and technological advantages for banking ecosystems, allowing the bank to create conditions for long-term competitive advantages. 

The goal is quite ambitious, but it is not accomplished properly. The literature review on ecosystems is very detailed and comprehensive though more focus on banking ecosystems (especially in a digital context) is needed. As the title suggests, latent innovation opportunities for increasing bank competitiveness should be identified as a research result. Unfortunately, this remained just an intention. Nothing is written about the model of technological increment and its role for banking ecosystems development.

Regarding the remarks concerning the literature. We are grateful that you noted that we have conducted a large analysis of the literature on the formation of ecosystems, and in response to your comments about the need to pay more attention to the literature devoted to the study of banking ecosystems. We fully agree with you on this issue. Furthermore, we conducted a large-scale literature search in scientific sources that addressed the issue specifically about banking ecosystems. But we are forced to conclude that there are still few authors studying exactly banking ecosystems. Although the number of researchers is growing, most of the research on banks and ecosystems is not related specifically to banking ecosystems as such, but to Internet banking tools, artificial intelligence models, database analysis and some other issues (let us not list the whole set of this and financial technologies). But the presence of such elements in the activities of this bank (and such elements are used by almost all modern banks) does not yet indicate that this bank is really building an ecosystem, and not just digitalizing part of its processes.

According to our understanding, ecosystems are an innovative business model for banks that has platform technology and characterizes the bank's readiness to diversify its activities and allow it to increase its innovative potential, which is not yet considered by banks as important opportunity generated by ecosystem business models. With just such a formulation of the question, there is still not enough literature. But we noticed that the number of publications is growing. We have worked through a lot of material and not all sources have been included in the article, but we have included in the review and in the bibliography exactly those that are closest to the problem under study. In the "Results" section, we proposed a technological increment model and indicated (line 812, formerly 761, et seq.) its significance. However, thanks to this remark of yours, we realized that we did not make the necessary emphasis in the text, and we corrected this in the text.

In addition, we would like to draw attention to the fact that the importance of ecosystems for the development of banks seems to us to consist in the fact that «the most important thing, in our opinion, is that innovative technologies are formed in ecosystems, formed through cooperation between the orchestrator and complementarities and between complementarities. The possibility of establishing control over the innovations created by the ecosystem by the orchestrator bank should allow it not only to gain access to innovations created in various areas, but also to manage and even own the intellectual property created within the ecosystem. Thus, the arranging bank becomes a strong agent of the innovative technology market and the owner of advanced intellectual property. This means both new competencies and new opportunities and prospects for growth», as we mentioned in the previous edition of the manuscript.

2. Do you consider the topic original or relevant to the field? Does it address a specific gap in the field?

The topic is original and relevant to the field but as I mentioned the research itself was focused on performance measurement using common economic indicators such as revenues and assets. 

Pointing to the understanding of this commentary of a respected reviewer, we would like to note that, like any researchers, we, of course, would like to analyze separately the information about what part of the companies' costs was assigned to the development of banking ecosystems, and we have a research plan in this direction, in which, among other things, are the tasks of what innovative technology and how it influenced the growth of economic efficiency of this bank. However, there are limitations associated with the fact that such matters fall under trade secret aspects, which no commercial bank (and no company) is interested in sharing because they expect a return on investment in their activities (we pointed out this in the Discussion section: “We cannot be sure that all the costs of digitization and acquisitions are directly related to building ecosystems. But we can be sure that the process of ecosystem formation is always connected with both the first and the second. Therefore, the analysis of profits, revenues and increments of assets are rather indicators reflecting the dynamics than indirect indicators, but they cannot be considered as indicators that do not reflect their dynamics. In this regard, the direction of future research will be to conduct a broader comparative analysis aimed at studying the effectiveness of ecosystem activities of banks. In addition, we do not exclude that the income from the functioning of ecosystems for banks at the first stages may be negative, which is explained by the costs of creating and developing the ecosystem”).

By providing such data, we could violate their commercial interests. At the same time, our analysis of data related to the measurement of economic efficiency was the result of serious research. So, at the stages preceding the stage of writing the article, at the stage of research, we conducted a comparative analysis of a few banks that form or do not form ecosystems and revealed a stable relationship between the fact that the economic efficiency of banks having an ecosystem growing faster than those that do not make a choice in favor of the formation of ecosystems.

Moreover, the financial performance of these banks (ecosystem builders) is growing at a faster rate than other banks (and not only because of the size and influence of these banks), comparable to the growth rates of leaders in the field of ecosystem building. This seemed interesting as a science problem to us, so we conducted a study to make sure of this and found confirmation of this, and for banks - promising, invaluable, and as you quite rightly noted in paragraph 3 of your review, we showed a comparison with ecosystem leaders.

