1 

 

  

Innovation Strategies for a South 

African Bank to Form Strategic 

Partnerships with FinTechs to Gain a 

Competitive Advantage. 

 

Tebogo Prince Chipeya 

2738980 

2738980@students.wits.ac.za l 0658442513 

Supervisor – Dr Tebogo Sethibe 

A research proposal submitted to the Faculty of Commerce, 

Law and Management University of the Witwatersrand, in 

partial fulfilment of the requirements for the degree of Master of 

Management in the field of Digital Business. 

 

Johannesburg, 2024 

 

 

 

 

mailto:2738980@students.wits.ac.za


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Abstract 

In the rapidly evolving South African financial landscape, traditional banking institutions 

face the dual challenge of maintaining competitiveness, while simultaneously leveraging 

cutting edge technological advancements. This study investigated the innovation 

strategies that a South African bank can adopt to form strategic alliances with FinTechs, 

aiming to capture a competitive advantage within the South African banking industry.  

The purpose of this study was to identify the key drivers for forming strategic partnerships 

with FinTechs, the opportunities and challenges that come with such alliances, and as 

well as their effect on a banking institution’s competitive advantage. The research 

focused on the traditional banking sector, which must sustain and enhance existing 

structures, while adjusting to changes brought about by financial technologies. 

A qualitative research method was employed, with data collected by way of semi-

structured interviews. The interview participant were executives and senior managers 

involved in the development and implementation of innovation strategies as well as 

strategic partnerships with FinTechs. Thirteen participants were selected from various 

departments within the bank, thus providing a comprehensive view of that bank's 

approach to innovation and collaboration with FinTechs. 

Key findings revealed that internal factors such as organizational culture and 

technological capabilities; along with external factors like regulatory changes and 

prevailing market conditions, significantly influence the bank’s innovation strategies. 

Strategic collaborations with FinTechs appeared to offer several advantages, including 

but not limited to improved operational efficiency, increased market reach, and enhanced 

customer experience. However, potential drawbacks such as reputational risk, regulatory 

risk, market saturation, and cultural fit need to be managed effectively. 

The study emphasized the importance of strategic fit and alignment between the bank 

and FinTechs ensuring that both entities share common goals and values. Additionally, 

a customer-centric approach was crucial in selecting FinTech partners and developing 

solutions that meet customer needs. Continuous monitoring and evaluation of FinTech 

partnerships were essential to ensure their success and make necessary adjustments. 

The study contributed to the existing body of knowledge (BoK) in banking innovation and 

strategic partnerships. It did so by providing insights into the strategic considerations and 

implications of banking innovation and partnership strategies within the South African 

context. Managerial implications included recommendations for creating an environment 



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where innovation can flourish, enhancing existing technological infrastructure, 

addressing regulatory issues, and developing effective risk management frameworks. 

By leveraging the attendant strengths of FinTechs, the South African bank can improve 

its competitive advantage and create more value for its customers. 

 

Keywords 

Innovation strategy, FinTech, Strategic Partnerships, Competitive advantage, 

Traditional Bank, South Africa 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



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Declaration 

 

I, Tebogo Prince Chipeya, declare that this research report is my own work except as 

indicated in the references and acknowledgements. It is submitted in partial fulfilment 

of the requirements for the degree of Master of Management in the field of Digital 

Business at the University of the Witwatersrand, Johannesburg. It has not been 

submitted before for any degree or examination in this or any other university. 

 

Name: Tebogo Prince Chipeya  

Signature: TPC 

Signed at: Midrand 

On the 19 day of February 2025 

 

 

 

 

 

 

 

 

 

 

 

 



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Dedication 

 

To my mother, Doris Kholiwe Chipeya, for always believing in me, even when I didn’t 

believe in myself.  

 

A special dedication to my late grandmother, Maria Chipeya, for all the wisdom you 

imparted upon me; and to my late uncle Khotso Lekoekoe, for reuniting me with my 

paternal family.  

 

To my aunt, Dr Lucky Chipeya, for always encouraging me to pursue my Masters; and, 

to my sisters Lwazi Chipeya and Thandiwe Chipeya, for always pushing me to embrace 

my true potential. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



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Acknowledgment 

 

All Glory and Honour unto my Lord and Saviour, Jesus Christ, the author and the 
creator of my faith. 

 

To my entire family including my mother, aunt, siblings, uncles, cousins and nieces; I 
appreciate what you all contribute to my life; big and small. 

 

To my God sent partner, Rethabile, thank you for your love, patience and affirmations. 

 

A special thanks to my employer for affording me the opportunity to purse my masters.  

 

To my supervisor, Dr Tebogo Sethibe, for your guidance and knowledge; you made the 
journey less stressful and more enjoyable. 

 

To my friends and colleagues, for all the words of encouragement; every little bit 
counts. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



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Table of Contents 

Abstract ...................................................................................................................................................... 2 

Keywords ................................................................................................................................................... 3 

Declaration ................................................................................................................................................ 4 

Dedication ................................................................................................................................................. 5 

Acknowledgment ..................................................................................................................................... 6 

List of tables ........................................................................................................................................... 11 

List of figures.......................................................................................................................................... 11 

Chapter 1: Introduction ........................................................................................................................ 12 

1.1 Purpose of the Study ..................................................................... 12 

1.2 Context of the Study ........................................................................... 12 

1.2.1 The Banking Industry in South Africa ................................................................................. 12 

1.2.2 Evolution of FinTech in the Banking Sector ....................................................................... 13 

1.2.3 Intersection of Banking and FinTech .................................................................................. 14 

1.2.4 Competitive Landscape and Strategic Imperatives .......................................................... 14 

1.2.5 Challenges and Obstacles.................................................................................................... 15 

1.3 Research Problem .............................................................................. 15 

1.4 Research Objectives........................................................................... 17 

1.5 Research Questions ........................................................................... 17 

1.6 Significance of the Study ................................................................... 18 

1.7 Delimitation for the Study................................................................... 19 

1.8 Definition of Terms ............................................................................. 19 

1.9 Assumptions ....................................................................................... 20 

1.10 Chapter Outline ................................................................................. 20 

Chapter 2: Literature Review .............................................................................................................. 21 

2.1 Introduction ........................................................................................ 21 

2.2 Background information .................................................................... 21 

2.2.1 Background on the Participating South African Bank .......................... 21 



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2.3 Definitions ........................................................................................... 23 

2.3.1 Innovation Strategies ............................................................................................................. 23 

2.3.2 FinTechs .................................................................................................................................. 24 

2.3.3 Strategic Partnerships ........................................................................................................... 25 

2.4 Previous Studies ................................................................................ 26 

2.4.1 Key Findings from Previous Studies: Innovation Strategies............................................ 26 

2.4.2 Key Findings from Previous Studies: FinTechs ................................................................ 29 

2.4.3 Key Findings from Previous Studies:  Strategic Partnerships ......................................... 31 

2.4.4 Key Findings from Previous Studies: Competitive Advantage ........................................ 34 

2.5 Analytical Framework ......................................................................... 35 

2.5.1. Theoretical Framework ..................................................................... 35 

2.4.2. Conceptual Framework ..................................................................... 37 

2.5 Literature review summary and closing remarks. ............................. 39 

2.5.1. Proposition 1 .................................................................................... 40 

2.5.2. Proposition 2 .................................................................................... 40 

2.5.3. Proposition 3 .................................................................................... 40 

Chapter 3: Research Methodology ................................................................................................... 41 

3.1 Research Approach ............................................................................ 41 

3.2 Research Design ................................................................................ 41 

3.3 Data Collection Methods .................................................................... 42 

3.4 Population and Sample ...................................................................... 42 

3.4.1 Population ............................................................................................................................... 42 

3.4.2 Sample and Sampling Method ............................................................................................. 43 

3.5 The Research Instrument ................................................................... 43 

3.6 Procedure for Data Collection ............................................................... 44 

3.7 Data Analysis Strategies and Interpretation ...................................... 44 

3.8 Quality Assurance (Trustworthiness) ................................................ 45 



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3.8.1 Transferability ......................................................................................................................... 45 

3.8.2 Credibility ................................................................................................................................ 46 

3.8.3 Dependability .......................................................................................................................... 46 

3.8.4 Confirmability .......................................................................................................................... 46 

3.9 Limitations of the Study ..................................................................... 47 

3.10 Ethical Considerations ..................................................................... 47 

Chapter 4: Presentation of Findings................................................................................................. 48 

4.1 Introduction ........................................................................................ 48 

4.2 Background information .................................................................... 48 

4.2.1 Demographic Characteristics of Participants ..................................................................... 48 

4.3 Research Questions ........................................................................... 51 

4.4 Data Analysis Using Thematic Analysis Procedure .......................... 52 

4.4.1 Review Themes & Define and Name Themes .................................................................. 52 

4.5.1 Key Drivers for Strategic Partnerships ............................................................................... 54 

4.5.3 Navigating the FinTech Ecosystem ..................................................................................... 56 

4.6 Results pertaining Proposition 2 ....................................................... 57 

4.6.1 Competitive Advantage through Partnerships ................................................................... 57 

4.7 Results pertaining Proposition 3 ....................................................... 60 

4.7.1. Perceived Benefits and Risks ............................................................................................. 61 

4.8 Summary of the Findings ................................................................... 64 

4.8.1 Proposition 1 ........................................................................................................................... 64 

