Creating entrepreneurial change CIM ASSIGNMENTS

CREATING ENTREPRENEURIAL CHANGE|40053634|JULY 2020
1
ASSIGNMENT SUBMISSION FRONT SHEET
Please complete all sections and attach to the front of your assignment
CIM Membership Number: 40053634
Module Title: Creating Entrepreneurial Change
Qualification: Level 7 Postgraduate diploma in professional marketing
Accredited Study Centre: Cambridge College of Business Management
Candidate Declaration Statement:
“I confirm that I have applied, to all tasks, the CIM policies relating to (please tick relevant boxes
to confirm):
• Page/Word count* ☒
• Plagiarism ☒
• Collusion ☒
* dependent on the requirements of the assessment brief.
By checking the box below: I certify that
• this assignment/project is the result of my own independent work/investigation except where
otherwise stated. All other sources are referenced and a bibliography is appended.
• the work submitted has not been previously accepted in substance for any other award and
has been submitted in accordance with the set requirements. I further confirm that I have not
shared my work with other candidates.
• this assignment is free from plagiarism and I understand that the assignment may be checked
for plagiarism and may be transferred and stored in a database for the purposes of data-
matching to help detect plagiarism in future”.
Tick to confirm ☒

2
I hereby give consent for this assignment/project, if accepted, to be used by CIM for the
dissemination of best practice and/or other appropriate purposes, on the understanding that the
assignment/project is anonymised.
Tick here to opt out ☐
Checklist for Candidate
Format and Presentation
• Have you included the module title, assessment session and your CIM
membership number in the header of each page?
☒
• Has the word/page count been adhered to? ☒
• Has the word count for each task and total for the submission been added to
the front cover of your assignment?
☒
• Have you spell checked your work and carried out a final proof read? ☒
• Have tables/diagrams/images been made context-specific and
numbered/labelled accordingly?
☒
• Has Harvard Referencing been followed and used as required? ☒
• Are all appendices clearly labelled and relevant to the assessment requirement? ☒
• Has a bibliography been included (where required)? ☒
• Are page numbers correct and tasks clearly identified? ☒

3

4
TABLE OF CONTENTS
TASK 1.A COMPANY BACKGROUND – COMMERCIAL BANK OF CEYLON (PLC)......................................................................7
1.A.1 – TYPE AND SIZE OF COMMERCIAL BANK....................................................................................................................7
1.A.2 PRODUCT AND SERVICES.............................................................................................................................................7
1.A.3 CUSTOMER BASE .........................................................................................................................................................7
1.A.4 MAIN COMPETITORS...................................................................................................................................................7
1.A.5 KEY INTERNAL AND EXTERNAL STAKEHOLDERS...........................................................................................................8
1.A.6 KEY CUSTOMER SEGMENT...........................................................................................................................................8
1.A.7 THEME CHOSEN – CUSTOMER LOYALTY......................................................................................................................8
TASK 1.B.TWO ASPECTS OF THE MACRO ENVIRONMENT THAT HAVE HAD THE MOST SUBSTANTIAL IMPACT ON
COMMERCIAL BANK DURING THE PAST YEARS TO INCREASE CUSTOMER LOYALTY. ...........................................................9
TASK 1.B.1 CHANGES IN TECHNOLOGY THAT IMPACTED COMMERCIAL BANK FOR THE PAST 5 YEARS...............................9
TASK 1.B.2 SOCIO CULTURAL CHANGES THAT IMPACTED COMMERCIAL BANK FOR THE PAST 5 YEARS............................10
TASK 1.C DISRUPTIVE INNOVATION AND ASSESSMENT ON COMPETITOR, RISK AND IMPACT ANALYSIS ON HOW THE
CURRENT INNOVATIONS HAS IMPACTED THE BANKING INDUSTRY TO INCREASE CUSTOMER LOYALTY...........................11
TASK 1.C.1 DISRUPTIVE INNOVATION AND THE IMPACT ON THE BANKING SECTOR TO INCREASE CUSTOMER LOYALTY..11
TASK 1.C.2 CRITICAL ASSESSMENT OF COMPETITOR, RISK AND IMPACT TO INCREASE CUSTOMER LOYALTY....................12
TASK 2.A INNOVATION AUDIT TO ANALYSE THE ORGANIZATION’S CAPABILITY AND INNOVATION CAPABILITY FOR
DEVELOPING AND MANAGING CHANGE FOR IMPROVING CUSTOMER LOYALTY...............................................................15
TASK 2.A.1 INNOVATION AUDIT (DRUMMOND & ENSOR, 1999)........................................................................................15
TASK 2.A.2 MCKINSEY’S 7S FRAMEWORK...........................................................................................................................15
TASK 2.B THREE ENTRPRENEURIAL APPROACHES THAT COULD BE USED TO INCREASE CUSTOMER LOYALTY FOR
COMMERCIAL BANK. ..........................................................................................................................................................18
TASK 2.B.1 EFFECTUATION APPROACH TO INCREASE CUSTOMER LOYALTY.......................................................................18
TASK 2.B.2 KAIZEN PROCESS TO INCREASE CUSTOMER LOYALTY.......................................................................................18
TASK 2.B.3 LEAN THINKING TO INCREASE CUSTOMER LOYALTY.........................................................................................19
TASK 2.B.4 HORIZON SCANNING.........................................................................................................................................20
TASK 3.A VALUE PROPOSITIONS CANVASES THAT ADD VALUE TO ACHIEVEING INCREASED CUSTOMER LOYALTY. ..........23
TASK 3.A.1 ARTIFICIAL INTELLIGENCE MOBILE APPS TO INCREASE CUSTOMER LOYALTY ..................................................23
TASK 3.A.2 BLOCKCHAIN PAYMENTS TO INCREASE CUSTOMER LOYALTY..........................................................................24
TASK 3.B TWO APPROPRIATE MEASUREMENT TECHNIQUES TO MEASURE THE IMPACT THE TWO INNOVATIONS ..........26
TASK 3.B.1 BALANCE SCORE CARD (S. KAPLAN & P.NORTON, 1992) ..................................................................................26
TASK 3.B.2 COST BENEFIT ANALYSIS (Refer Annexure 4)....................................................................................................27
TASK 3.B.3 AI ENABLED MOBILE APP..................................................................................................................................27
TASK 3.B.4 BLOCKCHAIN.....................................................................................................................................................27
TASK 3.C CHANGE MANAGEMENT STRATEGY FOR IMPROVING THE INNOVATION CULTURE WITH COMMERCIAL BANK.29
3.C.1 STAKEHOLDER ANALYSIS FOR IMPLEMENTING ARTIFICIAL INTELLIGENCE MOBILE APP (Refer Annexure 5 ) ...........29
3.C.2 JOHNSON’S AND SCHOLES FSA FRAMEWORK ...........................................................................................................29

5
3.C.3 RESOURCE CAPABILITY ANALYSIS ..............................................................................................................................29
3.C. 4 KOTTER’S CHANGE MANAGEMENT PLAN (Diaz, 2017) .............................................................................................30
3.C.5 RISK ASSESSMENT......................................................................................................................................................30
TASK 3.C.7 POTENTIAL BENEFITS AND BARRIERS IN IMPLEMENTING THE STRATEGY ........................................................31
LIST OF ANNEXURES
ANNEXURE 1 – INDUSTRY ANALYSIS...................................................................................................................................37
ANNEXURE 2 – PESTLE ANALYSIS........................................................................................................................................38
ANNEXURE 3 – COMPETITOR CAPABILITY ANALYSIS ..........................................................................................................40
ANNEXURE 4 - LEWIN’S FORCE FIELD ANALYSIS .................................................................................................................42
ANNEXURE 5 – MENDELOW’S MATRIX...............................................................................................................................43
LIST OF TABLES
Table 1 – product range........................................................................................................................................................7
Table 2 – key customer segment..........................................................................................................................................8
Table 3 – technological impact on Commercial bank............................................................................................................9
Table 4 - socio cultural impact on Commercial Bank ..........................................................................................................10
Table 5 - risk, impact, competitor analysis..........................................................................................................................13
Table 6- innovation audit...................................................................................................................................................15
Table 7 -Mckinsey’s 7Ss ......................................................................................................................................................17
Table 8 -Effectuation ..........................................................................................................................................................18
Table 9 -Kaizen Approach ...................................................................................................................................................19
Table 10 – Lean thinking.....................................................................................................................................................20
Table 11- Balance score Card..............................................................................................................................................26
Table 12 -cost benefit analysis on AI...................................................................................................................................27
Table 13 -Cost Benefit Analysis on blockchain....................................................................................................................28
Table 14 -stakeholder analysis............................................................................................................................................29
Table 15- FSA framework....................................................................................................................................................29
Table 16 – Resource capability analysis..............................................................................................................................29
Table 17 -Kotter’s change management.............................................................................................................................30
Table 18 -Risk Assessment..................................................................................................................................................30
Table 19 -Gantt Chart .........................................................................................................................................................31
Table 20 -Potential Benefits and barriers ...........................................................................................................................31