In other words, there is a relationship between the growth rates of economic efficiency and the presence and development of an ecosystem in the bank, and the decision to form its own banking ecosystem is promising for banks, but also contains underestimated hidden prospects for the development of their innovation potential and technological increment.

But we understand the significance of this remark and therefore placed the necessary emphasis.

3. What does it add to the subject area compared with other published material?

I am very glad the authors wrote this article. It is a well-written, needed, and useful comparative study of the performance of 8 leading companies – 4 banks having own ecosystem and 4 ecosystem leaders.

Thank you for appreciating our selection.

 4. What specific improvements should the authors consider regarding the methodology? What further controls should be considered?

Research methodology is based on the methods of comparative analysis, cluster analysis, regression analysis and the DEA method. These methods are applied in a logical and systematic way, but they reveal only market performance of selected companies and confirm some obvious economic relationships between profit (as dependent variable) and revenues and assets (as independent variables). Data visualization is perfect. The results from statistical analyses are scientifically sound, but they reflect different research situation. 

We understood that this remark is connected with some of the above, as well as with the remark below, and in relation to the formulation of the goal and its achievement, including the argumentation and made the appropriate changes, we placed emphasis.

5. Are the conclusions consistent with the evidence and arguments presented and do they address the main question posed?

The result of the paper as stated by the authors should be “… a model of technological increment occurs which formed during the functioning of the banking ecosystem has been developed; the author established that the orchestration of the ecosystem by the bank creates opportunities for the formation of new profit centers due to the formation's greater number of innovative technologies and possibility to dispose the intellectual property.” In fact, the goal wasn’t achieved. The conclusions are not related to the evidence and arguments presented. 

We also understood that this remark is connected with some of the above, as well as with the following remark, and in relation to the formulation of the goal and its achievement, including the argument and made the appropriate changes, we placed emphasis. However, we would like to draw attention to the fact that we presented the model but supplemented it with explanations.

6. Are the references appropriate?

The references are appropriate. 

7. Please include any additional comments on the tables and figures.

It should be clarified if there is one author (as it is written in the abstract) or authors because both forms are used in the text.

Thank you for bringing this to our attention. There are several scientists among the authors, and we have corrected this technical error.

We sincerely hope that we managed to follow all the instructions of the respected reviewer and make the results of the work clearer.

With thanks,

The authors

Author Response File: Author Response.pdf

Reviewer 3 Report

1. The review of the bibliography includes a very large body of work and included the main references on the subject, highlighting those with the most citations. The review begins with a generic overview and subsequently narrows the subject down to the issue it wants to address and study. Note that there are recent references in Scopus and ScienceDirect that deserve to be included in your work dating back to 2022.

2. It requires a revision of the text, as a significant number of misspelled sentences were identified. There are misspelled references (not leaving space between the abbreviation and the name of the author cited, e.g.: R.Adams [22]; it should be R. Adams [22] or if they follow MDPI indications it should be: Adams [22]).. If you want to cite the author and the reference is at the beginning of the sentence the citation must be in the form e.g. "Adams [22] stated ....". They should and need not re-insert the reference at the end of the sentence. Note that this occurs frequently throughout the text.

All acronyms should be described when first used. (MNC and MNE).

Inappropriate and exaggerated use of quotation marks throughout the text. Requires some revision.

The authors write several times throughout the text something like: "we agree with ... of other authors". Since this is a text and a scientific research, with quantitative methods, the authors should express their opinion based on the results and not on their mere opinion.

3.The research question should be clarified and objectively supported by the corresponding bibliographical references.

4. Section 2 - materials and methods - is brief and does not contain sufficient information on the methods and techniques used, preventing the work from being replicated by other researchers. A significant part of the text that is in the subsequent sections could be in section 2. It is in this section that the methodology, methods and techniques used are described.

5. Some of the text that is in section 3, results, should be included in section 2, as it does not actually constitute results.

The results section continues to present concepts, ideas, literature review, market data, etc. All of this is not to be incorporated into the results section.
From line 550 onwards, it is acceptable for the text to remain in the results section.

6. Figure 1 and 2 are similar except for the scale.

7. Regressions are performed but no tests for autocorrelation, multicollinearity and heteroscedasticity are mentioned.
If the tests were performed, then that fact should be mentioned.

8. For regression it should be indicated whether normal regression or panel data regression was used.

9. Are the variables used referred to in the literature and is it therefore necessary to mention this, or is this a new experimental study?

10. Still on the regression model, it is crucial to explain why the exogenous and endogenous variables were chosen. The objective is that the data corroborate the model.

