Innovation and Business Model at Commonwealth Bank, Australia

This report focuses on the innovation and business model at Commonwealth Bank, Australia. It discusses the smart-connected products and the business model canvas of Commonwealth Bank. It also covers the opportunities and threats linked with the smart-connected products and the capabilities, resources, and value propositions.

Running Head: Innovation and Sustainable Business Development
Commonwealth Bank
Innovation and Sustainable Business Development

Innovation and Sustainable Business Development 1
Innovation and Business Model at Commonwealth Bank, Australia
The most crucial elements of organizational life are disruption and business model. Business
model acts as the structure for a business that includes sundry aspects for an organization. All
these aspects consists key capabilities and resources which plays crucial role in terms of overall
environment of a business enterprise. The main aim of an organization is to gain competitive
advantage and attaining sustainable growth and development. In relation with this, it is necessary
to adopt an effective and sustainable business model. Environment of business and its resources
are crucial elements for an organizational success and it also plays crucial role in terms of
reaching to the desired destination (Paetz, 2014).
With regards to the determination of significance of business model, this report will focus over
the two crucial aspects of Commonwealth Bank Australia (Commonwealth Bank, 2018). These
two crucial aspects are disruption and business model. Apart from this, this report will also focus
over the innovation at Commonwealth Bank under which some smart-connected products will be
discussed. With regards to this, opportunities and threats linked with the smart-connected
products and the business model canvas of Commonwealth Bank will be discussed along with
the capabilities, resources and value propositions (Porter & Heppelmann, 2014).
Business model describes the structure of business and this term is being used in the business
formats since last few years. Business model describes the structure of a business enterprise but
in order to compete with the other companies in the dynamic and competitive business
environment, most of the organizations seem to alter, modify or adopt innovation in their
business model. Main aim behind this is to gain competitive advantage. Business model
framework includes all crucial components of a business which plays crucial role in terms of
enhancing the efficiency and competency of a business enterprise. In relation to this, business
model canvas is the essential element and significant concept of strategic management which all
are necessary to develop effective business models (Porter & Heppelmann, 2015).
It acts as a visual structure which includes customers, resources, value propositions of products
of company, finance and other components. Dealing with external business environmental
challenges becomes quite easy task for companies with the help of business model canvas as it

Innovation and Sustainable Business Development 2
leads to develop an effective business model. This has also been considered as the vital element
for raising funds for the organization as well as to enhance the productivity. Along with this, this
also acts as the mediator between strategy and the processes of an organization and reduces the
gaps amongst to make organizational practices effective and efficient. This process is also
effective in terms of managing the organizational functionalities so as to provide adequate
benefits to the consumers. This also includes various types of resources and key findings which
help the company to tackle the situation in the appropriate manner and it also plays crucial role
in approaching the target audience (Christensen, Raynor & McDonald, 2015).
Implementation of disruption has been a common practice nowadays as it plays crucial role in
performing effective functions in the competitive industry. Disruptive innovation is a term which
indicates the field of business administration. It refers to an innovation which creates new
markets or modifies existing products of the organization to acquire an effective position in the
existing market. Thus, disruptive innovation takes place in order to develop new markets and for
enhancing customer base. Innovators are considered as crucial part of an organization and it has
also been considered that all disruptors are innovators but all innovators cannot be disruptors.
Disruptive technique enhances entrepreneur’s thinking in order to perform organizational
functionalities in an effective manner. This enhances the success and growth of the organization
and in terms of increasing productivity, disruptive innovation leads to generate various new
methods. Value dimensions are also developed with the help of disruptive technique. Dimensions
which are created with the help of disruption are lower prices, accessibility, simplicity,
convenience to customers, etc. In relevance to this, organization could improve its brand value,
productivity, and reliability amongst the target audience which are necessary elements to gain
competitive advantage in the target market. Disruptive technology has allowed the companies to
practice smart-connected devices in relation with increasing the effectiveness of their operations.
Smart connected devices are helpful for businesses as it acts as a medium of information
exchange between the business organizations to its users. Some of the smart connected assets
and products are sensors, software, etc. Using smart connected devices in the business operations
are leading the companies to enhance its efficiency along with the development of an effective
image in the market. Opportunities increases for the companies with the help of smart connected

