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20Twenty had advantage creating resources in all three groups, as explained by Collis and Montgomery (1995):
? Physical capital resources
? Human capital resources
? Organisational capital resources
Only resources that could be sources of a sustained competitive advantage will be looked at in great lengths in this writing. The value, non-substitutability, rareness, and inimitability of these resources will be analysed to see if they meet Collis and Montgomery (1995)’s five tests of advantage creating, viz: inimitability, durability, appropriability, substitutability and competitive superiority. The analysis will be done keeping in mind the assumptions as listed in appendix A below.
Resources and Profitability
The following resources are identified for discussion:
? First mover advantage
? Customer loyalty
? Transparency
? Culture
The resources mentioned above are capable of allowing 20Twenty implement strategies for effectiveness and efficiency. Because they add value to 20Twenty, they can be considered as sources of competitive advantage that is sustainable (Barney, 1991) and (Dess, Eisner, Lumpkin and McNamara, 2012). The idea of transparent flat monthly charges drew more clients to 20Twenty.

20Twenty as the first virtual bank in South Africa had a lot of opportunities to create resource position barrier. Because it had no physical presence, it had an opportunity to save more on financial resources than major banks. These savings translate to more potential fast growth, which would enable it to create entry barrier. It may then use the barrier to cement the lead (Wernerfelt, 1984).
It is close to impossible for major banks to close all their operations to imitate a newly formed virtual bank. Entry barrier in at least one market is good, but an entry barrier without a resource position barrier leaves 20Twenty vulnerable to diversifying entrants (Wernerfelt, 1984). Entry points for other banks is through internet banking and combination of accounts into one, and still offer loans with credit card that will work almost everywhere.
Threads might also come from non-existing entrants (new comers) to compete in the virtual space. However, if 20Twenty succeed in exploiting the barrier – maybe using economies of scale, these new comers might not find it easy to stay in business and will collapse as a result. For example, if 20Twenty craftily execute the experience curve strategy, late acquirers should pay more and expect less return on the same experience (Wernerfelt, 1984).
According to Barney (1991), organisational culture may be one resource that is difficult to imitate. 20Twenty’s culture is one of a kind, and has earned them a good place in the hearts of their client, thus strong loyalty.
Contrary to popular believe that Resource Based View (RBV) critiques Porter’s five forces (Groen, Kraaijenbrink and Spender, 2009), porter’s model can be used to complement the RBV. Though it might be difficult to imitate 20Twenty’s resources, substituting them with other resources of the same quality is possible (Porter, 1985). It therefore follow that most human capital resources like team experience, managerial experience, etc. cannot necessarily be seen as sustainable competitive advantage – in this light, though they might be rare, inimitable and valuable.
On the other hand, employees that leaves 20Twenty present a threat as it experiences experience leaks that might land in the competitor’s yard. This will destabilise 20Twenty’s barrier, by enabling the competitors to lower their costs.
20Twenty’s resources should be able to stand the test of time. The longer the resource lasts, the more valuable it is. As a virtual bank, 20Twenty should rely more on technology, thus investment in R&D becomes a necessity. To protect its position, 20Twenty should grow its technological capacity. Things like web traffic quota limits should have been avoided.
Technological lead should not be seen as a sustainable competitive advantage, because anyone can come with something better at any time. Technology grows very fast and can be easily replaced with better new ideas. According to Collis and Montgomery (1995), relying on the durability of resources like technology is risky as most core competences have a limited life and will only earn temporary profits.
Imperfect Mobility
Standard Chartered Bank acquired 20Twenty and chose not to change its name. This was because of the understanding that brand name is an intangible asset that is not easy for another company to acquire. Transferring the value of the brand to new owner often present problems (Johnson and Scholes, 2002). In this case, the ’20Twenty’ brand was a sustainable source of competitive advantage.
Competitive Superiority
20Twenty introduced a new way of banking which if more favorable to customers in more than one way. Its ultimate customer service positioned it as ‘the ally of the customer’. Its all in one account, and flat monthly fees, all constitute to its core competence.