6

7
TASK 1.A COMPANY BACKGROUND – COMMERCIAL BANK OF CEYLON (PLC)
Largest private sector award winning bank in Sri
Lanka that kickstarted in 1920’s and celebrating their
100th
year. It’s a systematically important bank in Sri
Lanka in the country and accounts for 11.1 % of
sector assets in Sri Lanka. With the acquisition of the Bangladesh operations
of Credit Agricole Indosuez in 2003, the bank began its expansion beyond Sri
Lankan shores. So far it has established subsidiaries in Italy, the Maldives and
in Myanmar. (Combank Annual report, 2018)
1.A.1 – TYPE AND SIZE OF COMMERCIAL BANK.
Commercial Bank is a private limited profit-oriented company which is listed in the
Colombo Stock Exchange (CSE) with the share price of Rs 92.20 as at Feb 6, 2020. (CSE.lk,
2019)
CB declared with the total assets of Rs 1.3 Tn serving in 266 branches with 830 ATMs as at
31.03.2018 in Sri Lanka. The bank employees 5027 individuals to serve 3.5 million
customers. Receiving the highest rating for a local sector bank, rated AA (lka) with a
consistent outlook by Fitch Ratings Lanka Ltd. (Combank Annual report, 2018)
1.A.2 PRODUCT AND SERVICES
The bank has segmented the market based on their personal preference. This has empowered to differentiate the value
proposition and build customer loyalty. The bank is teaming by creating partnerships with numerous local and
international organizations of world class technologies to upgrade the product offering
and acquired technical expertise for New Product Development.
1.A.3 CUSTOMER BASE
Commercial Bank is a B2C organization, that is dominated by
corporate banking customers (25% ) and personal banking customers (51% ) . The diverse
portfolio has prompted to a substantial development in the core business, higher stakeholder
satisfaction levels and a loyal customer base. Both Corporate and Personal banking are
equally strong and complement each other with the
latter’s excess deposits being utilized for funding
corporate lending.
1.A.4 MAIN COMPETITORS
The changing dynamics of savings, disruption caused by fintech and other digital
challenges, financial implications of SLFRS 9 has increased the competition among
licensed banks in Sri Lanka. However, Commercial bank has been dominating the
Private banking sector by building a sustainable competitive advantage through
operations management to cater ever increasing customer demands using
emerging technology. (Combank Annual report, 2018)
Customer segment Product range
Corporate customers
SMEs
Mass Market
Millennials
High net worth
loans, current accounts , Treasury bonds, bills,
SME loans, SME accounts
Regular savings account, Fixed deposits, home loans
Achiever savings account, flash digital account, dialog eZ cash, e-passbook
millionaire account, premium credit cards, elite banking
Table 1 – product range
0
50
100
150
2014 2015 2016 2017 2018
Gross Income (Bn)
51%
25%
24%
Personal
Corporate
Other
Figure 1 – company logo
Figure 2 – global presence of Commercial Bank
Figure 3 – Gross Income of Commercial bank
Figure 4 – BCG matrix of products
Figure 5 customer base
Figure 6 – Market Share of the banking industry

8
1.A.5 KEY INTERNAL AND EXTERNAL STAKEHOLDERS
The two types of stakeholders according to Johnson and Scholes (1999) are
as follows: -
1. Strategic stakeholder (Internal Stakeholder) – The ones who can
influence Commercial bank and their interests and must be managed
cautiously so that the bank may still accomplish its objectives.
E.g. Employees, Managers, BOD, Investors
2. The moral stakeholder (External Stakeholder) – The one who is
influenced by the bank
E.g. Customers, Society, Government Shareholders, suppliers (Diaz, 2017)
1.A.6 KEY CUSTOMER SEGMENT
Commercial bank is dominated by the personal banking customer segment (51%) whose banking needs are transactional
banking and it’s the critical customer segment for the bank. (Combank Annual report, 2018) For banks, in general the
sweet spot lies with mass customers mostly the top 20% in customer relationship profitability, who are 5 to 10 times
more significant than the other customers. (Spitler, 2013)
Subsequently, the bank has to bring out various technological developments for the market from blockchain to artificial
intelligence to launch personalized customer solutions for the key customer segment. (Combank Annual report, 2018)
1.A.7 THEME CHOSEN – CUSTOMER LOYALTY.
Payne et al (1999) introduced the customer ladder of loyalty that proposes that a customer goes through a number of
levels from a prospect, customer, client, supporter, advocate to a partner.
Loyal customers offer Commercial bank a consistent source of income through repeat and increased purchase and
causes less promotional expenses that leads to increase in profits. Customer loyalty depicts the success in marketing
strategy in hyper competitive market that brings value to the customers. (Diaz, 2017)
Loyal customers are critical for the bank than acquiring new customers, because it costs 5 times to acquire a new
customer than to make loyal customers. Existing customers, where 50% will likely purchase new product/service than
new customers. (Bernazzani, 2020)
Customer loyalty cultivates a strong sense of trust between the organization and the customers, when customers decide
to come back to the company the value that is built on relationship outweighs the potential drawbacks caused by
turmoil such as COVID-19. The more committed customers contribute for the sound financial decisions and they bring
potential customers through referral traffic and word of mouth marketing. (Tedey, 2018)
PERSONAL BANKING CUSTOMERS
Demographic Age
Income
18 – 50
<Rs 250 Mn
Psychographic Interest Want technology that put power in their hands
Priorities
Objectives
Want services adding value than banking, appetite for innovation, willing to
bank more on social media, want instant advise via mobile
personal financial needs
Behavioral Level of engagement
Channel mix
Low
ATMs, Mobile banking, call centers
Table 2 – key customer segment (source - (Accenture, n.d.), (Combank Annual report, 2018)
Figure 7- Internal & External Stakeholders

9
BRIEFING PAPER ON THE SUBSTANTIAL IMPACT ON THE MACRO ENVIRONMENT AND DISRUPTIVE STRATEGIES
Prepared by – Marketing Consultant
Date – 30th
of June 2020.
This briefing paper reviews the substantial impact of the macro environment on Commercial bank and the disruptive
strategies that has impacted on the banking industry.
TASK 1.B.TWO ASPECTS OF THE MACRO ENVIRONMENT THAT HAVE HAD THE MOST SUBSTANTIAL IMPACT ON
COMMERCIAL BANK DURING THE PAST YEARS TO INCREASE CUSTOMER LOYALTY.
In the present business context, organizations today are bound to fail because they become irrelevant rather than being
inefficient and they neglect to monitor the environmental trends. (CEC coursebook, 2020) Based on the PESTLE analysis
(refer Annexure 2) the social and technological factors are impacting Commercial bank the most. The substantial impact
of the environmental factors is explained below.
TASK 1.B.1 CHANGES IN TECHNOLOGY THAT IMPACTED COMMERCIAL BANK FOR THE PAST 5 YEARS
DRIVER IMPACT ON COMMERCIAL BANK FOR THE PAST 5 YEARS
TECHNOLOGICAL
ADVANCES SUCH
AS AI, ROBOTICS
AND
BLOCKCHAIN
The digital banking users has outperformed 161 Mn in 2019. A 20%
increase from 2014. Two factors that lead to this expansion is increased
prevalence of mobile phones and technological advances and the other is
developments in fintech firms. (statista, 2015)
The Interest in block chain keeps on increasing
exponentially by empowering payment to payment
transactions, unlike traditional transactions that
vigorously rely on third parties for clearing and storing
blockchain payments. (PWC, 2016)
In the past 5 years bank fintech relationships are growing to
provide the right solutions to the customers to increase
customer loyalty and it’s is forecasted to increase in 2020.
(Americanbanker, n.d.)
Chatbots empowered by Artificial Intelligence are being deployed by
banks currently. Traditional two cay communication methods like email,
visiting branches, call centres are being replaced by chatbots. (Marr,
2019)
GARTNER’S RESEARCH
By 2020, 85% of customer service
interactions are likely to happen
through a chatbot that will increase
customer loyalty.
EXAMPLES
Huntington bank uses AI to
provide financial advice on
spending in 2019.
Bank of America use virtual
assistant ‘’ERICA’’ to alert
customers on spending to
increase customer loyalty.
Table 3 – technological impact on Commercial bank
Figure 8 – (statista, 2015)
Figure 9 – Blockchain adoption for the past 5 years
(PWC, 2016)

