Sustainable Business Development of Commonwealth Bank

This paper discusses the concepts of business model and disruption of the business model. It also delves into the impact of smart-connected devices on Commonwealth Bank, Australia. The Osterwalder and Pigneur’s business model is used to analyze the disruptive business model of Commonwealth Bank.

SUSTAINABLE BUSINESS DEVELOPMENT OF COMMONWEALTH BANK
SUSTAINABLE BUSINESS DEVELOPMENT OF COMMONWEALTH BANK
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SUSTAINABLE BUSINESS DEVELOPMENT OF COMMONWEALTH BANK
Introduction:
The aim of this paper is to harp on the concepts of business model and disruption
of the business model. The paper also discusses the threats and opportunities ushered in by the
smart-connected devices by delving into its impact on Commonwealth Bank, Australia. There
are discussions on the Osterwalder and Pigneur’s business model in contextualizing the
disruptive business model of Commonwealth Bank and further discussions on the two
perspectives of business model.
Business model:
Business model comprises of three elements that define the structure and goals of the
business (Tidd, Bessant & Pavitt, 2005). These three elements are profit formula, value
proposition and the key processes and resources. Customer value propositions deals with the
notion of fulfilling the task are meant for the better experience of the customers (Chesbrough,
2010). The notion of profit formula is concerned with the strategies that the company has
employed in generating a lucrative deal. Third notion of the key processes and key resources
indicates the processes imperative for the delivery of the proposition.
Disruption in business:
Disruption in business has become the trend in contemporary phase of business. The term
disruption refers to the drastic alteration in the landscape of the traditional business model of the
company. Companies have adopted the disruptive model to bring innovation in their business.
Some of the illustrations are that companies have disrupted the business model by converting the
necessities into shipping products and subscriptions (Commonwelath Bank of Australia, 2018).
Companies have tapped the advantage posed by the revolution in internet speed the

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SUSTAINABLE BUSINESS DEVELOPMENT OF COMMONWEALTH BANK
mushrooming of the mobile device that would stream high-quality content in exchange of
monthly subscription. Another illustration of innovation would be Netflix. The company has
ensconced a strong position by continuously innovating its business model. This is done through
renting the DVDs and therefore changing the fate of blockbusters. In 2007, the company
incorporated the streaming service and has over the years built a reputation. It has also branched
out into the sector of original content. Currently, Netflix has become the contributor in cord-
cutting phenomenon that has posed a threat to the cable companies. Another illustration of
disruptive business model is Amazon. The retail giant has been consistently focussed in elevating
the experience of shopping for the consumers. It has placed 500 products in the market that
would be available at the fingertip of the customers. Recently, it has launched that app that has
led to a sweeping increase in its sales. To stay ahead in the business, the company innovated
convenience that includes the facility of Amazon Prime for its customers. Along with that it has
granted access to the customers membership to two-day shipping and has allowed them to
access millions of products including the benefit of music libraries and video. Disruptive
business model has incorporated drop box for the purpose of communication. This had led to the
enhancement in participation, accessibility and productivity. Another feature of disruptive model
is that it has led to the building in of gamification that has led to the enhancement in engagement
with the customers.

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SUSTAINABLE BUSINESS DEVELOPMENT OF COMMONWEALTH BANK
Business model of Commonwealth bank: Opportunities and threats
The eruption in technology has led to the radical automation in the service of the
Commonwealth Bank (Porter & Heppelmann, 2014). The company has introduced a range of
smart machines that interact with humans and has led to the generation of GDP. Smart-connected
devices and service has altered the business model of Common Wealth Bank as envisaged by
Dilan Rajasingaham, the Head of the CommonBank’s Emerging Technology team (Welcome to
the Machine-to-Machine economy, 2018). The company has introduced machine-to-machine
economy the feature of which is that machines can eliminate the tasks that are otherwise boring,
tiring or onerous. The company is planning to introduce automated machines that can look after
it, in other words it can do self-monitoring and are capable of taking orders and making decisions
on insurance. Machines will perform these functions and will open a new door in terms of
providing smooth service to the customers and ease their pain. The technology partner of
Commbank Emerging Technology has collaborated with public and private tech partners and the
academic community who would be able to experiment with technology. The focus areas of
Commonwealth Bank are big data analysis, blackchain, smart machines and cyber security
(Reinventing Your Business Model, 2018). The team of CommBank is committed in preparing a
future based on experimentation, education, adoption of new technologies and learning. Whilst,
these were the opportunities, the threats are also quite prominent. According to a survey
conducted by the Mobile Ecosystem Forum, 60 per cent of the population were worried about the
proliferation of the connecting devices, and 62 per cent of the population was of the opinion that
privacy was a real concern that was being hampered by the smart-connecting devices
(Commonwelath Bank of Australia ,2018). It was reported that 21 per cent of the sample
population conceded that internet of Things (IoTs) poses a real threat (How Smart, Connected

