New Product Development

This report discusses the importance of new product development in the banking sector, specifically in combating threats like money laundering. It introduces CBA Secure, an innovative app developed by Commonwealth Bank of Australia, and explores the steps involved in its development and commercialization. The report also justifies the use of the new product development method in introducing CBA Secure.

Running head: NEW PRODUCT DEVELOPMENT
New Product Development
Name of the Student:
Name of the University:
Author Note:

1NEW PRODUCT DEVELOPMENT
Executive Summary:
The report shows that there is ardent need in the banking sector to make vigilance over inflows and outflows to check threats like
money laundering. Threats like money laundering are threats to the global economy as a whole and requires involvement of
stakeholders. The report then goes on to introduce a new product which would enable customers to get involved in fighting money
laundering and cyber theft. The report assumes that the innovative product called CBA Secure would be introduced by
Commonwealth Bank of Australia. The report also shows that the bank would use NPD method to launch the product.

2NEW PRODUCT DEVELOPMENT
Table of Contents
Introduction:....................................................................................................................................4
Outline of the new project (product):..............................................................................................4
Justification of using new product development method to develop CBA Secure:........................5
Step 1. Generation of idea:..........................................................................................................5
Step 2. Idea evaluation:................................................................................................................6
Step 3. Testing the concept:.........................................................................................................8
Step 4.1. Concept development:..................................................................................................8
Step 4.2. Concept testing:............................................................................................................8
Stage 5. Market strategy development:.......................................................................................9
Step 6. Product development:....................................................................................................10
Stage 7. Market feasibility testing:............................................................................................10
Step 8. Commercialisation:........................................................................................................11
Justification of using NPD method by CBA in introducing CBA Secure:............................11

3NEW PRODUCT DEVELOPMENT
How prepared is the firm for this technological innovation?........................................................12
Risk return analysis of the technological innovation:....................................................................12
Commercialization of the technological innovation:.....................................................................13
Evaluation of the impact of the new project on the firm’s overall success in the next 5 to 10 years: 14
Discussion on findings and analyses:............................................................................................15
Conclusion:....................................................................................................................................15
References:....................................................................................................................................16
Appendix: Risk register:................................................................................................................20

4NEW PRODUCT DEVELOPMENT
Introduction:
Multinational banks today play a very important role in facilitating flows of financial resources in the global economy. These
banks in order to serve their customers operate on both traditional banking platforms as well as fintech (financial technology) enabled
platforms. These two platforms combine to process millions of financial transactions. The companies in order to transfer and receive
payments today use the digital banking platforms. The individual customers today prefer to carry on thousands of transactions on the
online banking portals. The increasing demands of business and domestic customers have fueled technological advancements which
have led to internet banking and application based banking or app banking available on smart phones. The users of these digital
banking platforms today conduct immense amount of online transactions by inputting confidential information like bank account
numbers and personal identification numbers or PIN numbers. The illegal groups can use technology to gain these confidential pieces
of information and steal money online from the respective bank account holders. These groups often use the banking channels of
multinational banks to commit crimes like money laundering and to inject illegally earned money or black money into economies.
These threats have attracted the attention of the governments and central banks of the countries to direct the banks to keep vigilance on
the inflows as well as outflows in the accounts of the customers. However, the threats of money laundering have reached a level far
beyond the control of the banks alone. This calls for a new product which would enable the customers to get involve to assist the
banks tackle the threats of money laundering.

5NEW PRODUCT DEVELOPMENT
Outline of the new project (product):
The new product under study would be owned and marketed by the Commonwealth Bank of Australia or CBA. The
innovative product would be an application compatible with laptops, desktops and smart phones named ‘CBA Secure’. The new
product development (NPD) and commercialization process to be adopted for technological innovation: The new product which
CBA would develop would be a net banking application which would allow customers to identify the records of all their past banking
transactions including both debits as well as credits. The customers would be able to report poor services which they might receive
from their respective bankers in managing and reporting fraudulent transactions. The net banking application would enable the
customers report poor record keeping practices of any bank. This system of reporting would resemble a crowd sourcing method would
enable the customers lodge complains against inefficient banks. The advertising and use of the app called CBA Secure would generate
revenue for CBA, its owner and developer. The bank would be able to spread awareness about the app by using its marketing
channels. This would enable the bank to generate immense revenue by attracting huge numbers of customers to use the app.
Justification of using new product development method to develop CBA Secure:
Common Wealth Bank of Australia or CBA would use new product development process to develop CBA Secure. This
choice of NPD can be justified on the grounds that allows the manufacturing process to take into account both external influences and
internal influences. This would allow the final product to be more aligned with the requirements of the business strategies of the bank
concerned as well as the requirements of the consumers (Lentner, Szegedi & Tatay, 2015). The following are the steps which the
development of the new product under study namely, CBA Secure would undergo:

6NEW PRODUCT DEVELOPMENT
Step 1. Generation of idea:
The first step which CBA should take into account to develop CBA Secure would be idea generation. As pointed out by
Schemmann et al.(2016), the business organisations should take into account the findings from market research as well as internal
environmental research. CBA being an Australian international banking organisations should scan both its home country namely,
Australia as well its host countries like India. The company has presence in Asia, Europe, New Zealand and North America
(Commbank.com.au, 2019). This means that CBA in order to develop CBA Secure should take into account the macroeconomic
factors of all these markets. The company should identify the gaps which the banking customers are facing in these markets in terms
of securing their respective bank accounts like threats of online cash thefts and money laundering. The bank should use these gaps as
opportunities to generate ideas which it would incorporate CBA Secure. Calderon and Schaeck (2016) in this respect point out that the
banking sector being the bone of the economic development of every country, is highly under the regulations of the respective
governments and central banks. This means that CBA should also collaborate with the governments and central banks to gain their
inputs in the development of the app. The banking company should conduct a research on its internal capabilities like current
technological competencies of its employees, the level of technological advancements its systems have achieved and the financial
resources it has to develop the new products. The analysis of external and internal environmental factors would lead the staff members
of the bank to generate ideas which would be considered while developing the new product namely, CBA Secure (Serrat, 2017). The
management of the bank should also consider the ideas expressed by the employees in developing the new product.

7NEW PRODUCT DEVELOPMENT
Step 2. Idea evaluation:
The management of the CBA should evaluate the ideas generated by the employees as well as the findings from the external
market analysis. The bank while evaluating the ideas should take into account the potential benefits which the customers’ feedback
which it had gained during the process of the macroeconomic analysis conducted in stage 1. The bank should take into account the
constraints which it might face while developing the product in terms of technology as shown in figure 1. The bank should screen the
potential benefits which the ideas generated could usher to the new product namely CBA Secure.

8NEW PRODUCT DEVELOPMENT
Figure 1.Conceptual Framework of Current Meta-Analysis
(Source: Chang & Taylor, 2016)
The management of CBA should take into account the ideas expressed by the employees in evaluating the ways incorporation
of ideas would contribute the success factors of the new app in the global banking market as shown in the figure below (Florén et al.,
2018). The management of CBA should then screen the ideas to take decisions about the attributes of the new app namely CBA
Secure.

9NEW PRODUCT DEVELOPMENT
Figure 2.A
conceptual framework of success factors in the front end of new product development
(Source: Florén et al., 2018)
Step 3. Testing the concept:
The management of CBA at this stage must integrate the ideas screened in the previous stage in the concept of the target
product namely. CBA Secure. Cooper (2016) in this respects point out that company at this stage shapes the ideas into an actual
product.

10NEW PRODUCT DEVELOPMENT
Step 4.1. Concept development:
The management of CBA along with the research and development team develops the ideas into an actual product. Fleischer et
al. (2016) mention in this respect that the company at this stage develops a number of versions of the new product to be developed.
CBA would then test each version against the findings of customer expectations and feedbacks.
Step 4.2. Concept testing:
CBA at this stage tests the concepts of the new product developed. Cooper (2016) mentions that at this stage the companies
developing new products, gain participation of the customers to test the actual market performance of the product concept developed
in the previous stage. Commonwealth Bank of Australia at this stage introduces the new app developed among the customers to test
their reactions and feedbacks about it. For example, as per the description of CBA Secure, the customers would be asked to upload the
banking issues which they are facing regarding tracking the inflows and outflows in their respective bank accounts due to lack of
sufficiently strong online banking vigilance of their present banker. The marketing personnel would then record the time which the
preliminary version of CBA score would take to record and report the entire complaints. The company at every stage should record
whether the product meets the requirements and expectations of the customers. The company at this stages observes the customers’
reactions to the new product. The marketing department of the company interview customers about the product to gain idea about the
acceptance in the market which the final version of the product namely, CBA Secure would gain in the market.