4.8.2 Proposition 2 ........................................................................................................................... 64 

4.8.3 Proposition 3 ........................................................................................................................... 65 

Chapter 5: Discussion of the Findings ............................................................................................ 66 

5.1 Introduction ........................................................................................ 66 

5.2 Discussion Pertaining Proposition 1 ................................................. 67 

5.2.1 Key Drivers for Strategic Partnerships ............................................................................... 67 

5.2.1.2 External Factors .................................................................................................................. 69 

5.2.2 Innovation Strategy Framework ........................................................................................... 70 

5.2.3 Navigating the FinTech Ecosystem ..................................................................................... 73 



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5.3 Discussion Pertaining Proposition 2 ................................................. 75 

5.3.1 Competitive Advantage through Partnerships ................................................................... 75 

5.4 Discussion Pertaining Proposition 3 ................................................. 84 

5.4.1 Perceived Benefits and Risks .............................................................................................. 84 

5.5 Summary of Findings ......................................................................... 89 

5.5.1 Proposition 1 ........................................................................................................................... 89 

5.5.2 Proposition 2 ........................................................................................................................... 90 

5.5.3 Proposition 3 ........................................................................................................................... 91 

Chapter 6: Conclusion and Recommendations ............................................................................. 92 

6.1 Introduction ........................................................................................ 92 

6.2 Conclusions Regarding Research Questions ................................... 92 

6.2.1 What are the key factors – both internal and external – that drive a South African 
traditional bank to develop strategic partnerships with FinTechs? ........................................... 92 

6.2.2 What are the perceived benefits of strategic partnerships with FinTechs from the 
perspective of a South African traditional bank, particularly in terms of gaining a competitive 
advantage? ....................................................................................................................................... 94 

6.2.3 What are the perceived benefits and potential risks for a South African traditional 
bank that forms strategic partnerships with FinTechs? .............................................................. 96 

6.3 Recommendations .............................................................................. 99 

6.3.1 Invest in Technological Capabilities .............................................................................. 99 

6.3.2 Enhance Regulatory Compliance .................................................................................. 99 

6.3.3 Prioritise Customer-Centric Innovations ....................................................................... 99 

6.3.4 Establish Clear Communication Channels ................................................................. 100 

6.3.5 Develop Robust Risk Management Strategies .......................................................... 100 

6.3.6 Monitor and Evaluate Partnerships ............................................................................. 100 

6.3.7 Align Strategic Goals and Values ................................................................................ 101 

6.4 Limitations ......................................................................................... 101 

6.5 Suggestions for Future Research ..................................................... 102 

References ............................................................................................................................................ 104 

Appendix A: Interview Guide ............................................................................................................ 108 

Appendix B: Participation Consent Form ..................................................................................... 111 

Appendix C: Thematic Analysis Process ...................................................................................... 112 

Table: Previous Studies ..................................................................................................................... 120 



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List of tables 

Table 1.1:Definition of terms ....................................................................................... 20 

Table 1.1:Definition of terms ....................................................................................... 20 

Table 4.1: Participants’ Demographic Information ....................................................... 50 

Table 4.2: Final Themes ............................................................................................. 52 

Table 5.1: Research questions, propositions, and final themes. .................................. 66 

 

 

List of figures 

Figure 2.1: Innovation Diffusion Theory (Source: Rogers, 1983) ................................. 34 

Figure 2.1: High-Level South African Bank Organisational Structure .......................... 22 

Figure 2.2: Innovation Diffusion Theory (Source: Rogers, 1983) ................................. 36 

Figure 2.3: Resource-Based View (Source: Own draft; based on Barney, 1991) ........ 37 

Figure 2.4: Conceptual Framework (Source: Own draft) ............................................. 38 

Figure 4.1: Participant Split  by Gender....................................................................... 50 

Figure 4.2: Participant Split by Race  .......................................................................... 51 

Figure 4.3: Participant Level of Banking Experience Split ........................................... 51 

Figure 4.4: Thematic Analysis Process (Braun & Clarke, 2006) .................................. 50 

Figure 4.5: Thematic Map ........................................................................................... 53 

 

 

 

 

 

 

 

 

 



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Chapter 1: Introduction 

1.1 Purpose of the Study 

The purpose of the study was to investigate and identify successful innovation 

strategies that a South African Bank can adopt to form strategic partnerships with 

FinTechs with the aim of gaining a competitive advantage in the Banking industry. 

 

1.2 Context of the Study 

1.2.1 The Banking Industry in South Africa 

According to SARB (2024) the South African banking industry is the largest on the 

African continent, due in large part to its robust and well-developed financial systems. 

As of January 2024, the total number of banks operating in South Africa was placed at 

31. This figure includes local banks, local branches of foreign banks, and mutual banks 

(SARB, 2024). However, in terms of market share; the industry is dominated by five major 

traditional South African banks; Absa, FirstRand, Nedbank, Standard Bank, and Capitec 

(Mabejane, 2021). By 2023, driven primarily by organic capital (earnings) growth, these 

major banks’ combined ROE grew 56 bps to a commendable 17.6% (FY22: 17.1%). This 

figure was above their average cost of equity of 14.8% (PWC, 2024). 

 

Notwithstanding the aforementioned favourable financial milestones, the South African 

banking industry has been facing significant changes in recent times. One such change 

is the shift towards digitalization – with online banking being the most notable – due to 

changing consumer behaviours. Mugabe (2022) echoes this sentiment and argues that 

the ways in which banks currently operate have been influenced by dramatic changes in 

digital technology and shifting consumer preferences. Regulatory reforms aimed at 

promoting competition as well as fostering innovation have also added to the challenges 

faced by Banks. This is due to the fact that government regulations play a crucial role in 

shaping the environment within which banks operate and adopt financial technology 

(FinTech) solutions (Khuan, 2024). Similar to a number of other countries, South Africa 

operated in a financial system characterised by over-regulation and repression. This was 

before it adopted more liberalised financial policies, which still remain today (Mabejane, 

2021). As a result, banks were being impelled to revamp their business models and 

strengthen their digital strategies.  



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COVID-19 further accelerated this already underway digital transformation. The global 

health epidemic served as an extraordinary push for a global adoption of digital banking. 

Retail bank customers were compelled to embrace self-service channels like never 

before, on account of most branches being temporarily closed in an attempt to reduce 

physical interactions (Shumba, 2023).  

 

Consequently, traditional banks in South Africa now face growing competition from 

FinTechs. This is because traditional banks currently operate within the FinTech 

ecosystem which provides financial products and services historically provided by 

traditional banks (Telukdarie et al., 2022). As a result, traditional banks have been 

compelled to reassess their strategies and consider collaborative approaches in order to 

not only remain competitive but gain competitive advantage.   

 

1.2.2 Evolution of FinTech in the Banking Sector 

Takundwa (2022) opines that the rise of FinTech has been an interesting development 

globally; with South Africa being no exception. These are agile and technology-driven 

firms which are able to identify and address unmet consumer needs, often outpacing 

traditional banks in terms of speed, convenience, and user experience. As stated by 

Faour & Al-Sowaidi (2023), the integration of digital technologies for financial solutions 

has ushered in a new era of convenience, accessibility, and more tailored experiences 

for consumers. FinTech has seen a growth in transaction executions such as; payments 

for processing, clearing and settlement, funds management, financial intermediation 

services, and risk sharing through insurance products; amongst others (Takundwa, 

2022).  

 

In South Africa, this technological evolution mirrors the global trend, with FinTech start-

ups gaining increased prominence due to offering innovative financial solutions which 

resultantly disrupt traditional banking practices. The country’s well-established financial 

sector and supportive government policies create an ideal ecosystem for FinTech 

innovation (International Trade Administration, n.d.). 

 



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The South African Reserve Bank acknowledges the rapid progress in the financial 

technology sector. This is evidenced in by the establishing of a FinTech Unit. The 

attendant risks attached to FinTech offerings has resulted in the creation of enforceable 

regulations. These are updated at a speed proportional to the technological 

advancements implemented in the FinTech sector (Takundwa, 2022). 

 

1.2.3 Intersection of Banking and FinTech 

The increasing prominence of FinTech has necessitated traditional banks in South Africa 

to re-evaluate their existing strategies and explore new opportunities for collaboration. 

While collaborations between traditional banks and FinTechs are on an upward trend, 

there remains vast potential for growth in this still emerging financial landscape. The 

nascent relationship between FinTech and traditional banks illustrates that new business 

models are indeed developing in the financial services sector (Virasamy, 2021). These 

partnerships could prove vital for traditional banks, as these institutions can 

simultaneously advance technologically and remain relevant in a rapidly changing 

financial services ecosystem (Mugabe, 2022). Legislation, technology, financial 

products, and the increasing number of industry participants have transformed the 

banking sector by injecting higher levels of competition (Mabejana, 2021). Therefore, by 

collaborating with FinTechs, traditional banks can gain access to cutting-edge 

technologies, streamline their operations, and deliver more personalized and convenient 

services to their customers. This would invariably render a bank that successfully 

achieves these because of the collaboration, competitively ascendant.     