11. Presenting the data in tables is totally unthinkable in an article (table 3).

12. The introduction of a new subject from line 733 to line 827 is not understandable. The insertion of that specification goes totally out of context of what you set out to do. At most it could go into an appendix.

Author Response

Dear reviewer!

Let us express our gratitude for the great work you have done in reviewing. Following your comments and recommendations, we have significantly improved the manuscript and are pleased with the results. Below we describe how we have worked through your comments, for which we are grateful (your numbering has been retained).

1. According to this comment regarding the expansion of the bibliography with the 2022 studies.

We followed your suggestion to review Scopus for 2022 and found a significant increase in publications on topics related to our research. We are already preparing subsequent articles on the same topic, and many manuscripts will be the beginning of a new work. In the same manuscript, following your recommendations, we added a few publications from Scopus and ScienceDirect related to the topic and indicated them in the list of biography, highlighting them in the text with a yellow marker.

2. « It requires a revision of the text, as a significant number of misspelled sentences were identified. There are misspelled references (not leaving space between the abbreviation and the name of the author cited, e.g.: R.Adams [22]; it should be R. Adams [22] or if they follow MDPI indications it should be: Adams [22]).. If you want to cite the author and the reference is at the beginning of the sentence the citation must be in the form e.g. "Adams [22] stated ....". They should and need not re-insert the reference at the end of the sentence. Note that this occurs frequently throughout the text.»:

Authors: Thank you for bringing this aspect to our attention. In the text, we tried to use non-printable characters that do not allow breaking the first and second names of the author. But apparently, this unprintable character was not reflected everywhere. Therefore, thanks to your comment, we once again reviewed all indications of the authors and corrected. In parallel, we worked on the quality of English.

About acronyms:

Authors: We have made changes to the text.

About quotation marks: We have worked on this note and where possible (not related to quoting) we have removed the quotes.

About speech turns, "the authors agree ..."

Authors: Thank you for your comment, we appreciated the significance of your comment and corrected our position

3. About «The research question should be clarified and objectively supported by the corresponding bibliographical references».

Authors: We have made the necessary adjustments

4. and 5 About the sections 2 and 3:

Authors: Thank you for this recommendation. Just like the reviewer, considering this recommendation important, we acted in accordance with it and moved the description of the content of these methods to the materials and methods section.

6 About Figure 1 and 2 are similar except for the scale.

Authors: When transferring the text of the manuscript to the recommended form of the journal article, a technical error was made - the same figure was inserted 2 times. In the revised version of the manuscript, the duplicate drawing has been removed.

The same applies to equation (2) - when transferring the text to the recommended form of the journal, equation (4) was transferred instead of equation (2). Equation (2) has been corrected in the revised version of the manuscript.

The authors thank the referee for the remark about a technical error.

7 About “Regressions are performed… “

Authors: Before regression analysis, the data were checked for multicollinearity.

The pair correlation coefficient for the independent variables Revenues and Assets for cluster 1 was 0.63 (with the accepted sign of collinearity equal to and more than 0.7), for cluster 2 it was -0.201.

Based on these data, the authors excluded the multicollenarity of independent factors in the data used. We have entered this fact into the manuscript (lines 652-654 and 678-681).

Also, to understand the quality of the obtained models, the characteristics Standard error, F, Significance F for each obtained regression equation were added to tables 2 and 4.

Tests for autocorrelation and heteroscedasticity were not performed.

8 About “ Regression”

Authors:  The study used Single Variable Normal Linear Regression Model and Multiple Normal Linear Regression Model. This is indicated in the manuscript (lines 656-657).

9 About the variables used referred

Authors: In answering this question of a distinguished reviewer, we would like to thank you for this comment. At the same time, I would like to note that, on the one hand, we used information from open sources (which is included in the bibliography) as initial data, but on the other hand, as it was found out as a result of the analysis of scientific and business literature, a similar (similar) analysis carried out has not yet taken place. Of course, we assume that some part of the research could not fall into our field of vision, but the analysis of publications in MDPI publications, in the Scopus database, WOS over the past 10-20 years, when ecosystems (based on platform technologies) were formed and their development by banks, regarding the availability of similar studies, it was not revealed. This allows us to believe that the results of the study can rather be characterized as a new experimental study. Although, for our part, we did not allow ourselves to qualify the result of researching as it's named by reviewer.

