MGMT20132: Sustainable Business Development and Innovation at CommBank

This essay examines the sustainable business development and innovation strategies of Commonwealth Bank (CommBank), focusing on its business models and integration of the Internet of Things (IoT). It analyzes the opportunities and threats presented by smart connected products, highlighting CommBank's Pi platform and its emphasis on security. The essay also applies the Osterwalder and Pigneur framework to dissect CommBank's value proposition, customer interface, infrastructure management, and financial aspects. Furthermore, it evaluates CommBank's business model as a value proposition and profit formula, referencing the bank's reported profits and asset growth. The study concludes that the IoT revolutionizes the banking industry, with CommBank effectively integrating it to enhance customer engagement and payment systems while mitigating data security risks.

Running head: SUSTAINABLE BUSINESS DEVELOPMENT AND INNOVATION
Commonwealth Bank
Name of the Student:
Name of the University:
Author Note:

1SUSTAINABLE BUSINESS DEVELOPMENT AND INNOVATION
A business model can be described as a company plan that lays emphasis on the revenue
generation and profit making. The business model explains the services and the products that the
business plans for the market and the manufacture and also include the execution plan. A typical
business model includes the projected costs of the start-up and the different sources of financing.
The major important parts of a business model include the projected expenses and the revenues,
marketing competition and marketing strategy, and a target customer base for the purpose of
business (Amit & Zott, 2012).
Business model and disruption (literature review)- companies commercialize the new
technologies and ideas through the business models. The extensive processes and investments
that the companies have been used for the purpose of exploring the new technologies and the
ideas. This means that two products taken to through the market will have two different
economic outcomes. Thus it is recommended that the companies must have a good sense of
business so that it can have the ability to develop and innovate the business models. It is also
important to mention that the business model has the certain functions like: the articulation of the
value proportion; identification of the market segment and also the specification of the
generation mechanism; defines the proper value chain creation and distribution, it also includes
the complementary assets and offering; estimation of the cost structure and the potential of profit
(Chesbrough, 2010). The business models once used to be popular are now less durable. The
basic rules of the game include the capturing and creating economic value which once used to be
fixed for decades. In this scenario, the companies used to perform better with respect to its
market competitors. the present scenario, however, is different and lays emphasis on the rapid
disruption, displacement and in certain extreme cases, there is an outright destruction (De Jong &
van Dijk, 2015). Disruptions are both creative and destructive at the same time as it is important

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to mention that the companies that turn upside down have a profound and permanent impact on
the industry. Disruptive technological innovations like the smart apps, new hardware, and the
Big data analytics needs the individuals to be connected with the corporation. The disruptive
technologies help in the management of the value creation and creation of the knowledge of
creation. Disruption is deeply embedded within the business model and is an important part of
the business operations (Alberti-Alhtaybat,Al-Htaybat & Hutaibat, 2017).
Analysis of the opportunities and threats of Commonwealth Bank with respect to the
smart connected products- The Commonwealth Bank is at the continuing process of innovating
the payment technology arena. Along with Pi platform, the Commonwealth Bank has built a
framework for the purpose of enabling the business to innovate via a decentralized and
distributed structure. The Pi platform has rendered an easy integration of the apps and the easy
customization to suit the needs of the customers and the businesses. The major strength of this
platform is the robust privacy protocol and secure technology that is the main foundation of the
Commonwealth Bank transaction system. Security is a critical issue for Commonwealth Bank
and is a major weakness (Harvard Business Review., 2018). It has been found that about 65
percent of the customers either have their identities stolen or compromised. This is one of the
major issues and this may lead to the customers switching to other institutions. Thus, it is
important to note that Commonwealth Bank is a compliance led organization and it requires a
continuous protection for the purpose of protecting the needs of the customers
(Commbank.com.au, 2018a). The internet of things has enabled a new kind of intuitive and rapid
payment method. The payment method takes place to form a smartphone wallet to a wearable.
This is a welcome change with respect to the traditional POS systems and this system has
become obsolete. Amongst the global transformation, it is actually practical to imagine that cash

