The Impact Of Crypto Currencies On ANZ Banks: A Study Essay.

1). Strategic Background

a. This report provides background to the case study organisation.

b. Reference to scholarly articles is required.

2). Strategic Environment

a. This report provides a PESTEL analysis for the case study organisation.

b. Reference to scholarly articles is required.

3). Competitive Environment

a. This report provides a five forces analysis of industry in which the case study organisation operates.

b. Reference to scholarly articles is required.

4). Strategic Analysis

a. This report provides an overview of the potential strategic dilemma for the case study organisation that is being created by cryptocurrencies. The report provides recommendations to the case study organisation on how to address the risks created by cyrptocurrencies. The report provides a justification for these recommendations.

b. Reference to scholarly articles is required.

Advantages of Crypto Currencies

Crypto Currency Background with ANZ 

When crypto currencies approached the market, the banks were also focused upon and public were making money out of the transactions and investing within the currencies. These currencies presently are the most talked about in the market as they operate for work like the method of swap with usage of cryptography for safe dealings. Such crypto money make the use of the decentralized electronic money & systems of banking (Bhosale & Mavale, 2018). Decentralized control of each type of currency always works by the way of block chain which is public database and is open for everyone. It is used for making the transactions and other functions.  If a person looks for the certainty in the delivery of the money transferred and also want to ensure that the transaction would go to the same person it should be delivered to, then these crypto currencies can help him. This makes it all a great deal to be done. The block chain does this for the crypto currencies which need to be transferred to any other person. And this is known to be as Bitcoin. This currency is digitized and could simply be held electronically. No one else can take power over it.  This increases the industry with usage of the software that resolves the issues of mathematics (Bech & Garratt, 2017).

Bad effect of the banking existed such as the reason of the dangerous rise in currency, downfall in the buying of power & living regularities of the people, tax which is invisible for all people for support in find wars & social wellbeing programs were the reasons. Bitcoin was the one which could bring all crashes down. In 2016, many public in banking companies & organizations were flippant of Bitcoin (Berentsen & Schär, 2018).

In the year 2015, ANZ group desired to find out about Bitcoin out & they thought of Bitcoin as a danger to them and their business & also at the same time though if Bitcoin might help their business to grow. All this was confusing to ANZ group of authorities. Then Nigel Dobson, the GM of the wholesale digital transformation of ANZ, set out to search all about Bitcoin and other currencies.   He then took out each little detail about the same. Now they had number of proofs for the same concept and how these currencies work (Durden, 2017). Dobson felt that at least there is a good part of the transaction is the resolution of the compromise. Therefore, Dobson had evidences about concept of the other banks and organization about both the processes. Though, the person who spoke on the behalf of ANZ informed that they won’t exclude users buying the digital currencies.

Challenges Faced by Banks

Strategic Environment

Environment study of any company could be done by performing the Pestle analysis. The pestle for ANZ follows below:

• Political Factors: These factors verify the degree to which the authorities like government influences the economy or it can influence any organization as well. These authorities can anytime impose policies relate to tax or can change norms and polices which should benefit people in the end. The laws which are new for the currencies that work digitally and working in Australia were being put into practice by AUSTRAC. It rose up chances for division of financial intelligence and data related to use of currencies that operate digitally with the shareholders in any industry. This works in both way positively & negatively for ANZ. Assertive because crimes like breaches of data could be fought with and negative because the currencies have now taken huge part in the market(Austrac, 2018).
• Economic Factors: These factors always studies about the organization’s performance with respect to the economy considering the long term stability.  Prior to the crypto currencies, the monetary transactions were allowed by central banks. Since Bit coin’s inception, the scenario in the market has completely changes. Now the power has shifted from all the banks to block chain. This helps the economy on the whole and hence, ANZ too. The power could be challenges with people having access to crypto Currencies(Jain, 2017).
• Social Factors: The environment which is social is examines the market and trends of culture and demographics are verified. There are a large number of people who are under banked in US. With the inception of the crypto currency, people are recognizing the importance of money, economy and many other factors. Issues which are social illustrates that it is to include swath of genuine concerns and many of these kinds of issues are related with the Bitcoin. Yet this idea does not relate to the issues(Rastogi & Trivedi, 2016).
• Technological Factors: This analysis is about the new interventions being done that may help or impact the firm in any way. The crypto currencies do not require the platform or online portal etc to work on.  It works on the basis of code and software which facilitates transactions with no services and also provides the guarantee of the delivery that it will reach to the exact person on time. This process affected the technology very much which was being utilized by banks earlier like ANZ.
• Legal Factors: They refer to atmosphere of business in particular nation whilst in that country exist policies which are abided by all the firms in the country. Laws related to the crypto currency were being passed in Australia which are passed out by AUSTRAC. ANZ and other banks were affected by that(Blanc, 2016).
• Environmental Factors: This refers to the factors that may impact the firm in terms of climate and environment. Bitcoin is been given another name which is Virtual gold because it was incepted in the procedure called mining. The combining of the mining code online needs to be of high powered in the usage that is needs by the PC. Therefore, much more power is required. This may lead to global warming (Gupta, 2013).