 

1.2.4 Competitive Landscape and Strategic Imperatives 

The presence of FinTech and the resultant disruption characterised by this industry has 

intensified competition within the banking sector. This has fostered a push for 

differentiation and customer-centric services (Faour & Al-Sowaidi, 2023). Traditional 

banks are confronted by several challenges; including the need to adapt to digital 

transformation, manage regulatory compliance, and meet the evolving demands of tech-

savvy consumers (PWC, 2024). As a result, South African banks are investing 

significantly in their digital transformation; so as to stay ahead of industry competitors, 

benefit from first mover advantage, as well as increase market share (Shumba, 2023). 

Therefore, a traditional South African bank that aims to increase their competitiveness 



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must focus on strategic imperatives such as; investing in the appropriate technology, 

enhancing digital capabilities, and fostering collaborations with FinTech companies. 

 

1.2.5 Challenges and Obstacles  

While the collaboration between traditional banks and FinTechs may offer myriad 

advantages, it is not without challenges. Significant issues that emerge in the literature 

include the impact of cyber-security risks, regulatory challenges, and the lack of 

consumer trust as it pertains to FinTech adoption within the traditional banking industry 

(Alexandri et al., 2023). Another factor hindering the collaboration process is the 

difference in organizational culture between FinTechs and traditional banks (Hoang et 

al., 2021). These challenges potentially create barriers for banks looking to implement 

FinTech solutions, which can affect the overall adoption rate (Khuan, 2024). Traditional 

South African banks largely enjoy consumer trust as financial service providers, while 

FinTechs on the other hand provide valuable customer-focused financial solutions 

(Virasamy, 2021). As such, banks that opt to collaborate with FinTechs will need to 

ensure that customer data provided to FinTechs is closely supervised, with stringent 

implementation of policies to protect customer information. FinTechs on the other hand, 

must ensure that customer information security is strictly prioritised (Hoang et al., 2021). 

 

1.3 Research Problem  

The traditional banking sector in South Africa is currently grappling with a dual challenge; 

maintaining competitiveness in a rapidly evolving financial services landscape and 

leveraging technological advancements to meet emerging customer needs. According 

to PwC (2024) South African banks are navigating a complex macroeconomic 

environment but are utilizing their existing digital channels to stay competitive and 

address evolving customer demands.  

 

Virasamy (2021) contends that external factors such as FinTech enablers, technological 

advancements, innovation, changing customer behaviour, catastrophic events, and 

competitive pressure are accelerating the pace of innovation within banks and the 

financial services industry. Additionally, traditional banks must grapple particularly with 

the disruption posed by innovative FinTech companies that are redefining financial 



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services. These FinTechs emphasize efficiency, user-friendliness, and adaptability; thus, 

setting themselves apart from conventional banking offerings (Faour & Al-Sowaidi, 

2023). 

 

While strategic partnerships with FinTechs may present a promising avenue for 

traditional banks to accelerate innovation and enhance their market positioning; the 

development and implementation of effective innovation strategies for such 

collaborations remain underexplored. There exists a miniscule amount of comprehensive 

qualitative studies on the relationship between traditional banking and FinTechs.  This 

includes the attendant advantages and disadvantages surrounding cooperation, partner 

selection criteria, and the prospects of products developed through these collaborations 

(Hoang et al., 2021). 

 

In the context of the fourth industrial revolution (4IR), banks must adapt their strategies 

to keep up with technological developments. Failing which, they risk losing market share 

to established rivals as well as emerging challenger banks (Asa et al., 2023). Notably, 

research such as, "The Effect of FinTech on Banking Performance in South Africa", 

highlights the significant impact of FinTech innovations on financial institutions' 

operations and performance (Mugabe, 2022). These findings underscored the need to 

investigate the strategic frameworks that underpin successful bank-FinTech 

partnerships, and how these alliances can be leveraged for competitive advantage. 

Bank-FinTech partnerships are crucial for transforming as well as enabling traditional 

banks to enhance their services, streamline processes, and deploy requisite innovations 

(Faour & Al-Sowaidi, 2023). 

 

In light of all of this, this study aimed to investigate the development and execution of 

innovation strategies that facilitate strategic partnerships between South African 

traditional banks and FinTech companies. Seemingly, traditional banks view the rise of 

FinTechs not only as a challenge but as the catalyst for their own transformation as well 

(Feyen et al., 2021). By examining how banks can effectively integrate FinTech 

innovations; insights can be revealed on the possible gaining of a competitive edge, as 

well as the potential to set new industry standards in delivering value to customers. 

Virasamy (2021) enumerates the positive changes brought about by FinTech as 



17 

 

including innovation, technological advancements, organizational growth, potential 

economic development, lower prices, and various other benefits; all of which ultimately 

benefit customers. This research focused on the mechanisms through which innovation 

strategies are conceived and implemented within traditional banks, the outcomes of 

these strategies in relation to forming successful FinTech collaborations, and the 

resultant shifts in the competitive dynamics of the banking industry. 

  

1.4 Research Objectives 

The primary objective of this study was to establish the key drivers for a South African 

traditional bank in forming strategic partnerships with FinTechs, as well as how the said 

bank  perceives the benefits and risks of such collaborations.  From the primary objective 

the following sub-objectives emerged: 

1. To identify the internal and external factors influencing a South African traditional 

bank to pursue strategic partnerships with FinTechs. 

2. To explore the perceived benefits of strategic partnerships from the perspective 

of the South African traditional bank, particularly in terms of gaining a competitive 

advantage. 

3. To examine the perceived benefits and potential challenges associated with 

forming strategic partnerships with FinTechs as perceived by the South African 

traditional bank. 

 

1.5 Research Questions  

The study was guided by the following research questions: 

1. What are the key factors – both internal and external – that drive a South African 

traditional bank to develop strategic partnerships with FinTechs? 

2. What are the perceived benefits of strategic partnerships with FinTechs from the 

perspective of a South African traditional bank, particularly in terms of gaining a 

competitive advantage? 

3. What are the perceived benefits and potential risks for a South African traditional 

bank that forms strategic partnerships with FinTechs? 



18 

 

1.6 Significance of the Study 

The emergence of FinTechs is accelerating innovation and technological development 

within established financial service providers, which in turn is prompting changes in 

organisational structures, culture, and strategy (Virasamy, 2021). Ndung’u (2022) noted 

that FinTechs have revolutionized the electronic payments in retail and are increasingly 

shaping the financial services landscape in sub-Saharan Africa, offering opportunities for 

financial inclusion, operational efficiency, and customer-centric innovation. Therefore, 

this study provides pertinent insights into the strategic considerations of traditional South 

African banks seeking to collaborate with FinTechs. By focusing on the intersection 

between innovation and partnership, the study contributes to the limited body of 

knowledge that exists on banking innovation strategies in the South African context.  

 

Furthermore, the research highlights how strategic alliances with FinTechs can help 

banks enhance operational efficiency, improve customer experiences, and maintain 

competitiveness in a rapidly evolving financial landscape. Meyer and Okoli (2023) found 

that while FinTech adoption can initially support bank profitability, excessive adoption 

without strategic alignment may reduce profitability, underscoring the need for balanced, 

collaborative approaches. This study thus offers a localized perspective that contributes 

to the global discourse on FinTech integration and banking transformation, while also 

addressing much needed academic understanding in this area. 

 

From a practical perspective, the findings offer actionable recommendations for South 

African traditional banks aiming to navigate the challenges introduced by FinTech 

disruption, while simultaneously capitalizing on strategic collaboration opportunities. For 

instance, Tshukudu et al. (2022) highlight that while FinTech enhances financial inclusion 

and operational efficiency, it also introduces risks such as data security and regulatory 

uncertainty. By identifying the key drivers, benefits, risks, and challenges associated with 

bank-FinTech partnerships, this study can equip decision-makers in traditional banks 

with tools to formulate effective innovation strategies.  

Moreover, in establishing a case for the development of policies and frameworks that 

balance innovation with customer protection and regulatory compliance, the study 

summarily encourages sustainable growth in the banking sector. As Takundwa (2022) 

argues, a risk-based regulatory approach tailored to the South African context is 



19 

 

essential to enable innovation while safeguarding financial stability.  Ultimately, the 

research enables South African traditional banks to align their strategies with the 

demands of the fourth industrial revolution, while gaining a competitive advantage in a 

customer-centric market. 

 

1.7 Delimitation for the Study 

The study focused on a single traditional bank in South Africa. This was done in order to 

provide an in-depth examination of the key drivers for forming strategic partnerships with 

FinTechs, and the perceived benefits and risks of such collaborations within a specific 

organisational context. The study did not include the perspectives of FinTechs, 

regulators, or other stakeholders in the banking ecosystem. The primary focus lies 

exclusively on the strategic considerations of the South African traditional bank. 

 

1.8 Definition of Terms 

Term  
Definition  

Competitive Advantage 

Competitive advantage within commercial banks, is defined 

as adeptness in strategically entering a market and 

establishing a competitive position, which it can safeguard 

(Odhiambo & Mang’ana, 2022). 

FinTech 

FinTech represents entities that harness newly developed 

digital and online technologies to revolutionize banking and 

financial services (Ndung’u, 2022). 

Innovation Strategy 

Innovation strategy pertains to a system of long-term vision 

and goals that articulate the relationship between a 

company's innovative capacity and the outcomes of its 

innovative activities (Oksanych, 2021). 

Strategic Partnerships 

Strategic partnerships are described as purposeful 

collaborations between traditional Banks and FinTechs; 

aiming to drive innovation, streamline processes, and 

create value for customers (Fofanov, 2022). 



