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Innovation Management at Australian Commonwealth Bank - Research Paper Example

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The idea of this paper "Innovation Management at Australian Commonwealth Bank" emerged from the author’s interest and fascination in how does the Australian Commonwealth Bank manages innovation providing examples of innovative products and processes developed by the organization in recent years…
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Innovation Management at Australian Commonwealth Bank
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?Australian commonwealth Bank Table of Contents Australian commonwealth Bank Table of Contents 2 Question 3 Question 2: 6 Reference 8 Question How does the Australian Commonwealth Bank manage innovation and provide examples of innovative products and processes developed by the organisation in recent years. Australian Commonwealth Bank or Commonwealth Bank of Australia is one of the largest multinational banks and it has its operations in a number of developed and developing economies like United Kingdom (UK), United States of America (U.S.A), New Zealand, Asia etc. The Commonwealth Bank was founded as per Commonwealth Bank Act during 1911 and finally, it started operations since 1912. This bank is also one of the oldest and the most trusted banks offered a number of corporate and retail financial services. After the rapid development of globalisation and international trade, the bank experienced very rapid growth and currently, there are 800,000 shareholders are associated with the banks with 52,000 employees in the global market place (Commonwealth Bank Group-1, 2011). Australian Commonwealth Bank basically, offers three types of banking and other financial services for the personal, business and corporate. The financial service is one the most important sectors for the growth of economies as the financial institutions offers major necessary financial assistance to the population and industry of the economy. Like the other manufacturing and technology industries, the research and development is also important for the financial services sectors. In financial services, it is easier to develop a product but its viability is always questionable. Moreover, ineffective financial products are harmful for the entire economy; for example, the mortgage backed securities were one of the prime factors which had led to bring the U.S. mortgage crisis. Therefore, the financial institutions should develop their research and development process for innovating viable and effective financial product and services (Financial Services Innovation Centre, 2009). One the key factors for the success of Australian Commonwealth Bank is its innovative operational and product development process. The bank has realized the necessity of the innovation for gaining a sustainable competitive advantage in the global competitions. Innovation requires necessary resources including infrastructure and skilled employees. The banks is financial very stable and has invested significantly to acquired necessary physical resources for infrastructural and technological development. Besides, its intangible resources like innovative and highly skilled employees are also vital determinants for innovations in the organisation (Commonwealth Bank of Australia, 2008, p.6-7). The following diagram depicts the structure of Australian Commonwealth Bank that plays a key role in managing the innovation within the organisation. Figure 1: Value Chain Element of Australian Commonwealth Bank (Source: Commonwealth Bank of Australia, 2008, p.7) This bank has been constantly trying to bring innovative products and services to increase the value of its services and its business. Recently, the banks have brought a number of innovative process, services and products signifying the better business performance. During 2010, it has launched a number of successful products and services and some of them are listed below. Introduced Core Banking by 10 million accounts. Launched a savings product with high interest bearing, called GoalSaver. Brought in the new premium products like Diamond Awards credit card. Better and user friendly technological development has led to increase its netbank users by 20%. Net banking trough mobile device has also been upgraded. It has also brought many new developments and expansion in its School Banking programme for increasing financial literacy. Due to such successful product and process innovation, it has become of the pioneer in customer service satisfaction. These initiatives for innovations have offered the banks a number of recognitions and awards. Recently, the bank has received the Australian Business Awards on 22 July 2011 for recognition of its R&D of Travel Money Card (The Australian Business Awards, 2011). Prior to this latest award, it has also received a number of awards like “Innovative Mortgage Product of the Year”, “Credit Card Issuer of the Year”, “Best Online Banking”, and “Best Financial Service” and “Best Mobile Advertising or Marketing” awards and many more (Commonwealth Bank Group-2, 2011). Question 2: What is the approach adopted by the Australian commonwealth bank to manage in a global environment? The present