10
TASK 1.B.2 SOCIO CULTURAL CHANGES THAT IMPACTED COMMERCIAL BANK FOR THE PAST 5 YEARS
DRIVER IMPACT ON COMMERCIAL BANK FOR THE PAST 5 YEARS
CHANGES IN
CUSTOMER
PREFERENCES IN
BANKING
All customer segments are using digital
technologies to manage their finances.
Millennials have embraced and use
mobile apps via a significant margin by
80 %. (Marous, 2017)
Protecting customer data is the pillar of
building customer loyalty. 43% of
customers cited the biggest driver of
loyalty is building relationships by
protecting data. (Accenture, n.d.)
Based on PACE Index (2017) digital payments
have increased by 18% across all customer
segments. (Phelps, 2017)
GAFA (Google, Apple, Facebook and Amazon) are offering attractive banking
options alternatives to traditional banks. While 31% of customers prefer
moving towards online providers in 2018 and an increase of 41% in 2019
since it’s highly responsive personalized and pillar of customer loyalty.
Further, millennials want to move towards online providers to customize
their financial products while co creating with social media. (Accenture, n.d.)
MCKINSEY’S RESEARCH
Digital technologies are powerful lever to
build customer loyalty. The COVID- 19 crisis
has heightened the consumer behavior, as a
shift towards digital banking to fulfill the
banking needs. Customer facing touchpoints
and services are increasingly digitized to
increase loyalty. (Mangala, et al., 2020)
61% customers cite that blockchain payments
are useful
60% want contactless payment apps
50% customers insist on getting access to
digital money such as bitcoin
57 % demand technologies that could make
international money transfers at low cost.
Table 4 socio cultural impact on Commercial Bank
Appetite for personalization has increased
drastically for the past 5 years.
As indicated in the World Retail Banking
Report (2018) Personalization is key for
customer loyalty. 70% of customer prefer
personalized services from their banks.
(James, 2018)
Figure 10 – channels used by customers (Marous, 2017)
Figure 11- Increase in demand for personalization
Figure 12 – GAFA model

11
TASK 1.C DISRUPTIVE INNOVATION AND ASSESSMENT ON COMPETITOR, RISK AND IMPACT ANALYSIS ON HOW THE
CURRENT INNOVATIONS HAS IMPACTED THE BANKING INDUSTRY TO INCREASE CUSTOMER LOYALTY
TASK 1.C.1 DISRUPTIVE INNOVATION AND THE IMPACT ON THE BANKING SECTOR TO INCREASE CUSTOMER LOYALTY
Disruptive Innovation, depicts any circumstance where an industry is shaken up and already successful incumbents
stumble (Raynor & Mcdonald, 2015) According to Clayton Christenson, (2003) disruptive innovations were offering an
alternate bundle of attributes from those esteemed by the standard market. Disruptive innovators hold a foothold in the
market either by making a low-end product that in interest to customers for whom existing products tend to address a
different set of customer segment or ignored by competitors. ( Gobble , 2016)
E.g. CLOUD COMPUTING has become mainstream in banking with flexible solutions with data security, reduction in cost,
improved efficiency and 75% of banks have confronted that hybrid cloud solutions has expanded into industries and
created new product portfolio to achieve customer loyalty.
API PLATFORMS, the open banking platform will disrupt the banking eco system that will shape the customer
experience by bringing new innovations to increase customer loyalty. With APIs customers will have more options where
the switching cost will be low to the customers.
INSTANT P2P PAYMENTS Blockchain developments has changed consumer expectations in payments in spite of the lack
of payment infrastructure. This provides a speed in transactions digitally, which are less expensive and more customer
friendly according to the customer’s expectations that increases customer satisfaction and brings out loyal customers.
(Marous , 2018)
Figure 13 – Disruptive technologies that will shape the future (Marous , 2018)

12
TASK 1.C.2 CRITICAL ASSESSMENT OF COMPETITOR, RISK AND IMPACT TO INCREASE CUSTOMER LOYALTY.
As per the Innovation Matrix of Clayton Christenson, (2003) the two types of innovation used by the competitors (Refer
Annexure 3 ) to increase customer loyalty is explained below.
COMMERCIAL BANK HATTON NATIONAL BANK
INNOVATION FLASH ACCOUNT
Sri Lanka’s fully-fledged
digital bank account
SIMPLE PAY
Personalized instant online
payment gateway
SOLO E-WALLET
HNB’s own digital payment
ecosystem
VIRTUAL REALITY
Oculus Rift brand
experience using virtual
reality
APPROACH Radical Innovation Disruptive Innovation Radical Innovation Disruptive Innovation
FEATURES Customers can make
payments using QR
codes.
Location specific
marketing alerts
regarding discounts and
promotions.
Customers can enroll
their biometrics to
mitigate risk.
Personal financial
management tools are
available to empower
spending and savings.
(Combank Annual
report, 2018)
Personalized website for
the customers with an
instant online payment
gateway.
Customers can receive
credit and debit card
payments.
Real time dashboards are
available.
24/7 multilingual support
(combank.lk, n.d.)
e- wallet provides both
cashless and digital payments
for its customers.
customers can scan the QR
code at any stores for
payments using virtual
platforms. (HNB, 2019)
Oculus Rift provides a head
mounted display to step
into a virtual bank with 3D
environment (Business
today.lk, 2015)
Market
Existing
New
Technology
Existing New
Figure 14 – Innovation Matrix (Clayton Christenson, (2003))

13
IMPACT Promotes Financial
Inclusion in Sri Lanka,
the app centers on
promoting financial
wellbeing which creates
emotional ties between
the bank and its
customers. (Khomushka,
2017)
Since, this is a budgeting
tool that tracks all the
spending in real time.
Thus, genuine customer
care is shown through a
friendly UX interface,
therefore it’s potential
tool to build loyal
customers. (Combank
Annual report, 2018)
Electronic payments open
door to maximize existing
relationships and to
acquire new customers.
Builds brand loyalty by
offering product bundles
to customers.
Creates competitive
advantage and increase
market share by defending
competition (combank.lk,
n.d.)
Provides customers with an
opportunity in digital payments
that reflects in increased
customer loyalty.
Since HNB understood the
changing customer behavior of
carrying phones that will make
payments hassle free impacts
the reputation. (HNB, 2019)
Increased personalization and
convenience by understanding
customers’ expectations for
flexibility and speed builds
emotional relationship with
the bank. (Forbes Finance
Council, 2018)
53% of the key customer
segment assumed that their
bank doesn’t offer unique
services from other
competitive banks.
Disruptive technology like
VR uses artificial human
interfaces to provide vivid
experiences to make
customer loyal towards the
bank. (Wong, 2016)
RISK NTB, the direct
competitor launched a
similar app ‘’FRIMI’’ this
has bee the market
leader in the digital
banking platform for the
past 2 years that causes
competitive risk for
Commercial Bank. (ft.lk,
2019)
The key customer
segment were
complaining about that
they should visit a
branch to collect the
flash card and fill 6
different forms to open
the account. (Playstore,
n.d.)
CBSL has a Fintech
Regulatory Sandbox for Sri
Lanka that offers a
controlled procedure to
promote technology
advancement of Fintech
whilst keeping up
regulatory standards, that
caused a business risk of
high documentation and
cost to initiate the project.
(Onlanka, 2018)
|
Setting up a digital payment
platform was difficult because
of the past customer service
issues that led to reputational
risk.
Before purchasing the e- wallet
requires to be topped.
(Yamu.lk, 2018).
Increased up of operational
expenses during the launch.
Expenses in employee
training and management
Reputational risk because of
data breeches (Marr, 2019)
Table 5 risk, impact, competitor analysis

14

15
REPORT
To – Senior Management Team
From – Marketing Consultant
Date – 30th
of June 2020
The purpose of this report is to understand Commercial bank’s readiness to innovate and to justify the innovation
through entrepreneurial approaches.
TASK 2.A INNOVATION AUDIT TO ANALYSE THE ORGANIZATION’S CAPABILITY AND INNOVATION CAPABILITY FOR
DEVELOPING AND MANAGING CHANGE FOR IMPROVING CUSTOMER LOYALTY
TASK 2.A.1 INNOVATION AUDIT (DRUMMOND & ENSOR, 1999)
Table 6 innovation audit
TASK 2.A.2 MCKINSEY’S 7S FRAMEWORK
The ability to adapt and make improvements to the organization drives the company forward (Exchange.cim.uk, 2017)
Mckinsey’s 7s framework will evaluate Commercial bank’s ability to change
ELEMENTS JUSTIFICATION RATING
1. STRATEGY TO CREATE LOYAL CUSTOMERS BY BEING TECHNOLOGICALLY ADVANCED
Strategic actions based on the corporate plan (2018 – 2020)
• Strategic emphasis on supporting entrepreneurs and the SME sector
• Creating loyal customers by creating consistent customer experience
across all touchpoints (Combank Annual report, 2018)
Figure 15 (Source – Author’s work adopted from ( Wettasinghe, 2020)
Reconsidering the current strategy to be in line with the current environment. Bank
has plans to move into the emergent strategy on waving off loan interests and
9/10
Organizational Climate Change management level is positive HIGH
Current Performance Market leader in the private banking industry therefore needs to be in
line with the macroeconomic landscape
HIGH
Policies and Practices Customer driven and innovation oriented aligned with bank’s strategy MEDIUM
Style Thinking style concerned with bank’s objectives and drives innovation MEDIUM

