BANKING DIGITALLY TO MICRO-BUSINESS: EXPLORING VALUE CO-CREATION STRATEGY IN NEW PRODUCT DEVELOPMENT

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INTRODUCTION
The rapid development of information and communication technologies (ICTs) drive a new phenomenon where company and its consumers are becoming more engaged, especially around the way they interact with each other. Information and communication technologies provide both the company and individual consumers with countless tools that enable direct and real-time interactions between them (Lusch and Nambisan, 2015).
Globally, the blossoming of internet culture is taking part in influencing how company is doing the business. For example, according to PwC Global Entertainment and Media Outlook in Indonesia (2018), the number of internet advertising by Indonesian company has been growing 21.3% from 2013 to 2018. This rate is even higher compared to the global growth rate in the same period, which is 10.7%. Social media, call center/ hotline, website, and mailing services are just a few names that help companies multiply consumers' contact points across digital channels. The rise of consumers' contact points across digital channels has been used not only as a way for companies to communicate their products, it also contributes highly to product knowledge received from customers. The huge amount of information received by companies through these countless interactions empowers companies to create or adapt their value proposition according to the voice of consumers. Consumers are no longer the object of commerce, they become actively involved in collaboration on shaping and creating the product (Das et.al., 2017).
Collaboration between the company and its consumers can help organizations learn and adapt to the constant changing of product requirements in the market. This idea has been conceptualized as value co-creation. Value co-creation can be defined as the collaboration, concurrent peer-like process of producing values in products or services through interaction between producers and consumers (Galvagno and Dalli, 2014). In addition, stated by Ind and Coates (2013), the term co-creation has been used widely to describe the shift of thinking from producers as the sole definer of value' to a more collaborative process where consumers and producers are together generating values in marketable products.
The concept of value co-creation is mainly adopted by technology-driven companies, including Banks and other Financial Technology companies (Fintech). For a Bank, being digital should be translated to being more customer-centric.
According to PwC report on Digital Banking in Indonesia (2018), the future for the bank is about a drastic reset: shifting the product-centric mindset into the customer-centric mindset. Although not applied fully, Indonesian Banks are starting to apply different product development concept that put users or consumers at the heart of the process. These Taking a different approach, after being in the market for around three years, Jenius by BTPN as a pioneer of Digital Bank in Indonesia finally decided to broaden its market by also targeting the microbusiness owners. Even though the concept of value co-creation is not foreign to Jenius, conducting cocreation activities to a different kind of consumers segment might require a different approach or implementation. Jenius should be fully aware that individual consumers and business consumers are naturally different as they use banking products differently. Value co-creation that takes place within the product development process should also be adjusted to cater unique attributes attached to the micro-business owners. Moreover, the microbusiness segment has been underserved by the Bank, and many modern micro-entrepreneurs prefer fintech companies when looking for additional capital as Banks are perceived to be rigid and inflexible when dealing with paperwork. Banking products need to be more relevant to the microbusiness segment.
Hence, it is interesting to consider Jenius as a case study that is capable of revealing important knowledge on value co-creation strategy in Digital Banking. The objective of this research is to be able to answer these following questions: 1. What are relevant Banking products to be offered to the micro-business segment?
2. How to conduct value co-creation activities in new product development for Digital Banking in the micro-business segment?
3. How to drive consumer involvement in value co-creation activities for Digital Banking in the micro-business segment?

LITERATURE REVIEW
No single party has all the resources to co-create value, thus they need to be involved in the resource integration processes (Babu et al., 2020). Hence, multiple parties integrate their resources as a part of the value creation process. Over recent years, an increase in academic interest in the topic of value co-creation has been growing (Seppä and Tanev, 2011). Value co-creation is a simultaneous effort of collaboration between companies and consumers to build up values on both sides (Guzel et al., 2020).
Value co-creation is interchangeably used with concepts such as user innovation and co-production (Ophof, 2013). Yet, there is a continuing debate in the literature towards the need to differentiate cocreation and co-production (Grönroos and Voima, 2013). Etgar (2008, cited in Roberts, Hughes andKertbo, 2014), differentiate the two concepts based on the product's life stage: co-creation takes place in the consumption stage; while co-production takes place before the consumption stage or during the development stage.
However, this research considers the concept of value co-creation more generally by covering all the theoretical and empirical understanding in which companies and customers generate value together through interactive collaboration. This is supported by the definition presented by Prahalad and Ramaswamy (2004) that described value cocreation as a form of collaboration between companies and consumers in innovation which not only limited to the consumption stage, but also includes the activity of co-ideation, co-design, codevelopment and co-creation to produce a more market-focused and valuable product.
A frequent topic of research on value co-creation often focuses on the outcomes or benefits of practising the concept. Vega-Vazquez et al. (2013) studied how value co-creation results in customer satisfaction; Costa and Vale (2018) (Deci andRyan, 1985, cited in Roberts, Hughes andKertbo, 2014).
Many literatures that studied directly or indirectly about consumer motivation have taken the concept of motivational theories, which made between the intrinsic and extrinsic motivations (Ophof, 2013 Financial factor is concerned with direct or indirect financial rewards such as monetary prizes given to consumers (Hoyer et al., 2010). Learning factor explains how consumers engage in value cocreation because they can acquire certain knowledge that is perceived as highly valuable to them (Ophof, 2013). Hedonic factor emphasises the drive for pleasure which consumers see their involvement in value co-creation as the source of enjoyment (Nambisan and Baron, 2009). Personal factor relates to materialistic forms of motivation such as the construction of self-identity through the status or reputation gained from the participation (Katz et al., 1974). Social factor highlights the motivation for enhancing sense of belonging as part of community (Ophof, 2013). Lastly, psychological factor is concerned with participation that is purely motivated by a sense of altruism where the consumer has a strong affection with the brand or the company (Hoyer et al., 2010).
Since the concept has been taken and adapted to the landscape of various value co-creation studies, this research will also adopt motivational theories. This research combines such literature with a broader understanding of value co-creation practices across different innovation stages in the Digital Banking industry and tries to find out if motivation varies depending on the product innovation stages or not.
Not only will the study fill a gap in academic knowledge, understanding value co-creation in the context of consumers' motivation is important as it can help companies to build strategies required to increase consumers' involvement; in order to achieve desirable results from conducting value cocreation itself.

