Student: Deborah Haverkort (11154535) Contact: dchaverkort@gmail.com
Course: Msc Business Administration - Strategy Supervisor: Stephan von Delft
Submission: July 15th, 2017
An Empirical Analysis
of the Bank Business Model:
Delineating the Business Model Components
in the Banking Industry
Statement of Originality
This document is written by Deborah Haverkort, who declares to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it. The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
Signature:
Deborah Haverkort 15.17.2017
2 Acknowledgements
This thesis is written as part of an Msc Business Administration at the University of
Amsterdam. It was drafted with support and guidance of several individuals without whom I would not have been able to finish the report.
Therefore, first and foremost I offer my gratitude to my supervisor, Dr Stephan von Delft, who supported me throughout my thesis. With his patience and understanding, he was able to provide me often with detailed and deliberate feedback, guiding the way through literature, and encouraging me to work into detail and with great effort.
I am also very thankful to those who offered their time and support throughout the data collection process. Especially those who provided relevant insights during interviews, and invaluable reports that would not have been included in the data collection otherwise.
Lastly, I was lucky to meet a fellow researcher of business models. Being able to share my enthusiasm with a like-minded peer helped me to stay focused when I got overwhelmed in data and literature. To Monique I would like to say that I am sincerely grateful for your help and guidance.
Amsterdam, July 2017 Deborah Haverkort
“... We are like dwarfs on the shoulders of giants, so that we can see more than they, and things at a greater distance, not by virtue of any sharpness of sight on our part, or any physical distinction, but because we are
carried high and raised up by their giant size.”
3 Abstract
A review of strategy literature on business models suggests that the business model comprises ‘strategy’, ‘customer and market’ and ‘value creation’ components. These components should be considered evenly to understand the implications of business models on firm performance. This strategy research stream has focused mainly on SMEs, and has not yet considered the bank sector in business model research. The finance literature on the other hand, does research the business model in the banking industry. Yet, this literature stream focuses merely on value creation components, therewith showing a limited understanding of the construct. To bridge the two literature streams, this research delineates the business model components in the context of the banking sector by using the integrated business model framework suggested by Wirtz, Pistoia, Ullrich and Göttel (2016). The aim of this research is to enhance the understanding of the bank business model and business model components. Data obtained from case studies of four Dutch commercial banks, suggests that a narrow understanding of the bank business models exists, as it regarded a reflection of the financial structure. Moreover, focus lies on value creation from the bank perspective. To allow for a broader understanding of the bank business model, I enhance the existing business model framework through a grounded theory approach. The proposed framework allows for a complete representation of the bank business model, illustrates all relevant components, and delineates value creation in a broad sense. Findings contribute to strategy research on the business model by enriching theory of the business model components. A second
contribution is made towards finance research on the business model by providing a concise definition and holistic perspective of the construct. I propose that the enhanced business model framework may be used as a tool in designing the bank business. Future research should focus on integrating transparency, sustainability and (technological) developments within evolving business model theory.
4 Key words: Business models; bank business model; business model components; business
5 Contents 5 List of Tables 8 List of Figures 8 1. Introduction 9 2. Literature Review 13
2.1 The Business Model Definition 13
2.2 Towards an Integrated Business Model Framework 15
2.2.1 Conceptualizing the Business Model 15
2.2.2 The Business Model Functions 18
2.2.3 The Integrated Business Model Framework 20
The Strategic Components 22
Customer and Market Components 23
Value Creation Components 25
3. Methodology 30
3.1 Research Strategy 30
3.2 Sample 31
3.3 Data Collection 32
3.3.1 Expert Interviews 33
3.3.2 Interviews with Bank Employees 34
3.3.3Archival Documents 35
6
4. The Banking Industry and the Public Role of Banks 40
4.1 The Role and Importance of Banks 40
4.2 The Banking Industry 41
5. Findings 43
5.1 Strategy Components 44
5.1.1 Strategic Dimension 44
5.1.2 Resource Dimension 45
5.1.3 Network Dimension 47
5.1.4 Summary Strategic Components 49
5.2 Market & Customer Component 50
5.2.1 Customer Dimension 50
5.2.2 Market Dimension 52
5.2.3 Revenue Dimension 54
5.2.4 Summary Market & Customer Components 55
5.3 Value Creation Components 56
5.3.1 Manufacturing 56
5.3.2 Procurement 58
5.3.3 Financial 59
5.3.4 Summary Value Creation Components – To be Completed 60
5.3 Additional Codes 61
7
6. Discussion 65
6.1 Implications for Theory 68
6.2 Implications for Practice 71
6.3 Limitations and Future Research 72
7. Conclusion 73
References 74
Data Collection Articles and Documents 77
Appendix A: Data Collection Stage – Description of Key Activities 79
Appendix B: Example Interview Protocol 80
Appendix C: Process of Building Theory from Case Study Research 82
Appendix D: Example Contact Summary Sheet 83
8 List of Tables
Table 1: Definition and Value of Business Models Construct in Strategy Literature ... 15
Table 2: Understanding of Business Model in the Finance Literature ... 18
Table 3: List of Consulted Data Sources ... 35
Table 4: Initial codes and their Description ... 37
Table 5: Codes and their Description ... 37
Table 6: Summary of Findings per Component-Dimension ... 43
Table 7: Summary of Open-Code Findings ... 43
Table 8: Exemplary Quotes Strategy Dimension ... 44
Table 9: Exemplary Quotes Resource Dimension ... 45
Table 10: Exemplary Quotes Network Dimension... 47
Table 11: Summary of the Findings of the Strategic Components ... 49
Table 12: Exemplary Quotes Customer Dimension... 50
Table 13: Exemplary Quotes on Market Dimension... 52
Table 14: Exemplary Quotes on Revenue Dimension... 54
Table 15: Summary of the Findings of the Customer and Market Components ... 55
Table 16: Differences between Bank Business Models... 62
List of Figures Figure 1: Components of the Integrated Business Model ... 22
Figure 2: The Business Model Canvas ... 28
Figure 3: How decisions on business model components lead to different business models .. 29
Figure 4: Enhanced business model framework ... 67
9 1. Introduction
In the past, diverging perspectives in business model research have led to distinct
definitions and representations of the construct. Recently however, business model literature has developed significantly. Researchers have converged the different definitions into the understanding that the business model is a representation of how firms do business (Porter, 2001; Zott, Amit & Massa, 2011). Decomposing the business model into its different parts (components), allows for such a representation. Researchers therefore adopt a component-view in order to explain the model (e.g. Demil & Lecocq, 2010) and business model frameworks have been developed to allow for a conceptualization of the construct (e.g. Osterwalder & Pigneur, 2010; Johnson, Christensen & Kagermann, 2008).
