Blockchain Technology: An Explorative Study of the Consistency Between Banks' Strategic Logic Behind Cross-Border Payments and Retail Customer Demand in the Norwegian Market

Lena Falcke & Giggi Cecilie Nyquist Gefle

Student thesis: Master thesis


The purpose of this thesis is to adopt a practical approach from a strategic banking perspective in order to contribute to the emerging literature on blockchain as an innovation. An empirical analysis of the consistency between banks’ strategic logic behind cross-border payments and retail customer demand was conducted. The banking industry is undergoing substantial structural changes, where globalisation and digitalisation have altered the competitive environment and the traditional way of banking. Thus, the barriers to entry in the banking sector is lower, which has facilitated wider markets and expanded the competitive ground. New market entrants possess unique selling propositions by embracing innovative and disruptive business models, whereas traditional banks need to leverage on their large scale and customer base. However, banks seem to be rather overconfident in their market position as incumbent institutions, but at the same time struggle with determining a counter-strategy. Customer expectations have changed significantly in line with digital applications, and thus they expect more efficient and convenient product features. Transparency of information has increased customer bargaining power, which, in turn, reduce switching costs. Due to the high level of competition, strategic innovation facilitates most opportunities to establish competitive advantage. In this regard, blockchain is perceived as a radical innovation with revolutionary potential in different use cases in financial services. The thesis interviewed six banks operating in the Norwegian market, and 142 of their respective customers were surveyed. The findings reveal that the threat of new entrants is strategically viewed as an opportunity to enter into partnerships. In addition, a shift in strategic orientation is acknowledged, where customer value creation is an essential prioritisation. The emergence of blockchain technology has accelerated the development within the competitive landscape. Due to the immaturity and radicalness of the technology, the findings suggest that it is beneficial to be a follower. It is evident that improvements of cross-border payments are not a necessary prioritisation for the retail customer segment, despite the visibility of some efficiency demand in this context. The findings indicate that the product is more valuable for corporate customers and the banks. Conclusively, the thesis suggests that the banks’ strategic logic behind international payments is consistent with retail customer demand, however not fully consistent. Further research is recommended, specifically for corporate customers and other prominent blockchain use cases in financial markets.

EducationsMSc in Finance and Strategic Management, (Graduate Programme) Final Thesis
Publication date2018
Number of pages156