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Business Model Canvas of Digital Innovation

Discuss about the digital innovation in your chosen industry.

The digital innovation of an industry is analyzed in this report. Digital innovation is the key driving force for business development in any industry nowadays (Dapp et al., 2015). The chosen company in this report is The Development Bank of Singapore. The chosen organization is taken to be analyzed and evaluated on the basis of digital innovation. The purpose of this report is to analyze the digital innovation in the chosen organization using business model canvas and analysis of digital trends and technologies in the chosen company.

The outline of this report is business model canvas of digital innovation in the chosen company, analysis of technology and trends of digital innovation in the chosen company and recommendations.

The chosen organization is The Development Bank of Singapore on which the analysis will be done in context of the digital innovation. The various factors of digital innovation in the chosen organization are going to be analyzed through Business Canvas Model, and the trends and technologies in digital innovation are also discussed.

The model is designed to describe a business structure and operations on the basis of nine different components (Ojasalo and Ojasalo, 2015).The components are Value Proposition, Customer Segments, Channels, Customer Relationships, Key Activities, Key Resources, Partners, Cost Structure and Revenue Streams.

Customer Segment is the first component and the most important in this model. Target customers of banking industry in context of digital innovation are mainly existing customers of the bank who are working people. They do not have time to go to bank and do transactions or other work related to bank in traditional way. The other customer segment is small and medium-size enterprises (SMEs) who are using internet and the use will increase across the globe (Raju, Bai and Chaitanya, 2014). The digital innovations have helped the working people and young generations to save their time and do the banking related work from anywhere at any time such as net banking or digital wallets (Lipton, Shrier and Pentland, 2016). Value proposition is the second component in this model. The introduction of digital innovation in banking industry targeted the customer segment the bank is trying to address. There are various services or products that bank can offer. Some of them are delivering intuitive interface, no-defect and no-customer-leakage culture, with real-time processors and environment, personalized web experience, social and mobile applications and integrated multichannel access (Chen and Lam, 2014). These are the features that can be offered to the target customers to position itself in the market across the globe. Channel is the third component in this model. The connection between customer segment and value proposition in digital banking can be achieved through branch technology, internet technology, mobile technology and business intelligent technology (Fung and Halaburda, 2016). Branch technology provides information and transaction terminals, interaction through media and multi functional ATMs usage by customers. Internet Technology provides internet banking and brokerage portals, and platforms for peer to peer interaction. Mobile technology provides mobile banking and brokerage, and digital wallets and digital payments (Gupta, 2013). Business intelligent technology provides customer analytics, synchronization of channels and predictive modeling of business purposes. Customer Relationships is the fourth component in this model. The customer relationships in digital banking have been in rise due to popularization of internet globally. The increase rise in smartphones has increased the mobility of interaction among customers and bank. The mobile banking has transformed the operations of bank as mobile banking and paperless transactions are on rise (Shrier, Canale and Pentland, 2016). The social media is another strong platform where customers can interact with bank. Data analytics is also adopted by bank to store customer’s details and use it to interact with them efficiently. The customer relationship is established majorly through social media platform and mobile banking. Revenue Streams is the fifth component in this model. The revenue in banks in the context of digital banking is going to rise in future due to the potentiality that the digital innovation provides (Drig? and Isac, 2014). The transaction-based revenue, issuing and lending of credit card, providing value-added services for merchants and revenue from digitizing invoice payments are the ways through which banks can generate revenue streams. The transaction-based revenue in digital banking is done through mobile banking and the bank should become merchant acquirer for all mobile transactions generating revenue. This is because as a merchant acquirer, the bank in digital age could deliver payment transactions at a competitive rate to merchants and can earn significantly more than traditional way. Issuing and lending credit card is another useful technique and the revenue is generated through providing convenient transition to customers (Tornjanski et al., 2015). Value added services for merchants will generate revenue with a successful mobile payment offering, this will attract merchants to manage and accept payments from banks. Revenue from digitizing invoice payments is growing as there is no need of generating paper-based invoices and customers can be paid directly in their account (Pepper, Garrity and LaSalle, 2016). It is a hassle-free technique to generate revenue for digital banking. Key Resources is the sixth component in this model. The key resources are capital, sales channel, branches, employees and sale broker for lending. The capital is required for maintain the overall assets of banks and to provide efficient service to customers within the structure of capital. The sales channels are required to generate sales to generate the revenue and popularize the bank among the customers. The branches across the city or country is required to expand the services of bank operations in digital age to different customer segments and generate revenue from these branches also (Meigounpoory, Rezvani and Afshar, 2015). The employees in digital banking are required as the bank is still in process to get full advantage of technologies, thus employees are needed to interact with customers through online platforms. The sales broker for lending is also required in bank because they are the middlemen who impact the bank externally by generating revenue. Key Activities is the seventh component in this model. Key Activities are payments, lending and deposits. The payments are the foremost activity for banks in digital age and nowadays it is done through net banking or mobile payments. The lending is done through digital applications in banks nowadays and it is called digital lending. The deposits are done through digital applications or net banking. Key Partnerships is the eighth component in this model. Key partners are digital partners, merchants, payment networks, Telcos, technology partners and logistics partners (Dapp and Slomka, 2015). These are the partners who help the banks in digital age to generate services and revenue. Cost Structure is the ninth component in this model. The cost structure is credit pricing, compliance cost, and capital cost and broker fees. These are the cost associated with the developing and functioning of model.