RESEARCH METHOD
Besides collecting secondary data through academic journals, books and other online resources, this research will rely on a qualitative method for collecting the primary data. The chosen topic of value co-creation is clearly emphasizing the relationship between a company and its consumers.
However, this study is not designed to quantify this relationship, rather framed them to provide contribution of knowledge in understanding value co-creation as a contemporary business practice in new product development and formulate the right implementation strategy. To such a degree, the using the qualitative method will strategically help this research capture a better understanding of the novelty concept of value co-creation.

Interpretivist Paradigm
Prediction by creating the initial hypothesis that later will be refused or accepted is the main focus of positivism (Bartels, 1951). Positivism requires every aspect of the research to be as scientific as possible (Beverland and Lindgreen, 2010). As explained earlier, this study is designed to capture the understanding of the value co-creation concept as a whole contemporary business practice without quantifying the relationship for scientific prediction.
Hence, there will be no scientific prediction through creating hypothesis. It clearly defines that this research fully relies on the interpretivist paradigm.
By adopting the interpretivist paradigm, this research is inductive in nature. Deductive approach is clearly not ideal for this research as Hyde (2000) states, deductive is the approach-base of how instrument to measure any finding on the research is created by always endorsing the scientific principles, including the way of how questions are structurally prepared with a persistent order and language.
Opposite to deductive, the interview questions for this study are designed as semi-structured with emphasis on flexibility and openness without setting the focus on measurement.

Data Collection Method
There are a variety of qualitative data collection methods, such as interviews and focus group discussions (Gill et al., 2008). Yet, this study will rely only on in-depth interviews. An in-depth interview is a data collection method in which an intimate question-answer activity between a single participant and the researcher is conducted to unpack experiences, feelings, or attitudes on a specific topic (Milena, Dainora and Alin, 2008).
There is no ideal 'right' and 'wrong' to conduct an in-depth interview (Fischer, Castilhos and Fonseca, 2014 Two interviewees on the external interview protocol are the initial group that represents the expected respondent groups. In addition to the initial respondent group, a snowballing technique has been used for recruiting more external respondents.
Snowballing technique has been used to recruit respondents from external Jenius staff.
Snowball sampling is a non-probability sampling technique conducted by randomly choosing an initial group of participants, and then, later participants were chosen based on the recommendation or referral information provided by the initial participant (Malhotra, Birks, and Peter, 2012). This referral results on research participants with similar demographic and psychographic characteristics to the persons referring them. As suggested by Malhotra, Birks, and Peter (2012), the snowball sampling technique will also lead to relatively low sampling variance and require fewer costs.
The real problem when qualitative researcher justifies the number of samples is that the suggested number could vary (Marshall et al., 2013). However, qualitative scholars suggest the range of 6-10 participants as it is not too small nor too big, specifically in capturing broad idea in marketing studies (Morse, 2000). This rationale is making sense and practical. Using the suggested number, six external respondents from each respondent group were participating in this study. Hence, there are twelve external respondents participating in this research.

Research Procedures
In-depth interviews were conducted face-to-face, without any online mediums. This has been considered to get a better understanding from any shapes of responses, such as body languages, facial expressions, and other things that possibly could not be captured through an online interview. All participants have the right to choose any places they want for the interview. However, it is recommended for participants to choose a place with less distraction, convenient and familiar to them.
The interview is arranged to be semi-structured and last around 20-30 minutes. An unstructured interview is not considered as it is very timeconsuming and hard to manage (Gill et al., 2008).
By highlighting some prepared key questions that can later be modified in responses to unpredictable answers, semi-structured questions will provide clear guidance to the research on what to ask.
Participants were interviewed for a single time.
According to Malhotra, Birks, and Peter (2012), this process is known as ad-hoc or cross-sectional, a form of research approach that engaging the information or data collection from samples once only. Interview protocols can be found in Appendix 2 and Appendix 3.