Wirtz, Pistoia, Ullrich and Göttel (2016) bring together existing business model research in strategy literature, and define the business model as (2016, p.41) “a simplified and
aggregated representation of the relevant activities of a company". Converging the component-representations, they conceptualise the business model through a framework comprising value creation, strategic- and market and customer components. Together, these components form the potential to create sustained competitive advantage for the firm. Research should therefore consider every component when assessing the business model.
It is this notion – that the business model can be a source of competitive advantage – on which the relevance for strategy research and practice hinges. This idea has led to
increased interest on the construct. Amit and Zott (2001) for example, ascribe the
implications of the construct to the business model’s potential to create and appropriate value. As the strategy research stream, finance research on business models suggests a contingent relation between business models and bank performance (e.g. Chen, Danbolt & Holland, 2014; Hryckiewicz & Kozłowski, 2017). In this research stream, Curi,
Lozano-10 Vivas and Zelenyuk (2015, p.22) find that the interest in bank business models has been rekindled by the effects of the financial crisis on the financial landscape, and research seeks to find an optimal business model for banks.
Even though consensus between both streams exists on the notion that business models relate to performance, the strategy literature has rarely taken the banking sector into account when developing theory on the construct (e.g. Teece, 2010), focusing mostly on SME (e.g. Achtenhagen, Melin & Naldi, 2013) and e-business (e.g. Amit & Zott, 2001). It therefore remains unclear whether existing component theory is applicable for the banking industry. Concurrently, research on bank business models in the finance stream remains undeveloped. Literature does not offer a (concise) definition of the concept (e.g. Beck, Demirgüç-Kunt, Merrouche, 2013) and researches the business model merely through the banks financial structure. By focussing on the financial structure, strategy and customer and market components - such as the customer relationship (Chen et al., 2014) - are often
disregarded. As such, this research stream shows only partial character of the model. This has led to diverging understanding of the construct in both literature streams. Ambiguity caused by different notions of the business model may cause conversations about business models to become highly ambiguous, vague, and confusing (Zott & Amit, 2013, p.406).
This paper advances the study of business models by bridging the two literature streams. To do this, I take a strategic – rather than financial – stance towards the business model in the context of the banking industry. I do this by adopting Wirtz et al.’s (2016) integrated business model framework. As the framework is established through integration of relevant strategy literature on business models, it provides a strong starting point to further analyse the construct. Specifically, adopting a component-oriented view to analyse a business model in a novel industry will allow new insights to develop theory of the components. This
11 is especially relevant for future research, as “the variety of different components and partial models exhibit a high degree of complexity that need to be reduced” (Wirtz et al., 2016, p.49).
Researching the business model is especially relevant in the context of banks, as existing studies on the bank business model often disregard strategic-, and customer and market components (e.g. Beck et al. 2013; Curi et al., 2015; Hryckiewicz & Kozłowski, 2017; Fahlenbrach, Prilmeier & Stulz, 2012). Specifically, the finance stream focusses on financial ratios, thereby overlooking essential aspects such as the customer relationship (Chen et al., 2014). This presents a second limitation of existing business model research in the banking context. By not considering all relevant components, it becomes difficult to delineate its potential consequences (Zott, Amit & Massa, 2011, p.1028). In other words, to effectively measure the effects of the business model, research on the construct should consider all its facets. Analysing the business model in the banking industry may offer valuable
opportunities for further developing business model research, and provide new insights to existing theories. By adopting the component-oriented view, this study is able to develop a more complete and comprehensive understanding of the bank business model.
In sum, literature on the business model construct in the context of the banking sector remains unclear on as it does not provide a unified definition of the business model, nor an integrated conceptualization of the construct in the banking industry. A lack of cohesion leads to dispersion of perspectives, and hampers further research on business models. The
ambiguity on the bank business model specifically affects the strand of research seeking to understand the effects of business model on performances.
This research takes a first step in conceptualising the bank business model by taking a strategic – rather than financial – perspective on the business model within the context of the banking industry. By first examining theoretically how the business model can be understood
12 and illustrated I conceptualize the construct strategically. I then investigate empirically the bank business model, along the structures of the integrated business model framework (Wirtz et al., 2016).
A multiple case study of four Dutch commercial banks reveals that existing conceptualisations of the business model are insufficient to represent the bank business model. Using data obtained from interviews with industry experts and bank employees, as well as archival data, I delineate the components that comprise the bank business model. This has led to the development of an enhanced business model.
The contribution of these findings to the literature is twofold: First, by delineating all components from a strategic perspective, the research gives an in-depth and holistic overview of the bank business model. This may clarify some of the ambiguity that remains on the definition of the business model and its components, contributing to a coherence and acceptance of the construct.
Secondly, by creating an understanding of the construct within the distinct context of the financial industry, new insights are provided to the strategy literature. Specifically, by using a component framework, the findings enrich the literature aiming to identify the different business model components. The consideration of these components has
increasingly gained importance, through the increasing differentiation of the business model within a strategic understanding (Wirtz et al., 2016, p.37).
A third contribution is made towards practitioners in the banking industry. Only when a business model and its components are well defined, can they be identified, compared, and possibly enhanced. Thus, a clear understanding that is developed through this research, allows bank management to better evaluate their business model, and make more educated decisions towards value creation and capture. Specifically for banks, an appropriate business
13 model may reduce sensitivity of performance to financial crisis (Fahlenbrach, Prilmeier & Stulz, 2012).
2. Literature Review
This section first provides an overview of the business model literature and explains its relevance in strategy research. It then describes how a component view aids in the
conceptualization of business models, with a focus on the application of concepts to banking.
2.1 The Business Model Definition
The first use of the notion of business models can be traced back 70 years ago (Markides, 2013, p.313), after which diverging perspectives on the construct have led to distinct definitions of the term and of its implications on both strategy research and practice. The ambiguity on its use and dispersion on the definition of the construct has been
recognized by various researchers (e.g. Casadesus-Masanell & Ricart, 2010; Zott et al., 2011), and has led to debate on its value as distinct unit of analysis (Arend, 2013).
