Commonwealth Bank: Business Model and Disruptive Development

This essay provides an analysis of the Commonwealth Bank's business model, focusing on its key partners, activities, value propositions, customer relationships, cost structure, resources, revenue streams, channels, and customer segments. It explores the integration of disruptive innovation, specifically the Internet of Things (IoT) technology, and its impact on the bank's operations, highlighting the adoption of smart connected devices like the Albert EFTPOS tablet and the CommBank small business app. The essay discusses the opportunities and threats associated with these technologies, particularly in relation to the bank's value proposition and profit formula. It concludes that the incorporation of smart connected devices has significantly improved the bank's efficiency, customer experience, and overall business development, while also emphasizing the importance of managing potential risks and challenges.

Running head: BUSINESS MODEL AND BUSINESS DEVELOPMENT
Business Model and Business Development
Name of the Student:
Name of the University:
Author Note:

1BUSINESS MODEL AND BUSINESS DEVELOPMENT
Business model refers to the company’s plan, employing which the companies generate
revenues and make profits (DaSilva & Trkman, 2014). It forecasts the expenses that the
companies need to incur and descries the products or services that the business strives to
manufacture and market. It also shows the marketing phenomenon of the companies so that
through its operation in the market place, it is able to earn profits. The business model has
various integrated parts that evaluate its business plan and helps it to function effectively in the
market.
Disruptive innovation in business refers to innovation that creates new market and value
network through which it disrupts the existing market situation of the businesses. All disruption
innovation however is not disruptive. Outside entrepreneurs generally produce them. The
disruptive process is slow since not all the firms accept the innovation in the first instance.
However, after being deployed in the market in a conventional way, it leads to a faster and
higher impact on the established markets.
An integration of disruptive innovation in the business models helps to facilitate greater
productivity and efficiency in the industries. Considering the business model of Commonwealth
bank, an analysis of the smart connected devices and its influence has been depicted in the
assignment (DaSilva & Trkman, 2014)
The Business model of Commonwealth Bank that documents its existing business structure and
process has been discussed below:
Key partners:

2BUSINESS MODEL AND BUSINESS DEVELOPMENT
The key partners of the bank are investment partners, financial market operators, financial
consultancies, investors, and associates. Joint ventures, subsidiaries and members of Global
Banking Alliance for Women also serve to be the partners of the bank.
Key Activities
The chief activities of the bank are banking operations, treasury services, corporate and
institutional banking, funds management, superannuation and building portfolio. The bank also
provides investment and broking services, market researches, risk assessments and are equally
engaged in advising and counseling to customers.
Value Propositions
The chief value propositions of the bank are that it has a vast knowledge of financial markets and
operates as a Universal bank.
Customer Relationships
The bank is a consumer bank engaged in online services as well. It is a wholesale bank that
assists customers on personal grounds. It has automated system that makes it easy for customers
to be used and also have user’s community at service for the customers. The bank acts as an
intermediary in international transactions and manages account of the customers with consent.
They are well pronounced for the efficient customer services gaining high customer satisfaction.
Cost Structure
The cost structure of the bank is enormous. It has insurance policies and staff compensation
strategies. There is a high development of IT facilities with the prevalence of taxes and
operational costs. The bank is also subjected to legal costs and spends a good amount on its
presence and the other branches.

3BUSINESS MODEL AND BUSINESS DEVELOPMENT
Key Resources
More than 87000 employees working in the bank act to be the key resource for the bank. It has
about 1100 branches in more than 70 countries. The company has brand awareness and enjoys
high reputation. It has qualified and trained staffs and a rapid networking. The massive financial
strength of the bank also act as a resource for it. Most of the employees in the bank accounting to
more than 90% are from Asia, Africa and Middle East.
Revenue Streams
The revenue stream of the bank includes commissions, returns on portfolio investment,
understanding fees, premium on insurance policies, spread of exchange rates, credit cards
availability, mortgage loans and corporate and consumer banking.
Channels
The various channels of the bank for its proper functioning are through the website, the multiple
branches, and call centers. The corporate and regional offices with specialized officers also act as
the channels for the bank. Mobile banking facility, social media and blogging also act as
channels for the bank to be more emphasized in the market.
Customer Segments
Government segment, individuals, credited investors and corporate customers are the segmented
customers of the bank. The various financial institutes, traders and wealthy investors also serve
to be the major customers for the bank.
The incorporation of the disruptive innovation that is the Internet of Things (IoT)
Technology has been very beneficial to the Commonwealth Banks. It has enabled it to share
information and get transactions done with the use of smart technology in no time (Hartmann &
Halecker, 2015). The Commonwealth bank has adopted the technology of Albert, a new and