16
delayed penalties on credit cards to help its loyal customers to conquer COVID – 19.
( Wettasinghe, 2020)
2. STRUCTURE Tall and functional
organizational structure
with several hierarchies,
well defined roles and
responsibilities
(Combank Annual Report
, 2018)
Figure 16
Lacks integration within departments that inhibits the coordination of objectives
and activities of different units, (Mintzberg, 1993) so there are gaps in the flow of
work. (manager, 2020)
3/10
3. SYSTEM Systems supporting Innovation
1. Customer Relationship Management System – Provides managers with customer
insights about the customer behavior from various sources to launch innovations to
build customer loyalty
2. Marketing Intelligence System – Monitors the industry trends and report to the
management team that could give ideas as per the demand. (Author, 2020)
7/10
4. STAFF 1. Human capital – Solid team of 5025 employees with abundance of experience
and are at the core of success of innovation plans.
2. Research and Development – The bank has invested Rs 29. Bn deepening
technical expertise for the employees working at the R & D department (Combank
7/10
5. SKILLS CB provides innovation-based rewards linked to the performance appraisal system.
Partnerships – Teamed up with local and International tech suppliers for new
product launches for world class technologies and acquired technical expertise for
R&D.
Training and Development – The bank is centered around ensuring that employees
are future ready through workshops and online training model so that they can
contribute to the innovation
6/10
6. STYLE AUTOCRATIC LEADERSHIP
It follows the autocratic leadership style and firmly believes in a disciplined
approach, where decisions are made and executed by the top management.
(Author, 2020)
3/10
7. SHARED VALUES VISION
To be the most innovative and technologically advanced organization to build a
loyal customer base in Sri Lanka.
8/10

17
MISSION
Giving reliable, innovative services utilizing cutting edge technology and consistently
concentrated on creating loyal customers whilst developing employees by
obtaining necessary expertise to expand locally and Internationally. (Combank
Table 7 Mckinsey’s 7Ss
CONCLUSION
Commercial Bank has an innovative culture according to the above audit, The Board supports employees to implement
every idea into an innovation that encourages to create loyal customers to the bank.

18
TASK 2.B THREE ENTRPRENEURIAL APPROACHES THAT COULD BE USED TO INCREASE CUSTOMER LOYALTY FOR
COMMERCIAL BANK.
TASK 2.B.1 EFFECTUATION APPROACH TO INCREASE CUSTOMER LOYALTY
Effectuation is a rationale of entrepreneurial expertise founded by ‘’Saras Sarasvathy’’, that articulates a dynamic and
iterative processes of bringing new artifacts. Effectuation consists of 5 principles. (effectuation.org, 2018)
PRINCIPLE DESCRIPTION INNOVATION RATING
1. Bird in hand Start with the available means, Taking
actions dependent on the available
resources.
Enhancing the current app (task 1.c.2) with
the available IT resources for all financial
needs rather than visiting the bank due to
COVID – 19 shutdowns. (Koetsier, 2020)
3/5
2. Affordable loss Evaluate opportunities and budget
affordable losses.
Setting up a virtual tour using 3D video to
visualize the future of banking. It might
acquire customers, if not the bank needs to
bear the infrastructure costs. (Pilcher, 2017)
2/5
3. Lemonade Being flexible rather than sticking to
existing goals.
Investing in AI, developing plans on
personalized AI apps to provide financial
customers that strengthens customer
loyalty, adopting machine learning for
secured transactions; these contingency
plans help to shift from any uncertainties.
(Walch, 2020)
4/5
4. Crazy quilt partnership Creating partnerships with suppliers to
jointly create future.
Commercial bank can partner with
blockchain, that facilitates instant end to
end remittances with tracking solution that
are effective for customers, which in return
create loyal customers. (Combank Annual
report, 2018)
4/5
5. Pilot on the plane To monitor the environment at least a
certain degree within control.
(effectuation.org, 2018)
Coming up with an emergent strategy by
understanding behavioral changes; shifting
away from branches coming up with AI apps
and blockchain payment platforms help to
drive brand loyalty. (PWC, 2020)
4/5
Table 8 Effectuation
CONCLUSION
Lemonade, crazy quilt partnership and pilot on the plane are more suitable for Commercial bank because it’s in line with
the current situation and increases customer loyalty
TASK 2.B.2 KAIZEN PROCESS TO INCREASE CUSTOMER LOYALTY.
Looking at the current market conditions, Commercial bank needs to focus on improving their processes to increase
productivity and to create a loyal customer base. Kaizen can help the bank to upgrade their competitiveness. (Kaizen
Institute, n.d.)

19
PRINCIPLE DESCRIPTION JUSTIFIED INNOVATION
1. Know your
customer
creating customer value by responding to their
behavior.
Customers need an app that’s simple, consistent in
experience, 24/7 service and instant gratification.
They expect individual attention and personalized
offers to be loyal to the bank. (microsoft, 2017)
2. Create value Creating value by eliminating waste Developing versatile mobile app with AI as the
fundamental channel.
• Reduces operating expenses
• Allows for a paperless banking which saves
time and cost by eliminating paper.
• Eliminate branch maintenance cost and
less expensive than ATM. (Samojlo, 2019)
3. Go to Gemba Value is created by partnerships Partnering with AI suppliers and building integrated
app leveraging developed cloud technologies to
increase customer loyalty. (microsoft, n.d.)
4. Empower People Organizing teams and providing systems CB needs to begin small due to the losses caused by
COVID- 19. Creating cross functional teams to
conduct an ethnographic research on AI to adopt a
consistent approach to refine ideas.
Building a organizational culture that fosters staff
to be capable for innovating and continuous
improvement. (Deloitte, n.d.)
5. Be transparent Measuring and monitoring performance Building a dashboard to monitor on how the app is
contributing for customer loyalty. Using analytics
like downloads, active users, retention rate, rating
and reviews. (Savvy, 2019)
Table 9 Kaizen Approach
CONCLUSION
An AI app would battle with COVID- 19 would trim operational costs and increase customer loyalty as justified using the
Kaizen approach.
TASK 2.B.3 LEAN THINKING TO INCREASE CUSTOMER LOYALTY
Lean thinking prepares commercial bank to address the challenges of customer demands and to consistently develop
new products and services that in return build loyal customers. (Ferro, 2013)
PRINCIPLES DESCRIPTION JUSTIFIED INNOVATION
1. Identify value Specify value to the end customer Blockchain payments facilitates faster
transparent P2P cross border payments using
digital currency. Since, it’s more secure and
transparent creates value to the customers.
(Koksal, 2019)
2. Map the value stream Eliminate steps that don’t create value • Potential to remove intermediaries
• Disintermediate market arbitragers

20
Table 10 – Lean thinking
CONCLUSION
Commercial bank is working to resolve it’s capital issues due to COVID – 19. By deploying blockchain can reduce cost and
achieve results in few months. (PWC, 2020)
TASK 2.B.4 HORIZON SCANNING
As per John Day (2013) Horizon scanning helps to better prepare Commercial Bank to mitigate the risk by examining the
environment. (Pearson, 2015)
Figure 17Author’s work – adapted from (PWC, 2020) )
• Reduce operating costs and human
interactions. (Bender, et al., 2019)
3. Create flow Take value creating steps to occur in tight sequence
to reach customers.
Since, Commercial bank follows a top down
approach (Task 2.A.2), they need to change over
the leadership-based questioning, training and
teaching based on plan- do- check- act.
4. Establish pull Allow customers to pull value Customers need active management and
outreach from COVID- 19 crisis. (PWC, 2020).
Blockchain payments provides customers
frictionless support with less effort by facilitating
low cost international payments in real time, that
would increase customer loyalty. (Faden, 2017)
5. Seek Perfection Continue the process to reach perfection
(fourprinciples, n.d.)
A critical element in any lean change is
establishing a sustainable culture and continuous
improvement. The bank needs to invest in
training the staff to adopt lean principles and
continuous improvement. (lean.org, n.d.)
Inputs
Global pandemic COVID - 19
Foresight
The share price of CB reduced by 2.29% due to COVID – 19
CB stopped collecting loan installment payments
Outputs
Commercial bank needs to offer concessions for loan providers
Focus on business continuity plans on issues for survival
CB needs to think about customers while making sound decisions
Strategy
Deploying AI apps and blockchain to trim costs.
Replotting the strategy with new business models as mentioned above with
personalization according to individual financial needs to increase customer
loyalty.