Table 1 illustrates how scholars use different definitions, as they aim to conceptualize the business model in a way that best suits the research objective and focus of their analysis. Most notably, the various definitions distinguish different perspectives of the model. Baden-Fuller & Haefliger (2013) for instance, emphasise the model’s implications for capturing value from technology, whereas Teece (2010) focus on monetizing the value that is created for the customer.
From this, it seems that the opacity of the concept may be ascribed to the fact that, depending on its use in research or practice, the model can have different descriptions. The idea of the business model as construct with diverse implications is highlighted by Baden-Fuller and Morgan (2010), who coin this the ‘multivalent character’ of the business model. As they explain, the model acts “as various forms of model: to provide means to describe and
14 classify businesses; to operate as sites for scientific investigation; and to act as recipes for creative managers.” (p.156).
Author Definition Value
Amit & Zott (2001)
“A business model depicts the design of transaction content, structure, and governance so as to create value through the exploration or business
opportunities” (p.511)
The business model has the potential to create value for a firm through distinct sources of value creation.
Baden-Fuller & Haefliger (2013)
“… a system that solves the problem of identifying who is (or are) the
customer(s), engaging with their needs, delivering satisfaction, and monetizing the value.” (p.419)
The business model mediates the link between technology and firm performance.
Casadesus-Masanell & Zhu (2013)
“… the logic of the firm, the way it operates and how it creates and captures value for its stakeholders.” (p. 471)
The entrant’s choice of business model has implications for its position among incumbent competitors.
Chesbrough & Rosebloom (2002)
“... provides a coherent framework that takes technological characteristics and potentials as inputs, and converts them through customers and markets into economic outputs” (p.532)
The business model acts as a focusing device that mediates between technology
development and economic value creation.
Demil & Lecocq (2010)
“... the way activities and resources are used to ensure sustainability and growth.” (p.231)
Business model evolution determines firm sustainability.
McGrath (2010) Describe business model by its components: “... the basic ‘unit of business’, which is what customers pay for and ‘key metrics’ of process or operational advantages for delivering superior performance”. (p.249)
The business model provides firms “a fresh new way to consider their options in uncertain, fast-moving and unpredictable environments”. (p.247)
Teece (2010) “A business model articulates the logic and provides data and other evidence that demonstrates how a business creates and delivers value to customers.” (p.173)
The business model defines how “an
enterprise delivers value to customers, entices customers to pay for value, and converts those payments to profit.” (p.172)
15 Zott & Amit
(2010)
“… a system of interdependent activities that transcends the focal firm and spans its boundaries (p.216)
The business model enables the firm, in concert with its partners, to create value and also to appropriate a share of that value
Table 1: Definition and Value of Business Models Construct in Strategy Literature
2.2 Towards an Integrated Business Model Framework
Recent research aims to unify the different understandings of the business model concept (e.g. Zott et al., 2011). From a recent review of business model research in the strategy literature, Wirtz et al. (2016) move passed the dispersion of perspectives. They converge the existing views and conceptualizations, and define the business model as
“a simplified and aggregated representation of the relevant activities of a company. It
describes how marketable information, products and/or services are generated by means of a company's value-added component. In addition to the architecture of value creation,
strategic as well as customer and market components are taken into consideration, in order to achieve the superordinate goal of generating, or rather, securing the competitive
advantage.”
This definition is found to be useful for the purpose of this research, as it incorporates relevant business model research. It addresses three important notions of the construct that have been established throughout previous research, and as such lends itself as a solid groundwork for further research on the construct. First, it adopts the idea the business model takes a holistic representation of ‘how firms do business’. Second, it incorporates the two main business model functions, namely value capture and value appropriation. Lastly, it integrated the notion that the business model can be a source of competitive advantage. These notions are explained in the following sections.
16 The business model takes a holistic perspective on ‘how firms do business’ (Zott, Amit & Massa, 2011, p.1021). The idea is captured within the definition of Wirtz et al. (2016), as it defines the construct as ‘a representation of the relevant activities of a company’. This
description remains broad however, and leaves room for ambiguity. For example, such an explanation may be confused with firm strategy. It is not surprising that the two are often confused, as a firm’s business model can be considered a reflection of its realized strategy (Casadesus-Masanell & Ricart, 2010, p.195). Strategy and business model are hence closely linked, and both describe a company’s relevant activities, or actions, to reach the firm’s objectives. The two thus go hand-in-hand – a business model must be coupled with the strategy in order to sustain its competitive advantage (Teece, 2010, p.180). Even though the two are alike, researchers emphasize the distinct value for strategy research of strategy and business models (Chesbrough & Rosenbloom, 2002; Casadesus-Masanell & Ricart, 2010; Baden-Fuller & Haefliger, 2013).
From this example, it can be seen that by defining the business model broadly, research on the construct lacks specificity and opens the door to misunderstandings. Overlap with other concepts thereby leads to doubts on its relevance as unit of analysis (Arend, 2013). It is therefore that Zott and Amit (2013, p. 405) point out that, to avoid confusion on what it is being researched, it is necessary to incorporate a clear definition into future research.
A study of business model literature in the banking industry reveals that this research stream has not yet provided such a clear definition. As in strategy literature, finance literature on business models supports the notion that a firm’s business model is related to its
performance (Chen, Danbolt & Holland, 2014). But where strategy research has made
significant progress in developing a concise definition and theoretical framework, research on bank business models in finance research has only developed after the most recent financial crisis in 2008 and remains quite limited (Table 2).
17 More precisely, in existing finance literature on business models, researchers either don’t provide any definition (e.g. Fahlenbrach et al., 2012), or provide merely a proxy of the
model. Thereby the researchers ignore the advice of providing a clear definition, and
illustrate partial character of the model (Table 2). Hryckiewicz and Kozłowski (2017) provide an illustrative example of this in their research on the link between business models and bank performance. Firstly, they do not provide a definition of what a business model is, but merely state that “each banking business model is a choice of the empirical investigation of bank asset and liability structure” (p.3). Secondly, in the paper the authors equate business models to strategy, disregarding statements of their distinct differences (e.g. Teece, 2010). As noted before, Zott and Amit (2011) explicitly mention that the scientist should specify the definition it uses, and in what context it will analyse the construct.
