The commercial functions and the corporate direction of an organization are highly dependent on the aspect of business strategy. In commercial term, this means the tactical path which aims to maximize the growth of the business. Therefore, business strategy additionally chips in for profit maximization and growth assurance in the specified sector of business operation. The presence of business strategy in the banking sector too is instrumental in distinguishing between the factors of realizing the outcome and the approach of reaping profits. The aspect of customer services in banking is quite crucial to ensure that the firm can hold on to its strategies of growth and customer retention (Bharadwaj et al. 2013). Needless to say, it is only possible in the presence of appropriate business strategies. This report is based on the Commonwealth Bank and its strategies in the industry. This report entails a critical analysis of the strategies of the past five years along with the current strategies that are in practice within the organization. Additionally, the report would include recommended business strategies for the next five years. The stated recommendations have also been justified followed by a conclusion that includes an overview of the entire report regarding the strategic analysis of the bank. The banking sector fundamentally being a dynamic and fast-changing industry with multiple evolutionary decisions and strategies, this report serves the vital purpose of enhancing the know-how with regards to the aspect of business strategy.
Commonwealth Bank is based in Australia and is also operational in countries like US, UK, New Zealand and many countries of Asia. The bank is known for its integrated financial services. The business is based in Sydney of Australia and numbers of employees are around 51800. Commonwealth Bank was established by the Commonwealth Bank Act 1911. The bank was introduced in the market by Andrew Fisher labour government with favouritism of nationalization of the bank (Blackburn et al. 2013). The first branch that was opened by the bank was in Melbourne. The bank offers a variety of finance-related services including institutional and business banking, retail, insurance services, fund management, broking, and investment services. This bank was established in the year 1911 and got completely privatized in the year 1996. Commonwealth Bank is one of the major banks in Australia. In 1991, the bank became listed with Australian stock exchange. The commonwealth bank boasts of an efficient managerial team, committed to the customers as well as the investors and in perfect synergy with the aspect of corporate social responsibilities. The bank has a large number of overseas branches and it has its own codes of conduct and is focused on corporate governance for the professional management of its overall functions to ensure a better and consistent position in the banking industry (Verbeke, 2013).
This strategy was put into force by the bank ever since the bank felt the importance of the requirement of the factors of service and sales leadership.
The requirement of a change in the service operation was challenged in the wake of severe competitiveness in the banking industry. The Commonwealth Bank established the issue of complicated operation model to gain understanding about the needs and perceptions of the customers (Galbraith, 2014). Skilled and talented employees were required in large number to handle new process and tools for serving the customers in the finance industry.
The firm recognized the need of shifting the focus from product orientation to customer orientation. Though this has been helpful for the firm, risks of reduced focus on product development get higher with the increase in service orientation. Mithas et al (2013) stated that in service industry customer service does not exclude product attributes as services are hardly detachable from products for customers.
The bank earlier gave much effort in change programs through its own plan of communication and amendments. Moreover, this was not rightly viewed in favor of the bank since successive change programs often lead to complexity and lessening of the possibilities of reaching the aim. For addressing this issue the package of change aligned with a competent leadership and better arrangement of strategy as well as the strategies and perspectives of change were crucially effective. Hubbard et al (2014) pointed out that change cannot be made possible without better governance and leadership and this supposition is apparent in this strategy taken by the bank. For the Commonwealth Bank, the change package took into its ambit channels of distribution such as call centers, digital operations, and branches. A new set of transformation including transaction-migration efforts towards innovative technology and tools became the bank’s priority. Ability pick up training was also not an exception from the perspective of employees of the bank. According to Woerner & Wixom (2015) for the organization-specific process of change in the banking sector validation is required for calculating the efficiency of the rolled out process of change. Peng (2017) also was in agreement to the statement. The bank has achieved merit in this respect and due to this, the business is able to resolve existing problems, if in case.
This is in use for better technology and a better understanding of the needs among customers and the move is aligned with capabilities to improve satisfaction among customers.
This is the most realistic approach of making the front line people adapt to new policies and practices with the approval of their leaders. This creates efficiency on their parts to perform better in the line of organizational requirement. Thus, the bank has put effort to develop frontline leaders (Grover & Kohli, 2013).
This element incorporated practices of evaluation and measurement. The bank always focused on refining its business practices to make it the best from better. The sustainable move got into the need for immediate attention. Persistent cycles of performance, analysis with improvement as the possible outcome were aimed by the bank. This is crucial for the bank to affirm with the supposition by Akter et al (2016) which stated that sustainable moves are perceptibly helpful for process efficiency and capacity build-up for sustaining a position in the competition.
