Digital financial innovation, smart tourism ecosystems and destination competitiveness: a framework for sustainable tourism development in Jammu & Kashmir

Abstract

Jammu & Kashmir (J&K) is a major tourism destination with substantial natural, cultural, religious and experiential resources, but its tourism sector also faces seasonality, congestion, uneven destination development, infrastructure constraints and limited integration among stakeholders. This study examines how digital innovation and digital financial innovation can strengthen a smart tourism ecosystem, destination competitiveness and sustainable tourism development. The proposed framework integrates five constructs: Digital Innovation (DI), Smart Tourism Ecosystem (STE), Digital Financial Innovation (DFI), Destination Competitiveness (DC) and Sustainable Tourism Development (STD). A quantitative cross-sectional design was used with 400 respondents comprising tourists and tourism-related stakeholders. Data were analysed using Partial Least Squares Structural Equation Modelling (PLS-SEM). The measurement model demonstrates satisfactory indicator loadings, internal consistency and convergent and discriminant validity. The structural results show significant positive effects of DI on STE (β = 0.681, p < 0.001), STE on DFI (β = 0.487, p < 0.001), DFI on DC (β = 0.462, p < 0.001), and DC on STD (β = 0.528, p < 0.001). DFI also has a significant direct effect on STD (β = 0.214, p < 0.001). The model explains 46.4% of STE, 52.9% of DFI, 61.2% of DC and 57.1% of STD. Significant mediation and serial mediation effects support the pathway DI → STE → DFI → DC → STD. The findings indicate that digital transformation contributes more effectively to sustainable tourism when supported by integrated digital ecosystems, accessible financial services and stronger destination capabilities. The study contributes a finance-oriented perspective to smart tourism research and provides implications for tourism authorities, financial institutions, enterprises and local communities in J&K.