Eindhoven University of Technology MASTER Financial technology innovation in the financial services industry of Vancouver B.C. Baltissen, J. Award date: 2017 Link to publication Disclaimer This document contains a student thesis (bachelor's or master's), as authored by a student at Eindhoven University of Technology. Student theses are made available in the TU/e repository upon obtaining the required degree. The grade received is not published on the document as presented in the repository. The required complexity or quality of research of student theses may vary by program, and the required minimum study period may vary in duration. General rights Copyright and moral rights for the publications made accessible in the public portal are retained by the authors and/or other copyright owners and it is a condition of accessing publications that users recognise and abide by the legal requirements associated with these rights. • Users may download and print one copy of any publication from the public portal for the purpose of private study or research. • You may not further distribute the material or use it for any profit-making activity or commercial gain Financial technology innovation in the financial services industry of Vancouver B.C. A thesis submitted in fulfilment of the degree: Master of Science, Innovation Sciences Jip Baltissen Supervisors Eindhoven University of Technology Faculty of Industrial Engineering and Innovation Sciences Dr. Bert M. Sadowski Dr. Z.O. Nomaler Prof. dr. F. Alkemade Consulate-General of the Kingdom of the Netherlands Economic department in Vancouver B.C. Canada Barry Nieuwenhuijs – Deputy Consul General Maarten den Ouden – Trade Officer Eindhoven, August 2017 1 Preface From the end of January 2017 until June 2017, I did an internship for five months at the Consulate- General of the Kingdom of the Netherlands in Vancouver B.C., Canada. This internship gave me a unique chance to experience a new country and culture, while getting the opportunity to broaden my professional network, make new friends and gain work experience in an international environment. This experience is an invaluable asset to my career. I would like to thank the staff of the Consulate-General in Vancouver for selecting me for this internship position. The subjects and tasks fitted very well with what I was looking for in an internship position, given the focus on innovation and technology of this vacancy. Also, the freedom and the large amount of time I received for doing my research during office hours, is something I want to thank the staff for. Adding to that, I am very pleased for the great atmosphere in the office that kept me motivated and gave me energy for doing the research. Especially, I would like to thank Barry Nieuwenhuijs, deputy Consul General, and Maarten den Ouden, trade officer, from the Consulate-General for providing a great work environment, and for the feedback I received during the writing process of my thesis. I did not only learn a lot from this feedback, but also from their professional approach to work during economic trade activities, which is very useful for my further professional career. From the University of Technology Eindhoven, I would like to thank dr. B.M. Sadowski for being a great mentor during the whole Innovation Sciences master’s program and during the last part of the bachelor Technical Innovation Sciences. Especially during the internship program, you have been a great mentor and guide through the research process. The feedback I received was very useful and made me push a little harder, which made the research process more interesting and helped me to substantially improve the quality of my thesis. I would like to thank Onder Nomaler as second supervisor for the support and feedback I received for improving the quality of my work. Also, I would like to thank Nadieh Wesseling, MSc, for being a great colleague and friend during the internship. Your advice and additional feedback on my research helped me a lot with finding new research directions. I also would like to thank Sacha, and my parents who supported me during the internship selection and post-research process. 2 Executive summary The goal of this master thesis was to understand the dynamics between different stakeholders and their innovation activities in the emerging financial technology (FinTech) industry of Vancouver. In the case of Vancouver, different applications of innovative technologies by new ventures, a strong group of traditional financial services providers, and the involvement of universities and the government come together. The potential of the growing number of new ventures in the financial industry is that it introduces new business models, and improves the quality of service for both the traditional financial services and the FinTech company customers. The problem is that these new ventures should have access to enough resources, like for example public and private financial support and enough qualified personnel, in order to grow as a business. Their success and survival depends on how well they are connected in the inter-organisational network, and whether the resources they need are available to them. To get an overview and understanding of the roles of different stakeholders in the emerging FinTech industry and the types of resources they share, required an analysis to uncover the dynamics that hinder or stimulate the development of the innovative new ventures. The concept of social network analysis (SNA) has been used in which the centrality of different stakeholders in the financial services industry: FinTech companies, traditional financial services providers, universities and colleges, venture capital organisations and the government, has been analysed. This has been done for the complete network and four resource-based networks: knowledge, investment, advice and consultancy, and human resources. This master thesis research contributed on two fronts, namely by contributing to the inter- organisational network literature with the application of the theory on a new type of industry, and by providing new insights to the Consulate-General of the Netherlands, gaining a better understanding of the activities and status of the innovation and technology sector of Vancouver. The main findings are presented in the section below. Key empirical findings Venture capital organisations and the government have the most positive influence on the development of FinTech companies by taking a central position in the inter-organisational investment network. However, the lack of private financial support is far more inhibiting the innovation activities compared to public financial support. From the human resources perspective, although universities and colleges take the most central position and they have the strongest connection with FinTech companies among the analysed stakeholders in the financial industry, a lack of enough qualified personnel is one of the most important factors that is inhibiting the further development and innovation by FinTech companies. Traditional financial services providers have many connections in the financial technology network, however from a network perspective this stakeholder does not play an important role for the development of FinTech companies. Knowledge sharing is mainly done among FinTech companies. Financial institutions have also many connections in the knowledge network, however they do not have an important or influential role relative to financial technology companies. 3 Table of Contents Preface ........................................................................................................................................ 2 Executive summary .................................................................................................................... 3 Key empirical findings ............................................................................................................ 3 Table of Contents ....................................................................................................................... 4 List of Figures ............................................................................................................................ 6 List of Tables ............................................................................................................................. 6 1. Introduction .................................................................................................................... 8 1.1 Financial Technology Industry ...................................................................................... 9 1.2 Research scope and question ....................................................................................... 10 1.3 Research Questions ...................................................................................................... 11 1.4 Outline of the Thesis .................................................................................................... 12 2. Research Context ......................................................................................................... 14 Introduction ........................................................................................................................... 15 2.1 The Digital Revolution ................................................................................................ 15 2.2 Financial Services ........................................................................................................ 15 2.3 The Global