Figure-1 Greiner growth model
(Source: www.decisionstats.com)
The bank decided to adopt a proper growth plan for the organization with an assumption of inherent complexity prevalent in the growth process of a firm in the banking industry. Therefore, the manner of growth and responsible factors for the growth became essential factors for the firm to understand. This use of strategic management tool is to its elaboration, identical with the Greiner growth model. This helped the firm to identify growth and related crisis in the course of growth. But many scholars are critical of this assumption. Therefore, the efficacy of this strategy is questioned. Köseoglu et al (2013) opined that it is not compulsory for each firm to experience crises along with growth in their businesses. Spender (2014) agreed to say that this tool is more simplistic and many times do not consider the pace of growth in an external environment of business that is fast changing. Matt et al (2015) argued and opined that this tool is to identify growth to find out relative crises in business so that crises can be managed.
The social media strategy was adopted to hook up with maximum customers on the interactive platform. The purpose was to maximize the exchange of response with customers for becoming the most accessible bank throughout a day. The major reason for this is to have a customers’ community and to provide them better customers support while staying online all day long. Another purpose the bank tried to serve by its social media strategy is to improve the rate of engagement of its customers in the banking process. The social media strategy for the bank comes with a package that included a new strategy of delivering customers services, a better content strategy that launched many online gifts and promotional event for securing more service sales for the bank (Reich and Benbasat, 2013). The bank undertook multi-layered commitment which was aimed to be fulfilled through customer services by social media practices. The customer support team was focused on replying to any banking service related queries put forward by the customers. This was the adoption of a model of customer service that speaks for service delivery in hours beyond the branch working period. This creates a ground of customer satisfaction. Smith (2013) stated that consistent approach of an interactive session with customers must remain quality-centric as this process sometimes loses the required rhythm. Moreover, this system in the bank could not be understated since the net banking volume was not insignificant from the perspective of the number of customers showing interest in it. In fact, the bank experienced an increase of twenty percent in customer engagement. Therefore, the social media strategy has benefitted the bank. All existing customer service model is always considerate on the efficiency of customer support even if it is by means of the physical platform of communication interface as suggested by Bartlett (2013). However, this has not been agreed upon by Ghezzi (2013) who stated that physical presence of customers and service providers create a great deal of assistance to customers and online or virtual presence cannot suffice. But the banks’ move to make the customer satisfied in this industry through a better and flexible customer service is worth appreciating. The effectiveness is the most beneficial aspect of the social media strategy of the Commonwealth Bank and this has been coupled with a content strategy for achieving doubly convenience in favor of the customers. Moreover, many scholars including Zorio et al (2013) suggested that social media strategy no longer seems useful in banking industry unless the bank is able to quantify its profit in relation to social media related presence of its services and customers who are the possible recipient of the services. However, the bank authority’s optimism prevailed over the argument and its strategy of social media marketing and garnering maximum engagement of customers led by the ideal precedence of social media adoption for proper marketing and achievement of competitive advantage (Verbeke, 2013).
The present strategy of the business of Commonwealth Bank is not beyond the set vision of the business. Excellent services for customers and world-class financial services are the most looked after aspects by the bank to satisfy its stakeholders in the markets worldwide. The success of the strategies is measurable from improvement in metrics relating to customer services, the reputation of the bank reflected in the business growth and return to shareholders and satisfaction among communities (Chu et al. 2014). Business strategies of the bank are based on focuses on some core paths and these are performance improvement in customer service as well as business banking, operational excellence, team development and maintenance of trust among customers and other stakeholders, concept of progress and momentum, and sustainability move for helping society and environment (Annabi & McGann, 2013).
This is the most prioritized domain in the service spectrum of the bank. The banks want its customers to be its advisors and performance can thereby be always evaluated and improved. Measures that are taken by the banks in this respect are performance spontaneity at the point of sales, enhancement in customer engagement, the readiness of service and products for ensuring the value of money invested by the customers. Staff performance and customer service are similarly viewed as important and this improves customer satisfaction with regard to the services that are being offered. Norton and Pine (2013) suggested that employee engagement and employee performances are always pivotal to achieve success and customer services are not optimum without employee performance. Bartlett (2013) does not hold the same view and contended that customer service is a different proposition and cannot be mingled with the approach of staff performance. Only employee satisfaction is the final achievement only when separate approaches like customer service and staff performance are at maximum. Commonwealth Bank identifies the requirement of staff engagement and customer services separately with a common purpose in the form of satisfaction of clients (Švárová & Vrchota, 2014).
