This article discusses the business model of Commonwealth Bank and the integration of disruptive innovation in the form of smart connected devices. It explores the opportunities and threats of the technology and its impact on the bank's value proposition and profit formula.
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Running head: BUSINESS MODEL AND BUSINESS DEVELOPMENT Business Model and Business Development Name of the Student: Name of the University: Author Note:
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1BUSINESS MODEL AND BUSINESS DEVELOPMENT Business modelrefers to the company’s plan, employing which the companies generate revenues and make profits(DaSilva & Trkman, 2014). It forecasts the expenses that the companies need to incur and descries the products or services that the business strives to manufacture and market. It also shows the marketing phenomenon of the companies so that through its operation in the market place, it is able to earn profits. The business model has various integrated parts that evaluate its business plan and helps it to function effectively in the market. Disruptive innovationin business refers to innovation that creates new market and value network through which it disrupts the existing market situation of the businesses. All disruption innovation however is not disruptive. Outside entrepreneurs generally produce them. The disruptive process is slow since not all the firms accept the innovation in the first instance. However, after being deployed in the market in a conventional way, it leads to a faster and higher impact on the established markets. An integration of disruptive innovation in the business models helps to facilitate greater productivity and efficiency in the industries. Considering the business model of Commonwealth bank, an analysis of the smart connected devices and its influence has been depicted in the assignment (DaSilva & Trkman, 2014) The Business model of Commonwealth Bank that documents its existing business structure and process has been discussed below: Key partners:
2BUSINESS MODEL AND BUSINESS DEVELOPMENT The key partners of the bank are investment partners, financial market operators, financial consultancies, investors, and associates. Joint ventures, subsidiaries and members of Global Banking Alliance for Women also serve to be the partners of the bank. Key Activities The chief activitiesof the bank are banking operations, treasury services, corporate and institutional banking, funds management, superannuation and building portfolio. The bank also provides investment and broking services, market researches, risk assessments and are equally engaged in advising and counseling to customers. Value Propositions The chief value propositions of the bank are that it has a vast knowledge of financial markets and operates as a Universal bank. Customer Relationships The bank is a consumer bank engaged in online services as well. It is a wholesale bank that assists customers on personal grounds. It has automated system that makes it easy for customers to be used and also have user’s community at service for the customers. The bank acts as an intermediary in international transactions and manages account of the customers with consent. They are well pronounced for the efficient customer services gaining high customer satisfaction. Cost Structure The cost structure of the bank is enormous. It has insurance policies and staff compensation strategies. There is a high development of IT facilities with the prevalence of taxes and operational costs. The bank is also subjected to legal costs and spends a good amount on its presence and the other branches.
3BUSINESS MODEL AND BUSINESS DEVELOPMENT Key Resources More than 87000 employees working in the bank act to be the key resource for the bank. It has about 1100 branches in more than 70 countries. The company has brand awareness and enjoys high reputation. It has qualified and trained staffs and a rapid networking. The massive financial strength of the bank also act as a resource for it. Most of the employees in the bank accounting to more than 90% are from Asia, Africa and Middle East. Revenue Streams Therevenuestreamofthebankincludescommissions,returnsonportfolioinvestment, understanding fees, premium on insurance policies, spread of exchange rates, credit cards availability, mortgage loans and corporate and consumer banking. Channels The various channels of the bank for its proper functioning are through the website, the multiple branches, and call centers. The corporate and regional offices with specialized officers also act as the channels for the bank. Mobile banking facility, social media and blogging also act as channels for the bank to be more emphasized in the market. Customer Segments Government segment, individuals, credited investors and corporate customers are the segmented customers of the bank. The various financial institutes, traders and wealthy investors also serve to be the major customers for the bank. The incorporation of the disruptive innovation that is the Internet of Things (IoT) Technology has been very beneficial to the Commonwealth Banks. It has enabled it to share information and get transactions done with the use of smart technology in no time (Hartmann & Halecker, 2015).The Commonwealth bank has adopted the technology of Albert, a new and
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4BUSINESS MODEL AND BUSINESS DEVELOPMENT smartEFTPOStablet(Commbank.com.au,2018).Thisnextgenerationportablepayment terminal has made business more efficient and has been improving customer’s experience in banking. All the modes of payment can be securely done and the customer’s receipt can be mailed or printed. The new incorporation of the CommBank small business app has also proved to be a very effective tool made for payments with the next generation EFTPOS devices. Through these smart connected products, people and businesses engaged in banking with Commonwealth Bank can send invoices and manage payments from anywhere in real time. Through this new technological advancement, the bank can accept any card payments on spot. Thus, it does not require heading to the banks for every new transactions. The smart connected device has brought multiple opportunities for the Commonwealth bank that has led to its better growth and progress. The incorporation of the smart connected device that works on the new technology as is observed in the products of EFTPOS has been very effective in recent times that has smoothen transactions and resolved the various issues one faced in banking (Wortmann & Flüchter, 2015). Through the new incorporation by the Commonwealth Bank, online banking has become easy and convenient for the users. This has led to the growth of the bank as a whole. Opportunities such as the automated services will engage more number of people in the bank, thus, the bank has greater scopes to flourish. With the smart device, the bank can maintain and manage assets reducing risk exposures and thus, opt for more assets to be managed effectively (Wortmann & Flüchter, 2015). Since the cost of incorporation of the device is cheap, the bank can utilize the machine and increase its functions.