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Traditional Bank 

A Traditional bank is a financial institution that emphasizes 

in-person client service and manages the money deposited 

by clients, using it to provide loans to individuals or 

businesses with interest (Business Yield ,2022). 

Table 1.1: Definition of terms 

 

1.9 Assumptions 

The study assumed that the selected South African traditional bank was willing to 

participate in the research and provide accurate and truthful information. It was also 

assumed that the participants possessed the requisite knowledge and experience to 

provide valuable insights into the bank's innovation and partnership strategies. 

 

1.10 Chapter Outline 

Chapter one outlines the purpose, context of the study, research problem and objectives, 

significance and delimitations of the research, and key definitions and assumptions. 

Chapter two is the literature review; which will provide definitions of innovation strategies, 

strategic partnerships, FinTechs, and competitive advantage. It also includes summaries 

of previous studies on the aforementioned topics and theoretical frameworks underlying 

the study. 

Chapter three delves into the research methodology, research design, data collection 

methods, and data analysis techniques. 

Chapter four presents the findings of the study, as well as the key themes and insights 

garnered from the data. 

Chapter five discusses the findings and the implications of the findings. 

Chapter six includes the conclusion, provides recommendations for the South African 

traditional bank, and outlines the limitations of the study while suggesting potential areas 

for future research. 

 

 



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Chapter 2: Literature Review 

2.1 Introduction 

An overview of the literature review is provided so as to highlight the importance of 

understanding the key concepts of innovation strategies, strategic partnerships, 

FinTechs, and competitive advantage. All of which fall within the ambit of the banking 

and financial services industry. The chapter commences by contextualising the South 

African bank being analysed. 

 

2.2 Background information 

2.2.1 Background on the Participating South African Bank 

The participating bank is one of the largest in the South African banking industry. It has 

been identified as one of the four biggest banks in the country. Headquartered in 

Johannesburg, it is a publicly traded company listed on the Johannesburg Stock 

Exchange. The bank provides a variety of financial products and services to meet the 

needs of diverse customer segments, such as corporate, medium enterprises, small 

businesses, and retail consumers which include young people as well as high net worth 

individuals. All the clusters of the bank are included in this study, except the bank’s 

clusters that have not entered into partnerships with FinTechs. 

 

Figure 2.1 depicts a high level South African bank’s structure, which comprises of the 

following clusters: 

1. Retail Business Banking: This division services individual clients and businesses 

with an annual turnover of less than R750 million, offering a full range of banking 

services. Within retail business banking, the following four business units are 

found: 

a. Consumer Banking: This business unit offers personal banking services 

including accounts, loans, and credit cards; all of which are tailored to 

individual consumer needs. 

b. Relationship Banking: This business unit provides personalised banking 

services for high net-worth individuals and businesses, through dedicated 

relationship bankers. 



22 

 

c. Commercial Banking: This business unit delivers comprehensive banking 

solutions for medium to large businesses with an annual turnover 

between R30 million and R750 million. 

d. Solution Innovation: This business unit is responsible for designing, 

developing, and delivering winning value propositions, innovative 

products, and solutions. 

2. Corporate and Investment Banking: This business unit provides secure and 

innovative solutions for managing day-to-day banking needs, optimizing working 

capital, and mitigating risks for businesses. 

3. Operations: This business unit oversees the bank's operational strategies; 

ensuring efficient execution and alignment with the organisation's goals. 

 

Figure 2.1: High-Level South African Bank Organisational Structure  

 

 

 

 



23 

 

2.3 Definitions 

The key concepts defined below are crucial for the understanding and integration of the 

subsequent findings of said concepts. These findings are derived from previous research 

conducted on the key concepts. 

 

2.3.1 Innovation Strategies 

According to Abduvakhidovna (2022) the innovation strategy of a high-tech industrial 

enterprise represents a pivotal functional strategy. This encompasses an assortment of 

measures aimed at optimising technological advancements in production, structural 

organizational changes, and the implementation of contemporary management 

technologies. Mochama (2021) characterizes innovation strategies as involving the 

development of novel ideas, practices, or objects perceived as new by their intended 

users. These include new product development and service innovation, which are 

distinguished by their dynamic performance capability. These innovation strategies 

appear to transcend the obvious; thereby delving into new concepts, developments, and 

improvements in order to achieve strategic benefits, while concurrently redefining long-

term core business goals and dictating resource allocation to attain said goals. Notably, 

innovation strategies in distinct business units such as process, marketing, 

management, product, and technology; focus on different areas of organizational 

advancement (Mochama, 2021). 

 

Oksanych (2021) takes it a step further by emphasizing that an innovation strategy 

pertains to a system of long-term vision and goals that articulates the relationship 

between a company's innovative capacity and the outcomes of its innovative activities. 

In other words, it serves as a guide for decisions and actions that create and sustain 

competitive advantages through the introduction and support of new ideas, technologies, 

products, or services. The outcomes encompass direct financial results as well as 

indirect results such as knowledge accumulation, skill enhancements among employees, 

and the development of an innovative corporate culture. Additionally, Mbugua (2021) 

highlights that innovation strategies comprise of methods and approaches which are 

employed by companies so as to align their objectives with requisite resources and 

capabilities. Consequently, this engenders the facilitating of investments in technology, 



24 

 

support for research and development, and the efficient utilization of various innovations 

to achieve desirable outcomes. 

 

Moreover, Mbugua (2021) adds that innovation strategies entail the adoption of new 

technologies for product and service distribution, transformation of customer service 

delivery through online and mobile banking, as well as marketing innovation strategies 

that include changes in product design, promotion, packaging, and pricing to address 

customer needs and establish new markets as evidenced by Equity Bank Limited. Nduati 

(2023) further underscores that innovation strategies involve the methods and processes 

employed by firms to develop and introduce new products, services, processes, or ideas 

in order to achieve specific business objectives. This is particularly pertinent within the 

context of the data service industry; where innovation strategies combined with emerging 

technologies play a significant role in shaping new business strategies. 

 

2.3.2 FinTechs  

FinTech, as defined by the Financial Stability Board FSB (2017), is the application of 

technology to propel financial innovation. This can potentially give rise to new business 

models, applications, processes, and products that significantly influence financial 

markets, institutions, and the delivery of financial services (Takundwa, 2022; Mugabe, 

2022). The emergence of FinTechs, as articulated by Ndung’u (2022), results from 

entities that harness newly developed digital and online technologies to revolutionize 

banking and financial services. This transformation has redefined the provision of 

financial services by offering novel solutions across the banking value chain. Customer 

appeal and accessibility are thereby enhanced, while search and verification costs are 

reduced. Ndung’u (2022) notes that FinTechs leverage big data and algorithms in order 

to facilitate the matching of borrowers with lenders; with the ultimate aim of providing 

customers with targeted financial products both efficiently and at competitive prices. 

Additionally, Meyer and Okoli (2023) describe FinTech as a foundational system that 

models, values, and processes various financial services and products including bonds, 

stocks, contracts, and currency. They further add that it encompasses "products or 

services in non-financial institutions created with highly innovative and disruptive service 

technologies" thus underscoring FinTech's pivotal role in shaping the financial services 



25 

 

sector through the integration of innovative technological solutions (Meyer & Okoli, 

2023). 

 

2.3.3 Strategic Partnerships  

The concept of strategic partnerships encompasses cooperative arrangements between 

entities such as FinTechs and established financial service providers. These 

partnerships have the potential to lead to sustainable growth and resilience of the 

financial industry (Virasamy, 2021). These cooperative arrangements are also viewed as 

collaborative efforts to leverage FinTech capabilities, thus enhancing customer 

satisfaction and driving profitability for the banks involved (Kariuki, 2022). Fofanov (2022) 

describes strategic partnerships as purposeful collaborations between traditional banks 

and FinTechs aimed at driving innovation, streamlining processes, and creating value 

for customers. When traditional banks and FinTechs collaborate, mutual goals can be 

achieved, potentially leading to increased market share and competitive advantage for 

both parties (Hoang et al., 2021). Sorongan et al. (2021) depicts these partnerships as 

joint initiatives that address industry challenges, and which can lead to an ecosystem 

development and improved financial services. Ruhland & Wiese (2023) argue that 

strategic partnerships are seen as essential for adapting to changing market dynamics; 

which fosters agility, customer-centricity, and long-term sustainability.3) Tshukudu et al. 

(2022) takes this idea a step further by adding  that these partnerships are mechanisms 

to harness FinTech innovations; contributing to overall industry growth and resilience. 

Strategic partnerships are also defined as a collaborative effort to stay relevant in a 

dynamic banking landscape, and this enables traditional banks to thrive amidst 

technological disruptions (Faour & Al-Sowaidi, 2023). 

 

2.3.4 Competitive Advantage 

Asa et al. (2023) posit that technological innovations are a pivotal domain for sustainable 

competitive advantage in the contemporary era. Ioniţă (2022) delves into the concept of 

competitive advantage, but primarily within the context of a company's sustainable 

competitive advantage. It is said to be associated with a company's capacity to maintain 

growth at an optimal rate without relying on external funding. This is achieved through a 

delicate balance between exploration and exploitation of innovation strategies. 