Innovation and Sustainable Business Development 3
devices which is an essential tool to fulfil target demographics’ demand in an effective manner
along with diversifying the product offering (Radziwill, 2015).
Disruptive technologies have assisted companies in order to perform the functionalities in an
effective manner. Disruptive innovation leads to create smart connected devices which are
essential to operate in an effective manner. In terms of Commonwealth bank, Australia which is
a multi-national bank and offers various services to the customers as well as to the business
enterprises. Financial services, retail services, investment, insurance, business banking, etc. are
some of the primary services offered by bank. Along with Australia, Commonwealth Bank is
also situated in various parts of the globe such as New Zealand, United Kingdom, and United
States of America. In terms of banking sector, it has been reviewed that banking sector plays
crucial role as smart-connected devices helps the banks to enhance the customer experience in
relation with the consumption of banking services. In relation with the continuous increase in the
customer base, management of Commonwealth Bank has adopted usage of smart-connected
devices in their procedure. Apart from the smart-connected devices, being an experienced
member of the banking sector, Commonwealth Bank has also invented various new and unique
methods in terms of enhancing the productivity as well as for smoothening in the operations of
the organization. Some of those inventions include Block-chain, big data, smart machines,
Internet of Things, etc. (Schlagwein, Thorogood & Willcocks, 2014).
Along with these products and services, Commonwealth Bank offers a unique debit card to its
clients that help them to transact and shop from anywhere anytime. Every debit card of
Commonwealth bank consist a unique identity code which separates the debit card from each
other. Apart from this, this debit card is also useful for various other purposes such as it can be
used at any ATM machine without giving extra charges, etc. The debit card issued by
Commonwealth Bank with unique identity code comes under the smart-connected devices
invented under disruptive innovation method. This leads to numerous opportunities as well as
threats for the organization which ultimately affects bank’s operations. On one side, products and
services invented under smart-connected devices helps the organization to generate various
opportunities in terms of sustaining in the competitive business environment whereas on the
other hand, it also leads certain threats such as leakage of client’s information, miss-utilisation of

Innovation and Sustainable Business Development 4
smart-connected devices, etc. Smart-connected devices have taken an important place in the
bank’s operations which acts as the major factor for enhancing organizational performance. In
relation with these smart-devices and technologies, one of the major innovations by
Commonwealth Bank is innovation of smart-machine. This machine is useful for delivering
various banking services to its customers such as depositing cash, taking out mini-statement,
transferring cash, etc. Generally, customers’ needs to visit bank for these types of services but
after such innovation of smart-machine, it offer effective financial services to its clients. Apart
from this, this machine is useful for opening instant bank account without paperwork. This
machine is fitted with sensor technology through which bank could easily locate and detect
machine and operations of the machine. This helps to reduce the chances of fraudulent activities
and enhance the value of destructive innovation and smart-connected devices (Christensen,
2006).
Thus, it could be considered that the unique services offered by the bank generates various
opportunities which is a positive indicator for the growth and success of bank along with gaining
competitive advantage in the target market. Generally, opportunities bring challenges along with
it and same feature is linked with the usage of smart-connected devices. Smart-connected devices
help Commonwealth Bank to enhance its performance whereas it also leads to various
challenges. This affects organizational performance and in order to avoid these challenges or to
develop effective strategies in terms of uplifting organizational performance. On one side,
Commonwealth Bank is moving towards automation and with this regard; organization has
adopted various technologies and smart-connected devices. On the other hand, old age customers
of banks are not able to understand the usability of these technologies. Hence, organizational
performance is getting affected. With regards to this, organization is required to adopt
appropriate training and awareness programs for its existing customers in order to make them
realise the usability of smart-connected devices as well as of the technologies adopted by the
bank for smoothening the operations. This strategy will also act as the customer retention
strategy through which the desired goals and objectives could easily be attained. Apart from
these issues, Commonwealth Bank also suffers from stolen of ATM machines; still there are
several customers who are not able to operate through automated technologies, etc. These types

