A Method for Innovation Capability Evaluation in Banking

Abstract

Measuring innovation processes becomes urgent in the era of fierce competition under the strong impact of technology development. That helps firms review their innovation activities, thereby to have reasonable adjustments in their innovation policies. There have been emerging innovation trends in banking industry such as using big data, mobile applications and cooperating with FinTech companies. However, there remain few relevant research on evaluating innovation capabilities in banking sector particularly. In this paper, first we determine key innovation management practices based on literature review and establish a set of measurement items for these practices. Then, an innovation capability evaluation method is developed based on Analytic Hierarchy Process (AHP). A group of five experts in banking major is invited assess the development degree of each practice in a sample group of Vietnam banks as well as determine the importance weights for each practice. Finally, a composite innovation capability index is computed for each bank and used for ranking. The findings could be a basis for bank managers to propose new strategies in order to improve their innovation outcomes.