Meanwhile, Odhiambo & Mang’ana (2022) contextualize competitive advantage within a 



26 

 

commercial bank setting; defining it as adeptness in strategically entering a market and 

establishing a competitive position which can be safeguarded. A study they have 

undertaken revealed that commercial banks deploy various competitive strategies as 

their primary competitive approaches, including but not limited to; focus strategy, 

combinations strategy, differentiation, and cost leadership. The overarching notion 

appears to be that competitive strategies empower firms to not only survive but thrive in 

intensely competitive environments. This is achieved through implementing strategic 

measures and leveraging the organisation’s capabilities, including the integration of 

innovative technologies (Odhiambo & Mang’ana, 2022).  

 

2.4 Previous Studies 

Having established the key concepts that are pivotal to this study in the literature review; 

key findings from previous studies on the aforementioned concepts will further cement a 

solid foundation   for the current research. By understanding what has already been 

evidenced or concluded by other authors, this research can unfold in a more focused 

and impactful way, guided by an existing body of knowledge on the topic at hand. 

 

2.4.1 Key Findings from Previous Studies: Innovation Strategies 

The key findings from previous studies on innovation strategies highlight several 

important points, with this section reviewing studies on innovation strategies from 

Abduvakhidovna (2022), Nduati (2024), Mbugua (2021), Oksanych (2021) and 

Mochama (2021).  All the aforementioned studies emphasize the importance of 

innovation strategies in gaining competitive advantage. However, each study 

approaches the topic from a disparate perspective and focus. 

 

In the paper, Classification of Innovative Strategies of Industrial Enterprises, 

Abduvakhidovna (2022) conducted a systematic examination of the current approaches 

to innovative strategy in industrial enterprises. To this end a detailed classification of 

these strategies is proposed. It argues that the significance of innovation strategy is a 

fundamental component of a company's overall strategy and is a crucial factor for its 

competitive and developmental prowess. The key findings in relation to innovation 

strategy were: (i) the innovation strategy is identified as a key element of maintaining 



27 

 

and enhancing the competitive position of an enterprise, (ii) the presence of a strategic 

innovation planning system in large companies enables them to conduct innovative 

activities consistently, (iii) a standard for sustaining innovation dictates implementation 

every 1 to 3 years (iv) large firms often deploy a mix of strategies to maximize innovation 

mobility and effectiveness. The paper emphasized that understanding and applying the 

right innovation strategies were vital for maintaining a competitive edge and fostering 

sustainable growth in industrial enterprises. 

 

In the paper, Innovation Strategies, Entrepreneurial Orientation and Performance of Data 

Service Providers in Kenya, Nduati (2023) investigated how various innovation strategies 

such as process, product, market, and technological innovation affect the performance 

of data service providers in Kenya. The study aimed to explore the role of these 

strategies in influencing a firm's performance. The paper also examined whether an 

entrepreneurial mindset influences the connection between innovation tactics and a 

firm's performance. The key findings in relation to innovation strategy were that: (i) 

innovation is a crucial strategic element directly affecting an organization's performance; 

and is important in differentiating services, adding value, and benefiting consumers, (ii) 

the performance of data service providers in Kenya showed notable differences, (iii) 

various factors such as the availability of technology, perceived benefits of technology, 

organizational size, resource availability, and regulatory/legal environment had a strong 

impact on the adoption of mobile financial technology; and this adoption affected 

operational cost reduction and business operation efficiency, (iv) entrepreneurial 

orientation was not found to be a moderator in the relationship between innovation 

strategies and the performance of data service providers in Kenya. While the paper 

focused on data centre providers, it illustrated the link between innovation strategies and 

their beneficial impact on an organization’s performance. 

 

In the paper, Innovation Strategies Adopted by Equity Bank Limited to Gain Competitive 

Advantage in Kenya, Mbugua (2021) evaluated innovation strategies adopted by a 

commercial bank named; Equity Bank, in their attempt to gain competitive advantage in 

Kenya. The paper examined the bank’s innovation strategies in technology, product, and 

market; as key levers for achieving competitive advantage. The key findings in relation 

to innovation strategy were that: (i) product innovation was found to be crucial for Equity 

Bank’s competitive advantage, (ii) the adoption of technology by Equity Bank led to the 



28 

 

implementation of various developments; thus transforming organizational activities from 

paper banking to paperless systems, (iii) the formation of multiple market segments and 

efficient distribution channels improved product presence and delivery, increasing the 

bank's competitive edge. Therefore, the key innovation strategies in technology, product, 

and market innovations connected positively with competitive advantage, allowing Equity 

Bank to prosper in the competitive banking industry in Kenya. 

 

In the paper, Innovation Strategy and its Impact on the Company’s Competitive Position, 

Oksanych (2021) examined the cause-effect relationship between a company's 

preferences for an innovation strategy relative to its competitive position. The key 

findings highlighted that the development of an appropriate innovation strategy is crucial 

in leveraging innovations to build a competitive advantage in a knowledge-based 

economy. The paper concluded that innovation strategies directly influence a company's 

ability to reduce costs, enhance product quality, and increase sales; all of which 

contribute to greater competitiveness. 

 

In the paper, Influence of Innovation Strategies on Competitive Advantage among 

FinTech Companies in Kenya, Mochama (2021) analysed the connection between 

innovation strategies and competitive advantage within the context of FinTech 

companies in Kenya. The aim was to determine how different innovation strategies 

contribute to creating a competitive advantage within the sector. The findings underscore 

the importance of various innovation strategies that companies can adopt, ranging from 

product, technological, process, market, to management innovations. The outcomes 

imply that for FinTech companies to stay competitive, they must continually adjust and 

respond to environmental changes while creating products and services that meet 

customer expectations, and which cannot be readily replicated by competitors. Financial 

technology companies, for example, focused on creating and improving their products 

continuously as part of their innovation strategies, which was instrumental for their long-

term success. 

 



29 

 

2.4.2 Key Findings from Previous Studies: FinTechs  

In the paper, A conceptual framework for the South African FinTech ecosystem, 

Masangwana (2021) conducted a study evaluating the suitability of current FinTech 

ecosystem frameworks for the South African context, and compares frameworks in both 

developed and developing nations. The study interviewed 12 executives from South 

Africa whose professions range from entrepreneurs, start-ups, policymakers, and 

financial institutions. The paper emphasizes the need to customise existing frameworks 

to fit the South African environment as opposed to implementing a uniform approach. It 

also underscores the importance of educating consumers about FinTech services in 

order to boost adoption rates, address regulatory challenges and infrastructure 

limitations, and build trust; thus strengthening a robust FinTech ecosystem. 

 

Meyer & Okoli (2023) sought to analyse the development, metrics, and influence of 

FinTech on established banks across sixteen African countries from 1800 to 2020; in the 

paper, Financial Technology Development: Implications for Traditional Banks in Africa.  

The study divides the aforementioned period into three phases, namely, analogue 

(1800–1967), digital (1967–2008), and modern (2008–2020). Key observations include 

the emergence of FinTech concepts in the analogue era, structural shifts within the 

financial system during the digital era, and a substantial reduction in bank profitability as 

a result of increased FinTech adoption in the modern era by about 12.6% which revealed 

its disruptive effect on traditional banking revenue streams. However, it is noted that this 

negative impact was swiftly rectified at an annual adjustment rate of approximately 

90.9%, indicating traditional banks' adaptability. The paper concludes that excessive 

FinTech adoption has had adverse implications for traditional banks in Africa and 

recommends collaboration between FinTechs and traditional banks to mitigate these 

disruptive effects. 

 

Mugabe (2022) conducted a study analysing the potential long-term connection between 

financial technology firms and the performance of the banking industry in South Africa 

from the period 2000 to 2018. The paper, The Effect of FinTech on Banking Performance 

in South Africa, explores the influence of FinTech on banking sector performance. It 

focuses particularly on bank size in order to determine whether there exists any causal 

links between the presence of FinTech firms and banking sector performance. The key 



30 

 

findings indicate that; (i) FinTech presence had a significant impact on long-term 

indicators such as return on equity, return on assets, and yield on earning assets at a 

significance level of 1%; while it was only notable at a level of 10% for NIM; (ii) results 

from the Granger Causality test reveal that FinTech presence could not be utilized for 

predicting future RSA banking sector performance. In summary, the study highlights that 

embracing FinTech within the banking sector could lead to more efficient performances, 

with new innovations introduced by these firms financially benefiting both sectors. 

 

In the paper, FinTech in Sub-Saharan Africa, Ndung’u (2022) discusses the growth of 

FinTech in Sub-Saharan Africa. This includes its changes over time, as well as the 

resulting advantages achieved at each phase of its adoption and market development. 

The study indicates that the use of FinTech products has resulted in numerous benefits 

such as the increased financial inclusion of marginalized populations, enhanced welfare, 

and efficient provision of services across all sectors with reduced costs. However, 

challenges to be addressed are identified, in order to facilitate rapid uptake of FinTech 

solutions in Sub-Saharan Africa. The author concludes that driven by FinTech, the fourth 

industrial revolution could elevate savings levels, investments, employment 

opportunities, and inclusive growth for the continent. This can be achieved if an 

appropriate legal framework is established, and appropriate resources are allocated for 

sufficient infrastructure development. 

 

Financial inclusion appears to be a pivotal pursuit, as it emerges in a study conducted 

by Takundwa (2022) to investigate the impact of regulation on the adoption of e-money.  