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might become dysfunctional. It has been found that the withdrawal from the ATM has fallen
within the Australians. The number of the ATM transactions has declined considering the 20
years’ time. Thus the major strength of this technology will help Commonwealth Bank will have
a competitive advantage over its competitors for better market share. The internet of things also
provides the option for the in-app payments for the services that will convenient for the
customers. Exploring the potential of the wearables so that the customers can have a seamless
transaction (Commbank.com.au., 2018b). An analysis of McKinsey& Company has revealed that
the integration of the integration of the internet of things has resulted in potential support
systems that will up an entirely new business model. This will enable the industrial equipment
manufacturer to monitor the machines that are being used at the customer sites. Through the
integration of the sensor data, the visibility of the manufactures will increase considerably. The
potential weakness with respect to the advances is that the possibilities are still at the infant
stage. Thus, more research and development will be required for powering the internet of things
in future (Commbank.com.au., 2018c). The data that is generated from the integrated systems
will be able to create more customised experiences and customized loyalty programs. The
effective consideration of the advantage of the internet of things is the real-time delivery of the
data (Commbank.com.au., 2018d).
The business model framework according to Osterwalder and Pigneur (2010)- the
product pillar has a single business model element as a value proposition. The value proposition
defines the banking services and the insurance products that are provided by the Commonwealth
Bank. The customer interface provides the 3 different business model element like customer
segments- the segments of the customers are the professionals, youth, insurance buyers, investors
and entrepreneurs and businessmen and even the public sector (Commbank.com.au., 2018f);

4SUSTAINABLE BUSINESS DEVELOPMENT AND INNOVATION
channels- the way the Commonwealth Bank gets in touch with its customers are SMS, emails,
private meetings, counselling and customer engagement; customer relationships- the main link
that the company tries to establish itself with the customer is through the customer engagement,
sell of insurance products and banking activities. The infrastructure management pillar consists
of the 3 different business model element like key resources- the assets are arranged by
providing banking services through the various bank branches and the customer centric insurance
products; key activities- the major activities of the Commonwealth Bank is the banking services
and the customer centric insurance products, payment clearing, debt capital market, structured
finance, financial markets, credit facilities, trade finance, migrant, retail and corporate referrals,
global asset management, residual value management and structured asset management
(Commbank.com.au., 2018e); key partners- the key partners of the Commonwealth Bank are the
other banking institutions that are located in Hong Kong, London, Auckland, Sydney and New
York. The financial aspects pillar consists of the 2 business model element like revenue system-
the company makes money through the various customer-centric insurance products, payment
clearing, debt capital market, structured finance, financial markets, credit facilities, trade finance,
migrant, retail and corporate referrals, global asset management, residual value management and
structured asset management; cost structure- the investment is around 272 million dollars, and it
will yield a profit of 9,881 million dollars (Commbank.com.au., 2018g).
Analysis of business models- Business model as a value proposition- it is one of the
strategies of the Commonwealth Bank and the strategy is based on the differentiated customer
value proposition. The main source of the sustainable value creation is the customer satisfaction.
Customer satisfaction is one of the main motives and goals of the banking industry and this does
not differ with respect to the other banks (Smartconference.com.au., 2018). Business model as

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profit formula- Commonwealth Bank reported a profit of 57.4 million dollars for the year 2016.
The total amount of the asset of Commonwealth raised to 1.6 billion dollars. The total assets
were 4.8 percent with respect to 2015. The bank through the continued reinforcement of the
business model along with the conservative risk assessment process has led to an effective credit
administration program. Through this procedure, the administration was able to accrue more
profit as against the headwinds experienced in the year 2016 (DIANE PHILLIPS &
ASSOCIATES., 2018).
Thus from the above study, it can be concluded that the internet of things has led to the
revolution in the arena of the banking industry as well as the Banking firm of Commonwealth
Bank. The bank is Australia's one of the premier banks and follows the business model which
effectively emphasizes on the business model of value proposition and business model of profit
formula. There are different types of payment options available for the customers are effectively
integrated with the internet of things. This has facilitated and led to the formation of a system
that can effectively engage the customers to make seamless payment. Also, the integration of the
Pi platform has led to the formation of the reduction of the loss and theft of the customer data.

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