Reshaping Innovation in The Romanian Banking System

Abstract

This paper draws on the challenged banking system to maintain profitability under an extremely unfavorable environment, focused on quantitative targets and increasing competitiveness. While the most powerful force that is currently reshaping the banks goals is increasing customers’ expectations, banks reach to all internal and external sources of innovation. The purpose of this paper is to build the argument of a strong innovation culture as a response of banks to the market demand. We also refer to an innovation risk management framework that blends an effective risk management strategy with sound innovation practices. Using risk management processes to improve the innovation capabilities represents a field of study little explored in the current literature. We locate our study on the Romanian banking system, using the insights gained from key managers from three large banks, invited at expert group meetings. The research carried out was exploratory and the cases were chosen because of their relevance for the current innovation landscape in the banking sector in Romania. The results were indicative for three major variables to be positively associated with the development of a viable innovation risk management framework: intrapreneurship, technology and resources. Our study is suggestive of a business model that banks apply lacking a formalized innovation strategy culture, requiring a rapid shift of strategic forces.