environment of globalisation has rendered a situation in which firms are breaching geographical and political boundaries to reach out to new markets. This has intensified the levels of competition in the market with player using different business strategies to grab a share of the market. Commonwealth bank is an Australian bank that has been in the banking business in the nation for a certain time period Commonwealth Bank Group, 2011). The global financial services industry has been severely hit by the effects of the global recession that has led to considerable pressures. In this regard Commonwealth bank of Australia has implemented the BASEL II norm in its banking business so as to incorporate greater financial regulations into the bank to meet the risk disclosure norms and improve capital adequacy measures while increasing the disclosure levels to maintain greater transparency (Commonwealth Bank Group-a, 2011). The effectives of the bank’s policies can be analysed from the fact that the bank still has AA credit rating. Moreover in order to meet the needs of competition the bank has also improved its operations base by investing over one billion dollars towards modernising the core banking operations of the bank and to generate greater customer satisfaction. The bank also believes in providing better value to the customers in the form of excellent customer services. The company received a large number of accolades from various quarters for its continuous better services and value to the customers. Some of the new products launched to improve customer services include the launch of the contactless card facility for payments, launch of CommBiz that would ease internet banking and make it more secure. The implementation of this strategy would help customers to undertake banking practices and use the banking facilities across the year without any breaks thus giving sustainable competitive advantage. In addition to new products the bank has also entered into strategic alliances with Vietnam International bank in 2010 and also ventured into China by undertaking a partnership agreement with Bank of Communications in Shanghai thus enabling the entry of the bank into the lucrative Chinese market that holds immense potential for any organization by virtue of its explosive economic growth and a huge population. The bank also ventured into India with the opening up of a branch in Mumbai. The company seems to have fully leveraged the aspect of globalisation and has ventured into new market areas that hold immense potential. Moreover the large scale competition and saturation of existing market it is fairly a good strategy to penetrate the existing market by using new innovative products and better customer services to retain customers and expanding into the market into new areas to add to the customer base of the bank. Commonwealth Bank has also initiated a slew of measures including cross selling of related third party products including insurance and other such liability based products to increase its earnings and to increase its bouquet of services to its new as well as exiting customers (Commonwealth Bank Group-b, 2010, p.4-6). The entry of the bank into new territories would also help Commonwealth bank to scale up its operations and also minimise the risk of being located in a single locality. It would also give the company access to larger number of customers so as to generate greater sustainability and profitability. In view of the recent recession and its after effects the bank has also decided to work closely with the central bank in order to ensure minimal damage to the interest of the customers in case of tabulations in the macro economic scenario. All these aspects along with a proper feedback and evaluation tool would go about a long way in ensuring sustainable competitive advantage for the organization in the global environment. Reference Commonwealth Bank Group-1, (2011). About Us - Our company - History. [Online]. Available at: http://www.commbank.com.au/about-us/our-company/history/default.aspx. [Accessed on September 27, 2011]. Commonwealth Bank Group-2. (2011). Annual Report 2011. [Pdf]. Available at: http://www.commbank.com.au/about-us/shareholders/pdfs/annual-reports/2011_Commonwealth_Bank_Annual_Report.pdf. [Accessed on September 27, 2011]. Commonwealth Bank Group-a. (2011). Shareholder Center. [Online]. Available at: http://www.commbank.com.au/about-us/shareholders/financial-information/basel/default.aspx. [Accessed on September 27, 2011]. Commonwealth Bank Group-b. (2010). Annual Report 2010, [Pdf]. Available at: http://www.commbank.com.au/about-us/shareholders/pdfs/annual-reports/Commonwealth_Bank_2010_Annual_Report.pdf. . [Accessed on September 27, 2011]. Financial Services Innovation Centre. (2009). Research and Development in Financial Services and the Role of Innovation. [Pdf]. Available at: http://www.fs-innovation.org/files/research_and_development_in_financial_services_and_the_role_of_innovation.pdf. [Accessed on September 27, 2011]. The Australian Business Awards. (2011). The Australian Business Awards | Authentication Page - Commonwealth Bank. [Online]. Available at: http://www.businessawards.com.au/winners/2011/220/. [Accessed on September 27, 2011]. Read More
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