In the paper, FinTech Regulation in South Africa, a comparative analysis is carried out 

on various countries where the use of e-money and other financial technology products 

has been successful. The aim is to offer insights into regulatory strategies that promote 

financial inclusion while mitigating risks to South Africa's financial system. The findings 

indicate that; (i) regulation can act either as a limiting factor, an impartial element, or a 

facilitator in the development of FinTech, (ii) South African regulators have adopted a 

cautious approach towards FinTech regulation; with emphasis on consumer protection 

related to market conduct risk, data protection and market failure risk. (iii) Economies 

with well-established financial markets tend to favour collaborative approaches where 

FinTech entities and traditional financial institutions collaborate due to regulatory 

requirements or market demands. 



31 

 

2.4.3 Key Findings from Previous Studies:  Strategic Partnerships 

One economy with a well-established financial market which opted for FinTech-

traditional bank collaboration is Finland.  In the paper, FinTech and the Financial 

Industry: Partnerships for Success, Fofanov (2022) investigates the partnership 

dynamics between traditional banks and FinTechs, as well as the attendant regulatory 

consequences in Finland. The research analyzes the motivations behind traditional 

banks and FinTechs opting for collaboration rather than competition.  The study also 

assesses how the existing regulatory framework impacted on the growth of the FinTech 

sector in Finland. The key results indicate that the majority of industry representatives 

from both sectors recognized that adaptability to digitalization was crucial for banks. As 

a result, cooperation was viewed favourably by parties involved, allowing leveraging of 

the core strengths from each sector, and thus enhancing banking services diversification. 

Despite this, certain concerns relating to this collaboration were raised by bank 

executives, particularly regarding potential security risks. 

 

The possibility for security risks notwithstanding, one of the overarching aspects to 

consider in these FinTech-Banks collaboration is the overall outcome from the 

partnership. In the paper, Toward Successful Bank-FinTech Partnerships: Perspectives 

from Service Providers in an Emerging Economy, authors Hoang et al. (2024) investigate 

the viewpoints of FinTech firms and banks in their collaborative ventures, thereby 

identifying elements that could impact the effectiveness of a Bank-FinTech alliance. The 

study utilised qualitative methods; which included individual interviews as well as focus 

group sessions with commercial banks and FinTech companies in Vietnam. Major 

outcomes consist of the benefits, challenges, as well as pros and cons faced by each 

party along with their respective strengths and weaknesses. Criteria for selecting 

partners emerged as a crucial factor influencing the collaboration process. 

 

Partner selection criteria and its drivers are explored in the paper FinTech and the 

Financial Industry: Partnerships for Success. In this study, Ruhland and Wiese (2022) 

aim to identify the key common and distinct strategic partnership reasons between 

financial institutions and FinTechs, thus providing a valuable framework for both parties. 

The primary results indicate that from the perspective of FinTech companies, the most 

significant drivers for partnerships were financial gain, reputation, and trustworthiness. 



32 

 

Conversely, the main motivations for traditional financial institutions centred on seizing 

opportunities to innovate and transform their existing business models, while enhancing 

customer contentment through new innovative offerings. 

  

Virasamy (2021) aims to enhance comprehension of the interplay between FinTech and 

established financial service providers (FSPs) in the evolving competitive financial 

services environment within the South African context. In the paper, Exploring the 

Relationship Between FinTech and Financial Service Providers in South Africa, Some of 

the pivotal discoveries include; (i) newer FinTech companies are driving accelerated 

innovation and technological advancement within established FSPs, prompting various 

modifications to latter’s organizational structures, culture, strategy, and norms; (ii) 

transformation is sweeping across the financial services value chain with emergent 

business models; (iii) the market is progressing, which is leading to potential 

opportunities for FSPs and FinTech firms to capitalize on each other's products and 

services through mutually advantageous interactions; and (iv) there appears to be 

insufficient oversight over the FinTech sector by government authorities and regulators 

in South Africa. The study cautions that significant negative effects on the economy could 

arise if there is a delay in regulating this industry. 

 

Lack of regulation of nascent sectors such as the FinTech industry does little to negate 

the advantages for traditional financial institutions that partner with FinTechs. In the 

paper, The Relationship between FinTechs and Financial Performance of Commercial 

Banks in Kenya, Kariuki (2022) investigates the association between FinTechs and 

financial performance of commercial banks in Kenya, targeting all forty commercial 

banks in Kenya. The key findings reveal that; (i) a positive correlation exists between 

FinTech adoption and bank performance, specifically in terms of return on assets (ROA), 

(ii) FinTechs, such as mobile money services, were associated with improved bank 

performance. While the paper did not extensively elaborate on the benefits of strategic 

partnerships between traditional banks and FinTechs; it did however highlight the 

positive correlation between FinTech adoption and bank performance, specifically 

pertaining return on assets (ROA). 

 



33 

 

Despite the positive influence resulting from Bank-FinTech collaborations, forming these 

partnerships is seemingly not without its challenges.  In the paper, Model of Banking and 

FinTech Collaboration in Indonesia: Present and Future Challenge, Sorongan et al. 

(2021) emphasize the obstacles in creating collaborative models between banks and 

FinTech companies in Indonesia; both presently and in the future. The study findings 

underscore the importance of comprehensive regulations, policies, and laws governing 

collaboration, which continue to present significant challenges for Bank-FinTech 

partnerships, particularly in Indonesia.  

 

In the South African context, Tshukudu et al. (2022) investigate the correlation between 

financial technology and the financial performance of commercial banks in South Africa 

using simple linear regression, descriptive analysis, and correlation analysis on the top 

five banks in the country. In the paper, Analysing the Relationship between Financial 

Technology and Commercial Banks’ Financial Performance in South Africa, it is revealed 

that during specific timeframe, there was a discernible link between the financial 

performance of South Africa's top five banks and their adoption of financial technology. 

This was particularly driven by an increase in mobile subscriptions for internet banking. 

Additionally, the study highlights the emerging competitive landscape within the banking 

sector as a sign of a transition from oligopoly to increased competition in South Africa’s 

banking environment. These findings imply strong support for transitioning from 

traditional-based banking to digital approaches for improved financial results and 

increased market share within this industry.  

 

Faour and Al-Sowaidi (2023) suggest that financial technology is merging with traditional 

banking to reshape the financial sector, with agile FinTech startups posing as strong 

competitors to long-standing banks. In the paper, FinTech Revolution: How Established 

Banks Are Embracing Innovation to Stay Competitive, the interaction between FinTech 

and banks, including their collaborations and the combined impact they have on future 

developments, is duly investigated. The main findings that emerge underscore the 

potential for collaboration between these entities in order to drive innovation, provide a 

variety of financial services, and address regulatory complexities and customer trust 

issues.  

 



34 

 

2.4.4 Key Findings from Previous Studies: Competitive Advantage 

While the benefits of Bank-FinTech collaborations have been extensively enumerated in 

key findings on innovation strategies, FinTechs, and strategic partnerships; in the paper, 

Technological Innovation as a Strategy for Competitive Advantage within the Namibian 

Banking Industry, Asa et al. (2023) examines the impact of technological innovation on 

gaining competitive advantage and expanding market presence in the banking industry; 

with a particular focus on Namibia. The paper indicates that utilising technological 

innovations as a strategy is favourable for banks aiming to achieve both competitive 

advantage and an increased market share. Furthermore, the paper elucidates that given 

the challenges posed by the fourth industrial revolution, banks need to adapt their 

strategies to keep up with technological developments or risk losing market share to 

established rivals and growing challenger banks. 

 

FinTech partnerships can be a way through which traditional banks keep up with 

technological developments. This is illustrated in the paper, Role of FinTech Adoption 

for Competitiveness and Performance of the Bank: A Study of Banking Industry in UAE; 

wherein Dwivedi et al. (2021) examine how FinTech affects the competitiveness and 

performance of the banking sector in the UAE. Their main discoveries indicate that; (i) 

integrating FinTech significantly influenced both competitiveness and performance 

outcomes in the UAE's banking industry, and (ii) effective adoption of FinTech along with 

proper technology management directly affected the performance of the banking sector 

in the UAE. 

 

Yet, technological advancements must address the particular needs within the context 

the innovation is adopted. Odhiambo and Mang'ana (2022) explore how leveraging 

advancements strategically impacts the standing of commercial banks in Kenya. In their 

paper titled, The Impact of Embracing Technological Innovations on the Competitive 

Edge of Commercial Banks, in Kenya the authors assess the influence of E-Money 

transfer systems, telephone banking services, internet banking platforms, as well as  

internal controls on the advantage of these banks. The main outcome highlights that 

integrating technologies like E transfers, telephone banking, internet banking and 

internal controls positively; significantly boosted the competitive edge of commercial 

banks in Kenya. 



35 

 

 

A sustainable competitive advantage being more preferable; Ioniţă (2022) clarifies some 

less-discussed aspects in the literature and emphasizes the significance of innovative 

management strategies for leveraging intangible resources in order to enhance 

sustainable competitive advantage and company value. In the paper, Exploration vs. 

Exploitation: How Innovation Strategies Impact Firm Performance and Competitive 

Advantage, theoretical and empirical studies were carried out at both national and 

international levels. The conclusions indicate that; (i) effective utilization of intangible 

assets through innovative exploitative and exploratory strategies, can impact a 

company's sustainable competitive advantage as well as its market value; and (ii) failure 

to adapt to environmental changes can lead businesses to rapidly lose their competitive 

edge, thus necessitating companies to either exploit existing capacities or explore new 

capabilities in order to reinvent themselves. 