5BUSINESS MODEL AND BUSINESS DEVELOPMENT The effective device stores and computes the data of the users. Thus, it is not very complicated for bankers to maintain the files. They can expand the market to a significant extent. The bank has the opportunity to improve customer experience and increase customer satisfaction through these incorporations. They have the potential to transform the financial services of the bank positively that would exchange and collect information from objects and render a smooth communication. Along with the opportunities, that smart device incurs certainthreatsas well. Some of them are the increased efficiency that encourages new industries and entrepreneurs to emerge, increasing the competitiveness in the sector. A dysfunction of the smart device can collapse and damage the repute of the bank since it deals with the money of people that is very crucial. Threats relating to security and privacy are also evident for the banks since an explosion of the device and sensors can lead to serious consequences (Harriet et al., 2017). Considering the two aspects ofthe business model of Commonwealth bank, namely value proposition and the profit formulathe Commonwealth Bank can lead to greater expansion and progress with the smart device. It can add to itsvalue propositionssignificantly rendering to the customers the need of adopting new technology and using the app that the Bank has adopted. This would enable them to make transactions and payments easily. It would add more value to the banking services and accelerate the good repute that the bank has in the global market. With the incorporation of smart connected devices, the Commonwealth bank can also increase its profits by increasing the customer segment, including the younger generation and women sections in the banking service. Since the technology relieves the customers from coming into the banks and transact sitting back at homes or any other place, it can provide its services to
6BUSINESS MODEL AND BUSINESS DEVELOPMENT all kinds of people coming from all sections of the society who have enough money in the accounts. Thus, an expansion in the customer segment would enrich the economy of the bank making it even more successful.This ultimately would add to the profit formula of the bank increasing its profit margin largely. The incorporation of smart connected devices proves to be very effective for every industry that engages it in their functioning. The Commonwealth bank has been integrating various smart measures to render its services at large and increase its efficiency and banking services. The smart connected devices have enabled the bank to be operative throughout the year in all the 24 hours in a day. Thus, the transactions have significantly increased. It also allows the customers as well as the bankers to be informed about their transaction and get access to their account that makes the entire process transparent (Morey, Forbath & Schoop, 2015). It has enabled the customers to do banking from anywhere and at any time without any obstructions. Thus, overall the impact of the new technology has a widespread significance on the bank that has proved to be profitable for them. It has not only enriched the customer experience but has also increased dimensions for the bank to adopt greater business opportunities and proceed further with its services. From the analysis, it can be concluded that smart connected products are very effective for any industry to accelerate its production and efficiency to a significant extent. The products, if employed properly make business transactions easy and convenient and make the entire process transparent. In aspect to the Commonwealth bank; the smart connected service that the bank has adopted and aims to adopt in the future, increases opportunities for the bank to be progressive and more successful in the future. The use of the devices have certain threats, however, advancement in technology serves to be an important aspect that needs to be employed
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7BUSINESS MODEL AND BUSINESS DEVELOPMENT in the preset business situation. A proper initiative can bring the most out of the high potential that the disruptive innovation and its devices have that ensures a productive development of businesses in the long term.
8BUSINESS MODEL AND BUSINESS DEVELOPMENT References: Commbank.com.au.(2018).OurinnovationinBusinessbanking-CommBank.[online] Available at: https://www.commbank.com.au/business/our-innovation.html [Accessed 6 Apr. 2018]. DaSilva, C. M., & Trkman, P. (2014). Business model: What it is and what it is not.Long range planning,47(6), 379-389. Harriet, E. E. U., Oluseye, O. O., Omotayo, A., & Augustina, D. (2017). Queuing Theory Perspective in e-Banking and Service Performance: A Conceptual Approach.Asian Journal of Information Technology,16(6), 364-373. Morey, T., Forbath, T., & Schoop, A. (2015). Customer data: Designing for transparency and trust.Harvard Business Review,93(5), 96-105. Wortmann, F., & Flüchter, K. (2015). Internet of things.Business & Information Systems Engineering,57(3), 221-224.