Distribution of profits
Competitive advantage creates value for the firm, which translates to more profits. Many firms fall into a trap of distribution of profits with lots of money used to pay highly skilled employees for the fear of losing them, instead of going to the shareholders. Dess et al. (2012:91) explains four factors that explains the extent to which employees and managers will be able to obtain a proportionately high level of the profits that they generate:
? Employee Bargaining Power
? Employee Replacement Cost
? Employee Exit Costs
? Manager Bargaining Power

Knowing that 20Twenty started very well, one would first do systems audit to diagnose what might have gone wrong. 20Twenty seemed a lucrative idea loved by the clients, obviously something good is happening, however, the fact that it was on its steep down dive also points to a possibility of a faulty business model. Focus should also be on the founding principles.
Knowing what clients like should help in decision making, as to what other principles of the banking industry can be applied (maybe modified) to do well for the bank. Clients are happy, so what can the bank do to regain financial stability and also keep shareholders happy.
Clients wanted the flat monthly account management fee, they liked the all in one account idea, but more importantly, the customer service. These are things that should not be changed to keep clients happy, thus inviting more others. The following principles should be relooked at, to add value to 20Twenty:
? Principle of liquidity;
? Principle of solvency;
? Principle of profitability;
? Principle of loan and investment;
? Principle of saving; and
? Principle of technology
Goodhart (2008) argue that the term ‘liquidity’ has many facets, and thus commonly used without further and closer definition. Business dictionary defines liquidity as “a measure of the extent to which a person or organisation has cash to meet immediate and short-term obligations, or assets that can be quickly converted to do this”.
Because 20Twenty does not want to milk its clients for revenue, it should then generate revenue from investments and maybe even loans. Client’s deposits must be reinvested to generate revenue. The biggest challenge is managing liquidity. One obvious strategy is to cab a number of free withdrawals, and reward clients for keeping their money longer in their accounts.
Encouraging a saving habit will result in high liquid cash that can be strategically (guided by policy) invested to generate revenue. A small fee should be charged for withdrawing more than a given times in a month to discourage clients from withdrawing, and also paying them a certain percentage for keeping their money as a reward. This fee may also be used to pay the bank’s inter-trade with other banks.
Marketing should be done at a lower scale, to save more for operations. Marketing should be done in a way that reflect the true operations of the bank. A theme like: ‘while you pay them to save guard your money, we pay you for trusting us with your money’ may seem simple but might work because simplicity is best in marketing (Molloy, 2015).
Loans are arguably the most important source of liquidity (Nikolaou, 2009), and thus a good form of investment for banks. As long as 20Twenty does not hamper on its crowd pullers, adding services should not keep clients away. In a way, 20Twenty will be creating a win-win situation between itself and the clients.
Because of its virtual nature, 20Twenty should focus on short-term small amount loans. Online applications might pose several threads, including FICA regulation fraud, issuing loans in big amounts might disturb the smooth running of the bank.
Sophisticated measures using technology should be implemented to guard against insolvency, while no much cash is left idling – may result in loses. Well-crafted technological solutions (algorithms) should help in bringing about the balance between how much is to be invested and how much to be left liquid, looking at clients’ behavior and withdrawal patterns. Sufficient amounts should be invested to grow the R;D department to remain competitive, using unique advanced technological methods.
Online traffic quotas should be extended to prevent the expected congestion. As a virtual bank, most transactions are done online and telephonically. Enough resources should be put in place in this regard. It amounts to poor customer services when servers are down, and customers are placed on hold for long periods just to make a simple transaction. In a way, the transaction becomes expensive because the client pays for the call.

During the early years of the second millennium, cellphone apps where not popular and advanced like today. Though the use of apps for banking might reduce web traffic (as we know today), the best practice at the time would be to explicitly indicate supported browsers for the online banking system and also give warnings that the client might not have a good banking experience using certain browsers. This way, client will not complain about poor service but will rather switch to the supported browser.

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