21
TASK 2.B.5 MINDMAP
Innovations in the banking
industry to drive customer loyalty
Blockchain in banking
Opensource platforms that safely
transfer data and value. Reduce the
expense of handling payments.
RIPPLE NET – SANTANDER
The first bank to launch the world’s
first mobile app ONE PAY FX for
cross border payments integrating
Ripple net
CRYPTO CURRENCY – USAA
First bank to make deposits
using cryptocurrency by
working with Coinbase.
Artificial Intelligence
MACHINE LEARNING
CITI bank uses AI and
big data to detect
fraudulent activities
BANK OF AMERICA – CHATBOTS
AI integrated device provides
financial guidance for the customers
through voice and text message
AI BASED MOBILE APPS
Wells Fargo and JP Morgan Chase
launched AI apps to monitor
customer behavior and to personalize
for better customer experience.
PROCESS
AUTOMATION
JP Morgan Chase
invested in Coin
that automates
reviewing
documents in less
time than human
Virtual Reality
Banks are making use of
VR to make vital content
and engaging banking
using vivid imagery
CITI BANK – VR CONCERTS
The bank partnered with
live nation and Next VR to
deliver live VR concerts for
card holders.
BNP PARIBAS – VR
APPS
Launched VR apps that
allows customers to get
their account activities
in a VR environment.
WELLS FARGO- VIRTUAL MAZE
COMMUNITY MARKETING
Offered customers to test drive
Oculus that stimulate an authentic
experience exploring virtual world.
Offering 360-degree vivid VR
experience
BANK OF KUWAIT
A consultant built up a 3D virtual
tour using 3D video to
substantially envision the banking
experience in future.
Mobile app
CHASE BANKING
APP
It allows to make
payments, alerts
customers to
manage their
finances.
BANK OF AMERICA MOBILE APP
Provides customers with credit
cards redemption, can deposit
cheques using phone camera and
can get cashback offers thorough
location-based marketing.
DISCOVER MOBILE
APP is the most
secured app for
payment, that
offers fingerprint
passcodes to login
and to protect the
account.
CAPITAL ONE
Make bill payments and
deposits using the app with
touch ID. They use sure
swipe technology for quick
interaction and this app is
available on iWatch to
check account on wrist.
WELLS FARGO APP
Customers can do
all banking
activities through
this single app,
there’s no need to
login the website or
contact the branch
for any account
activity.
Figure 18
Source – Author’s work
Adapted from (Plicher, 2017), (Maskey, 2018), (Karimi, 2020)

22

23
STRATEGIC REPORT
To – Senior Management Team
From – Author’s work
Date – 30th
June 2020.
The purpose of this report is to identify two innovations that support Commercial bank to increase customer loyalty, to
identify potential impact of implementing the innovations and a justified change management strategy.
TASK 3.A VALUE PROPOSITIONS CANVASES THAT ADD VALUE TO ACHIEVEING INCREASED CUSTOMER LOYALTY.
The value proposition canvas has two sides with the customer profile by explaining the customer understanding and
value map on creating value. Commercial bank achieves fit when one fulfills other. (Osterwalder, et al., 2014)
TASK 3.A.1 ARTIFICIAL INTELLIGENCE MOBILE APPS TO INCREASE CUSTOMER LOYALTY
Artificial Intelligence apps can meet the customer’s expectations with personal, contextual and predictive analysis.
These apps that monitor the customer transactions and provide them personalized insights on spending and savings.
(Patel, 2019).
Since 70% of customer prefer personalized services (refer task 1.A.3) Commercial bank can give financial management
services by integrating AI to the app, because it’s more effective to assist users on financial planning with AI strategies.
Personalized
service
Intelligent
analysis on
spending
One click
requests
Biometrics
for login
Smart
payments
24/7
banking
Jobs
Privacy
concerns
System
cracks
Less
standardization
Less
knowledge
Poor app
design
Pains
Traditional
banking habits
Lack of personal
banking
relationships
Limited scope
of services
Accessibility
Convenience
Control of
financial accounts
Immediate response
Customer satisfaction
Time saving
analysving
No 3rd
party involvement
Gains
Process data through
machine learning &
provide relevant
information
AI shows services,
offers and insights
in line with
customer behavior
Assists customers
in financial
planning with AI
strategies
Assists customers
in financial
planning with AI
strategies
Pain reliever
Gets rid of
long
authentication
process
Saves
time and
effort of
customers
24/7
service
Products
& service
Reduce workload
Unique service
Prevent frauds
Predictive analysis
Mitigate risks
Hedge fund
management
Drive banking
business
Wealth
management
Gain creators
Artificial
intelligence
mobile app
VALUE PROPOSITION
CUSTOMER SEGMENT
Figure 19

24
Therefore, AI apps increases customer satisfaction, remove all customer pains, improve efficiency and increase customer
loyalty. Both JPMorgan Chase and Wells Fargo recently launched their AI apps. They were launched with the aim of
increasing customer loyalty by simplifying the processes (Maskey, 2018)
TASK 3.A.2 BLOCKCHAIN PAYMENTS TO INCREASE CUSTOMER LOYALTY.
Figure 21
Figure 20 – Author generated diagram on how AI apps will increase customer loyalty.
Transparency
Autofill payment
information
Advanced
security
Data storage
Better
financial
products
Convenience
Efficiency
Jobs
Service fee
s
Service fees
Vulnerability to cyber
crime
Technical
problems
Identity theft
Price volatality
Privacy issues
Lack of IT literacy
in customers
System failures
Pains
Unique
experience
Accurate
information
User friendly
Instant settlements
Real time
automation
Gains
Pain reliever
Fast, secure
payment
Low cost international
payment
Real time
verification of
transactions
Decentralized
payment gateway
Less vulnerable to
malicious attacks
No geographical
barriers
Simple cross
border
payments
Gain creators
Customer
satisfaction
Faster
transactions
Reduced
additional cost
Improved data
quality Improved
data security.
Increased
financial
performance
Blockchain
payments
VALUE PROPOSITION CUSTOMER SEGMENT

25
Commercial bank partnering with, global payment network leveraging blockchain like Ripple net, with an end to end
tracing and tracking solution guarantees transparent process. As mentioned in Task 2.B.3 this makes remittances of
lower denominations because of lower rates. Since, this is equipped with an anti- fraud feature that makes it hard to
tamper transactions. (Combank Annual report, 2018)
Along with transparency, customers anticipate to autofill all their payments be remembering their personal information
and preferences. Therefore, blockchain removes all customer pains and increases customer loyalty by offering advanced
data security, ease and automation. (Arundel, 2018)
Figure 22- Author generated diagram on how blockchain payments increase customer loyalty.

26
TASK 3.B TWO APPROPRIATE MEASUREMENT TECHNIQUES TO MEASURE THE IMPACT THE TWO INNOVATIONS
TASK 3. B.1 BALANCE SCORE CARD (S. KAPLAN & P.NORTON, 1992)
Many companies use Balance Score card as a management tool to gauge their business performance, particularly
compared to the strategy. This is a useful tool to integrate strategic management and to convey to the employees
regarding the innovation in measurable terms (Gama, et al., 2014)
STRATEGIC OBJECTIVE KPIS TARGET RATINGS (1 TO 5)
AI APP BLOCKCHAIN
Increase in revenue 1. Sales growth Increase by 20% 4 4.5
Return on Investment 2. ROI Increase by 10% 4 4
Increase in Market share 3.Net profit Gain 40% by 2022 3.5 2
Reduction in operational costs 4.Operating
profit
Reduce by 15% annually 4.5 3.5
Increase in loyal customers 5.Customer
survey
Increase by 25% quarterly 4 3
Increase in monetary value of
customers
6.Customer
lifetime value
Increase by 30% annually 3.5 4
Increase in customer retention 7.Customer
retention rate
Increase by 15% 3 4.5
Increase in customer acquisition
through existing customers
8.First time
customers
Increase by 5% monthly 2.5 3
Increase in customer service
quality
9.Customer
survey
70% positive feedback 4 3.5
Efficiency in risk management 10.Risk
mitigation
percentage
Reduced by 25% 4.5 3
Innovative culture 11.Success rate Increase by 75% 4 4
Investing in employee training 12.Employee
productivity
Increase by 50% and check
quarterly
3.5 2.5
Invest in Research and
Development
13.Number of
patents
Enhance by 15% 4 4.5
Continuous improvement 14.ROI Increase by 25% 3 3.5
Table 11 Balance score Card
FINANCIAL
CUSTOMER
INTERNAL
PROCESS
LEARNING
AND
GROWTH