Author Definition Measures Types of Model
Beck, Demirgüç-Kunt, Merrouche (2013)
Difference in business model “should become obvious from banks’ balance sheets and income statements” (p.434) No definition Fee income Non-deposit funding Loans-deposit funding Islamic banking Conventional Banking
Chen, Danbolt &
Holland (2014) “… the organisation’s chosen system of inputs, business activities, outputs and outcomes that aims to create value over the short, medium and long term.” (p.564) (from IIRC (2011))
Identify four categories of intangibles:
- Top management human capital - Employee level human capital - Structural capital - Relational capital N.A. Curi, Lozano-Vivas & Zelenyuk (2015)
“We follow the academic literature in using diversification measures to analyze bank business models… “ No definition
Asset structure Income structure Funding
Focused business model Diversified business model
Hryckiewicz & Kozłowski (2017)
Use portfolio approach to define business model and define: “each banking business model is a
Asset structure Liability structure
Diversified model Specialized model Investment model
18 choice of the empirical
investigation of bank asset and liability structure.”
Trader model
Fahlenbrach, Prilmeier & Stulz (2012)
No definition, Riskiness:
Reliance on short-term funding
Leverage
Table 2: Understanding of Business Model in the Finance Literature
It makes sense that without specification of the definition and use of business models, discussion on the topic becomes dispersed and ambiguous. Developing theory of bank
business models and establishing a definition within this context, may thus progress the value of business models as distinct unit of analysis in both research streams.
2.2.2 The Business Model Functions
Besides the understanding of the business model as a representation of how firms do business, strategy scholars agree on the idea that business models can be considered a source of value creation and value capture (e.g. Amit and Zott, 2001). The first, value creation, refers to the extent to which the firm creates value for the customer. Value capture denotes the extent to which the firm is able to monetize this value (Baden-Fuller & Haefliger, 2013, p.420). Casadesus-Masanell and Ricart (2010, p.196) explicitly link the business model to these two functions as they refer to a firm’s business model choice as “the firm’s logic of value creation and value capture”. This is the second notion that is covered by Wirtz et al.’s (2016) definition.
In this definition, value creation is addressed through mention of ‘value-added component’, whereas value appropriation is suggested through presenting the model as a
means of securing the competitive advantage. It is through these two functions that a business model can affect firm performance, and should therefore be a careful consideration when designing a business model.
19 The question then arises of how the business model creates and captures value. Many scholars aim to answer this question by identifying the mechanisms that drive value creation (e.g. Amit & Zott, 2001), and provide guidelines for developing a successful business model (e.g. Johnson et al., 2008).
Amit and Zott (2001) do so by identifying sources of value creation for a business model, namely efficiency, complementarities, lock-in, and novelty. Their description of these sources is helpful for our understanding of the mechanisms that generate value, but it does not specify how practitioners should then develop their model to be successful. Johnson et al. (2008) provide more guidance through a roadmap of three steps that should be taken to design the firm’s business model. These three steps include creating a customer value
proposition, designing the profit formula, and identifying required resources and processes. It is important to note that this value creation is cantered around customer value.
The findings on value creation and appropriation are useful for scholars and
practitioners to develop an understanding of how the business model can contribute to a firm performance and yet, the findings are only meekly reflected – if at all – by bank business model literature. Rather than using the findings of the strategy scientists, the finance literature focusses merely on the bank’s financial structure, such as capitalization and asset quality (Beck, Demirgüç-Kunt & Merrouche, 2013). It thereby shows only partial character of the model.
In sum, the relevance of the business model lies in its potential to create and appropriate value. It is important to adopt an inclusive approach when assessing this
potential. That is, when looking at an organization’s business model, one must consider not
merely the financial ratios, or look at different revenue streams. The business model is more than a sum of its parts (Kindström, 2015), and a creating representation of the model would thus require more holistic analysis methods.
20 2.2.3 The Integrated Business Model Framework
Demil and Lecocq (2010) adopt the idea of the business model being more than a sum of its part. They emphasise the word ‘model’, insisting on the importance of the coherence
between the business model elements, referred to as components (p.227).
Similarly, by adopting a component-oriented perspective, Wirtz et al.’s (2016) research delineates the different elements that comprise the business model, creating an integrated business model framework. As the paper suggests: “In addition to the architecture of value creation, strategic as well as customer and market components are taken into consideration, in order to achieve the superordinate goal of generating, or rather, securing the competitive advantage.”. Through an extensive research, their paper delineates and
summarizes the dimensions that comprise the business model, and subsequently groups these under types of components, illustrated in Table 2.
Thus, the business model comprises value creation, strategy and market and customer components. Together, these components allow for a representation of the business model and should be valued equally when assessing the business model and its implications towards firm performance.
From the previous sections, it became clear that bank business model literature has not yet integrated conceptions of the business model definition and its implications on performance into its theory development. Its third limitation relates to the partial
representation of the model throughout existing research. Chen, Danbolt and Holland (2014) point towards the incomprehensiveness of existing bank model research in their paper, as they refer to the literature on how well the bank business model is run as “somewhat limited, as it focuses heavily on tangible or financial resources in banks” (p. 564).
21 This of course, has significant implications for bank management, and the decisions made on the different dimensions. For future research, this limitation hampers further development of theory on the consequences of the business model, and implications on its performance.
Considering the recentness of research on business models in the finance literature, along with the opacity of the market and the increased complexity of the bank’s activity (Hryckiewicz & Kozłowski, 2017), it is not surprising that a coherent understanding of the
bank business model and their relevant components has not yet been developed. This research aims to provide a first step in addressing the gap through a thorough analysis of the bank business model and its components within the context of the banking industry.
As the integrated framework by Wirtz et al. (2016) provides a means to adopts a component-oriented view of the entire business model, it allows for a holistic perspective of the construct. The next chapter continues by elaborating on the different components, and creates a thorough understanding of their content and importance. To reduce ambiguity that may arise from referring to the underlying dimensions of the business model as ‘models’, as done by Wirtz et al. (2016), I continue to refer to these as dimensions. Thus, strategic
components are represented by dimensions of strategy, resources and network. For example, a bank’s investor network is a strategic component that falls under the network dimension.
22
Figure 1: Components of the Integrated Business Model (Wirtz et al., 2016, p.44)
The Strategic Components
The strategic components consider the implications of corporate strategy, along with a firm’s resources – including competencies and capabilities, and its network.