Data Analysis
Qualitative data obtained from in-depth interviews were transcribed manually word by word. Analysis has been conducted by using axial coding, the analysis methods for primary data analysis that highlight the finding through themes organisation (Goulding, 2005

Relevant Banking Products for The microbusiness Segment
Compared to other banking segments, the microbusiness segment has been underserved by Loan application process should rely on the use of better quality of digital data e.g. store transaction history on ecommerce, electronic bank statement, past credit history, etc. and processed digitally to enhance the accuracy of risk profiling for each applicant. Thus, pricing can meet the best price based on solid customer risk profiling for each individual.
Firstly, the pains most respondents expressed when asked about the business loan from Banks is that the application process requires too much paperwork and took too long to get approved. To relieve this pain, Banks should consider to set-up a digital lending infrastructure that will help the Bank automate manual works and shortened processing time. To set up such infrastructure, Banks will require at least six systems as mentioned in the table above.
Secondly, Banks can consider digitizing their loan application process by using a more relevant data set that is easy to get. This data can be the store transaction history on e-commerce sites, electronic bank statement, past credit history, photos of the store's physical building if any. By relying on more relevant data that can be provided digitally, Banks can enhance the accuracy level of risk profiling in each individual applicant. Thus, the pricing can meet the best price that is tailored uniquely based on a solid customer risk profiling for each individual.

Gain Creators
In conclusion, consumers in the micro-business segment expect three main solutions that can help them run and grow their business, namely: Business Savings Account to help them manage and track business finance; Business Loan to help them grow the business with additional capital; and Business Management Tool to help them manage daily business activity with ease. Banks that serve the micro-business segment.

Development for Micro-Business Segment
Digitalization in the Banking industry equals being more customer-centric. For many digital companies across the globe, there is a shift in how innovation or value creation is being made. In the past, product The concept has been implemented as part of its business strategy to involve consumers in the process of ideation for product development.
Currently, the co-creation process in Jenius is conducted both offline and online.

Financial Driver
Financial factor can be the main driver for involvement in value co-creation process. As stated by Ophof (2013)  Moreover, Banks can consider these learning strategy alternatives when trying to increases or drives external involvement in the value co-creation activities: Hedonic motive in engaging the value co-creation activity derived when consumers perceived cocreation activity as the source of highly pleasurable, interesting and as mentally stimulating experiences (Nambisan and Baron, 2009). Given this view as the underlying for getting more external actors to be involved in value co-creation, Banks should be able to include entertainment aspect on its value cocreation initiative. Hedonic driver consists of two factors, namely entertainment and satisfaction gain.
Proposed strategy to drive consumers involvement in value co-creation through hedonic driver can be seen on the table below: The driver for engaging in value co-creation activity can also be personal, social and psychological.
According to Ophof (2013), these three factors shared similarities in the extent of self-identity, recognition and belonging in social settings. Thus, propose strategy for engaging consumers with personal, social and psychological motives to be engaged in value co-creation activity will be covered within one section. Each factor and its proposed strategy can be found in the following Lastly, Banks need to be able to improve consumer's involvement in the value co-creation process. It is recommended for Banks to consider a motivational approach that can explain the underlying rationale for each customer to better engage with their Bank in value co-creation. Banks can drive consumer's involvement using multiple factors in motivational theories (Ophof, 2013) through Financial driver (monetary incentive, discounts and special offering, possible job offers, and obtaining intellectual property ownership); Learning driver (workshop, training and product teaser to encourage curiosity); Hedonic driver (promoting value co-creation activities as the source of entertainment by creating gamification when doing research or problem-solving challenges); Personal, Social and Psychological driver (create contest or competition, community building and differentiate forums for different discussion according to different topics of interests).

Recommendations for Future Research
Although the findings of this research have contributed some interesting knowledge to the understanding of value co-creation strategy, future studies that are aiming to explore similar topic could consider these recommendations.
Firstly, if the research could be conducted in a longer time period, applying mix-method research (qualitative and quantitative) would be beneficial as the research will be able to capture a larger number of samples with better systematic order. Secondly, considering the fact that digitalization in Banking has become mainstream in Indonesia, future research will be more interesting to undertake a comparison study between different banks with digitalization initiative, especially in the microbusiness segment.
Thirdly, future research in value co-creation can also be extended to other financial technology companies outside banking, for example, mobile payment service. Lastly, as the findings also show that value co-creation has been embraced as part of their digitalization strategy in Banking, it will be interesting for future research to measure direct business impacts such as product adoption rate or brand awareness from conducting value co-creation activity.