Question

A UK based asset management group has an insurance subsidiary and a small banking subsidiary.

The group’s banking subsidiary is planning to roll out a new online retail banking services. This service will allow the customer to view in one place all the customer’s bank accounts (both with the bank and with competitors) alongside any cryptocurrency holdings he or she has across various cryptocurrency platforms and any loans or mortgages the customer has taken out from a range of sources. The service will make it easy for customers to switch between product providers for all the financial products mentioned earlier in this paragraph. In addition, the group plans to make it easy for customers to set up regular transfers into and out of the group’s collective investment funds from or to any of the bank accounts the customer chooses to include in the service. There are no current plans to include any other asset managers’ collective investment funds within the service.

Q: Assess the risks and opportunities that such a business expansion might introduce to the group.

Answer 1

The business model comes with lot of opportunities which are as follows:

1. More and more people will be attracted because of the ease of transactions.

2. The cryptocurrency held in other accounts can be now merged with the new banking facilities this increases their liquidity.

3. this provides the company with expansion strategy because of the fact that all the accounts can now be merged and thus provides the cutomer with a wide variety of product offerings and thus helps in expansion.

However it comes with a lot of risks also:

1. The company has risks with the new business model because of the fact that customers can have different options to choose from and thus have comparables to choose from. This might give the competitors an upper edge.

2. The cryptocurrency is prone to market changes more than the normal this though increases liquidity increses price fluctuation risk.

3. The funds can be withdrawn from the collective scheme at ease this might affect the company's business.