Strategy – As previously outlined, strategy and business model are not the same (e.g. Teece, 2010). However, one cannot be separated from the other, as for the firm’s strategic position and development has a crucial influence on the business model design. Should a bank for instance position itself as a sustainable bank, it would incorporate sustainability into its strategic goals. The business model, in its turn, would reflect the banks efforts towards sustainability by choosing for sustainable resources, or reaching out to a customer segment that is actively choosing for more sustainable solutions. The Dutch Triodos Bank is an illustrative example of such a strategic path.
23 Resources – The notion that resources are relevant to the firm’s competitive
advantage, is backed by the now widely adopted Resource Based View of the firm. The theory suggests that valuable, rare, inimitable and non-substitutable resources are, in essence, the core of a firm’s sustained competitive advantage (Grant, 1991; Peteraf, 1993). Within the realm of business model literature, Demil & Lecocq (2010, p.230) build on this view to research performance implications of the resources, and suggest managers should constantly pay attention to their portfolio of resources and competences and develop the business model to best exploit these. It is important to highlight the fact that with resources, we do not only refer to the tangible assets. As suggested by Osterwalder & Pigneur (2010, p.34) the
resources can be physical, intellectual, human or financial.
Network – Company’s networks have been found especially important for capturing value by Chesbrough and Rosenbloom (2002). An example of this can be found in the Dutch banking sector, where a network of banks offer an online application that allows clients to pay more easily to other clients using the same application. Not only does this exemplify how networks can form an important role within a business model, it shows how two sources of value creation – complementarity and network effect (Zott & Amit, 2001) – can be
operationalized through business model design.
Customer and Market Components
The second set of components refer to dimensions of the firm’s customer and the market in which it operates.
Customer – In the business model literature, customers are often put centre stage to the business model (e.g. Baden-Fuller & Haefliger, 2013). McGrath (2010) argues that without creating value for the customers, business models cannot create value for firms either
24 (p.248). Likewise, customer relationships are argued to be a core intangible element for many banks (Chen et al., 2014). A mismatch between offering and customers’, or failing to reach the target market, will directly affect a firm’s competitive advantage. It is therefore important to identify, reach and retain the target segments.
Market offer – Johnson et al. (2010, p.52) suggests that to attract the customer to buy a product or service, a firm must construct a value proposition, stating how the firm offers the best alternative to get the customer’s job done. Wirtz et al. (2016, p.41) suggest that the entire market, including competitor and market structure, should be considered in this context.
Revenue – Successfully being able to convert offering to sales allows the firm to generate transaction (one-time) or recurring revenue streams (Osterwalder & Pigneur, 2010, p.30). Deregulations have caused bank to diversify, now having numerous revenue streams (Curi et al., 2015). This makes it even for regulators hard to understand how banks do business.
25 Value Creation Components
The third and last group of components are the value creation components. They revolve around the dimensions of manufacturing, procurement and financial structure.
Manufacturing – The manufacturing dimension – also referred to as service provision, reflects the key activities and processes of the firm. In other words, the manufacturing
dimensions consists of processes necessary to delivering the customer value proposition (Johnson, 2010). Considering the banks landscape, this dimension reflects rather service activities than the processes of transforming lower value goods into higher value goods.
Procurement – The procurement dimension clarifies how relevant input factors can be procured cost-effectively. However Wirtz et al. (2016, p.42) suggest that this cannot be neglected, the procurement dimension is least represented throughout business model literature. This could be ascribed to the fact that the dimensions are considered relevant mostly for manufacturers and production firms, rather than service providers. When
analysing the model in service industries, information and human capital could be valued as relevant input factor, as well as the processes of their acquisition such as human resource management.
Financial – When analysing the business model, finance research focusses mainly on this dimension, assuming the functions of financial control and planning. Even though the notion of the business model “refers in the first instance to a conceptual, rather than a
financial, model of a business” (Teece, 2010, p.173), the components are of equal importance
when aiming to conceptualise the integrated business model. After all, a company would not be able to facilitate its key resources without necessary capital (Osterwalder & Pigneur, 2010, p.40).
Chen, Danbolt and Hammond (2014, p.564) point towards the incomprehensiveness of existing bank model research in their paper, and refer to the literature on how well the
26 bank business model is run as “somewhat limited, as it focuses heavily on tangible or
financial resources in banks” (p.564). Also Hryckiewicz and Kozłowski (2017) notice the
ambiguity on how banks to business, and notice that even within banks there is lack of sufficient and reliable knowledge of banks’ activities, which have hampered the accurate assessment of banking sector risks and appropriate reactions to the sector’s problems during the crisis (p.2). This of course, has significant implications for bank management, and the decisions they make on the different dimensions.
Designing the Business Model
Each dimension mentioned in the previous section has a specific contribution towards the value creation and value capture potential of a firm’s business model. Therefore, each dimension must be considered carefully, in order to develop an integrated conceptualization.
From this we can conclude that when designing a business model, firms should make well thought-out decisions on all dimensions that fall under each of the components
suggested by Wirtz et al. (2016). These choices can be grouped into one of three types identified by Casadesus-Masanell & Ricart (2010, p.198). Policy choices are decisions about all aspects of a firm’s operation. For instance, banks could make choices about closing offices
in sparsely populated areas; discouraging employees to accept bonuses; or offering more on-line service through their website or through apps. Asset choices are about tangible resources, such as office facilities. Governance choices are decisions on the structure of contractual arrangements. These choices confer decision rights over policies or assets. For example, a bank business model may contain (as a choice) a certain capital-to-asset ratio, which leads onto a governance choice for the investment it makes. Seemingly slight differences in the governance of policies and assets can have dramatic effects on value creation and –capture, meaning that governance choices should be extremely well-thought-out. This counts
27 especially for the banking industry, as banks are bound to national and international
regulations that limit the decisions they can take.
To guide practitioners in this decision making, Osterwalder and Pigneur (2010) develop a framework they coin ‘the business model canvas’ that consist of nine building blocks representing the business model. It is an understandable way for practitioners to grasp the model’s worth, and use it to develop a business model. They describe its use through the metaphor of the painter’s canvas: “this tool resembles a painter’s canvas – preformatted with
nine blocks – which allows you to paint pictures of new or existing business models”. The blocks described within the framework can be viewed as dimensions of the business model components described by Wirtz et al. (2016). This idea is illustrated in Figure 1. Grouping the building blocks along the component groups, illustrates that frameworks such as that of Osterwalder and Pigneur (2010), can be a useful means to provide a holistic
representation of the construct. It shows how a framework can be used to make decisions on the various dimensions, and how the components form a model that together is more than the sum of its parts, as they individually and collectively contribute towards value creation.
