Growing Use of Crypto Currency: Strategic Impact to ANZ Group

This report investigates the growing use of crypto currency and analyzes its impact to ANZ Group. It provides a background study of crypto currency majoring on Bitcoin and litecoin and ANZ Group. The report also assesses ANZ strategic and competitive environment and provides strategic recommendation to the company in relation to Crypto currency.

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Executive Summary
Crypto currency technology is a new form of currency that is transforming how transactions are
made. the crypto currency is a virtual, decentralized and build-in scarcity currency that enable
users to easily transact across borders, at a low transaction cost without involving a third party
institution. The following report investigates crypto currency and analyzes it impact on ANZ
group strategies in the financial industry. The report use peer reviewed journals, company
available information online, and other scholarly materials to investigate and analyze the case
study. The study found that crypto currency is a disruptive technology that threats the ANZ
group strategic environment and competitive environment. The report concludes that financial
institution should adopt crypto currency and align their strategies to the technology to remain in
the market and earn return on investments.

Table of Contents
Introduction.................................................................................................................................................4
ANZ Group...................................................................................................................................................4
Strategic Background information...............................................................................................................5
Strategic Environment.................................................................................................................................8
Competitive environment.........................................................................................................................11
Strategic Analysis.......................................................................................................................................12
Recommendations.....................................................................................................................................13
Conclusion.................................................................................................................................................13
References.................................................................................................................................................14

Growing Use of Crypto Currency
Strategic Impact to ANZ Group
Introduction
The invention and rapid adoption of crypto currency is changing how transactions are made.
Crypto currency is a virtual or digital currency that is intended to works as a medium of
exchange. The crypto currency uses cryptography technology to secure (Labbe, 2017). The
virtual currency is set to disrupt the traditional currency and enable unlimited transactions online.
The currency has been influenced by increase internet connectivity, usage, and ecommerce.
Companies have little or no control over the development of crypto currency that will change
their business models (Heires, 2016). This necessitates formulation and implementation of
effective strategies to enhance business survival and superior returns. Strategies enable a
company to plan, analyze, monitor and assess internal and external factors and outline actions
that can be taken to meet organizational goals and objectives. Therefore, companies can use
concepts of strategic management concepts to understand the effect of growing use of crypto
currency and position the organization to achieve its objectives.
The following report investigates the growing use of crypto currency and analyzes its impact to
ANZ Group. This will involve a background study of crypto currency majoring on Bitcoin and
litecoin and ANZ Group. The report will also involve assessing ANZ strategic and competitive
environment and provide strategic recommendation to the company in relation to Crypto
currency
ANZ Group
The ANZ group is one of the largest commercial and retail banking organization in Australia and
New Zealand. The ANZ group has the third and first largest bank in Australia and New Zealand
respectively by market capitalization. The group also operates globally with its presence in over
34 countries. The ANZ has more than 180 years of heritage and was founded in Sydney in 1835
and extended operations in Melbourne in 1838. The group is headquartered in Melbourne and is
led by Shayne Elliott as the CEO and David Gonski as the group chairman. The group is listed in

both the ASX and ANZ stock exchange. The ANZ group business structure comprise of
Australia division for retail, personal, and private banking units, Institutional division, new
Zealand, Wealth Australia, Asian and pacific, corporate centre, digital Banjing, Group operations
and services and technology division.
Strategic Background information
Crypto currency in the past was a theoretical construct until 2009 when bitcoin was launched as
the first crypto currency. Bitcoin was the first publically modern crypto currency and used as
means of exchange and had decentralized control, built-in scarcity, record keeping using block
chain and user anonymity (Iansiti, and Lakhani, 2017). Examples of modern crypto currencies
include litecoin, ethedash, monero, zcash, ripple etc. According to Satoshi Nakamoto, crypto
currency provides peer to peer electronic cash that is secure allowing online payment without
involvement of a financial institution (Horia , 2017). The crypto currency requires the following
to function; a blockchain, private keys, wallets, miners, finite supply and crypto currency
exchange. The digital currency transactions happen in a network where a new transaction is
broadcasted to all nodes, individual node collect the transaction into blockchain, node works to
find proof of work, node find proof of work and it broadcast to all nodes, the nodes accept the
transaction that finally accepts the transaction if it valid.
Crypto currency mining requires different resources in respect to size of operation. Mining is the
process that enables authentication of a transaction in the blockchain and in return the system
owner is awarded crypto currency (Hochstein, 2014). A small crypto currency home user will
require certain equipments for effective mining of crypto currency. These equipments are coin
price, high voltage source of power, ample space for cooling, cooling unit, ASIC miner and PSU
(Catania, & Grassi, 2017). For a large factory, the mining will require more sophisticated
equipments that include specialized software, a cooling system, and reliable high voltage source
of power. The investment is expensive but viable due to high return on investment (ROI). For
instance, the bitcoin will be released in the markets until 2040. The value of bitcoin once
increased from $1000 to $20000 within 12 months. The crypto currency is disruptive to the hard
currency banks. The crypto currency is decentralized and has built-in scarcity. The currency is
secure, has low cost of transaction and few international barriers compared to traditional

currency threatening it very existence. Adapting crypto currency will change how financial
institutions operate.