10 About “Still on the regression model, it is crucial to explain why the exogenous and endogenous variables were chosen… “

Authors: Banking structures are not yet fully aware of the importance of the formation and prioritization of ecosystem models for them, this case seems important to authors, significant both for enriching the theory of innovation and banking and for practical application in practice. That is why, when developing the conceptual framework for the development of ecosystems, we recommend banks (and not only banks) to take a closer look at this opportunity, the effectiveness is confirmed by the experience of one of the objects studied in the manuscript. It has been established that there is a clear relationship between profitability and the degree of readiness of the bank to create ecosystems or is highly active in this direction, in addition, it is these data that are objective, they are reliable and, as can be seen, in the study they can achieve relevance.

11. About table 3

Authors:  Table 3 (line 674) presents data for six research objects (constituting cluster 2) for regression analysis (calculation of regression equations). Previously presented similar table 1 (line 650) contains data for two research objects (constituting cluster 1) for regression analysis (calculation of regression equations).

The authors ask the reviewer to clarify the essence of his question: what exactly is totally unthinkable in table 3?

12. About line 733 to line 827

Authors: Unfortunately, we have not been sure that we understood this comment of the distinguished reviewer correctly, but we assumed that the question is about how the model allows understanding revealing latent opportunities for banks that orchestrate their ecosystems. As our reviewers rightly noted, we applied elements of dynamic programming in the development of the model and a systematic approach, which is reflected in the lines (761-898). Nevertheless, we will allow ourselves to make some explanations and, as before, we rely on your deep understanding of the issue under study. The systems approach allowed us to demonstrate how the system remains the same, but transforms: some ecosystem - S, which, as a result of the growth of technologies and participants, is transformed from the state S₀ to the state S_n in time, remaining the same ecosystem. In this system, at the zero stage S₀ in the period, there are m participants. Since the formation and development of ecosystems occurs due to the growth in the number of participants, each of which can bring new technological knowledge, which can also be transformed, forming new technologies that make this ecosystem more efficient and unique with every step. Of course, a feature of modern and, first, banking ecosystems is their scaling, which is achieved by involving new participants in the ecosystem. But it is also important that the existing participants, already included in it, also develop their functions and competencies, contributing to the qualitative transformation of the ecosystem, but without new participants and their new knowledge, the transformation of the ecosystem, apparently, will not be so qualitative and promising, therefore, illustrating the development of the system by incorporating new entrants with their technological expertise shows the growth potential of ecosystem business models. We allowed to write such a broad explanation because while reading the review, we realized how competent the respected reviewer is in the issue under study and how important all his comments are (and involuntarily moved on to the discussion).

 

With gratitude for the work done and useful comments and suggestions,

The authors.

Round 2

Reviewer 2 Report

I don't have any further comments and suggestions.

Reviewer 3 Report

1. The authors ask the reviewer to clarify the essence of his question: what exactly is totally unthinkable in table 3?

I still don't understand why you put the data from a table in the main body of the article. If you consult other articles you will see that the data is placed in appendices. When you are in a section entitled results, what you present are the results and eventually your discussion, you do not insert a table with the data. Consequently, my recommendation is that the data should be placed in an appendix.

2. The authors start from line 761 dynamic programming elements in the development of elements of a model.
The scientific nature of the model elements or their development is not called into question. What the authors have done is scientifically correct.
What is called into question is the inclusion of that development in a paper that so far had a coherent literature review and empirical part. It is my conviction that the inclusion of this part could and should be done in another article.

 

Author Response

Dear Reviewer!

1. The authors ask the reviewer to clarify the essence of his question: what exactly is totally unthinkable in table 3?

I still don't understand why you put the data from a table in the main body of the article. If you consult other articles you will see that the data is placed in appendices. When you are in a section entitled results, what you present are the results and eventually your discussion, you do not insert a table with the data. Consequently, my recommendation is that the data should be placed in an appendix.

Thanks for the clarification: we've moved tables into applications.

2. The authors start from line 761 dynamic programming elements in the development of elements of a model.
   The scientific nature of the model elements or their development is not called into question. What the authors have done is scientifically correct.
   What is called into question is the inclusion of that development in a paper that so far had a coherent literature review and empirical part. It is my conviction that the inclusion of this part could and should be done in another article.

 

Thank you for your high appreciation of our model and its scientific value. We highly appreciated your suggestion to separate the proposed model into a separate article. But we would like to keep this part within the scope of this article, especially since other reviewers support us in this. We are afraid that in the absence of a model in this manuscript, its (manuscript) scientific value will decrease, since only a review of the literature and empirical studies will remain, but in subsequent publications we plan to develop this model. Hope for your understanding. Please note that due to the need to give some explanations on the text that arose during interaction with other reviewers, line 761, and subsequent lines have shifted and become numbered 812.

 

With thanks and best wishes,

The authors

 

Author Response File: Author Response.pdf