27
TASK 3.B.2 COST BENEFIT ANALYSIS (Refer Annexure 4)
TASK 3.B.3 AI ENABLED MOBILE APP
Table 12 cost benefit analysis on AI
RANKING - 8/10 since benefits outclasses risks
TASK 3.B.4 BLOCKCHAIN
BENEFITS RISKS
• Payments built on blockchain technology can
REDUCE FRADULENT (KPI 10) documentation
by approving ownership and certifying
transactions
• Blockchain does bring together loyal
customers and the bank in a new automated
ecosystem and makes it far simpler and a LOT
CHEAPER (KPI 4) to run an ecosystem.
• The blockchain protocol guarantees IMMUTABILITY
and IRREVERSABILITY (KPI 11) of all transactions
occurred
• JOB LOSSES (KPI 12) in frontline workers because f
blockchain automation. (deloitte, n.d.)
BENEFITS RISKS
• MASS PERSONALIZATION (KPI 5 to 7) where
the single interface will be personalized
based on individual’s preferences and needs.
• REDUCTION IN RISK (KPI 10) because DATA
INTELLIGENCE will generate insights and
automate data into analytics at phenomenal
speed in real time. (Kuder, et al., 2018)
• Big data analytics provide precise targeting
for the key customer segment and accounts
for increased OPERATIONAL EFFICINECY and
PROFITS (KPI 2 & 3) (Chalimov, 2019)
• COST REDUCTIONS (KPI 4) AI automate tasks
using data processing, reduce overhead costs
and employee hours dedicated to simple
tasks and improves the accuracy
(Seewooruttun, 2018)
• Lack of employee empowerment (KPI 12) because
of insufficient inhouse skills and lack of cultural
integration to adopt appropriate AI solutions
(Deloitte, 2018)
• SECURITY SNAGS (KPI 10 & 11) an emerging issue
to abuse non sensitive customer data that
commercial bank collect to fuel the AI app.
(Cheathem & Samandari, 2019)

28
• Digital signatures during cross border
payments has functions of DATA TAMPERING
(KPI 10) through encryption and chain of hash
information (BCG, n.d.)
• Has the disruptive potential to drive
OPERATIONAL EFFICIENCIES (KPI 1 to 3).
COST REDUCTION (KPI 4) from existing
processes by expelling intermediaries
(Carson, et al., 2018)
Table 13 Cost Benefit Analysis on blockchain
7/10 because benefits outclass risks.

29
TASK 3.C CHANGE MANAGEMENT STRATEGY FOR IMPROVING THE INNOVATION CULTURE WITH COMMERCIAL BANK
As per Rawlins (2004), change management is managed through strategic discourse by the hierarchy, and build changes,
respond to criticisms and realign expectations following difficulties. (Mark, 2018)
3.C.1 STAKEHOLDER ANALYSIS FOR IMPLEMENTING ARTIFICIAL INTELLIGENCE MOBILE APP (Refer Annexure 5)
INTERNAL
STAKEHOLDERS BENEFITS RISKS POWER INTEREST
Employees Employees can concentrate on
strategic, complex tasks and
improve productivity (Grossman,
2020)
Lack of internal communication
because of the hierarchical structure
(Refer 2.A.2)
MEDIUM HIGH
Management Increased productivity and
increase in loyal customers
Damage to corporate reputation if
the project is failure HIGH HIGH
Table 14 stakeholder analysis
3.C.2 JOHNSON’S AND SCHOLES FSA FRAMEWORK
Johnson, Scholes and Whittington (2013) contend that a strategy needs to be evaluated before the decision-making
process, for the strategy to be successful it should satisfy the FSA framework.
SUITABILITY Artificial Intelligence Mobile apps will fulfill the vision statement of CB to be technologically advanced and
innovative. As mentioned in task 2.B.3 personalization feature will create loyal customer base to the bank.
ACCEPTABILITY The key customer segment (Refer 1.A.8) expect services that add value and are appetite for innovation, thus
the AI mobile app is acceptable
FEASIBILITY current financial status of Com bank (Refer background) supports to fund the innovation, and the COVID – 19
suggests feasibility to the innovation to cut down operational costs (refer 2.B.4)
Table 15 FSA framework
3.C.3 RESOURCE CAPABILITY ANALYSIS
The resource management distinguishes the resources that are available and identify the competencies. It diagnoses the
strength of the resources to the extent to achieve competitive advantage to the organization. (Diaz, 2017)
RESOURCES
TANGIBLE INTANGIBLE
Financial – strong financial capabilities
(Refer background)
Physical – Diversified branches and ATMs
network
Organizational – Largest international
footprint and have IT systems exceeding
customer expectations
Human capital – Well trained, experienced and
profoundly energetic employees with a top management
on implementing the innovation
Brand value – Strongest banking brand in Sri Lanka with
20.3 Bn brand equity.
Organizational culture – culture fostered with integrated
thinking to derive loyalty.
CORE
COMPETENCIES
According to the vision statement “to be the most innovative and technologically advanced “the AI app is
the preliminary innovation.
CAPABILITIES Product augmentation, digitally savvy employees, intelligent workflows, unified customer experience to
achieve customer loyalty. (Bayern, 2019)
Table 16 – Resource capability analysis

30
3.C. 4 KOTTER’S CHANGE MANAGEMENT PLAN (Diaz, 2017)
Kotter’s (1996) eight step change management process portrays the series of steps to be taken to achieve the mandated
organizational changes supported by the justified FSA framework mentioned in 3.C.2
CREATE URGENCY Sense of urgency should be created between the top management to embrace the change by
deploying the app to reduce the branch visits and physical interactions due to COVID – 19.
Communicating the need to the employees regarding the AI app to maintain survival and customer
loyalty
CREATE A GUIDING
COALITION
Assembling a leadership team with the Board of Directors and Chairman to facilitate the change and
be responsible to ensure the communication with the employees and create cross functional teams
(refer 2.B.3.4)
DEVELOP A NEW
STRATEGIC INTENT
‘’ Be at the forefront to embrace change with new innovations to fine tune loyal customers’’ A clear
vision aspire, enthuse employees and strengthen performance
COMMUNICATE THE
VISION
Using viable channels to communicate the vision to its 5027 employees and address their concerns
and opinions regularly.
REMOVE THE OBSTACLES Barriers to the innovation such as technical expertise and financial funding should be supported by
the top management. Identify the resisters and take action to reinforce
GENERATE SHORT TERM
WINS
Set realistic short wins by testing the AI mobile app within the Commercial Bank employees and
analyzing the app. Supporting and rewarding people who create short wins.
CONSOLIDATE GAINS Using increased credibility from employees and customers reinvigorate acceleration and create loyal
customers
ANCHORING NEW
CHANGES
Articulate the AI mobile app into the core strategy and weave innovation into the culture
Table 17 Kotter’s change management
3.C.5 RISK ASSESSMENT
The risks associated when implementing the Artificial Intelligence Mobile app are explained below
(Cheathem & Samandari, 2019) (Deloitte, 2018)
TYPE OF RISK IMPLICATION OF RISK RATING MITIGATION STRATEGY
Reputational risk Distortion of customer data prompts to defamation HIGH AVOID
Business risk AI mobile apps leads to systematic risks due to
unskilled implications
MEDIUM REDUCE
Technological risk Increased reliance on the components that support AI
are not openly accessible and leads to additional
security vulnerabilities
MEDIUM TRANSFER
Table 18 Risk Assessment

31
3.C.6 ACTIVITY PLAN – GANTT CHART
TASK 3.C.7 POTENTIAL BENEFITS AND BARRIERS IN IMPLEMENTING THE STRATEGY
Potential
benefits
• Internal and
External alignment
Internal business functions will be more aligned with the bank’s objectives and
increases responsiveness and customer loyalty.
• Productivity Yields competitive advantage and strengthens Commercial bank’s resilience against
turmoil (Greeno, 2016)
Potential
barriers
• Resistance Employees feel reluctant to adopt to new changes and fear of job uncertainty (Basu,
n.d.)
• Budgets The inadequate investment for change initiatives especially during COVID – 19
causes reductions in change management (Kambil, 2017)
Table 20 Potential Benefits and barriers
Table 19 Gantt Chart
ACTIVITY BUDGET
2020 2021 2022
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Call for idea generation proposals
50 Mn
Screening all proposals
Final decision on AI mobile app
Seeking approval from the hierarchy
Forming a special team
Research and development on AI 100 Mn
Staff training and awareness
campaign
75 Mn
Identify the shortcomings for
implementing
50 Mn
Testing the prototype 110 Mn
Evaluate short term wins 25 Mn
Commercialization 200 Mn
Marketing campaigns 150 Mn
Regular monitoring and feedback 75 Mn
TOTAL BUDGET 835 Mn

