Complacency, capabilities, and institutional pressure: understanding financial institutions' participation in the nascent mobile payments ecosystem

As mobile payments become increasingly popular, their ecosystem is also evolving. The participation of financial institutions in this ecosystem, although is rapidly improving, remains relatively low. This paper studies why some financial institutions choose to, or not to, participate in this nascent mobile payments ecosystem. We developed hypotheses for the influence of three factors as aspiration gaps, customer-facing IT capabilities, and institutional pressures based on three theoretical foundations including the threat rigidity thesis, capability-based view, and institutional theory. We then empirically tested our hypotheses by analyzing the diffusion of mobile payments among 3549U.S. credit unions from 2013 to 2016. Results from our event history analyses provide support to the hypotheses that credit unions experiencing performance gaps, having superior customer-facing IT capabilities, and facing strong institutional pressures are more likely to start providing mobile payment services.