Our empirical study seek to identify the types of innovation capabilities required by firms to handle the digital transformation. The financial industry has already experienced the consequences of digitalization in addition to increased competition due to de-regulations. We have conducted a study of how the players in the mobile payment market are searching for dynamic capabilities. Digital transformation not only implies that implementing new technology, but changing the organization, as well as enhancing innovation capabilities. We apply theory from strategic management related to organizations’ resources and abilities to develop capabilities as an analytical lens. Data was collected through a qualitative research process from nine different players in to the mobile payment market. Our sample consists of market participants, collaborators and analysts, and industry observers. We gathered secondary information from the financial press, various market reports and publicly available sources. Our empirical findings contributes to our insight into how dynamic capabilities are created in the financial market for mobile payments. Developing dynamic capabilities involves the three processes of sensing, seizing and transforming- and we have utilized this framework to specify what developing dynamic capabilities means in the market for mobile payments. Management orientations and attitudes related to innovation are thus central to the development of innovation capabilities. The results from the study indicate that innovation capabilities are not identifiable structures themselves, but consist of a number of reinforcing internal practices and processes in the company. This interpretation implies that businesses can choose different strategic approaches to innovation, depending on the capabilities they hold, what resources they have at their disposal and the industry challenges they face. The study shows that dynamic capabilities are related to the ability to acquire sufficient information about new practice, transforming it into relevant knowledge, and incorporating it into the organization. This will be a dynamic process that can be systematized and elaborated throughout the organization. We can conclude that the search for dynamic capabilities require the organization to be open for new development ideas, create relationships with partners and are aware of the challenge of both competing and cooperating at the same time to be prepared for digital transformation.