11NEW PRODUCT DEVELOPMENT
Stage 5. Market strategy development:
Commonwealth Bank of Australia should develop market strategy for the new product namely, CBA Secure. Chen et al.
(2016) mention in this respect that business organisations developing new products recognise the target markets in which they would
introduce the product. For example, in this case that target market of CBA Secure would the present markets in which CBA operates.
Najafi-Tavani, Sharifi and Najafi-Tavani (2016) strengthens the argument by mentioning that the companies at this stage then go on to
make strategies on the pricing strategies, place strategies and promotional strategies of the product. CBA as per this finding would
make the strategies regarding the marketing mix of the new product to be developed, CBA Secure. Laine, Korhonen and Martinsuo,
M. (2016) strengthen the arguments of the previous authors that the companies should also form the long term sales targets which they
aim to achieve by the sales of the products. It can be pointed out as per this finding that CBA should form the long term sales strategy
of the product namely, CBA Secure. The management of the company should collaborate with the marketing department to form the
revenue generation which the bank aims to secure in the coming 1 year, three years and five years.
Step 6. Product development:
CBA at this stage develops the final version of the product which it aims to introduce into the market. Story, Boso and
Cadogan (2015) at this stage the business organisations developing new products inject immense amount of capital in development of
the final version of the new product which would be actually introduced into the market. It can be pointed out in this stage CBA
should channelize immense capital towards development of the final version of CBA Secure.

12NEW PRODUCT DEVELOPMENT
Figure 3. Flow showing concept testing and development of final design
(Source: Menold, Simpson & Jablokow, 2016)
Stage 7. Market feasibility testing:
The seventh stage which NPD takes is testing the market feasibility of the actual product. Cui and Wu (2016) mention in this
respect that companies test the actual market performance of the new product and its related marketing strategies developed in fifth
stage. For example, CBA introduces the products namely, CBA Secure in actual market test its actual capability of enabling customers
to report illicit banking transactions. The company at this stage testing the market strategies which includes testing the revenue its
segmentation, targeting and positioning strategies would yield. Davcik, N. S., & Sharma, P. (2015) mention at this stage companies
inject immense capital into marketing of the new products. CBA as per this finding should inject immense capital to test market its
new product namely, CBA Secure in the market.

13NEW PRODUCT DEVELOPMENT
Step 8. Commercialisation:
The company should conduct multiple marketing tests to ensure the the product would yield high revenue from the market. Lipizzi,
Iandoli and Marquez, (2015) mention that companies at this stage take final decision whether to actually release the new product in the
market. The management of the CBA should form strategies to commercialise its new product namely CBA Secure all its market.
Justification of using NPD method by CBA in introducing CBA Secure:
It can be justified that CBA appropriately used NPD to introduce its new product app namely, CBA Secure. Firstly, as Salter et
al. (2015) points out NPD allows the companies to generate ideas from both external stakeholders like customers and internal
stakeholders like employees. This leads to generation of a large body of ideas which the company can consider to incorporate in its
new product. Secondly, the company can evaluate and filter the ideas to ultimately develop it into a concept. The NPD model allows
the firm to test the concept into a preliminary form of the product which it can introduce in the market for testing (Choi et al., 2016).
Thus, as far as CBA is concerned, it can be pointed out that the bank would be required to invest immense capital towards
development of the product in the market. The company as pointed out above would be able to involve its customers right at the basic
level to generate ideas regarding the product. The company would again be able to again to gain customer participation at the concept
testing phase and then at the market feasibility testing phase. This means that company would be able to gain support from customers
throughout the NPD phase. This customer participation ensures high level of alignment of the product with the expectations of the
customers. This ensures that the product after commercialisation gains deeper market penetration and generate higher revenue for the