 

2.5 Analytical Framework 

2.5.1. Theoretical Framework 

The innovation diffusion theory serves as the foundational theoretical framework for the 

paper, as it has been employed in numerous studies focusing on IT innovations at 

individual and organizational levels in both developed and developing countries (Rhein, 

2021). Developed by Rogers (1962), the theory provides a framework for identifying 

factors that influence the success or failure of innovation. It assists in analysing the 

adoption and diffusion of innovations; considering factors such as relative advantage, 

compatibility, complexity, trialability, and observability as illustrated in figure 2.2. This is 

significant; as innovation is more likely to be adopted if it offers a clear advantage over 

existing alternatives, is compatible with existing values and practices, is not overly 

complex, can be tried before making a full commitment, and provides visible benefits that 

can be seen by other potential adopters (Kolsi, 2023). Furthermore, this theory suggests 

that the adoption of technological innovations is influenced by various factors; including 

perceived usefulness, barriers, and the diffusion process itself (Mochama, 2021). In the 

context of banking, this theory will guide the analysis of the adoption and impact of 

technological innovations in the banking industry, specifically with regard to achieving 

competitive advantage (Odhiambo & Mang’ana, 2022). The innovation diffusion theory 

is crucial to this study as it informs the independent variables and how financial 



36 

 

institutions can identify technologies for product/service differentiation in a competitive 

market (Odhiambo & Mang’ana, 2022).  

 

 

Figure 2.2: Innovation Diffusion Theory (Source: Rogers, 1982) 

 

The Resource-Based View Theory is also utilised in this paper in order to understand 

how technological innovations can create a sustainable competitive advantage by 

leveraging the unique resources and capabilities of a bank. The Resource-Based View 

Theory emphasizes the significance of effectively utilizing available resources and 

capabilities to gain competitive advantage (Ioniţă, 2022).  The theory views firms as 

comprising of several resources that may be either tangible or soft, and whose proper 

use confers a competitive advantage over organizations in a similar industry (Odhiambo 

& Mang’ana, 2022). According to Barney (1991), firms that possess resources which are 

valuable, rare, imperfectly imitable and imperfectly substitutable; hold the main sources 

of sustainable competitive advantage for sustained superior performance, as shown in 

figure 2.3. 

 



37 

 

 

Figure 2.3: Resource-Based View (Source: Own draft; based on Barney, 1991)  

Theoretical frameworks such as the Resource-Based View Theory and Innovation 

Diffusion Theory provide valuable insights into the relationship between technological 

innovations, competitive advantage, and company value (Odhiambo & Mang’ana, 2022). 

Therefore, these theories will serve as the foundation for examining the role of innovation 

strategies in enhancing competitive advantage within the South African banking industry. 

 

2.4.2. Conceptual Framework 

A conceptual framework is a visual or descriptive representation that outlines the main 

variables or constructs to be examined and their assumed relationships (Miles & 

Huberman, 1994). The proposed conceptual framework in figure 2.4 visually represents 

how the various variables of the conceptual framework interact with the theoretical 

frameworks, guiding the research on innovation strategies and partnerships between a 

South African bank and FinTechs. 



38 

 

 

Figure 2.4: Conceptual Framework (Source: Own draft) 

Explanation of the Visual Representation 

1. Internal Factors represent the bank's unique resources and capabilities, such as 

skilled personnel and technological infrastructure, which are essential for developing 

effective innovation strategies. 

2. External Factors include market trends and regulatory environments that influence 

how banks innovate and collaborate with FinTechs. 

3. Innovation Strategies are the central components that connect the internal and 

external factors to the formation of strategic partnerships. They reflect the methods the 

bank employs to innovate and work with FinTechs. 

4. Strategic Partnerships are the result of successful innovation strategies, leading to 

collaborations with FinTechs. This component is crucial for enhancing the bank's 

offerings and market position. 

5. Competitive Advantage is the ultimate goal of forming strategic partnerships, 

focusing on how unique resources and capabilities can enhance the bank's market 

position. 

6. Challenges & Risks: highlight potential barriers to forming partnerships and 

implementing innovation strategies, such as cyber security risks, regulatory challenges, 

and lack of consumer trust. 



39 

 

7. Theoretical Frameworks: 

• Resource-Based View Theory emphasizes the importance of internal resources 

and capabilities in achieving competitive advantage, influencing both innovation 

strategies and partnerships. 

• Innovation Diffusion Theory focuses on how innovations are adopted and spread, 

highlighting the role of perceived benefits and external factors in the collaboration 

process. 

 

2.5 Literature review summary and closing remarks. 

The literature review provides a comprehensive summary of salient findings from 

previous studies. It presents important viewpoints on the impact exerted by innovation 

strategies, influence of FinTech, strategic partnerships, and competitive advantage 

within the banking and financial services industry. I In a rapidly evolving and technology 

driven financial services environment; innovation strategies are necessary for gaining 

competitive advantage in the banking industry. Additionally, the emergence of FinTech 

with its technologically driven service offerings indicates a need for traditional banks to 

enter into strategic partnerships in order to harness technological advancements for 

long-term competitiveness. However, in collaborating with FinTechs, traditional banks 

must do so with the view of utilising their existing resources to maximise partnership 

benefits; while confronting the risks and challenges of said partnerships. . Overall, the 

literature review indicates that purposeful incorporation of innovation strategies, 

particularly as they pertain to strategic collaborations that harness technological 

advancements, can significantly improve a bank's competitiveness. 

 

Having established the key findings on innovation strategies, FinTech, strategic 

partnerships, and the competitive advantage resulting from traditional banks 

implementing these actions; there are three propositions that can be established which 

connect these seemingly disparate concepts. With the assistance of both the Resource-

Based View Theory and Innovation Diffusion Theory; construction of the three 

propositions will facilitate better understanding of the relationship between Innovation 

strategies and strategic partnerships as they pertain to competitive advantage in the 

South African banking industry.    



40 

 

2.5.1. Proposition 1 

Innovation strategies in South African traditional banks are shaped by a combination of 

internal factors—such as organizational culture, operational processes, and 

technological capabilities—and external factors, such as  regulatory changes and 

technological developments in the financial services sector. 

 

2.5.2. Proposition 2 

Strategic partnerships with FinTechs represent an innovation strategy that can be 

adopted by a South African traditional bank, which aides in gaining competitive 

advantage; thus enhancing operational efficiency and consequently improving customer 

experience. 

 

2.5.3. Proposition 3 

External challenges such as regulatory challenges, cyber security risk and lack of 

consumer trust, create barriers to successful partnerships between South African 

traditional banks and FinTechs. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



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Chapter 3: Research Methodology 

This chapter details the research methodology utilised in this study. It includes the 

approach, design, and sampling method employed. Additionally, the chapter explains the 

data collection process, including population and sampling methods. Also encompassed 

in the chapter are the research instrument, ethical considerations, and study limitations. 

Lastly; reliability, validity as well as techniques for data analysis are all discussed. 

 

3.1 Research Approach  

The study employed a qualitative research approach to analyse the connection between 

innovation strategies, strategic partnerships, and competitive advantage within a South 

African traditional bank. Through this methodological choice, the study sought to unravel 

the intricacies involved in creating mutually beneficial partnerships in the banking 

industry. 

The research employed a qualitative method because it enabled the examination of 

intricate matters within their natural environment by utilizing direct participant 

experiences and perspectives (Creswell & Poth, 2018). The research method proves 

most effective for studying how people interpret and react to organizational strategies 

and innovation (Denzin & Lincoln, 2018). Through qualitative research methods the 

researcher obtained deep and comprehensive knowledge about how banking sector 

leaders understand and implement innovation strategies while dealing with FinTech 

disruption challenges. 

 

3.2 Research Design 

This research utilises a case study approach, which focused on an in-depth exploration 

of a specific subject. This approach steered the collection of thorough information, thus 

providing insights into the complexities of innovation strategies, and strategic 

partnerships in the banking industry. The case study method enabled researchers to 

study a modern phenomenon in its actual environment because the distinction between 

the phenomenon and its context remains ambiguous (Merriam & Tisdell, 2016). 

The case study method proves most effective for qualitative research when researchers 

want to study intricate organizational processes to answer strategic decision-making 



42 

 

questions about how and why things happen (Creswell & Poth, 2018). The case study 

approach enabled researchers to gather detailed contextual information which exposed 

the complex processes of bank-FinTech partnership development. 

3.3 Data Collection Methods 

The research used semi-structured interviews as its main data collection method to 

gather information from South African traditional bank key personnel. The research 

participants consisted of executives together with managers and employees who actively 

participated in innovation strategies and strategic partnership development. The 

researcher selected semi-structured interviews because they provide both structured 

guidance and open-ended exploration which enables deep exploration of specific 

themes while maintaining consistent results (Merriam & Tisdell, 2016). 

Semi-structured interviews serve well to study complex organizational processes 

because they enable participants to share their personal experiences through their own 

words while staying focused on research objectives (Patton, 2015). The research design 

proved suitable for obtaining detailed insights from bank staff who lead innovation 

strategy development and implementation. 

The interviews delivered first-hand information about the practices and challenges and 

results of FinTech strategic partnership development. This research method matches the 

interpretive approach of qualitative research because it seeks to understand the meaning 

from the perspective of those who experience the phenomenon (Denzin & Lincoln, 2018). 