Competitive Environment

The Competitive market of any company is done by analysis the five factors given by Porter. They are as follows in terms of ANZ.

• New Entrant Threats: ANZ was in danger by development of the crypto currencies because of this currency money and very specifically Bitcoin; banks were facing lots of problems. They also thought of the danger that these currencies will be accepted by the people and so by their competitors as well(DeVries, 2016).
• Supplier’s Power: There were multiple firms which desired to collaborate with these currencies and particularly Bitcoin because it was growing very fast in the market. The share of Bitcoin fluctuated very quickly and in big numbers and same was with some other currencies too. Supplier’s power became high due to the currencies booming that time. Therefore, all these factors were new threat for ANZ group(Ven, 2017).
• Buyer’s Power: Similarly to the supplier’s power, the buyer’s power also became a threat to ANZ. The firm primarily was not into digital currencies. At the time when Dobson found about this, he got intrigued by the idea. Then, the collaboration was done with the larger companies with respect to Bitcoin.  Therefore, the buyer’s power went low.
• Rivalry: The reasons which are mentioned above all are the threats for ANZ group.
• Substitute’s threats: Since the crypto currencies came into picture, the market started fluctuating like anything. The market was really not predicted by any of the people. ANZ was dealing with the money in normal terms like it used to be before and Bitcoin or other crypto currencies brought a new threat to ANZ. No one absolutely would use the conventional technique of transactions now(Gandal & Halaburda, 2014).

Strategic Analysis of Bitcoin

Bitcoin and any other crypto currency all are the same in way. Bitcoin was incepted in the year 2009 by Satoshi Nakamoto.  In the crypto currencies, all kinds of transaction are being done by itself without having any third party around or any platform too. Such currencies can help in the usage of the purposes like Expedia, for booking the furniture online, etc. Recently in the years 2016 to 2017, Bitcoin caught attention of many people at the same time and that is why the prices of this went high in thousands of Dollars at the same time.

Commerce of internet is dependent on the entirely financial organizations that serve like the 3rd parties for allowance of payment. These schemes work for transactions yet there lies issues in the given model.  This model is weak in stopping provoking problems. The transactions which cannot be reversed cannot be made possible since financial firms are unable to ignore disruptions. Therefore, the cost of provoking rises up that which stops the size of practical transaction and also gives away the chance that exists for the small enterprise transactions (D’Alfonso et al., 2016).

Each holder transfers the coin to the other by digital signatures giving out the key to the other holder by combining this with the end of the coin.  The person who is paying can verify the signatures to the chain of holders. The issue comes when the payee is unable to verify the validity of the expenditure being done or more than once i.e. if the con is spent only once or not. This is t he issue which is mentioned in the study of Bitcoin.

The advice & also the way out to the issue is that the development of the faith in central authority which could be able to monitor every transaction for this double coin spending is to be done. When transaction process is completed, coin must go back to developed power for issue of coin and they are issued by authority are the ones to be believed on and rest must not be trusted. This process looks exactly same like bank within which the whole system is dependent on the firm’s being run by the authority because each amount is mandate to go via them only. Within the procedure, the payee is required for verifying that he did sign the prior transactions or not. The major objective is that the transactions that were done prior were only the ones to be believed on and the attempts which were made later were not being looked upon for double spending. People have to be aware and conscious about the transactional being done by him so that they can confirm about the other or fake transactions and recognize them. The model which is mint based gives the authority to be conscious of all the transactions and to judge which the primary transaction that was done is. For completion of procedure with no honest party, transactions must subsist by announcing them in public. Also, there is a good requirement of the system within which the candidates consents on the similar and solitary history of the order in which they expected the money.

