Responsible Innovation in Platform based FinTech Start-ups

Responsible Innovation in Platform based FinTech Start-ups

Waagmeester, F.C.

Scholten, V.E. (mentor)
de Reuver, G.A. (mentor)
van de Poel, I.R. (mentor)

Technology, Policy and Management

Values Technology and Innovation

Management of Technology

2016-09-08

The payment services market is growing; more and more companies introduce new payment methods, transaction systems, payment administration platforms, subscription methods and so on. These innovative new payment services, part of the innovative financial services or ‘FinTech’ industry, often introduce new challenges compared to the conventional payment methods via incumbent banks. As a lot of these new payment methods are intro-duced by start-ups, the responsibility for guaranteeing security, privacy and accuracy of money transfers that previously lay with the incumbent banks now shifts towards these start-ups. Furthermore, these start-ups are increasingly often structured as a (software or cloud) platform, introducing extra challenges with respect to how to control the behavior of the users of such a platform in order to prevent e.g. fraud. The purpose of this report is to explore the pro-active responsibility of such platform based start-ups in the FinTech sector by adopting the Responsible Innovation concept and relating this concept to specific challenges faced by start-ups and methods to control a plat-form. This report is intended to provide insight in how a start-up can include a responsible view to its innovation process when developing a new platform in the FinTech sector. An explorative case study into two start-ups with payment service platforms is conducted in order to explore to what extend the concept of Responsible Innovation is implemented, to explore the applied methods to maintain control over the platform, the specific challenges faced by start-ups and the FinTech industry, and the relations between these topics. The study shows that the acquisition of external knowledge and an entrepreneur’s ex-isting knowledge and experience is particularly important in order to be able to anticipate potential issues and to include values from a wide range of stakeholders in the platform. This can be done by either engaging in collaboration with representations of the (future) stakeholder groups directly or by collaborating with market parties already involved with these stakeholder groups and with significant experience. The anticipated future challenges can be translated into control mechanisms that allow the entrepreneur to respond ade-quately whenever an issue on the platform occurs. Such control mechanisms can be the re-striction of which customers are accepted on the platform, monitoring behavior on the plat-form and applying adequate measures in situations of misuse, and, specifically for FinTech companies, the control of money flows such that payments are only activated when the platform user does comply with the platform’s terms. Furthermore, designing the platform’s software modularly together with the organizational focus to adopt new knowledge increas-es the ability of a start-up to respond to new issues that arise. This also gives the platform owner the ability to change or add control mechanisms in order to increase his control over the platform and to decrease the misconduct by users of the platform. Lastly, making sure customers and other stakeholders accept the platform and agree with its business practice, preventing reputational damage, helps with becoming or remaining responsible when de-veloping a new platform.

Responsible Innovation
RI
platform
platform control
FinTech
start-up

http://resolver.tudelft.nl/uuid:d82d4d08-fd56-40c4-9762-f32bde78e18a

Student theses

master thesis

(c) 2016 Waagmeester, F.C.