4BUSINESS MODEL AND BUSINESS DEVELOPMENT
smart EFTPOS tablet (Commbank.com.au, 2018). This next generation portable payment
terminal has made business more efficient and has been improving customer’s experience in
banking. All the modes of payment can be securely done and the customer’s receipt can be
mailed or printed.
The new incorporation of the CommBank small business app has also proved to be a very
effective tool made for payments with the next generation EFTPOS devices. Through these smart
connected products, people and businesses engaged in banking with Commonwealth Bank can
send invoices and manage payments from anywhere in real time. Through this new technological
advancement, the bank can accept any card payments on spot. Thus, it does not require heading
to the banks for every new transactions. The smart connected device has brought multiple
opportunities for the Commonwealth bank that has led to its better growth and progress.
The incorporation of the smart connected device that works on the new technology as is
observed in the products of EFTPOS has been very effective in recent times that has smoothen
transactions and resolved the various issues one faced in banking (Wortmann & Flüchter, 2015).
Through the new incorporation by the Commonwealth Bank, online banking has become easy
and convenient for the users. This has led to the growth of the bank as a whole. Opportunities
such as the automated services will engage more number of people in the bank, thus, the bank
has greater scopes to flourish. With the smart device, the bank can maintain and manage assets
reducing risk exposures and thus, opt for more assets to be managed effectively (Wortmann &
Flüchter, 2015). Since the cost of incorporation of the device is cheap, the bank can utilize the
machine and increase its functions.

5BUSINESS MODEL AND BUSINESS DEVELOPMENT
The effective device stores and computes the data of the users. Thus, it is not very
complicated for bankers to maintain the files. They can expand the market to a significant extent.
The bank has the opportunity to improve customer experience and increase customer satisfaction
through these incorporations. They have the potential to transform the financial services of the
bank positively that would exchange and collect information from objects and render a smooth
communication.
Along with the opportunities, that smart device incurs certain threats as well. Some of them
are the increased efficiency that encourages new industries and entrepreneurs to emerge,
increasing the competitiveness in the sector. A dysfunction of the smart device can collapse and
damage the repute of the bank since it deals with the money of people that is very crucial.
Threats relating to security and privacy are also evident for the banks since an explosion of the
device and sensors can lead to serious consequences (Harriet et al., 2017).
Considering the two aspects of the business model of Commonwealth bank, namely value
proposition and the profit formula the Commonwealth Bank can lead to greater expansion and
progress with the smart device. It can add to its value propositions significantly rendering to the
customers the need of adopting new technology and using the app that the Bank has adopted.
This would enable them to make transactions and payments easily. It would add more value to
the banking services and accelerate the good repute that the bank has in the global market.
With the incorporation of smart connected devices, the Commonwealth bank can also
increase its profits by increasing the customer segment, including the younger generation and
women sections in the banking service. Since the technology relieves the customers from coming
into the banks and transact sitting back at homes or any other place, it can provide its services to

6BUSINESS MODEL AND BUSINESS DEVELOPMENT
all kinds of people coming from all sections of the society who have enough money in the
accounts. Thus, an expansion in the customer segment would enrich the economy of the bank
making it even more successful. This ultimately would add to the profit formula of the bank
increasing its profit margin largely.
The incorporation of smart connected devices proves to be very effective for every
industry that engages it in their functioning. The Commonwealth bank has been integrating
various smart measures to render its services at large and increase its efficiency and banking
services. The smart connected devices have enabled the bank to be operative throughout the year
in all the 24 hours in a day. Thus, the transactions have significantly increased. It also allows the
customers as well as the bankers to be informed about their transaction and get access to their
account that makes the entire process transparent (Morey, Forbath & Schoop, 2015). It has
enabled the customers to do banking from anywhere and at any time without any obstructions.
Thus, overall the impact of the new technology has a widespread significance on the bank that
has proved to be profitable for them. It has not only enriched the customer experience but has
also increased dimensions for the bank to adopt greater business opportunities and proceed
further with its services.
From the analysis, it can be concluded that smart connected products are very effective
for any industry to accelerate its production and efficiency to a significant extent. The products,
if employed properly make business transactions easy and convenient and make the entire
process transparent. In aspect to the Commonwealth bank; the smart connected service that the
bank has adopted and aims to adopt in the future, increases opportunities for the bank to be
progressive and more successful in the future. The use of the devices have certain threats,
however, advancement in technology serves to be an important aspect that needs to be employed

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in the preset business situation. A proper initiative can bring the most out of the high potential
that the disruptive innovation and its devices have that ensures a productive development of
businesses in the long term.

8BUSINESS MODEL AND BUSINESS DEVELOPMENT
References:
Commbank.com.au. (2018). Our innovation in Business banking - CommBank. [online]
Available at: https://www.commbank.com.au/business/our-innovation.html [Accessed 6
Apr. 2018].
DaSilva, C. M., & Trkman, P. (2014). Business model: What it is and what it is not. Long range
planning, 47(6), 379-389.
Harriet, E. E. U., Oluseye, O. O., Omotayo, A., & Augustina, D. (2017). Queuing Theory
Perspective in e-Banking and Service Performance: A Conceptual Approach. Asian
Journal of Information Technology, 16(6), 364-373.
Morey, T., Forbath, T., & Schoop, A. (2015). Customer data: Designing for transparency and
trust. Harvard Business Review, 93(5), 96-105.
Wortmann, F., & Flüchter, K. (2015). Internet of things. Business & Information Systems
Engineering, 57(3), 221-224.