Innovation and Sustainable Business Development 5
of activities act as threats for organization which ultimately affects organizational performance,
growth as well as success (Stefan & Richard, 2014).
Business model canvas for Commonwealth bank is as follows:
Key Partners
 Investors
 Credit card
firms
 Society
(Zott, Amit
& Massa,
2011).
 clients
 Agreements
with
Hangzhou
City
Commercial
Bank and
Jinan City
Commercial
Bank.
 Financial
regulatory
agencies.
Key Activities
 Insurance and
Investment and
services
 Saving account
 Risk
management
and assessment
 Loan facility
 Customer
procurement
Value Proposition
 Manageme
nt of
wealth
 The bank is
popular as
one of the
largest
banks in
Australia.
 Risk
monitoring
and control
 Viable
growth
 Financial
and retail
banking
services.
 B2C and
B2B
services.
Customer
Relationships
 Security to
confidential
information
of customers.
 Brand image
and
reputation.
 Trust and
convenience
Customer
Segments
 Mass
populati
on
 Unisex
 Account
holders
 Credit
card
users
 Govern
ment
Key Resources
 Wide network
of distribution
 ATM
 IT capabilities
 More than 100
branches
 Human
resources
Channels
 Website of
Commonweal
th Bank
 Presence over
social media
platforms

Innovation and Sustainable Business Development 6
 Mixture of
traditional and
modern
methods.
Cost Structure
 Administrative costs
 Technology development costs and
maintenance charges
 Salaries and wages too employees
 Interest paid
Revenue Streams
 Policy premium
 Return on investment.
 Financial revenues
Above business model canvas shows the key resources and capabilities of Commonwealth Bank.
Amongst those resources and capabilities, crucial factor is value proposition which is effective
for meeting with various challenges faces by the organization. Apart from this, it also acts as the
defensive strategy which is implemented to secure the acquired position in the competitive
business environment. Value proposition also helps the bank to develop positive perception
amongst the customers which is essential to retain old customers as well as to attract new
customers. Being the largest bank of the Australia, major responsibility of bank is to secure the
interest of its clients along with providing them most effective and adequate services. With
regards to these services, organization could easily enhance its performance along with reaching
on the peak position in the international banking industry (Chesbrough, 2010).

Innovation and Sustainable Business Development 7
Thus, it could be concluded that the business canvas model adopted by Commonwealth Bank is
effective enough to enhance the goodwill along with attainment of future growth objectives.
With the above analysis, it has been recognised that Commonwealth Bank is required to adopt
certain other strategies and resources with the objective of meeting with future customers’ needs.

Innovation and Sustainable Business Development 8
References
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Christensen, C. M., Raynor, M. E., & McDonald, R. (2015). What is disruptive
innovation. Harvard Business Review, 93(12), 44-53.
Cohn, A., Fehr, E., & Maréchal, M. A. (2014). Business culture and dishonesty in the banking
industry. Nature, 516(7529), 86.
Commonwealth Bank. (2018). CommBank: Personal banking including accounts, credit cards.
Retrieved from https://www.commbank.com.au/.
Paetz, P. (2014). Disruption by Design: How to Create Products that Disrupt and then Dominate
Markets. NY: Apress.
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competition. Harvard Business Review, 92(11), 64-88.
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companies. Harvard Business Review, 93(10), 96-114.
Radziwill, N. (2015). Value Proposition Design. The Quality Management Journal, 22(1), 61.
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Innovation and Sustainable Business Development 9
Zott, C., Amit, R., & Massa, L. (2011). The business model: recent developments and future
research. Journal of management, 37(4), 1019-1042.