The Evolving Role of Traditional Banks in the Fintech Era

Muna Azuddin; Henry Henry; Samantha Martinez

doi:10.34306/itsdi.v8i1.737

Authors

Muna Azuddin International Islamic University Malaysia Malaysia https://orcid.org/0000-0002-0515-5154
Henry Henry STIE PMCI Indonesia https://orcid.org/0000-0002-0036-1389
Samantha Martinez Rey Incorporation United States https://orcid.org/0009-0001-5796-0550

DOI:

https://doi.org/10.34306/itsdi.v8i1.737

Keywords:

Banking Transformation, Fintech Collaboration, Digital Ecosystem, Platform Strategy, Financial Innovation

Abstract

Traditional banks have long operated under a “fortress model” built on regulatory protection, proprietary infrastructure, and closed value chains, but fintech competition is pressing them toward open and collaborative ecosystems. Prior studies examine fintech disruption, open banking, and bank-fintech partnerships separately, leaving unclear how banks’ strategic identity changes. This study examines how incumbent banks reinterpret their competitiveness and redesign their value proposition through cross-industry partnerships, Application Programming Interface (API)-based services, digital onboarding, and modular financial platforms. A qualitative multi-case study was conducted using document analysis of regulatory frameworks, strategic reports, and partnership announcements from 2021 onward, covering purposively selected banks in Asia and Europe. Thematic coding and a three-level rating of four analytical dimensions were used to derive three transformation archetypes, namely Digitalized Fortress, Hybrid Value Orchestrator, and Ecosystem Platform Leader. The results show that banks integrating digital capabilities, organizational ambidexterity, and innovation governance tend to reposition themselves as orchestrators, and that partnership quantity does not equate to transformation depth. The pace and depth of this shift vary with legacy system rigidity, cultural inertia, and regulatory openness. The study concludes that ecosystem integration is a potential but not universally inevitable trajectory, requiring strategic clarity, technological interoperability, and trust-based collaboration. The future of banking is thus defined not by digital adoption alone but by institutional adaptability and cooperative value creation.

Downloads

Download data is not yet available.

References

Otoritas Jasa Keuangan, Bank Indonesia, and European Parliament and Council, “Regulatory Frameworks for Digital Banking, Open API Payments, and Digital Operational Resilience,” 2022–2023, sources: OJK Regulation No. 21/2023; Bank Indonesia SNAP (2021); Regulation (EU) 2022/2554. Accessed: Oct. 20, 2026. [Online]. Available: https://ojk.go.id/id/regulasi/Pages/Layanan-Digital-oleh-Bank-Umum.aspx

D. Verma and Y. Chakarwarty, “Impact of bank competition on financial stability-a study on indian banks,” Competitiveness Review: An International Business Journal, vol. 34, no. 2, pp. 277–304, 2024.

T. Le, T. Ngo, D. T. Nguyen, and T. T. Do, “Fintech and banking: Friends or foes? evidence from bank–fintech cooperation,” International Journal of Bank Marketing, vol. 42, no. 7, pp. 1513–1535, 2024.

A. Kale and S. Viswanathan, “Global surge in banking frauds: An international management perspective,” International Journal of Accounting and Management Sciences, vol. 4, no. 4, 2025.

V. T. Tran and H. Nguyen, “Liquidity creation, bank competition and revenue diversification,” The Quarterly Journal of Finance, vol. 13, no. 03, p. 2350007, 2023.

O. Kowalewski, P. Pisany, and E. ´Slazak, “Digitalization and data, institutional quality and culture as drivers of technology-based credit providers,” Journal of economics and business, vol. 121, p. 106069, 2022.

A. Ghaffar, A. Arshad, S. Abbas, and M. Tahir, “Artificial intelligence in information technology: Enhancing efficiency, security, and innovation a descriptive review,” Spectrum of engineering sciences, pp. 289–309, 2024.

M. V. Tambe, “Reshaping the labor landscape: Artificial intelligence and the future of workforce transformation in the global economy,” Int J Contemp Res Multidiscip, vol. 4, no. 3, pp. 38–43, 2025.

X. Wu, T. Jin, K. Yang, and H. Qi, “The impact of bank fintech on commercial banks’ risk-taking in china,” International Review of Financial Analysis, vol. 90, p. 102944, 2023.

J. G´orka, “The rise of instant payments: a cross-country comparison,” Central European Management Journal, vol. 33, no. 4, pp. 575–589, 2025.

D. Barile, G. Secundo, and C. Bussoli, “Exploring artificial intelligence robo-advisor in banking industry: a platform model,” Management Decision, vol. 63, no. 10, pp. 3323–3349, 2025.

D. Saha and N. K. Minz, “Workforce finance in a dynamic global economy: Challenges, strategies, and policy interventions,” People, Profits, and Policy: Redefining Workforce Economics and Financial Strategy in a Disruptive Era, vol. 76, 2025.

S. Farooqi and I. Robson, “Institutional logics and legitimacy strategies of fintech entrepreneurs in developing markets; the case of pakistan,” Entrepreneurship & Regional Development, pp. 1–20, 2026.

P. Choudhary and M. Thenmozhi, “Fintech and financial sector: Ado analysis and future research agenda,” International Review of Financial Analysis, vol. 93, p. 103201, 2024.

