Innovation constraints in FinTech SMEs: uncovering the structural logic of an emerging digital ecosystem

Purpose FinTech small and medium enterprises (SMEs) play a growing role in advancing digital financial innovation, yet innovation barriers are often treated as independent factors ranked by importance, obscuring which factors occupy structurally dominant positions relative to others. This study adopts a systems perspective to examine the structural relationships among innovation barriers in FinTech SMEs, using India as an empirical context. Design/methodology/approach The study employs an integrated Modified Delphi-Interpretive Structural Modelling (ISM)-MICMAC framework. A panel of 22 domain specialists participated in barrier validation, while 16 experts participated in the structural modelling phase to analyse 13 validated innovation barriers affecting FinTech SMEs. Findings Regulatory Complexity and Regulatory Uncertainty are structurally inferred to occupy the most dominant position in the innovation constraint system, connecting downstream to compliance costs, financial limitations, and technological and organisational constraints, and ultimately to outcomes such as consumer trust and demand uncertainty. MICMAC analysis identifies a stable two-cluster structure comprising six Independent (Driver) barriers and seven Dependent barriers, demonstrating the hierarchical and systemic nature of innovation constraints within regulated digital ecosystems. Originality/value The study demonstrates that innovation constraints in FinTech SMEs constitute a hierarchically structured system in which institutional and regulatory conditions occupy the most structurally dominant position. By moving beyond factor-based approaches, the study offers a systems perspective on how innovation constraints propagate within emerging digital ecosystems and identifies foundational intervention points against which firms, policymakers and ecosystem institutions can benchmark their innovation strategies.