32
Bibliography
Gobble , M., 2016. Defining Disruptive Innovation. Ebsco.
Accenture, n.d. Accenture Financial services consumer study, s.l.: s.n.
Americanbanker, n.d. americanbanker. [Online]
Available at: https://www.americanbanker.com/list/the-banking-tech-trends-that-will-dominate-2020
[Accessed 12 June 2020].
Author, 2020. Systems in Commercial Bank [Interview] (8 June 2020).
Basu, C., n.d. smallbusiness chron. [Online]
Available at: https://smallbusiness.chron.com/top-organizational-change-risks-30920.html
Bayern, M., 2019. techrepublic. [Online]
Available at: https://www.techrepublic.com/article/7-tech-capabilities-your-business-needs-to-hit-digital-
transformation-success/
[Accessed 30 May 2020].
BCG, n.d. Boston Consulting Group. [Online]
Available at: https://www.bcg.com/capabilities/technology-digital/strategic-opportunities-blockchain/what-is-
blockchain.aspx
Bender, P. J., Burchardi, K. & Sheperd, N., 2019. bcg.com. [Online]
Available at: https://www.bcg.com/publications/2019/capturing-blockchain-value.aspx
Bernazzani, S., 2020. hubspot. [Online]
Available at: https://blog.hubspot.com/service/customer-loyalty
Business today.lk, 2015. business today.lk. [Online]
Available at: http://www.businesstoday.lk/article.php?article=9976
Carson, B., Romanelli, G., Walsh, P. & Zhumaev, A., 2018. Mckinsey. [Online]
Available at: https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/blockchain-beyond-the-hype-
what-is-the-strategic-business-value
CEC coursebook, 2020. CEC course book. s.l.:s.n.
Chalimov, A., 2019. easternpeak. [Online]
Available at: https://easternpeak.com/blog/examining-ai-uses-in-banking-financial-services/
Cheathem, B. & Samandari, H., 2019. Mckinsey. [Online]
Available at: https://www.mckinsey.com/business-functions/mckinsey-analytics/our-insights/confronting-the-risks-of-
artificial-
intelligence#:~:text=Disastrous%20repercussions%E2%80%94including%20the%20loss,damage%20and%20revenue%20l
osses%20to

33
Combank Annual report, 2018. s.l.: s.n.
combank.lk, n.d. combank.lk. [Online]
Available at: https://www.combank.lk/newweb/en/personal/cards/simple-pay
CSE.lk, 2019. [Online]
Available at: https://www.cse.lk/home/listByAlphabetical
[Accessed 10 March 2020].
Deloitte, 2018. AI and risk management, s.l.: s.n.
deloitte, n.d. Deloitte. [Online]
Available at: https://www2.deloitte.com/us/en/pages/risk/articles/blockchain-security-risks.html
Diaz, L., 2017. Marketing and Business Strategy. s.l.:s.n.
effectuation.org, 2018. effectuation.org. [Online]
Available at: https://www.effectuation.org/?page_id=18
Exchange.cim.uk, 2017. cim.uk. [Online]
Available at: https://exchange.cim.co.uk/editorial/how-to-find-the-right-time-for-change/
[Accessed 23 April 2020].
Faden, M., 2017. Americanexpress. [Online]
Available at: https://www.americanexpress.com/us/foreign-exchange/articles/blockchain-to-accelerate-payment-
processing-services/
Ferro, J., 2013. lean.org. [Online]
Available at: https://www.lean.org/LeanPost/Posting.cfm?LeanPostId=84
Gama, N., Silva, M. M. d. & Ataide, J., 2014. Innovation scorecard, a balanced scorecard for measuring the value added
by innovation, s.l.: s.n.
Greeno, K., 2016. asymo. [Online]
Available at: https://www.asyma.com/blog/the-benefits-of-implementing-change-management
Grossman, C., 2020. beekeeper.io. [Online]
Available at: https://www.beekeeper.io/blog/3-reasons-you-want-ai-in-the-workplace/
HNB, 2019. hnb.net. [Online]
Available at: https://www.hnb.net/media-center/2019/a-new-dawn-in-digital-payments-hnb-launches-solo-ewallet
[Accessed 20 may 2020].
Kaizen Institute, n.d. Kaizen Institute. [Online]
Available at: https://www.kaizen.com/what-is-kaizen.html

34
Kambil, A., 2017. Deloitte. [Online]
Available at: ps://deloitte.wsj.com/riskandcompliance/2017/01/06/managing-the-execution-risks-of-change-initiatives/
Koetsier, J., 2020. forbes. [Online]
Available at: https://www.forbes.com/sites/johnkoetsier/2020/04/15/report-35-85-fintech-growth-on-mobile-thanks-
to-coronavirus-after-1-trillion-app-opens-in-2019/#729ab69a759a
Koksal, I., 2019. forbes. [Online]
Available at: https://www.forbes.com/sites/ilkerkoksal/2019/10/23/the-benefits-of-applying-blockchain-technology-in-
any-industry/#883105a49a56
Kuder, D., Mittal, N. & Hans, S., 2018. deloitte. [Online]
Available at: https://www2.deloitte.com/us/en/insights/focus/tech-trends/2019/driving-ai-potential-
organizations.html
Mark, H., 2018. Managing and leading organizational change. s.l.:Taylor and Francis group.
Marous , J., 2018. thefinancialbrand. [Online]
Available at: https://thefinancialbrand.com/77228/technology-trends-disrupting-financial-services-banking-future/
Marr, B., 2019. forbes. [Online]
Available at: https://www.forbes.com/sites/bernardmarr/2019/11/08/the-7-biggest-technology-trends-to-disrupt-
banking--financial-services-in-2020/#e6bfe2c42b91
Pearson, T., 2015. simplexityanalysis. [Online]
Available at: https://www.simplexityanalysis.com/blog/2015/6/23/defining-horizon-scanning
Pilcher, J., 2017. theFinancialbrand. [Online]
Available at: https://thefinancialbrand.com/68593/banks-credit-unions-finances-virtual-reality/
PWC, 2016. PWC., s.l.: s.n.
PWC, 2020. PWC.com. [Online]
Available at: https://www.pwc.com/us/en/library/covid-19/coronavirus-impacts-retail-banking.html#content-free-1-
9e93
Raynor, ,. C. & Mcdonald, M., 2015. Harvard business review. [Online]
Available at: https://web.a.ebscohost.com/ehost/detail/detail?vid=4&sid=621b08c4-8e67-4630-a721-
8a82da4ec0e8%40sdc-v-sessmgr03&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d
[Accessed 26 March 2020].
Seewooruttun, G., 2018. ey.com. [Online]
Available at: https://www.ey.com/en_gl/advisory/five-potential-advantages-of-integrated-ai-strategy

35
Spitler, R., 2013. novantas. [Online]
Available at: https://novantas.com/wp-content/uploads/2013/05/CEO_forum_mass_market_NR.pdf
statista, 2015. Statista.com. [Online]
Available at: https://www.statista.com/statistics/455418/number-of-digital-banking-users-usa/
Tedey, W., 2018. huify. [Online]
Available at: https://www.huify.com/blog/acquisition-vs-retention-customer-lifetime-value
Walch, K., 2020. forbes. [Online]
Available at: https://www.forbes.com/sites/cognitiveworld/2020/04/05/why-ai-is-transforming-the-banking-
industry/#7fd838ca7dd6

36
ANNEXURES

37
ANNEXURE 1 – INDUSTRY ANALYSIS
The banking sector in Sri Lanka, which comprises Licensed Commercial Banks (LCBs) and Licensed Specialized banks
(LSBs), dominates the financial system and accounts for the highest share of the total assets in the financial system.
Banks play a critical role within the Sri Lankan financial system, as they are engaged in provision of liquidity to the entire
economy, while transforming the risk characteristics of assets.
COMPOSITION OF TOTAL ASSETS
Turbulent economic and geopolitical conditions, transition to SLFRS 9 and Basel III
requirements made 2018 a reasonably challenging year for the banking sector. Sri
Lanka’s economic growth remained below expectation with a moderate GDP growth
of 3.2% in 2018.
The recent past has witnessed significant transformation in the banking industry .In
light of these developments, the banking industry has been challenged to re- examine
its business models and service offering in order to stay relevant and also relook at
the strengths and opportunities which are unique to banking and package them with
technological capabilities demanded by the market.
FINANCIAL PERFORMANCE OF BANKS
(KPMG, 2019)
CONSUMER BEHAVIOUR TOWARDS BANKING (Accenture, n.d.) FUTURE TRENDS IN BANKING
Net Interest Income of SL banks Total deposits of SL banks CASA % of SL banks
NOMADS
A highly digital active group, ready for new
model of delivery, not tied to traditional
financial service providers, willing to use
Amazon, google for financial services
QUALITY SEEKERS
Looking for high quality, responsive service and
data protection. They seek for financial providers
who will put their interests first. They are driven
by trust and the level of service than cost
HUNTERS
Searching for the best deal on price, they
don’t rely only on digital they need
traditional banks and financial services to
deliver the services.
The most prevalent trend in the banking
industry today is the shift to digital, specifically
mobile and online banking.
In today's era of unprecedented convenience
and speed, consumers don't want to have to
trek to a physical bank branch to handle their
transactions. The trends of banking are -
1. Tech companies drive deeper into banking.
2. Banks and fintech prioritize providing
customer insights.
3. Banks find additional ways to partner with
fintech’s.
4. AI and blockchain

