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Critical Analysis On UP Bank Business Model Canvas

Question

Task: To be completed individually, you are required to prepare a business report that deconstructs an organisation's business model and identifies the critical success factors that make the business sustainable. Your analysis will demonstrate your critical thinking skills and your ability to professionally articulate your findings.
Before commencing, you must seek your lecturer's approval to undertake an analysis of the business you have chosen. The type of organisation that should be identified for study is one that is relatively new, innovative in how they operate, and have most likely been established in the last five years.
To achieve a result that meets your study objectives, please ensure the business report addresses each of the assessment criteria detailed below and which is elaborated in the marking rubric.

Answer

Introduction
Up bank business model canvascan help in the growth of an organisation by understanding its application as well as the factors that can help in the development of the organisation. It considers the ways by which business can improve in the given economy as well as the sector.

The report considers the role played by the Up bank business model canvasin trying to determine the success of Up Bank in Australia. The bank was founded in 2018 and is a collaboration between software development companies Ferocia, Bendigo and Adeliade Bank (Up.com.au, 2020). The bank is known to avoid any restrictions related to the banking licenses so that similarity of banks may not be taken into consideration. Up bank offers transactions as well as savings accounts and supports all types of payment platforms for the convenience of the people. Hence, in the current crisis UP bank can be considered as one of the most responsible banking applications for the people to use. The growth has been such that 185,000 customers were recorded to be associated with the bank within February 2020 (Up.com.au, 2020).

The report conducts an analysis of the building blocks that exists while using the Up bank business model canvas. The interrelationship between the blocks as well as critical success factors that are associated with the bank are analysed so that the possibility of success of Up Bank can be made. The possible risks that the bank may have are also undertaken.

II. Up bank business model canvas
The effectiveness of the Up bank business model canvasis based on the amount of work undertaken in making transactions as well as savings accounts. Therefore, maintaining the customer satisfactionis one of the most important requirements of the banks and thus the focus can be more on improving the profitability of the bank as well as unique ways to manage its customer profile (Up.com.au, 2020).

A. What are the building blocks of Up bank business model canvas?
(Refer to Appendix 1)
1. Key partners

For Up Bank to succeed in the business, it is necessary that it maintains a good deal of investors. One of the strategic decisions undertaken by Up Bank is the fact that it supports Apple Pay and Google Pay, thereby ensuring that the investment from these companies can be gained (Up.com.au, 2020). At the same time, being associated with the software companies, the bank also gains assistance from the technological vendors.As stated by Girchenko, Ovsiannikova and Girchenko (2017) the legal way in which the bank has been able to avoid issues with restricted banking license suggests that the regulatory agencies also play a crucial role in the investment of the bank.

2. Key activities
The key activities associated with UP Bank is that it offers transaction and savings account thereby providing the customers with an opportunity to maintain a good deal of money in the bank. Customers are free to gain access to the banks and create accounts for in both mode of banking. Along with this the bank is also associated with the online payment methods. Features such as automatic saving of rounded transaction and analysis of the spending done area also considered as key activities for the bank (Up.com.au, 2020).

3. Key resources
The key resources that can be associated with UP Bank is the way in which the payment assistance is made which can be considered as one of the most important assets of the bank. At the same time, the technological support gained from the international companies as well as the software companies can help in the growth of the bank (Up.com.au, 2020).

4. Value propositions
Up ensures that each of the customers are provide with the proper value so that an effective interest rate can be generated. One of the value propositions of the bank is that it tends to provide customers with the opportunity to deposit products so that lower interest rates can be accounted for the products. At the same time, loans are provided so that a high interest rate can be charged upon which the profitability of the bank can ensured.As stated by Abid, Harrigan and Roy (2019) the bank ensures that customer satisfaction as well as profitability be maintained.

5. Customer relationship
It has been evidenced in this Up bank business model canvas analysis that the customer relationship is high in the bank. The initial start begun with promoting the services to Deaking University during orientation with 2000 students signing up with the bank.With the progress in the market, Up Bank also ensured that it devised a “invite a friend” system through which existing customers can make references for the bank (Up.com.au, 2020). Along with this support via the availability of different online payment modes also exist with the bank.

6. Channels
Up Bankhave channels with the partners that help in the easy transaction of money. One of the channels with which the bank can be associated with is the international payment service TransferWise. However, Kayl et al. (2017) stated that the bank has only one store across the country, making it difficult for it to cover the entire population of the country. Prediction can be made about the steady increase of the bank in the Australian market.

7. Customer segments
For Up Bank the customer segments include targeting those people that are involved in the retail and corporate sectors. According to Bhat and Darzi (2016), this includes a high number of depositors so that the profitability of the bank can be maintained. At the same time, borrowers from the banks are also considered as primary target customers mainly because it can help the bank to lent money on interest thereby improving the profitability as well as maintain a professional relation with the customers (Up.com.au, 2020).

Gender

No particulars

Income

People that can deposit in good numbers and can borrow money in large numbers

Types of customers

Retail and corporate sector workers

Psychographic segment

People interested in borrowing large sum of money for business

Table 1: Customer segmentation of Up Bank (Source: Up.com.au, 2020)

8. Cost structure
The cost analysis of Up Bank can be associated with the calculation of the expenses that are brought about at the bank. It has been evidenced in this block of Up bank business model canvas that the interest expenses associated with the bank can have a reasonable impact at the bank with investment being less in the upcoming year (Up.com.au, 2020).

9. Revenue stream
The revenue stream is analysed by the income generated by the bank. Interest in the loans provided along with the shared capital can make up for the revenue stream of the bank. The following year can also see changes in the revenue streamdue to the increase of the popularity of the bank.