14NEW PRODUCT DEVELOPMENT
bank. Thus, the NPD model in other words would ensure that CBA generates higher returns on the capital it would invest in the
development of CBA Secure.
How prepared is the firm for this technological innovation?
Commonwealth Bank of Australia is well prepared to bring about the technological innovation to introduce the new product
namely. CBA Secure. This assertion can be pointed out on several grounds. The first justification supporting the preparedness of CBA
of introducing CBA secure is, the bank is a public limited company (Berger & Roman, 2015). This means it is able to generate
immense capital by issuing shares in the stock market which it can channelize towards development of CBA Secure. The second
justification supporting the introduction of CBA Secure is that the bank operates in a huge market comprising of Australia, New
Zealand, Europe and North America. This means that the bank has a huge revenue over which it can spread its expenses it would incur
towards development of CBA Secure. The third justification is that the bank is technologically advanced and has its online
transactions under the supervision of financially strong third party firms. These firms enables the bank to carry on open innovation to
introduce technologically advanced products. Thus, it can be inferred on the basis of these three grounds that CBA is prepared
strategically to introduce CBA Secure (Al Nsour & Tayeh, 2018).
Risk return analysis of the technological innovation:
CBA prior to introducing its new product namely, CBA Secure should carry out risk and return analysis of the proposed
technological innovation. The multinational bank should maintain form a strong risk management strategy. The apex management of

15NEW PRODUCT DEVELOPMENT
the bank along with all the employees should take into account the risks and the impact on the financial position of the company
which the recognised risks can usher (Anna, 2018). For example, as shown in the attached risk register market risks can result due to
introduction of similar products by competitor banks like HSBC Bank. This would lead to loss of customers and resultant loss of
revenue. The bank should form strategies like aggressively promoting the new product namely. CBA Secure in the market. The bank
should also estimate the cost mitigation of each risk would attract. For example, it has been assumed that the total risk mitigation cost
CBA would require to mitigate the recognised risks is AUD 90000. Now if it is assumed that each unit of CBA Secure would cost
AUD 10, this means that the bank in order to regain the entire risk mitigation expenses, would require to sell 18000 units of CBA
Secure. Thus, in this case, the rate of return would be 100 percent (Doyle et al., 2016).
Commercialization of the technological innovation:
CBA should market its new product namely, CBA Secure to commercialise it in its present market. The company in order to
ensure deep market penetration right at the initial stage should market CBA Secure on its own official website and its social media
handles. Further, it can be pointed that the bank should promote the app on magazines and newspapers. The bank in order to gain
deeper market penetration should enter into joint venture with reputed smart phone companies which would install the app on the
handsets and offer them to customers for free. This would enable the bank to gain an immense customer penetration and ensure usage
of the product by a large base of customers. Usage of CBA Secure by this large base of customers would enable the bank generate
immense revenue.

16NEW PRODUCT DEVELOPMENT
Evaluation of the impact of the new project on the firm’s overall success in the next 5 to 10 years:
The management of CBA should evaluate the overall success of the new project to launch the new product namely CBA
Secure in 5 to 10 years. . Laine, Korhonen and Martinsuo (2016) can be reiterated that the management should compare the actual
revenue generation from the new product against the sales targets determined in the marketing development stage of NPD. The
management should measure the revenue generated by CBA Secure against the revenue generation targets set in the marketing
strategy development phase. A positive revenue generation would mean that the new product is having positive impact on the bank’s
business.
Discussion on findings and analyses:
It can be pointed out from the findings and analysis that CBA should conduct a thorough market research to develop the new
product namely, CBA Secure. It can also be pointed out that the management of the bank should strictly supervise the entire NPD to
ensure that the product is totally aligned to the customers’ requirements. The management should train the employees to work on the
new product. The employees of the bank should ensure that all the data pertaining to the new product are held securely against data
theft risks as pointed out in the register attached.

17NEW PRODUCT DEVELOPMENT
Conclusion:
It can be concluded that new product development and innovation hold great importance in the financial sector. The presence
of increasing threats of online theft of money and money laundering show that there exists a wide gap between the desired levels of
vigilance on customers’ accounts and the actual levels of vigilance which exists in the real banking arena. This gap clearly shows that
the apex banks of different nations, government bodies, the present fintech and the international presence of banks are insufficient to
deal with these threats. This analysis shows that involvement of customers in dealing with these two threats would empower
management of these threats to a great extent. The discussion shows that NPD model enables involvement of customers right from the
generation of the ideas to the product launch. CBA should introduce CBA Secure using the NPD model. The research faced some
issues due to lack of sufficient data. First of all, banks do not make actual money laundering information available to the public.
Secondly, in reality the involvement of customers in maintaining vigil over their respective bank accounts are far low than the level
which would be required if CBA actually tries to introduce products like CBA Secure. Finally the discussion can be closed that the
customers need to be more vigilant and responsible while carrying out banking transaction.
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Jordan from the Point of View of Banks’ Employees. Arab Economic And Business Journal, 13(1), 60-72.
Anna, P. (2018). Banking risks control using information technology and mathematical modelling.

