Commonwealth Bank chief executive Ian Narev has committed the bank to pursuing its growth strategy "in Australia primarily" over the next few years. Narev believes the bank's key capabilities are best deployed meeting the needs of customers in its core franchises - the domestic retail and small business markets.Narev briefed analysts and media on the bank's strategy yesterday - his first opportunity to set out his goals for CBA since taking the top job in December 2011.He said the bank could create long-term value by working on three core capabilities: the technology advantage the bank has gained through its core banking modernisation program; the big improvement in customer satisfaction and staff engagement that it has achieved over a number of years; and its strong balance sheet.Narev said: "When we determined our key capabilities we looked at whether we could strengthen them. We had to believe there was further value in leveraging these capabilities."And we had to believe these capabilities would be difficult for a competitor to replicate. We were not talking about anything like pricing. These had to be things that take years to build."The bank's core system modernisation, which involved 1000 people working on the project for four years, gives the bank something that no other Australian bank has - real-time banking and everyday settlement for almost all of its 10 million customers (a few corporate clients are yet to be migrated to the platform).Narev said innovations like Kaching (a smartphone application that facilitates payments to email and to mobile) rely on that core capability.He said new technology also enabled CBA to more easily meet the higher standards of trust and privacy that are demanded of banks now.Narev said one of the lessons of the financial crisis was that there was an advantage in balance-sheet strength. "It is a priority to maintain that relative strength," he said.The most contentious of the capabilities cited by Narev is the "customer-focused culture and people". Over the past five years the bank has improved on its customer satisfaction rankings in a number of markets, but it still lags behind its peers in most of the surveys. And the big banks lag most small financial institutions in satisfaction surveys.CBA rates a lot better than it did five years ago, but it is hard to argue that it has any comparative advantage in this area. Last year, the bank's board also trashed the incentive structure in place tying executive bonuses to improvements in these measures, deciding instead to pay the highest level of bonus irrespective of the bank's actual ranking surveys.It is also hard to argue that this capability is difficult to replicate. Over the past five years all the big banks, and the banking industry generally, have improved their customer satisfaction ratings.As to the deployment of these capabilities, Narev is convinced that his primary focus should be on the bank's Australian network of 1150 branches and on what is the biggest ATM fleet in the country, and on the most frequently visited financial services'