Crypto currency has led to boom in criminal activities. As a result of the system being self
regulating, criminals take advantages of the system and make illegal transaction (Zohar, 2015).
For instance, Collomb and Sok (2016) recorded that half of bitcoin transactions were illegal
activities with quarter of bitcoin users linked with crime such as money laundering, hacks, illegal
pornography and money laundering (Aste, Tasca and Di Matteo, 2017). This worries bitcoin
investors. The Chinese government is highly interested and investing in crypto currency. The
country aim to remove cross border payments that increase transaction costs, enable Chinese
people to transact despite lacking access to standard bank services, and eliminating corruption by
tracing all transactions. This will have implications of strengthening communist party of china
and influence multinational companies operating in china to adopt crypto currency as medium of
exchange, store of value and unit of account.
Strategic Environment
The strategic environment is the external factors that have impact to the company’s growth. A
PESTLE analysis is a tool take is used to analyze business environment and provide clear
information for a company to follow (Zohar, 2015). The PESTLE tool reviews the political,
social, economical, legal, technological, and environmental factors that inform strategies
decisions to succeed in the competitive industry. The crypto currency tremendous growth over
the last five years requires financial institution to review their business environment to avoid
business or market failure. The following is PESTLE analyses of ANZ group as a result of
growing use of crypto currency.
PESTLE
factors
analyzes
Political The ANZ operates in centralized and highly controlled
financial industry. The crypto currency is not regulated by
any government. Crypto currency developers create it
policies and regulations that are followed by users. The
currency is also issued by the developers who determine
how it released in phases to maintain in build scarcity
(Broadbent, 2016). This is different with fiat currency that

the ANZ uses for transaction that is issued and regulated
by the central bank of each government. The crypto
currency therefore operates with the same polices around
the globe.
Social
The ANZ bank financial system has set a stable,
predictable and fiat currency system that will impact
customers’ usages of the company’s products with
adoption of crypto currency. Crypto currency has received
a warm reception and adoption in many countries. The
currency is driven by anonyms, reach, and savings
(Horia , 2017). Users are able to make more transactions
anywhere provided the receiving end accepts crypto
currency as medium of exchange. Consumers enjoy the
convenience and privacy of using crypto currency. The
crypto currency has low level of awareness compared to
standard banking. This affects it usage of crypto currency.
One the other side, more and more merchants are
accepting and adopting crypto currency as a technological
payment to goods and services that is changing how
consumers pay for products enhancing crypto currency
adoption (Barratt et al., 2016).
Economic The ANZ group will be affected by introduction of crypto
currency in the economy. The company is majorly
involved in banking and finance that adoption of crypto
currency will disrupt. Crypto currency market
capitalization exceeds $760 billion which is larger than
19th largest economic GDP in the globe. Bitcoin has the
highest market cap of $260 billion which is larger than
Czech republic annual GDP. The crypto currency is not

affected by monetary policies that are used to manage
centralized banking system. Crypto currency is also
highly adopted and accepted as medium of exchange,
standard of measure and store of value by many
merchants that hence competing with fait currency. It
estimated over 100,000 merchants were using bitcoin for
transitions as at 2017 (Hochstein, 2014).
Technological ANZ has widely invested in technology to facilitate it
operations. The ANZ group has invested on online
platform for internet banking that enables the company’s
products accessible from different locations. Crypto
currency 100% supported by technology. The currency
requires technology to function. Advancement in
technology enables crypto currency to reach more
merchants and users (Chuen, and Deng, 2017). The
increasing use of internet and computing power have a
positive impact to crypto currency mining and usage.
Legal The ANZ Group complies with all laws and regulations
set by different authorizes where the company operates.
Crypto currency is not centralized that make it hard for
authorities to set regulations (Aste, Tasca and Di Matteo,
2017). Some countries have allowed it usage while others
have restricted or banned it usage. Countries such as EU,
USA and Canada are partnering with crypto currency
companies to regulate by licensing. Indonesia, Nepal,
Bangladesh, and Vietnam do not allow crypto buying,
selling, or mining (IFLR Correspondent, 2014).
Environment The ANZ Group has a sustainable approach to
environment. The group ensure that it activities have
minimal environmental impact. The crypto currencies are