B. Interrelationship
The building blocks of Up bank business model canvas provide a high intense relationship among one another. The interdependence between the building blocks ensure that success of Up Bank is high and the building blocks can have a proper success for the bank. The biggest example that can be seen is the key partners and the channels that exist in the banks (Up.com.au, 2020). The channels are important in partnering the bank to success and can be considered as one of the best ways by which customers can be gained. The key resources also help Up Bank to attract the customers in the bank.

C. Critical success factors
The critical success factor for selected bank considered in the Up bank business model canvas is the use of the online payment platforms and the investment gained from Apple and Google. It has been evidenced from the analysis that the bank is the first in Australia to support Apply pay provisions and hence can be considered as a possible means of success in the future.

D. Risk
With international partners helping the bank to grow, the risk can be the fall out between the partners and any form of economic recession in Australia can have a negative income on the bank.As stated by Sigala (2018) the year 2020 can be considered as a risky year in which Up Bank may be threatened to lose investors due to the economic crisis that is bound to be imposed on its investors.

E. Changes in the Up bank business model canvas
(Refer to Appendix 2)

III. Conclusion
From the analysis on Up bank business model canvas, the success of Up Bank can be considered as crucial and an inspiration for newly grown banks. Customer satisfaction as well as profitability is both kept in focus and the use of latest technology helps the bank to become successful in the country. However, despite the success, certain recommendations can be considered which can help the bank to grow further particularly in the following year.

IV. Recommendation
From the Up bank business model canvas, one of the changes that can be made is in the cost and revenue structure. With the crisis in the economy, the investments of the bank need to decrease and the loans and advances provided to the customers need to increase. The shared capital and the reserves can also increase to help the bank gain more profitability. At the same time, additional costof channels may be dealt with for which fee income can be considered to improve on the profitability of the bank.?

Bibliography
Abid, A., Harrigan, P., & Roy, S. K. (2019).Online relationship marketing through content creation and curation.UP bank business model canvasMarketing Intelligence & Planning.

Bhat, S. A., &Darzi, M. A. (2016).Customer relationship management.International Journal of Bank Marketing.

Girchenko, T., Ovsiannikova, Y., &Girchenko, L. (2017).CRM system as a keystone of successful business activity. Knowledge-Economy Society: Management in the Face of Contemporary Challenges and Dilemmas, 251-261.

Kayl, I. I., Zudina, E. V., Epinina, V. S., Bakhracheva, Y. S., &Velikanov, V. V. (2017). Effective hr management as the most important condition of successful business administration.UP bank business model canvasIn Integration and Clustering for Sustainable Economic Growth (pp. 23-30).Springer, Cham.

Larentis, F., Antonello, C. S., &Slongo, L. A. (2018). Inter-Organizational Culture: Linking Relationship Marketing with Organizational Behavior. Springer.

Osterwalder, A., &Pigneur, Y. (2010).Business Model Generation. Hoboken, New Jersey: John Wiley & Sons Inc.

Osterwalder, A., Pigneur, Y., Bernarda, G., & Smith, A. (2014).Value Proposition. Hoboken, New Jersey: John Wiley & Sons Inc.

Rosenbaum, D., More, E., &Steane, P. (2018).Planned organisational change management.Journal of Organizational Change Management.

Sigala, M., 2018.Implementing social customer relationship management.International Journal of Contemporary Hospitality Management.

Up.com.au. (2020). Retrieved 10 August 2020, UP bank business model canvasfrom https://up.com.au/?

Appendices
Appendix 1
Original Up bank business model canvas
Key Partners

Key Partners

 

Investment partners like Apple and Google

 

Legal partners

 

Technology vendors

 

Key Activities

 

Transaction and savings account

 

Online payment platform

 

Automatic saving of rounded transaction

 

Analysis of spending patterns

Value Proposition

 

Deposit products (Lower interest rates)

 

Loan products (Higher interest rates)

Customer Relationships

 

Orientation among students

 

Development of an invite system

Customer Segments

 

Retail and corporate customers

 

Distributors

 

Borrowers

Key Resources

 

Payment modes used

 

Customers

 

Technical support

 

Channels

 

Use of TransferWise

Cost Structure

 

Investment

Interest expenses

Revenue Streams

 

Interest from loans

 

Shared capital

Appendix 2
Changes made in the Up bank business model canvas

Key Partners

 

Investment partners like Apple and Google

 

Legal partners

 

Technology vendors

Key Activities

 

Transaction and savings account

 

Mobile applications

 

Online payment platform

 

Automatic saving of rounded transaction

 

Analysis of spending patterns

Value Proposition

 

Deposit products (Lower interest rates)

 

Loan products (Higher interest rates)

Customer Relationships

 

Orientation among students

 

Development of an invite system

Customer Segments

 

Retail and corporate customers

 

Distributors

 

Borrowers

Key Resources

 

Payment modes used

 

Customers

 

Technical support

Channels

 

Use of TransferWise

Cost Structure

 

Investment

Interest expenses

Channel costs

Revenue Streams

 

Interest from loans

 

Shared capital

 

Fee income

Appendix 3
Timeline of the bank

Activity

March 2018

October 2018

November 2018

March 2019

June 2019

February 2020

Promotion of services

 

 

 

 

 

 

Official launch

 

 

 

 

 

 

New services

 

 

 

 

 

 

30,000 customers

 

 

 

 

 

 

100,000 customers

 

 

 

 

 

 

185,000 customers

 

 

 

 

 

 

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