18NEW PRODUCT DEVELOPMENT
Berger, A. N., & Roman, R. A. (2015). Did TARP banks get competitive advantages?. Journal of Financial and Quantitative
Analysis, 50(6), 1199-1236.
Calderon, C., & Schaeck, K. (2016). The effects of government interventions in the financial sector on banking competition and the
evolution of zombie banks. Journal of Financial and Quantitative analysis, 51(4), 1391-1436.
Chang, W., & Taylor, S. A. (2016). The effectiveness of customer participation in new product development: A meta-
analysis. Journal of Marketing, 80(1), 47-64.
Chen, K. H., Wang, C. H., Huang, S. Z., & Shen, G. C. (2016). Service innovation and new product performance: The influence of
market-linking capabilities and market turbulence. International Journal of Production Economics, 172, 54-64.
Choi, H., Lim, J., You, J., So, W., & Jung, J. (2016). Supporting Technology Commercialization for SMEs: A New Service Model to
Support Idea Generation in the Product Development Process. Journal of Advanced Management Science Vol, 4(5).
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ei=abt-international-branches (2019). Retrieved from https://www.commbank.com.au/about-us/our-company/international-
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19NEW PRODUCT DEVELOPMENT
Cooper, R. G. (2016). Agile–Stage-Gate Hybrids: The Next Stage for Product Development Blending Agile and Stage-Gate methods
can provide flexibility, speed, and improved communication in new-product development. Research-Technology
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can provide flexibility, speed, and improved communication in new-product development. Research-Technology
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product performance. Journal of the academy of marketing science, 44(4), 516-538.
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22NEW PRODUCT DEVELOPMENT
Appendices:
Appendix 1: Risk register:
Risk register of Commonwealth Bank Limited
Ris
k
no
Document
control
information
Risk
identifier
Risk
Category
Risk
Description
Impact of the
risks
Risk
response
category
Owner of
risk
Risk
response
action
Owner of
Risk
response
action
1 Profit and
Loss
statement,
balance
sheets
Falling
profits in
spite of
strong
marketing
strategies
Market risks 1. Market
risks can
originate
due to
introductio
n of new
products by
existing
competitor
s and/or
entry of
new firms
with similar
products.
2. Market
risk can be
the
outcome of
introductio
n of low
priced
1. Fall in
revenue and
losing of
consumers.
(short term
impact)
2. Losing
investors, and
supply chains
due to falling
capacity to give
positive ROI.
(medium term)
3. Goodwill risk
and losing of
global market
position (long
term loss)
Strategic
decisions,
marketing
strategies
Finance
department,
Marketing
department
Strengthenin
g marketing
of products,
introducing
new and
innovative
products
with less
competitors
Marketing
department

23NEW PRODUCT DEVELOPMENT
variants by
local
companies.
For
example,
strong
competitor
s like HSBC
Bank
introduce
more
advanced
products
2
Unjustified
loss of
capital,
Unjsutified
loss of data,
Unexplainabl
e alter of
information
Employees,
customers
or any other
stakeholder
Cyber theft
risks
Cyber
attacks lead
to loss of
customer
and
financial
data of
extreme
business
significance
. Loss of
customer
data and
financial
resources
online lead
to R1
1. Loss of
sensetive
business data.
2. Loss of
financial
resources.
3. Unauthorised
access to the
business
strategy
information of
the company.
4. R1 High
Apex
managemen
t and all the
department
al heads
1. Tightening
of security.
2. Allocating
new email
ids and
passwords
to each
employees.
3.
Mandating
subordinate
s to obtain
approval of
superiors to
accede to
specific
information.
4. Making it
compulsory
for all
employees
Apex
managemen
t and all the
department
al heads