38
ANNEXURE 2 – PESTLE ANALYSIS
Factor Description Implication +/- Rating
Political CBSL eases policy rates
to support economic
activity amid
coronavirus pandemic
Easter bombing
Political conflicts
The Monetary Board of the Central Bank of Sri Lanka, at an urgent
meeting held on Monday to review its monetary policy stance has decided
to reduce the policy rates by 25 basis points to support the economic
activity amid coronavirus pandemic sweeping the country. (Central Bank
of Sri Lanka, 2020)
Easter 2019 bombings created a security crisis in top of the deepening
political crisis
The Ministry of Finance, Economy and Policy development have issued
directives to the CEOS to suspend the recovery of loans obtained by SME
sector. ( Wettasinghe, 2020).
+
_
+
HIGH
Economical Economic slow down
CSE being negative
CBSL issue directives to
Commercial banks
Sri Lanka is already facing the subdued growth environment, with 3.2%
GDP growth in 2018 and it’s expected to slow down to 3% or below due to
economic impact of Easter Sunday bomb attacks (combank.lk, n.d.)
The Colombo stock market ended on a negative note as investors turned
bearish amidst global concerns over the rapid spread of coronavirus. The
share price of Commercial Bank lost Rs. 2.00 (2.29%) to close at Rs.
85.50. (ft.lk, 2020)
The Central Bank of Sri Lanka has issued a set of directives to
commercial banks and the National Savings Bank to ease the
pressure on the exchange rate caused by the COVID-19 outbreak. (
Wettasinghe, 2020).
_
-
+
HIGH
Social Growing influence of
social media
Demand for more
transparency and
accountability
Changes in customer
expectations
Commercial bank is
ready to help customers
worst hit by COVID- 19
The era of mobile banking, a seamless cross channel banking experience is
what consumers expect.
Since consumers are skeptical, they value transparency and authenticity
more than ever. Consumers judge the brand reputation based on
transparency both on digital and traditional platforms (BOC Annual
Report, 2018)
Customer expectations are changing rapidly with increased demand for
personalized services, instant accessibility and convenience. The wider use
of digital platforms has also these emerging expectations and customer
preferences are likely to be at risk. (Combank Annual report, 2018)
Commercial Bank had stopped collection calls for overdue loans,
Commercial Bank and its peers have encouraged customers to switch to
digital transactions through call centers, or ATMs when the curfew lifts.
+
+
+
+
HIGH

39
Technological Financial
disintermediation
Technology advances
such as AI, Robotics and
blockchain
Automate payment
facility to Commercial
bank’s customers.
Mckinsey warns while fintech startups are manageable, a more daunting
challenge looms from Amazon and Facebook are bearing down the finance
sector. (Americanbanker, n.d.)
New technology in banking is transforming the financial sector. Safety
features such as advanced cryptography and biometrics, will help protect
against bank scams, and remote applications will make it easier than ever
to do your banking without visiting a branch, which is customer friendly
too. (Combank Annual report, 2018)
Commercial Bank’s Credit and Debit Card holders can now automate the
settlement of their monthly electricity bills, following the addition of the
Ceylon Electricity Board (CEB) to the Bank’s ‘Auto Bill Pay’ facility. The
Bank has introduced a new system to ensure that the registration process
is seamless and can be done remotely without visiting a branch.
(combank.lk, n.d.)
_
+
+
HIGH
Legal Implementation of
SLFRS 9- financial
instruments
SLFRS 9 may have a significant impact on the way financial assets are
classified and measured, resulting in changes in volatility within profit or
loss and equity, which in turn are likely to impact the Key Performance
Indicators (KPIs). (Central Bank of Sri Lanka, 2020)
The new provisioning computation (forward looking credit losses) is likely
to have a significant impact on the systems and processes of banks, due to
its extensive requirements for data and calculations. (BOC Annual Report,
2018)
_
_
MEDIUM
Ethical Increasing demand for
green banking and
reducing carbon
footprint
Sustainable banking practices are a key focus for banks in Srilanka, to
interweave sustainability into business practices.
Establishment of green banking channels, waste disposal systems,
reduction of paper use through digitization of processes and development
of green buildings for branches.
Agreement with IFC lending officers have been trained to identify and
promote green financing opportunities (Combank Annual report, 2018)
+
+
+
MEDIUM

40
ANNEXURE 3 – COMPETITOR CAPABILITY ANALYSIS
No. of Branches and
ATMs
COMMERCIAL BANK OF CEYLON (PLC) HATTON NATIONAL BANK BANK OF CEYLON
266 branches
830 ATMs
251 branches
853 ATMs
628 branches
689 ATMs
Financial strength Rs 1.303 Tn total assets Rs 1.149 Bn total assets Rs 2.268 Tn total assets
Size of the organization Customer base of 3.5 Mn
No. of employees 5027
Customer base of 2.5 Mn
No. of employees 4,781
Customer base of 13 Mn
No. of employees 8027
Digital presence
(similarweb, n.d.)
Global rank – 268,774
Total no of visits – 172.98K
Bounce rate – 71.28%
Global rank – 444, 904
Global rank – 80534
Unique features and
services offered
Reaching the diverse geographical
diversification and serving underserved
markets.
Furthering financial inclusions in the
country, bringing banking and banking
technology to the unbanked and
underbanked segments of the
community through innovations such
as BANK ON WHEELS.
Providing the Srilanka’s fully fledged
digital bank account, FLASH ACCOUNT
for the millennials with a seamless
banking experience.
Launching UNION PAY CARDS, for the
first time.
Launched the country’s first fully
automated cheque deposit machine.
Best SME bank in Srilanka.
Working with SME customers since
inception, enabling unique products
that cater to their needs.
Excellence in cash management and
the largest number of digital cash
collection solutions supporting the
corporate customer.
Fastest growing insurers in the
country, HNB Assurance PLC and its
subsidiary HNB General insurance,
offer a comprehensive portfolio of
life and non-life insurance products.
The lending partner in the
‘’ERAMBUMA’’ loan scheme, a
unique program which
promotes entrepreneurship
among the country’s youth.
BOC has been a vital partner in
the providing several facilities
at favorable rates for schools to
expand its infrastructure
facilities.
Unique customer value
proposition focused on
emerging customer
preferences and technology
driven competition and
increasing penetration among
youth.
Establish the first ever Security
operating center (soc) in
srilankan banking industry.
Sustainability/ CSR The CSR trust contributed 63Mn
towards the wellbeing of the
community under 4 pillars
- Education
- Community
- Healthcare
- Other projects
Green financing over the past several
years, the bank financed the first
commercially- viable wind power
project and the first commercial scale
solar power project developed in Sri
Lanka.
CSR initiatives evolve around 4
strategic areas.
- Education
- Health
- Environment
- Empowering entrepreneurs
HNB partnered with the annual
Sripada cleanup project organized
by the Leo club to clean non-
biodegradable waste.
Bio diversity projects in Sri Lanka,
partnered with Bio diversity Sri
Lanka to commemorate at the
Investment in CSR 108 Mn.
Investment in employee
training – Rs 338.0 Mn
CSR expenditure on health 3.0
Mn
Comprehensive medical
assistance scheme to
employees
Beneficiaries of grade 5
scholarships – 2000
CSR expenses on Education –
Rs 89.2 Mn
Equal opportunity employer
and do not practice gender
discrimination in selection,

41
International Day for Biological
Diversity.
determining remuneration or
promotions.
Technological
Advances
Commercial bank collaborated by
creating partnerships with world class
technologies to strengthen technical
capabilities
Adopting virtual banking platforms in
Fintech to launch new payment
technologies
Fortifying digital leadership by
leveraging digital platforms and
technologies to align with changing
customer aspirations.
Adopting customer friendly
technological innovations
(Combank Annual report, 2018)
Investing in game changing disrupt
technologies amounted Rs 1 Bn.
Launching SOLO to put smart
technology in the hands of digital
customers.
Strategic partnerships with
merchants for digital payments.
(HNB annual report, 2018)
Investing on cyber security and
technological developments.
Consulted with Boston
Consulting Group (BCG) to
make technology initiatives
Leveraging technology to build
new customer channels.
(BOC Annual Report, 2018)

42
ANNEXURE 4 - LEWIN’S FORCE FIELD ANALYSIS
AI
MOBILE
APP
AND
BLOCKCHAIN
PAYMENTS
Better personalized financial products
Reduced counterparty risks
Both blockchain and AI has the potential
to monitor customer financials
Reduced operational costs in the long run
Deepens customer relationship and
increase customer loyalty
Commercial bank can increase market share
by deploying disruptive innovations
9/10
8/10
8/10
7/10
9/10
8/10
DRIVERS - 49
High Investment required
Customer concerns about data privacy
Technological complexity and requires
specialization to operate
Problems in digital infrastructure
because Commercial bank is pioneer in
deploying disruptive innovation.
5/10
4/10
3/10
4/10
This tool evaluates the drivers and
resisters for blockchain and AI mobile as
an innovation. The drivers outclass
resisters by 33.
Source - (Mulders, 2019), (Digalaki, 2019),
(nibusiness.info.co.uk, n.d.)
RESISTERS - 16

43
ANNEXURE 5 – MENDELOW’S MATRIX (Source – Author’s work)

Creating entrepreneurial change CIM ASSIGNMENTS

More Related Content

What's hot (20)

Similar to Creating entrepreneurial change CIM ASSIGNMENTS (20)

Recently uploaded (20)

Creating entrepreneurial change CIM ASSIGNMENTS