Digital transformation in pawnshop services: Innovation in non-bank financial services in the digital era

Abstract

Background: Digital transformation has become a global phenomenon driving fundamental changes in the financial services sector, including non-bank financial institutions such as pawnshops. Pawnshop services, traditionally associated with conventional face-to-face transactions, are now undergoing a significant shift toward digital-based services that are faster, more transparent, and more inclusive. This study aims to analyze digital transformation in pawnshop services as a form of service innovation in the non-bank financial sector in the digital era. Methods: This research employs a qualitative descriptive literature review by examining academic journals, scholarly books, institutional reports, and relevant regulations. Findings: The findings indicate that digital transformation drives changes in business processes, service models, and governance of pawnshops, resulting in improved efficiency, service quality, and financial inclusion. However, digital transformation also presents challenges related to human resource readiness, data security, and regulatory adaptation. Conclusion: Digital transformation represents an important pathway for service innovation in pawnshop services, although its implementation requires stronger human resource readiness, data security, and regulatory adaptation. Novelty/Originality of this article: This study highlights digital transformation as a service innovation pathway for pawnshop services by integrating technological, organizational, and regulatory perspectives in the non-bank financial sector.