Some service dimensions in business banking focus on CommSee to assist employees in serving business banking clients in a better manner. CommBiz is the official name of service for delivering state-of-the-art services in the business banking segment. Banking footprint for the satisfaction of the relevant customers looks for expansion across all retail branches of the bank. The bank has planned to offer a more responsive method regarding wealth management. These measures are not worth appreciating in a short time frame since the bank cannot be overweighed relating to its share in a growing segment of the market (Robson, 2015).
The group-wide resource base always acknowledges the helpfulness of information technology for making a constant approach to service delivery. The plan aims at increasing the scale advantage. The Commonwealth Bank combines some initiatives in its search of excellence in technology and operation. These are in the form of an offer of leadership model for IT to maximize efficiency, and revitalization of system and processes with the support of strong information technology support. Moreover, the bank is in favor of introducing smarter sourcing. Making of efficient and lean processes are also highly prioritized. The lean process is an applied concept of lean management which works in line of approach of bringing continuous improvement based on a short-term approach to systematically ensure efficiency in process of service and production by waste minimization and improvement of services for customers (Granados & Gupta, 2013).
Figure 2: Lean process
(Source: www.pbexllc.com)
This strategy for process efficiency improvement is more suitable for a production unit that gets maximum advantage of the lean process. According to Burlton (2015), the lean process is efficient in maximizing production capacity by eliminating chances of wastage. This assumption, therefore, stands in favor of the manufacturing sector, unlike the banking industry that is engaged in service delivery by service improvement. The bank has focused on the lean process for improving its service efficiency.
Team building initiatives and the formation of collaborative working attitudes among employees are considered as the causes of better customer services for satisfaction in the banking industry. Talent management and mentoring are parts of employee management strategy of the bank to initiate business improvement. Work for community development and thoughtfulness on safety and better living of employees and people in society are in the priority list of the bank’s strategic realms (Scarborough, 2016).
Commonwealth Bank’s footprint in the banking industry is going to be unmatched with other competitors as believed by the management. The bank aims for developing a relationship with a maximum number of citizens of Australia as well as small and large corporations. Thereby, the bank aims for maintaining its distribution network to be of maximum convenience for the customers. Market focused product lines and portfolios are in high priority aspects of the bank. Among all these features of service dimension, the bank keeps its momentum of achievement of strategies high to meet the growing needs among the customers (Dittmann, 2013).
The bank drives its business through positive change and better business practices for aiming opportunity development for the community in the field of education and digital literacy development, well being and sustainable business practices. The bank is committed to meet local and international regulatory requirements in a sustainable approach for the satisfaction of customers. Commonwealth Bank has its own code of practices to deal with business clients and individuals to ensure more effectiveness. The bank aims to better its control and governance for the benefits of customers and communities. Corporate success is to a major extent dependent on success in sustainability practices which is related to the achievement of target or purposes through meeting sustainable business practices. Kossyva et al (2015) remarked many times a failed approach does not lift the corporate identity but spoils the name instead. In relation to the strategy mentioned here, the bank could be termed successful in its sustainability practices if it begins with verification and analysis process of moves of sustainability with the set code of business practices. However, the bank expects it to be helpful for long-term business improvement and implementation of sustainable practices (Buckley & Ghauri, 2015).
The Commonwealth Bank needs to be focused strategically on commercial and retail banking segment. This needs to be in progress much sooner for achieving better outcomes. This can support the bank to become simpler and better bank for every citizen. This is what many industry players call competitive advantage for the bank to keep its process simpler and qualified to be called banking for customers. This bank can leverage more for making a strong digital banking simple, safe and secured so that customers are completely reliant on the bank and its safety and security measures and process friendliness. This bank has not less than 6.5 million Australians as customers of digital banking. It is expected that the number of customers with the growing fondness of digital banking will multiply and need of transformation of business into simple and better digital banking is higher (Ryu et al. 2015).
Alongside this is also true that digital programme of the bank alone could not cause a strong position in the competitive market. Branch network is also increasing. Apart from this, there are contact centers of the bank. All of them need to work jointly to remain much relevant to customers in terms of service delivery. This can also sustain a leading position in the market.
