Innovative Strategies

Assignment 1

Yash Mani

13485812

Part A: Preliminary analysis (up to 1000 words) of the strategic initiative you are investigating using Rumelt’s “Kernel” framework to provide an overview of the strategic issue and how your initiative will address it. This will be submitted for feedback, and the input needs to be reflected in the final Business Case.

What’s going on here?

For this assignment, I have decided to be relatively ambitious and investigate the possibility of starting a bank. It isn’t often that one gets the opportunity to do an MBA and have access to a plethora of expertise, tools and supportive peers. So, why not?

Financial institutions today have come a long way from the old Roman temples that established the first money lending institutions to now, where they are some of the largest companies in the world. Although the fundamental business practices have not changed, banks are now more critical than ever to support government policies, to keep economies stable, to finance future businesses and allow people to be more secure. As banks invest the general public funds to support businesses and help the country grow, their relationship with society is indispensable. However, as banks have transformed into these major companies, their goals have shifted towards profits. To enable growth and trade, banks invest in the greatest returns, which often comes at the cost of the planet and its decay. The greed of profits has turned financial institutions into consumer-crushing oligopolies (1). Such that the very lenders that are meant to support society have been abusing its customers and its economy.

Financial institutions are also struggling to keep up with the pace of other technology companies that are quickly becoming the most valuable brands in the world. With the rise of technology and increased one to one connection with brands, customer experience is at the forefront of the largest companies. Technology companies such as Google, Amazon and Apple are gaining momentum with consumers now trusting these companies more than financial institutions or any other institution. As traditional banks grapple their conventional methods, consumers are shying away from them and moving to more sustainable offerings. EY surveyed over 55,000 people around the world to measure the state of bank relevance (2). From the results, 75% of consumers still consider a traditional financial institution to be their primary bank. However, 4 out of 10 customers are excited at the prospect of offerings alternative companies can offer them.

The relevance of banks is declining. The study also revealed that one-third of people do not see any differentiation in the products offered by the banks. It is difficult to comprehend what the role of the traditional bank today is as they do not provide any benefits to the consumer.

Sustainable Business and Sustainable Development

In a world where the global community is approaching nine billion people, whose primary needs have to be met, where natural resources are growing increasingly rare, and climate irregularities are becoming more prevalent. Organisations are at the tipping-point when growth is now interconnected to sustainable development goals. When it comes to sustainability issues, information is vital, and there is no shortage of data on how the global economy and its future development are inevitably linked to environmental and social sustainability issues. A new program to banking is needed to adapt to new realities and keep pace with these shifts.

The Kernel

With the above issues, my project intends to reform traditional banking to build a more dynamic, responsible and equitable financial platform that integrates environmental and social considerations into the overall business strategy. With consumer confidence at an all-time low for the legacy big four banks, the Australian market needs to challenge the traditional lenders with more personalised and innovative service. The platform will focus primarily on the customer and sustainable development goals with the interest rates and financing regulated by the nature of the consumers day to day activities.