demanding high computational power that consume high
electricity voltage and release a lot of heat to the
environment. The mining companies are using old coal
plants as alternatives to electricity. This has increase
carbon footprint associated with crypto currency by more
than 1.5 tons.
Competitive environment
The competitive environment is change as a result of dynamic external system that a business
operates in (Chuen, and Deng, 2017). Companies are threatened with increasing competition as it
reduces its market share and consequently it profits. The following is analysis use porter’s five
forces analysis of competitive environment as impacted by crypto currency to ANZ group.
Threats of substitutes
The crypto currency is a close substitute to ANZ group in financial sector. Crypto currencies can
be used for transactions, foreign exchange, and storing value. The ANZ bank will therefore
receive lesser deposits and transactions because customers can opt to use crypto currencies. The
ANZ group therefore faces threats from substitute product.
Threats of new entrants
The ANZ has operated in a highly restricted industry where the traditional monetary system has
dominated the industry and central bank has had full control to new entrant (Horia , 2017). This
restricted new entry by setting high requirements that could be attained by few. The crypto
currency is providing a different monetary system where companies are not restricted by any
authority and anybody is allowed to enter the market. Therefore the ANZ faces threats of new
entrants who increase competition in the financial industry.
Suppliers barging power

The supplier bargaining power refers to sources of input. In this case, suppliers refer to people
or agencies that input currencies to the bank system. The ANZ group operates in the traditional
model that crypto currency system is disrupting. Customers will opt to buy crypt currencies than
deposit money in their account. This means that the ANZ has low supplier barging power with
crypto currency entry in the industry.
Buyers bargaining power
The ANZ has enjoyed the most profitable monetary system where customer did not have an
alternative to make transactions across borders or store value without involving a bank. The
crypto currency offers an alternative to customers that reduce the ANZ buyer bargaining power.
Competitor’s rival intensity
Competitive rivalry is as a result of technological implications that a new entrant has (Horia ,
2017). Technology enables crypto currency to have a new standard approach over the traditional
monetary system. The crypto currency allows customers to have full control of their money by
use of internet (Fanning and Centers, 2016). It is also cheaper than the traditional banking
system. The crypto currency is therefore impounding pressure to ANZ banking system.
Strategic Analysis
The crypto currency monetary system leads to strategic dilemma in ANZ group. The ANZ group
is faced with the following strategic dilemmas;
The first dilemma is how to handle crypto currency competition rivalry. The ANZ group has no
alternative technology that can compete effectively on the same level with crypto currency
technology.
The second strategic dilemma is if to low transaction cost to match crypto currency cost. This
strategy can maintain customers but reduce company’s profits drastically.
Another strategic dilemma is attaining a competitive advantage with presence of crypto currency
in the market. The crypto currency disrupts the traditional monetary system and ANZ has to
rethink on how to position itself in the financial industry (Aste, Tasca and Di Matteo, 2017). The

company is in dilemma whether to continue with its current market positioning or change to
achieve superior results with crypto currency in the market.
Recommendations
The following are strategic recommendations to ANZ Group;
1. Adopting and investing crypto currencies. This will allow customers to transact with the
bank as a service provider. This will enable the ANZ survive in the financial sector. The
company will then be part of the modern currency monetary system rather than an
opposing side.
2. Diversifying it products. This will allow the group to have alternative products that
customers can get from the institution. This will ensure the group is able to retain it
customers.
3. Market repositioning. This will enable the ANZ group to position itself in the market and
be compete effectively even with the presence of crypto currency.
Conclusion
From the report, crypto currency is a new virtual currency transacted on the internet and disrupts
the traditional monetary system. The crypto currency enables users to do transactions across
border, and at a low transaction cost. Crypto currency requires resources to mine and is
transacted on crypto exchange website. The currency is generated a highly secure technology
called cryptography and the currency is decentralized. Bitcoin, etherium and litecoin are the most
known and used crypto currencies. The ANZ group uses the traditional monetary system that is
governed by the central bank. The strategic environment analyzes show that crypto currency
presents uncertain external environment to ANZ group that lead to strategic dilemma. The
competitive environment analysis also shows that crypto currencies are threatening the ANZ
group ability to compete in the market. The report recommends that the ANZ group adopts
crypto currencies, reposition in the market, and diversify its products to survive and get superior
returns in the financial industry. The report therefore concludes that crypto currency is a

disruptive technology in the financial industry and businesses should adopt it rather than
compete with it. This entails a change in strategy for companies in financial sector.
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