Strategic Environment

Conclusion:

The report mentioned above emphasizes on the ANZ bank in terms of the Crypto Currencies which have become famous in recent years in 2016 – 2017. The link between both the two is shared with doing the analysis of the strategic environment and competitive environment with the help of Pestle and Porter analysis. This analysis is done with respect of the crypto currencies and particularly Bitcoin.  However, the currencies were beneficial for the public in multiple ways like electronic transaction and digital currencies since came into the market trends etc. yet banks and other few firms faced few problems because of these currencies (Srokosz & Kopygciaeski, 2015). In the end, the study of the currency of “Bitcoin: A Peer-to-Peer Electronic Cash System” was mentioned with some of the issues, that are discussed and some recommendation based on the problems are shared in this report.

Australia and New Zealand Group which is also known as ANZ in short is an old name in banks which is considered to be the fourth biggest bank of Australia. It is in business since a very long time and the business it has is of retail and commercial banking. This organization presently operates in approximately 32 locations across world and this is the reason behind the bank getting the title of largest banking group. Its listing is done in the top 50 banks in the world and this can simply be considered a great honor this bank has got in itself. The main objective of the organization is to become super regional bank. The total numbers of employees in the company are 48,000 including all the offices across world. ANZ looks forward to develop in Asia Pacific region and desires to source approximately 30% of the profit earned from American region and Asia Pacific (ANZ, 2018).

References:

Austrac, 2018. New Australian laws to regulate cryptocurrency providers. [Online] Available at: https://www.austrac.gov.au/media/media-releases/new-australian-laws-regulate-cryptocurrency-providers [Accessed 7 June 2018].

Bech, M. & Garratt, R., 2017. Central bank cryptocurrencies. [Online] Available at: https://www.bis.org/publ/qtrpdf/r_qt1709f.pdf [Accessed 7 June 2018].

Berentsen, A. & Schär, F., 2018. A Short Introduction to the World of Cryptocurrencies. Federal Reserve Bank of St. Louis REVIEW, 100(1), pp.1-16.

Bhosale, J. & Mavale, S., 2018. Volatility of select Crypto-currencies: A comparison of Bitcoin, Ethereum and Litecoin. Annual Research Journal of SCMS, 6.

Blanc, G.L., 2016. The effects of crytocurrencies on the banking. [Online] Available at: https://commons.emich.edu/cgi/viewcontent.cgi?article=1498&context=honors [Accessed 7 June 2018].

D’Alfonso, .A., Langer, P. & Vandelis, Z., 2016. The Future of Cryptocurrency. [Online] Available at: https://www.economist.com/sites/default/files/the_future_of_cryptocurrency.pdf [Accessed 7 June 2018].

DeVries, P.D., 2016. An Analysis of Cryptocurrency, Bitcoin, and the Future. International Journal of Business Management and Commerce , 1(2).

Durden, T., 2017. Central Banks Are Driving Many To Cryptocurrencies. [Online] Available at: https://www.zerohedge.com/news/2017-06-17/central-banks-are-driving-many-cryptocurrencies [Accessed 7 June 2018].

Gupta, A., 2013. Environment & PEST Analysis: An Approach to External. International Journal of Modern Social Sciences, 2(1), pp.34-43.

Jain, Y., 2017. 5 Impacts of Bitcoin on Economy, Banking & Finance. [Online] Available at: https://www.newgenapps.com/blog/impact-of-bitcoins-on-the-economy-banks-finance [Accessed 17 May 2018].

Rastogi, N. & Trivedi, M.K., 2016. PESTLE TECHNIQUE – A TOOL TO IDENTIFY EXTERNAL RISKS IN CONSTRUCTION PROJECTS. International Research Journal of Engineering and Technology , 3(1).

Srokosz, W. & Kopygciaeski, T., 2015. LEGAL AND ECONOMIC ANALYSIS OF THE CRYPTOCURRENCIES IMPACT ON THE FINANCIAL SYSTEM STABILITY. Journal of Teaching and Education, 4(2), pp.619-27.

Ven, F.V.D., 2017. Blockchain & Porter’s 5 forces: disrupting the financial power balance. [Online] Available at: https://medium.com/@frankvandeven/blockchain-porters-5-forces-disrupting-the-financial-power-balance-ee5cb58354db [Accessed 17 May 2018].