In this framework, strategic components are the value proposition – previously described as how the firm gets the customer’s job done (Johnson, 2010), and key partners, activities and resources – those required to make the business model work. The customer and market components are clustered on the right side of the framework and include customer segments, customer relationships and channels – the way the company chooses to
communicate with and reach its customer segments to deliver a value proposition. Revenue streams are also included here. However, I would argue that this block shows some overlap with financial components, as for example the choice to lend money to generate revenue, will affect the financial structure of the firm). Finally, the cost structure describes all costs
28 When we ‘read’ the model from left to right we see that we the strategic components are required to reach the customer, and without an appropriate cost structure, it is not possible to generate revenue streams.
Figure 2: The Business Model Canvas (Osterwalder & Pigneur, 2010) grouped by Wirtz et al.'s (2016) Components
In sum, business models are representations of how firms do business. They comprise several components on which decisions are made when designing the model. Thus, the choices a firm makes on the different components form the company’s business model, and different choices will form different types of business models that can be mapped out through a framework such as the business model canvas. Each business model has a certain potential to create and capture value and thus create a sustained competitive advantage. It is therefore necessary to consider every component when designing the business model. This idea is captured in Figure 3.
Strategic Components
Customer & Market Components Financial Components
29
Figure 3: How decisions on business model components lead to different business models
Figure 3 illustrates that the decisions made on the dimensions determine the business model design. This can be clarified with an example: Should a firm decide that is will target high end market (customer dimension) with a luxury product (market offer dimension), its next decision may be to use high quality resources (procurement dimension). Decisions on any dimension will either add or destroy the business model’s potential to create and appropriate value for the firm.
Figure 3 is not an exhaustive illustration of possible decisions and outcomes, and it is not easy to map out every decision. Research aiming to identify the different types of
business models remains unclear on how many business models exist. Even within the banking industry, different research methods have led to the identification of different types of model (e.g. van Ewijk & Arnold, 2014; Hryckiewicz & Kozłowski, 2017). However, as this research focuses mainly on the value component, the literature shows only partial character. I shall elaborate further on this in the next chapter.
30 3. Methodology
3.1 Research Strategy
Previous research on business models has not yet established theory within the context of the banking industry. Similarly, finance research on the bank business model has not developed an integrated conceptualization of the bank business model. The dispersion leads to partial representation of the construct throughout the literature and limited
generalizability of the existing theory on business model components. By using Wirtz et al.’s (2016) integrated business model framework, I build on previous theory to generate new insights and enrich existing literature of the business model components, as well as further develop theory of the bank business model. Hence, the research is best described as theory elaboration (Gilbert, 2005).
To do this, I analyze the business model of banks along the lines of the framework. To my knowledge, there has not been a similar study to date. Along with the lack of prior
theorizing of the model, the exploratory nature of the research makes the inductive approach an appropriate choice of methodology for developing theory (Eisenhardt, 1989). Therefore, - although I deduct the framework from Wirtz et al.’s (2016) research - I take an inductive stance towards the research, and delineate different bank models by looking at their components.
A case-study analysis is adopted as it is found suitable for research of “a
contemporary phenomenon in its real-life context” (Yin, 2014, p.16). Every business model will be assessed along the lines of its strategy-, market and customer-, and value creation components. Addressing the different components of each bank’s business model separately from the business model as a whole through embedded case-study offers opportunities for extensive analysis, enhancing the insights into each case (Yin, 2014, p.56).
31 As single-case study design is found to be more vulnerable than the multiples-case study, the research adopts the latter approach (Yin, 2014, p.64). A research design based on multiple cases allows to create an in-depth and detailed understanding of the model, as each case is used to test the theoretical insights derived from analysis of other cases, and to modify or refine them. Therefore, the research outlines several bank’s business models, of which the findings are then used to develop theory. This will allow for replication logic and ensue a stronger case study.
Replication logic encourages the development of testable theory that is unbiased by the researcher (Eisenhardt, 1989), and allows for ‘cycling’ between theory and data (Glaser & Strauss, 1967). Grounding emerging theory through this replication logic may provide new perspectives on the business model literature (e.g. Amit & Zott, 2001). Moreover, since the multiple-case study is deeply embedded in rich empirical data, it is likely to produce theory that is accurate, interesting and testable (Eisenhardt & Graebner, 2007).
Findings may contribute to the understanding of the construct in different contexts, as well as enrich the literature that aims to delineate the business model forms and components (Wirtz et al., 2016, p.46).
3.2 Sample
The research design has been constructed as to provide an initial understanding of the commercial bank business model and provide novel insights on business model components. In this sense, its purpose is to develop, rather than test existing theory, making theoretical sampling an appropriate method (Eisenhardt & Graebner, 2007, p.2007).
As the variability of regulations and different reporting standards across countries makes drawing conclusions about banks across borders non-viable, the scope is limited to a specific geographical market. As with singling out one industry, this allows focus on
32 theoretically useful cases “constrains extraneous variation and sharpens external validity” (Eisenhardt, 1989, p.533), by removing the influence of environmental variation.
Thence, a sample is based on its contribution to theory development, including replication logic and elimination of alternative explanations (Yin, 2014). Resting on these statements, the scope for sample selection is narrowed down to Dutch commercial banks, comprising 22 banks in total.
From these, purposeful sample selection narrowed the scope to focus on banks that would be theoretically useful to extend emergent theory (Eisenhardt, 1989, p.537). This led to a selection of banks that could a) be studied from various perspectives, to be able to
triangulate data and build strong cases b) represent banks that varied in their business model, making within-case analysis valuable and also allowing for a more representative sample of the population of banks. Eventually, a sample of four banks were selected. The sample includes two of the largest banks (>50% of assets held by Dutch commercial banks (DNB, 2016)), and two smaller banks that were distinct in their target market and image.
Initially the research sample included only independent banks, but after expert interviews it became evident that including subsidiary and private-wealth banks would be necessary to shed light on all components and to provide a more accurate representation of variance between the business models. Including subsidiaries would also reveal whether there were differences between a bank’s business model and its subsidiary’s.
Eventually, a sample of 4 commercial banks is derived from the sampling process.