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SUSTAINABLE BUSINESS DEVELOPMENT OF COMMONWEALTH BANK
Products Are Transforming Competition, 2018). The advantage lies in gaining or securing the
trust of the customers in the management of transactional data. CommBank is committed to
innovating in the space of payment technology. The company has constructed a network that
would enable in the innovation of the business through a decentralized structure and distribution.
The broader aim of the company is to work its privacy protocols that would underpin the
transaction banking of CommBank.
Business model framework of Osterwalder and Pigneur to analyze the business model of
Commonwealth Bank:
An analysis of Commonwealth Bank’s disruptive model with the framework of
Osterwalder and Pigneur is imperative. It has been found that the bank is committed towards
building on its customer relationships and the value proposition. In terms of value proposition,
the company believes in making transaction smoother for the customers, in terms of customer
relationships, the company believes that smart-connected device would cater to the growing
needs of the millenials for whom everything is just a click away and finally in terms of channels,
the company is planning to reach to the potential customers via notification through mobile
phones (Osterwalder & Pigneur, 2010).
Key Partners
 Partner with
private and
public
service
providers
Key Activities
 Providing
smooth bank
experience
to the
customers
 Machine-to-
machine
transaction
Value Proposition
 The
company
delivers the
value of easy
money
transaction
Customer
Relationships
 Building
trust
 Customer
service
 Cordial and
long-term
Customer
Segments
 Millenials
who service
to be quick
and efficient

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SUSTAINABLE BUSINESS DEVELOPMENT OF COMMONWEALTH BANK
economy
 Big data
analysis
 Cyber
security
relationship.
Key Resources
 Smart
connected
technology
 Automated
banking
 Self-
monitoring
machines
Channels
 Decentralize
d structure
and
distribution
Cost Structure
 Technology
 Customs
 Employee wages
 Taxes to government and intercity and
interstate taxes
 Production costs
 Installation of the machines throughout
the country
Revenue Streams
 Easing the burden on payment technology
Two business model perspectives
Business model as a set of capabilities- This refers to the ability of an organization to recognize
and build on the right kinds of capabilities. This capability provides the opportunity to translate
the strategy into actionable tasks and ensured that it is executed in the business areas (Zott &
Massa, 2011).
Business model as profit formula- Business model as a profit formula refers to the four aspects
of business. These are cost structure, target unit margin, revenue model and the velocity of the
resources.

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SUSTAINABLE BUSINESS DEVELOPMENT OF COMMONWEALTH BANK
Conclusion
Therefore, it can be stated that smart-connected products in the form of machine-to-
machine economy will make it easier for the customers to make transactions. It will also
transform the landscape of the banking sector. This is an illustration of disruptive business model
for CommonWealth Bank.
References
Chesbrough, H. (2010). Business model innovation: opportunities and barriers. Long range
planning, 43(2-3), 354-363.
Commonwelath Bank of Australia (2018). Disrupting beliefs: A new approach to business-model
innovation. McKinsey Quarterly, 3, 66-75.

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SUSTAINABLE BUSINESS DEVELOPMENT OF COMMONWEALTH BANK
How Smart, Connected Products Are Transforming Competition. (2018). Harvard Business
Review. Retrieved 19 April 2018, from https://hbr.org/2014/11/how-smart-connected-
products-are-transforming-competition
Osterwalder, A., & Pigneur, Y. (2010). Business model generation: a handbook for visionaries,
game changers, and challengers. John Wiley & Sons.
Porter, M. E., & Heppelmann, J. E. (2014). How smart, connected products are transforming
competition. Harvard Business Review, 92(11), 64-88.
Reinventing Your Business Model. (2018). Harvard Business Review. Retrieved 19 April 2018,
from https://hbr.org/2008/12/reinventing-your-business-model
Tidd, J., Bessant, J., & Pavitt, K. (2005). Managing innovation integrating technological, market
and organizational change. John Wiley and Sons Ltd.
Welcome to the Machine-to-Machine economy. (2018). Commbank.com.au. Retrieved 21 April
2018, from https://www.commbank.com.au/guidance/newsroom/corporate-travel1-
201711.html
Zott, C., Amit, R., & Massa, L. (2011). The business model: recent developments and future
research. Journal of management, 37(4), 1019-1042.

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SUSTAINABLE BUSINESS DEVELOPMENT OF COMMONWEALTH BANK