The collected interview data served as the basis for conducting an in-depth contextual 

analysis of innovation and collaboration within the South African banking sector. 

3.4 Population and Sample 

3.4.1 Population 

The population for this study consisted of individuals working in a South African 

traditional bank and are involved in innovation strategies and strategic partnerships. The  

participants were selected based on their involvement in innovation strategies and 

strategic partnerships within the bank. These individuals were drawn from various 

clusters and departments, including innovation, strategy, partnerships, technology, and 

operations. This diversity ensured that the study captured a wide range of perspectives 

and experiences related to the bank’s approach to forming partnerships with FinTechs 

and leveraging innovation for competitive advantage. 



43 

 

3.4.2 Sample and Sampling Method 

This research used purposive sampling to choose participants who have experience with 

innovation strategies and strategic partnerships in Traditional South African banks. The 

qualitative research method of purposive sampling selects participants who possess 

valuable information about the research phenomenon (Merriam & Tisdell, 2016; Patton, 

2015). 

The study included thirteen participants. The selection criteria for participants included 

bank employment status and direct involvement in innovation initiatives or strategic 

partnership development and strategic direction insight. The participants came from 

different organizational levels of executives and middle managers and specialists to gain 

complete understanding of the bank’s innovation strategy from top to bottom. 

The study excluded participants who did not work in innovation or partnership functions 

and those who held administrative or support positions without strategic responsibilities. 

The data collection criteria were designed to meet the study objectives while ensuring 

data relevance. 

The qualitative case study required thirteen participants because depth of information 

was more important than broad representation. Creswell and Poth (2018) state that 

qualitative research uses a small number of participants to study complex issues in 

depth. According to Patton (2015) the adequacy of a qualitative research sample 

depends on the quality of the information obtained rather than statistical generalizability. 

The sample size in this study reached saturation because new themes stopped 

appearing in the data. 

3.5 The Research Instrument 

The data collection instrument for this research was a semi-structured interview guide. 

The interview guide in Appendix A was divided into three main sections – Standard 

questions, Innovation strategies and Strategic partnerships. This included open ended 

questions, which allowed room for exploring of unexpected insights and emergent 

themes during the interviews. The structure of the guide allowed for flexibility in probing 

emerging themes while maintaining consistency across interviews. This design is 

consistent with qualitative research principles, which emphasise depth, adaptability, and 

the importance of capturing participants’ lived experiences (Patton, 2015; Merriam & 

Tisdell, 2016). 



44 

 

 

3.6 Procedure for Data Collection 

The procedure for data collection involved the following steps: 

I. Participants were identified and selected based on their involvement in innovation 

strategies and strategic partnerships in a South African traditional bank. 

II. Participants were contacted and invited to participate in the study. 

III. Participants who agreed to participate were scheduled for an interview at a 

convenient time and location. 

IV. During the interview, participants were asked a series of questions related to their 

experiences and perspectives on innovation strategies and strategic partnerships in 

the bank of their employ. 

V. The interviews were audio-recorded with the participants' consent to ensure accurate 

capture of their responses. 

 

The data collected from the interviews was transcribed and analysed using thematic 

analysis. The aim of a thematic analysis is to identify patterns or themes within the 

qualitative data relating to the topic being investigated (Braun & Clarke, 2006). 

 

3.7 Data Analysis Strategies and Interpretation  

This study employed thematic analysis as the primary method for analysing qualitative 

data, following the widely recognized approach developed by Braun & Clarke (2006). 

Thematic analysis was chosen for its flexibility and its ability to identify, analyse, and 

report patterns (themes) within data, which aligns with the exploratory nature of this 

research. 

The analysis was conducted using the six-phase framework outlined by Braun & Clarke 

(2006), which ensures a systematic and replicable process: 

I. Familiarization with the Data: All interview transcripts were read multiple times to 

immerse the researcher in the data. Initial notes were taken to capture early 

impressions and potential patterns (Creswell & Poth, 2018). 



45 

 

II. Generating Initial Codes: Using an inductive approach, the researcher manually 

coded interesting features of the data across the entire dataset. Codes were data-

driven and not based on pre-existing theories (Merriam & Tisdell, 2016). 

III. Searching for Themes: Codes were then grouped into potential themes by identifying 

broader patterns of meaning. This involved organizing codes into candidate themes 

that reflected the research questions and objectives (Patton, 2015). 

IV. Reviewing Themes: Themes were reviewed and refined to ensure they accurately 

represented the data. This involved checking if themes worked in relation to the 

coded extracts and the entire dataset (Denzin & Lincoln, 2018). 

V. Defining and Naming Themes: Each theme was clearly defined and named to 

capture its essence. Detailed analysis was conducted to understand how each theme 

related to the research topic and to one another. 

VI. Producing the Report: The final phase involved weaving together the narrative of the 

data with illustrative quotes from participants. The findings were interpreted in 

relation to the research questions and existing literature, highlighting implications for 

innovation strategies and strategic partnerships in the South African banking sector. 

This rigorous and transparent approach to thematic analysis ensures that the findings 

are credible and that the study can be replicated by future researchers seeking to explore 

similar phenomena. 

 

3.8 Quality Assurance (Trustworthiness) 

In qualitative research, trustworthiness refers to the rigor and integrity of the study, 

ensuring that the findings are credible, transferable, dependable, and confirmable 

(Lincoln & Guba, 1985). Establishing trustworthiness is essential for validating the 

research process and outcomes, particularly in studies that rely on subjective 

interpretations of participants’ experiences. This study employed multiple strategies to 

address each of these four components. 

3.8.1 Transferability 

Transferability describes how well the research results from one study can be used in 

different settings or environments (Lincoln & Guba, 1985). The study supports 

transferability by providing detailed descriptions of the research environment and 

participant characteristics and organizational framework. The detailed descriptions 



46 

 

enable readers to assess how the research results apply to their specific contexts 

(Merriam & Tisdell, 2016). 

The research participants were chosen because they had firsthand experience with 

innovation strategies and strategic partnerships in South African banks which makes the 

study results more applicable to similar institutions. 

3.8.2 Credibility 

The findings' truthfulness depends on credibility according to Lincoln and Guba (1985). 

The investigation implemented several measures to enhance its credibility. The 

researcher developed and validated a semi-structured interview guide to achieve clear 

and consistent data collection. The researcher performed member checking by 

presenting initial results to participants to verify their interpretations and guarantee their 

viewpoints received proper representation. The thematic analysis followed Braun & 

Clarke (2006) six-phase framework in a transparent and systematic way to maintain 

data-driven theme development (Creswell & Poth, 2018). 

3.8.3 Dependability 

The research results demonstrated dependability through their stability and 

trustworthiness which extends across different situations and time periods (Lincoln & 

Guba 1985). The research used multiple methods to enhance credibility as its main 

objective. The research will achieve better data credibility through semi-structured 

interviews because they allow deep exploration of participant perspectives and 

experiences. The selection of participants who actively participated in innovation 

strategies and strategic partnerships guaranteed that the collected data directly 

addressed the research question and represented the target population. The use of 

audio recording during interviews produced an exact record of participant responses 

which enhanced data credibility. 

3.8.4 Confirmability 

The research process requires confirmability to maintain objectivity and neutrality 

because it ensures that interpretations and conclusions remain directly connected to 

the data (Lincoln & Guba, 1985; Patton, 2015; Merriam & Tisdell, 2016). According to 

Lincoln & Guba (1985), confirmability is achieved when research findings can be traced 

back to their sources and when the logic used to derive conclusions is explicitly 

documented. The researcher maintained a reflexive journal throughout the research 

process to document thoughts and decisions and potential biases which supported 



47 

 

confirmability in this study. The study supported its interpretations through direct 

participant quotations which maintained the findings' connection to actual data. Peer 

debriefing sessions with academic supervisors were conducted to critically examine 

assumptions and interpretations which improved the objectivity of the analysis (Patton, 

2015). 

 

3.9 Limitations of the Study 

Applying thematic analysis and data triangulation improves the trustworthiness and 

reliability of the research. However, it is important to consider certain limitations. Since 

this study focuses on a specific bank, the results may not be applicable to other banks. 

Moreover, relying on self-reported data from participants could introduce biases or 

inaccuracies. Lastly, including only those participants that are directly involved in 

innovation strategies and strategic partnerships, may limit the diversity of perspectives 

presented in the data. 

 

3.10 Ethical Considerations 

Throughout this study, ethical considerations were carefully examined. Measures were 

implemented to protect the privacy and anonymity of participants by obtaining informed 

consent. Furthermore, participants were assured of their right to withdraw from 

participating in the interview, without any negative consequences. The data gathered will 

be stored securely and only accessed for analysis purposes by the researcher. Rigorous 

precautions will be in place to maintain the confidentiality and security of participants' 

personal information during data storage. 

 

 

 

 



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Chapter 4: Presentation of Findings 

4.1 Introduction 

This chapter presents the findings of the research data collected and the analysis 

thereof. The analysis establishes several themes that elucidate the effects of innovation 

strategies and strategic partnerships on organizational performance in a South African 

bank. The chapter commences by the description of the participants’ characteristics as 

they relate to their employ at the bank being analysed. Proceeding from that is a 

comprehensive analysis of the themes unveiled. The data was analysed thematically in 

order to iden