M. Hamdouna and M. Khmelyarchuk, “Technological innovations shaping sustainable competitiveness—a systematic review,” Sustainability, vol. 17, no. 5, p. 1953, 2025.

C. Xie and S. Hu, “Open banking: An early review,” Journal of Internet and Digital Economics, vol. 4, no. 2, pp. 73–82, 2024.

N. Raviteja, “Financial technology (fintech) and banking industry transformation: A symbiotic evolution into the digital era,” Transactions, vol. 1, no. 2, pp. 23–29, 2024.

C. A. Anestiawati, C. Amanda, H. Khantinyano, and A. Agatha, “Bank fintech and credit risk: Comparison of selected emerging and developed countries,” Studies in Economics and Finance, vol. 43, no. 2, pp. 281–309, 2026.

W. L. Harris and J. Wonglimpiyarat, “Fintech and the digital transformation of the banking landscape,” in The Fintech Disruption: How Financial Innovation Is Transforming the Banking Industry. Springer, 2023, pp. 53–73.

A. Wolska, “New cooperation models between banks and fintech: A path toward digital transformation in the emerging financial ecosystem,” in Fintech and the Emerging Ecosystems: Exploring Centralised and Decentralised Financial Technologies. Springer, 2025, pp. 391–407.

S. Lobozynska, U. Vladychyn, and I. Skomorovych, “Digital banking transformation through cooperation with fintech startups in ukraine,” Finanse i Prawo Finansowe, vol. 1, no. 37, pp. 85–101, 2023.

D. Tribuana, U. Narimawati, and M. Y. Syafei, “A multi-group structural analysis of digital banking adoption determinants across generational cohorts in indonesia,” Aptisi Transactions on Technopreneurship (ATT), vol. 8, no. 1, pp. 37–50, 2026.

B. Larsson, B. Rolandsson, A. Ilsøe, T. P. Larsen, A. Lehr, and J. Masso, “Digital disruption diversified—fintechs and the emergence of a coopetitive market ecosystem,” Socio-Economic Review, vol. 22, no. 2, pp. 655–675, 2024.

C. C. Mbanefo and S. S. Grobbelaar, “Unveiling the core elements of platform ecosystem development: a systemic lens for value co-creation in small and medium enterprises and orchestrators,” Management Review Quarterly, vol. 75, no. 2, pp. 1575–1618, 2025.

P. McGuire, G. von Peter, and S. Zhu, “International finance through the lens of bis statistics: the global reach of currencies,” BIS Quarterly Review, pp. 1–16, 2024.

V. Stefanelli and F. Manta, “Digital financial services and open banking innovation: are banks becoming ‘invisible’?” Global Business Review, p. 09721509231151491, 2023.

U. Rahardja, R. U. Wijayanti, Y. Christy, and G. Fransiso, “A qualitative case study on fintech-driven modernization of capital market infrastructure,” IAIC Transactions on Sustainable Digital Innovation (ITSDI), vol. 7, no. 2, pp. 198–207, 2026.

M. Santos, “‘if you believe in a platform world. . . ’–corporate banking and digital transformation in investor relations discourse,” Geoforum, vol. 151, p. 103695, 2024.

M. G. Jacobides, “How to compete when industries digitize and collide: An ecosystem development framework,” California management review, vol. 64, no. 3, pp. 99–123, 2022.

A. Tarawneh, A. Abdul-Rahman, S. I. Mohd Amin, and M. F. Ghazali, “A systematic review of fintech and banking profitability,” International Journal of Financial Studies, vol. 12, no. 1, p. 3, 2024.

S. P. Ng and P. K. Ahmed, “The role of dynamic capabilities in the development of organisational ambidexterity and its effect on timely responsiveness in emerging market high-tech firms,” R&D Management, vol. 55, no. 2, pp. 577–597, 2025.

M. A. S. Al Jabri and A. Lahrech, “The role of strategic orientations in the relationship between adaptive marketing capabilities and ambidexterity in digital services firms: the case of a highly competitive digital economy,” Systems, vol. 13, no. 5, p. 358, 2025.

S. Pemsel and J. S¨oderlund, “Governance and creativity in project-based organizations: Archetypes and agenda for future research,” Project Management Journal, vol. 56, no. 1, pp. 141–157, 2025.

Y.-y. Lau, Q. Chen, M. C.-P. Poo, A. K. Ng, and C. C. Ying, “Maritime transport resilience: A systematic literature review on the current state of the art, research agenda and future research directions,” Ocean & Coastal Management, vol. 251, p. 107086, 2024.

T. Prasetia, L. Meria, K. Sulastriningsih, and N. Liam, “The impact of gamification on retail investor behavior: A behavioral finance perspective,” IAIC Transactions on Sustainable Digital Innovation (ITSDI), vol. 7, no. 2, pp. 208–215, 2026.

A. M. Adenusi, “How leaders in selected african financial markets frame digital assets in relation to prior financial modernization waves,” Ph.D. dissertation, South College, 2026.

A. Odorovi´c, “Open banking: Between cooperation and competition,” , vol. 71, no. 1, pp. 65–91, 2023.

M. Scheer Evaristo and M. T. L. Fleury, “Platform-based banking ecosystems: a comparative analysis between incumbents and challenger banks from a dynamic capabilities perspective,” Management Research: Journal of the Iberoamerican Academy of Management, pp. 1–30, 2025