24NEW PRODUCT DEVELOPMENT
to exchange
official
information
exclusively
on the
formally laid
path of
information
sharing.
5.
Employees
holding
assistant
managers
and beyond
should lock
their
systems
using a four
layer
password
security.
2
Cannot be
documented
Employees,
customers
or any other
stakeholder
Natural
disasters
Natural
disasters
lead to loss
of
resources,
inventory
and assets
Depends on the
seriousness and
intensity of the
calamities Immediate
Government
, security
personnel
etc Evacuation
Government
, security
personnel
etc
3 Government
and legal
websites
Apex
managemen
t
Change in
legislations
Change in
laws
require
companeis
to comply
Requires CBAto
adapt the
relevant areas
of operations as
per the laws Immediate
Apex
managemen
t and all the
department
al heads Compliance
Apex
managemen
t and all the
department
al heads

25NEW PRODUCT DEVELOPMENT
with the
new laws
4
Financial
statements
Apex
managemen
t, finance
department,
CFO
Economic
risks
1. Change
in
internation
al currency
exchange
rates
2. Change
in taxes.
3. Adverse
economic
changes
4.
Emergence
of
economic
policies
resulting
from R5.
5. Scarcity
of raw
materials.
6. Increase
in policies
of financial
institutions
Requires CBA to
adapt the
relevant areas
of operations as
per the laws
Immediate
or within
the date of
enforceme
nt specified
specified
Apex
managemen
t and all the
department
al heads Compliance
Apex
managemen
t and
finance
department
5 Risk register Apex
managemen
t, security
officer and
any other
employee
Fire,
exlosions
Loss of
materials,
loss of
equipment,
injury of
employees,
loss of
CBA loses
productivity,
employees,
resources
Immediate
or within
the date of
enforceme
nt specified
specified
Apex
managemen
t and all the
department
al heads
Risk
managemen
t strategies
Apex
managemen
t and
finance
department

26NEW PRODUCT DEVELOPMENT
productivit
y, casualty
in case of
large scale
explosions
6
Financial
statements
Apex
managemen
t and top
managers
including
CFO
Goodwill
risks
1. Loss of
customers
2. Loss of
investors
3. Loss of
suppliers
4. Loss of
market
position
CBA loses
productivity,
employees,
suppliers,
patents and
assets Immediate
Apex
managemen
t and all the
department
al heads
Risk
managemen
t strategies
Apex
managemen
t and
finance
department
7
Financial
statements
Apex
managemen
t and top
managers
including
CFO Capital risks
Weakening
of capital
base due to
lower
generation
of capital
Unilever loses
productivity,
employees,
suppliers,
patents and
assets Immediate
Apex
managemen
t and all the
department
al heads
Strengthenin
g marketing
of products,
introducing
new and
innovative
products
with less
competitors
to boost
revenue
generation
and
strengthen
goodwill
Apex
managemen
t and
finance
department
8
Financial
statements
Apex
managemen
t and top
managers
including
Technologic
al risks
Modern
technology
leaves
perevious
technology
Requires CBA to
carry on
continuous
research on
product Immediate
Apex
managemen
t and all the
department
al heads
Requires
CBA to carry
on
continuous
research on
Technologci
al officer

27NEW PRODUCT DEVELOPMENT
CFO, R&D
head
versions
redundant
technology,
operation,
ecommerce
technology etc
product
technology,
operation,
ecommerce
technology
etc
Total risk
mitigation
expenses

28NEW PRODUCT DEVELOPMENT
Appendix 2: Innovation diamond and questionnaire:
Market Index
Innovation Index
Resource Index
Strategy Index 4
5
6
Product A
1. Are you happy with your present banker?
Yes
No
May be
2. How often do you visit the branch of the bank holding your account?
Frequently

29NEW PRODUCT DEVELOPMENT
Sometimes
Hardly
3. Do you use innovative banking products like net banking?
Yes
No
May be
4. How would be you rate your banker on innovative index?
High
Average
Low
4. How would be you rate your banker on resource index?
High
Average

30NEW PRODUCT DEVELOPMENT
Low
5. How would be you rate your banker on resource index?
High
Average
Low
6. How would be you rate your banker on strategy index?
High
Average
Low

31NEW PRODUCT DEVELOPMENT