3.3 Data Collection
The primary source of data collection for this research is derived from semi-structured interviews with bank employees. As the goal of the research was to evolve bustiness model theory and not to produce summary statistics about the banks, questions altered throughout
33 the course of the research. These alterations of the research questions were not unsystematic. Rather, they can be referred to as ‘controlled opportunism’, in which I took advantage of unique findings and the emergence of new themes to improve emerging theory findings (Eisenhardt, 1989, p.539).
However interviews are found to be a highly efficient way to gather rich, empirical data, this data source leaves space for bias (Eisenhardt & Graebner, 2007, p.28). Following the first principle of data collection (Yin, 2014, p.102), expert interviews and archival documents are added to the research to mitigate bias. Additionally, multiple data sources allow for triangulation of the data and strengthen grounding of the theory (Eisenhardt, 1989, p.538). The different sources are listed in Table 3: List of Consulted Data Sources.
3.3.1 Expert Interviews
To form an initial understanding of the components of the bank business model, explorative, semi-structured interviews were held with industry experts, including two staff members of the Dutch Central Bank and a consultant that had worked on projects in the financial services industry. As the Dutch Central Bank has a regulatory, rather than profit function, it falls outside of the scope of this research (commercial banks). Including expert informants who view the focal phenomena from different perspectives limits research bias (Eisenhardt & Graebner, 2007, p.28).
A first interview with a business model analyst of the Dutch Central Bank provided a preliminary overview of the components, informed the researcher about possible variance on specific components between banks, and indicated areas where it might be more difficult to create an accurate representation (e.g. due to subjectivity, or sensitivity of a topic within the banking industry or a specific bank).
34 An interview with a financial services consultant offered insight into the processes that might otherwise be neglected. Due to the consultant’s position, it was possible to shed light upon differences between banks that may go unnoticed by bank employees.
A third interview was held with an economic policy advisor of the Dutch Central Bank, the interview provided insights on a high abstraction level, along with an
understanding of past and future changes in the business model and answers to questions that came up after the first six interviews with bank employers.
Face-to-face, semi-structured interviews were designed to encourage the experts to talk freely and openly about their opinions and experience. Interview guides were constructed to answer three questions:
- What are the (most important) bank business model components? - On what components do the bank business models differ?
- What components may be overlooked?
All interviews were recorded and contact summary sheets were made to highlight important findings.
3.3.2 Interviews with Bank Employees
Initially I intended to interview employees in senior management positions as these are considered to have the most broad and in-depth knowledge of the business model.
However, from the first two interviews it became eminent that including actors from different hierarchical levels would allow to develop a more exhaustive understanding of the business model and provide a more accurate reflection of differences between the models of various banks. Additionally, offering different perspectives limits bias.
Six face-to-face, semi-structured interviews provided data to delineate each bank’s components. These interviews lasted 25 minutes to an hour, and some participants were
35 contacted afterwards to clarify certain topics or statements. The contact summary sheets of the interviews were sent back to the participants to get their feedback and to check the accuracy of the data.
Data Source Description Number
Bank Employee - Junior level - Senior level
Employee at a Dutch commercial bank <5 years working experience at a bank, executive function or trainee
>5 years working experience at a bank, management level or higher
3
3 Industry Expert Consultant in financial services industry
Employee of Dutch Central Bank
2 2 Industry Report Industry Reports by the Dutch Central Bank
Industry Reports by the European Central Bank Industry Reports from Consultancies
2 1 1 Annual Report Dutch Central Bank (year 2016)
Case banks (year 2016)
1 4 News articles News articles:
News article on data management in banks News article on bank business model
1 1
Internal Documents
Internal documents provided by interviewee 2
Table 3: List of Consulted Data Sources
3.3.3Archival Documents
Archival data included company websites, bank’s annual reports, industry reports, and materials provided by informants. Unobtrusiveness and specificity of the documents made these a valuable primary source of data and a means to triangulate interview data findings.
The most important use of the documents was to validate and augment evidence from other sources (Yin, 2014, p.107). Adding these sources additionally provides a means to control for retrospective bias (Gilbert, 2005). Lastly, they proved to be invaluable for
36 answering why certain patterns occurred (e.g. ‘why is it that banks consider their financial structure before the customer value?’
3.2 Data Analysis
Common to inductive case-study research (e.g. Graebner & Eisenhardt, 2004), there was overlap between data collection and analysis (Eisenhardt, 1989) during the period of the study. Field notes were derived from audio recordings, minutes taken during the interview and documents that were provided by the interviewees. Separate from data analysis observations, field notes were kept in an idea booklet to reflect on theory development.
Overlapping data analysis and -collection gives the researcher a head start in analysis. Moreover, it allows to take advantage of flexible data collection. The flexibility permitted by this method allowed to alter questions throughout the process to probe for information on emerging themes, improving resultant theory (Eisenhardt, 1989).
As discussed in the previous chapter, business models provide a framework to
describe how firms do business. In order to analyze the construct in the banking industry, we must therefore first understand what banks are, and create a perception of the context in which this research takes place. An initial interview with an industry expert and industry reports allowed for a preliminary understanding of the banking sector and how banks do business.
Using a directed approach (Yin, 2014), initial codes for data analysis are deducted from Wirtz et al.’s (2016) integrated business model framework (Table 4). Codification based
on an established framework allows for familiarisation with the data along the lines of a basic structure. However, as there has been no previous study on the business model in the context of banking industry, data is further analysed through Eisenhardt’s (1989) suggested process of building theory from multiple case study research (Appendix C). The clear procedures of
37 grounded theory data analysis can enhance construct validity of a qualitative study (Chen, Danbolt & Holland, 2016).
Interview data was processed by listening to the audio recordings and reflecting the findings onto a contact summary sheet, including extensive summaries of each interview (see Appendix D for an example). Table 3 shows the initial codes on which findings were
analyzed. For example, under the strategy component I sought data on the strategic
dimension. To do this, I looked for information about ‘implication of strategy on the business model’. These descriptions are derived from the literature. Where the table indicates ‘affect business model’, it infers that the component affects the business model potential to create and appropriate value. By allowing for open coding, new themes emerged. These themes are
reflected by Table 5.