Analysis of Technology and Trends

The criteria for adopting technologies in The Development Bank of Singapore include some steps as stated in Forbes (Forbes.com., 2017). The first step taken by them was to eliminate waste and adopt the latest technology and trends. They eliminated all previous methods of traditional banking and modified all the processes of operation in banking. The next step was to develop and build a design which is customer-centered and this was the process to improve the functioning of the bank. They changed the bank’s call center script which helped the bank to show empathy towards customers who have any problems, explain the process of operations to the customers, and lastly provide mobile numbers to customers to help them in any emergency in future (Hirt and Willmott, 2014). This design proved to be game changer for the bank. The bank developed a decision making process that required people to ask permission from senior managers. This will help them to analyze the delays or failures to respond in real time. The next step was to introduce change in innovation. The bank replaced the executive trainings with Hackathons. They introduced Digibank that is entirely mobile-centric banking and this provided them to do bank operations virtually with no additional investment (Dbs.com., 2017). These steps helped them to become the best digital bank in the world and they have proved to be a game changer in banking industry. The bank introduced Digibank which provided paperless, signature less and branchless banking that will help customers to operate completely digitally having in-built features such as biometrics and artificial intelligence technology. This helped them to have virtual assistant anywhere at anyplace. The bank adopted cloud-based productivity technology in the workplace to transform the operations of bank.

  • To use robust technology to achieve a vibrant digital future of business operations in bank.
  • To commit significant resources before embarking on any digital information in the bank.
  • To prioritize well to cope up with the constant flow of new ideas and methods for business growth in the bank.
  • To introduce and develop digital innovations, the bank should hire digital practitioners and particular domain expert. This will enhance the digital strategies that exist and that is going to be implemented.

Conclusion

The above discussions conclude that digital innovation in the chosen bank has helped them to improve their banking operations and satisfy their customer’s need in every possible way. The report discusses the overall process of introducing, developing and operating digital innovation in the bank. The report focuses on the current technologies and trends adopted by the bank and their future scope. Therefore, it can be concluded that the digital innovation is important in every industry and it should be adopted with proper strategies and development

References

Chen, J. and Lam, K., 2014. How to prepare for Asia’s digital-banking boom. McKinsey and Company, available at: www.mckinsey.com/insights/financial_services/how_to_ prepare_for_asias_digital_banking_boom (accessed 21 August 2014).

Dapp, T. and Slomka, L., 2015. Fintech reloaded–Traditional banks as digital ecosystems. Publication of the German original.

Dapp, T., Slomka, L., AG, D.B. and Hoffmann, R., 2014. Fintech–The digital (r) evolution in the financial sector. Deutsche Bank Research”, Frankfurt am Main.

Dbs.com., 2017. DBS launches digibank, an entire bank in the phone, in Indonesia. [online] Available at: https://www.dbs.com/indonesia-bh/newsroom/DBS_launches_digibank_an_entire_bank_in_the_phone_in_Indonesia [Accessed 28 Dec. 2017].

Drig?, I. and Isac, C., 2014. E-banking services-features, challenges and benefits. Annals of the University of Petro?ani, Economics, 14(1), pp.41-50.

Forbes.com., 2017. Forbes Welcome. [online] Available at: https://www.forbes.com/sites/jasonbloomberg/2016/12/23/how-dbs-bank-became-the-best-digital-bank-in-the-world-by-becoming-invisible/#6afbcf193061 [Accessed 28 Dec. 2017].

Fung, B.S. and Halaburda, H., 2016. Central Bank Digital Currencies: A Framework for Assessing Why and How. Bank of Canada Staff Discussion Paper, 22.

Gupta, S., 2013. The mobile banking and payment revolution. European Financial Review, 2, pp.3-6.

Hirt, M. and Willmott, P., 2014. Strategic principles for competing in the digital age. McKinsey Quarterly, 5, p.1.

Lipton, A., Shrier, D. and Pentland, A., 2016. Digital Banking Manifesto: The End of Banks?. Massachusetts Institute of Technology.

Meigounpoory, M.R., Rezvani, M. and Afshar, M., 2015. Identification of service innovation dimensions in service organizations. International Journal of Management, Accounting and Economics, 2(7), pp.737-748.

Ojasalo, J. and Ojasalo, K., 2015, June. Service logic business model canvas: implications for service business. In Proceedings of the QUIS14 Quality in Service Conference (pp. 18-21).

Pepper, R., Garrity, J. and LaSalle, C., 2016. Cross-Border Data Flows, Digital Innovation, and Economic Growth. The Global Information Technology Report 2016: Innovating in the Digital Economy, pp.39-40.

Raju, P.S., Bai, D.V.R. and Chaitanya, G.K., 2014. Data mining: techniques for enhancing customer relationship management in banking and retail industries. International Journal of Innovative Research in Computer and Communication Engineering, 2(1), pp.2650-2657.

Shrier, D., Canale, G. and Pentland, A., 2016. Mobile money & payments: Technology trends.

Tornjanski, V., Marinkovi?, S., S?voiu, G. and ?udanov, M., 2015. A Need for Research Focus Shift: Banking Industry in the Age of Digital Disruption. Econophysics, Sociophysics& Other Multidisciplinary Sciences Journal (ESMSJ), 5(3), pp.11-15

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