The business and customer service, as well as wealth management, must not lose focus and are required to be based on absolute transparency and ethical base. The Directives of Australian Prudential Regulatory Authority and Royal commission need to be always complied with for ensuring that customers and stakeholders keep faith on the bank. The bank needs to be utmost careful about not committing mistakes on a repeated basis (Ryu et al. 2015).
The bank must take a better and fair approach to treat superannuation customers. A heightened degree of care and diligence need to be administered for becoming a reliable trustee of superannuation. To avoid further contravention the bank must follow the written guidelines of the Royal Commission. If required a special legal committee can be formed by the bank to seek advice to be consistently compliant of the law and statutory requirement of the banking and financial service sector (Buckley & Ghauri, 2015). Simplification of the banking process needs to be strategically fit to have a proper direction considering the future plan. Retail and commercial banking in the entire part of Australia and New Zealand can be strengthened both by digital programs to improve digital banking and branch and contact center networking to increase business volume (Ryu et al. 2015).
Commonwealth bank needs to upgrade its sustainable practices based on policies’ improvement. This must be viewed by the bank as part of core business strategies for making the business grow faster. Environmental aspects need to be on par with the guidelines of the Royal Commission.
Strategy to tackle climate change could support the firm to initiate measures for satisfying environment-related norms of the Royal Commission. The concerned policy must aim to restrict global warming within a certain level duly consented by the Royal Commission. Adoption of renewable substitutes and low carbon can suffice to keep the climate-related threats away (Buckley & Ghauri, 2015).
The bank could adopt a framework regarding environmental risk management to motivate it and other associates to take a moral approach to protect the environment. Additionally, the bank needs to review its policy periodically. Commonwealth Bank needs to act on climate disclosures and carbon reporting. The policy regarding disclosure of carbon emissions must be an extended effort in the line of commitment taken in 2014 so that disclosure related norms laid down by Royal commission can be satisfied.
Display of respects for human rights is another strategy to leverage its brand power and reputation among customers internally. The bank needs to adopt an approach for developing a statement of human rights position. This must adhere to the UN guiding principles on business as well as human rights (Buckley & Ghauri, 2015).
Banking leadership cannot be developed undermining face to face interaction in all branch and contact centers. Customers’ experiences can be elevated through assisted channels of communication which are branch networks. Australia alone does have 6.5 million customers of digital banking. A simple, safe and secure banking could be more helpful for business as well as individuals to rely on (Scarborough, 2016). The bank finds that around ninety percent of business comes from New Zealand and Australia and this could be better for the bank to strengthen its digital banking spectrum of business along with branch banking in these two countries. By managing superannuation customers the Commonwealth Bank can garner faith from the customers and Royal commission as well. Better treatment conferred to them is likely to lift up its reputation in the banking sector.
Commonwealth Bank can build on its reliability among stakeholders and regulatory body such as the Royal Commission. A responsible approach towards the environment could be clearly presented and this can power its business as well as social and sustainability drives (Scarborough, 2016). The framework of environmental risk management is likely to help the bank to support its change to the low-carbon economy. Additionally, commitments can be built on for minimizing direct impact related to the environment. Climate disclosure and carbon reporting can provide the firm with a strong quantitative base for identifying as well as performing on important chances for bringing improvement in carbon performance. The disclosure will improve the reporting of carbon performance. Accordingly, climate disclosure norms could be satisfied by the bank.
Human rights position statement can help the bank to make its stand clear involving consideration on human rights and its integration across the business realm as well as the supply chain. The bank could affirm more about its responsibility and activities for honoring human rights through its operations across the business performances (Scarborough, 2016).
Conclusion:
This report has shed knowledge about business strategy concerning the Commonwealth Bank which has a business presence across some major countries in the world. This report in analytical form is related to the past and present strategies of the bank. Moreover, recommended strategies for the bank and justification for the strategies have been presented at the end of the report. The bank has adequate focus on making consumers banking and business banking performance oriented by digitally enhanced platform. Focus on team development; change initiatives and corporate social responsibility are prime aspects of its strategies. Banking through digital and branch operation could initiate more growth in Australia and New Zealand. The bank must have strong compliance about environmental aspects in alignment with the requirement of the Royal Commission. Sustainability drives through climate as well as carbon disclosure can initiate better outcomes. Environmental risk management framework can ensure the bank to change to low carbon economy and brand perception could become more developed.
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