Component-Dimension 1. Strategic 2. Resources & Competencies 3. Network Strategy
Implications of strategy on business model
Resources and competencies that affect the business model
Individuals or organisations that affect the business model
4. Customer 5. Market 6. Revenue
Market & Customer
Target segments Segment offering
Market offering: The value created through the business model
Implications of competition on business model
Direct and indirect forms of revenue streams
Revenue structure
7. Manufacturing 8. Procurement 9. Financial
Value Creation Activities and processes of value creation How relevant input factors are attained Financial structure determinants that affect the business model
Table 4: Initial codes and their Description (Based on integrated business model framework (Wirtz et al. 2016)
Code 10. Value Creation 11. Societal Function 12. Sustainability Trends The various perceptions
of value creation
The importance of commercial
banks to society The shift towards sustainable business
38 3.2.1 Within-Case & Cross-Case Analysis
Following Eisenhardt’s (1989) suggested process of theory development, collected data is structured in two ways. First, interview and archival data from each bank was grouped to build a conceptualization of a bank’s business model. The model is reflected through its underlying components. The within-case analysis helped to cope with the cascade of data resultant from the data collection process. Additionally, familiarization with each case accelerated the process of cross-case analysis.
After within-case analysis, a cross-case analysis was structured per business model component. A distinction is made between within-case and cross-case data analysis. Individual case studies (within-case) are drawn from all employees and archival data from one bank and describe the business model of one bank. After completing within-case
analysis, constructs are sought across multiple cases in an attempt to discover similar themes in different settings. Tentative propositions are drawn from grouping the bank business models’ components according to variables of potential interest. Additional cases were compared in pairs to identify similarities and differences. Eventually, emerging concepts and themes are refined, revisiting the data to see if theory corresponds to each case, in order to construct a conceptual framework (Eisenhardt, 1989).
The interview data were manually analyzed due to the consideration that grounded theory is an “interpretive process” (Suddaby, 2006, p.638) between the researcher and the data. The first step of this analysis was to code the data according to initial codes deducted from Wirtz et al.’s (2016) integrated business model framework, thus using a directed approach (Hsieh & Shannon, 2005). However, as there has been no previous study on the business model in the context of banking industry, data is further analyzed through
39 The case data is manually analyzed due to the consideration that grounded theory is an “interpretive process” (Suddaby, 2006, p.638) between the researcher and the data.
40 4. The Banking Industry and the Public Role of Banks
As put forward by the strategy business model literature, the business model offers a means to represent ‘how firms do business’. Due to the societal function that banks hold, the way they day do business is in some ways distinct from other industries. I suggest that it is this specific function, and resultant complexity that has led strategy scholars to avert from research on the business model within this industry. Simultaneously, it is this function and complexity that forms the relevance of the industry as a context for business model research.
In any way, it offers a perspective/context that requires clarification. To understand how banks do business, I shall therefore first shed light on the context in which this research took place.
4.1 The Role and Importance of Banks
Commercial banks are, as most commercial firms, driven by profit generation. They carry out services and deliver products to customers to create profit that is either invested or distributed among shareholders. Yet, in several ways the banks differ from other for-profit firms. That is, where other firms derive their right of existence from the value they create for customers in the form of the product or service they deliver, banks exist primarily for their role within society.
As stated on the website of one of the largest banks in the Netherlands: “Our economy couldn’t function without banks, … banks are the oil for the wheels that keep the economy turning.” This role can be described as their societal function, and it is precisely this
characteristic that makes the sector a particularly opaque industry (Altunbas, Manganelli & Margues-Ilbanez, 2011, p. 34). To explain how banks affect the economy, one must first gauge its primary activities:
41 - Accepting deposits – The bank secures a large portion of society’s savings, including
savings that are held by any type of organisation (SME, NGO’s, insurance firms, etc.).
- Providing credit – The savings kept at the bank are used to give out loans for industrial, commercial, and other purposes.
- Payment infrastructure – Without banks, it would be difficult for most individuals and firms to process payments in a way that is made possible through the bank
payment system. Risk-free payments of large sums of money can be done at any time, mostly at a very low cost.
From the execution of these activities, banks derive their importance for society. Firstly, without their support function it would be much more difficult and costly to store money, receive and grant loans, and process payments. Besides, these activities must all be done in risk-free manner. For example, the bank cannot give out more loans than it is capable of, considering its liquidity. This is to ensure society’s capital is safe. From this it can be stated the banks have a utility function and a risk function.
Second, by giving out credit, banks allow businesses to invest beyond their cash at hand. This enforces rapid economic growth and promotes entrepreneurship. This can be called its economic development function. I shall further refer to the banks importance to society by its societal function.
4.2 The Banking Industry
Because of these functions, commercial banks are under scrutiny of central banks. Central banks impose regulations to ensure risk the risk management- and economic
development function are fulfilled before the bank’s profit generation function. I shall further to the
42 This is done through several regulatory measures, of which the limits to banks
leverage ratio is the most restrictive to the profit potential. The required leverage ratio is set by central monetary authorities to ensure banks have a capital buffer, and to constrain the degree to which a bank can leverage this. The international Basel III establishes a minimum of 3% leverage ratio. (Currently, Dutch commercial banks are at an average leverage ratio of 9%, for more information, see Appendix D).
This creates a specific competitive environment for banks. The regulations enforced on banks limit competition by raising barriers to entry. Specifically in the Netherlands, competition between banks is low. However the sector is large compared to other countries – its capital volume is four times the country’s GDP, compared to an average of 300% – it is relatively concentrated (DNB, 2016, p.16). The three largest banks hold over 80% of the market for mortgages, capital loan, and savings in terms of outstanding (p.17).
Against this background, we can further develop an understanding of the bank business model by looking at the different components.
43 5. Findings
Based on data analysis along the lines of the integrated business model framework (Wirtz et al. 2016), findings can be structured per component and underlying dimension. A summary of these findings is reflected by Table 6.
Component/
Dimension 1. Strategic 2. Resources & Competencies 3. Network
Strategy Strategy evolves around financial structure Human Capital Image Data
Knowledge Development Data Management
External: Government & competitors
Internal: Organisational structure
4. Customer 5. Market 6. Revenue
Market & Customer
Segments:
Corporate/ Retail/ Private Offerings: Based on volume
Similar offerings
Limited competition Most revenue from leverage Overlap financial dimensions
7. Manufacturing 8. Procurement 9. Financial
Value Creation
Short-term rents against long-term expertise
In-house development versus external expertise
Restricted by network
Restricts business model design
Table 6: Summary of Findings per Component-Dimension
From the codes derived from open coding, the findings can be summarized as per Table 7.
Code 10. Value Creation 11. Sustainability 12. Societal Function
Strategy Banks create value from bank, customer & society perspective There is a trend towards sustainability in business model design
Banks’ business model lack transparency for society
