Case Study Description of First Direct: Branchless Banking
First Direct has become the model of tele-banking worldwide, despite similar initiatives undertaken by large international banks. The case describes the history of First Direct and the various components of its operations, especially around the central issue of relationship marketing at a distance.
Authors :: Jean-Claude Larreche, Delphine Parmenter, Christopher H. Lovelock
Swot Analysis of "First Direct: Branchless Banking" written by Jean-Claude Larreche, Delphine Parmenter, Christopher H. Lovelock includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Direct Branchless facing as an external strategic factors. Some of the topics covered in First Direct: Branchless Banking case study are - Strategic Management Strategies, Supply chain and Sales & Marketing.
Some of the macro environment factors that can be used to understand the First Direct: Branchless Banking casestudy better are - – increasing commodity prices, challanges to central banks by blockchain based private currencies, talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, technology disruption, increasing government debt because of Covid-19 spendings, competitive advantages are harder to sustain because of technology dispersion,
central banks are concerned over increasing inflation, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of First Direct: Branchless Banking
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in First Direct: Branchless Banking case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Direct Branchless, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Direct Branchless operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of First Direct: Branchless Banking can be done for the following purposes –
1. Strategic planning using facts provided in First Direct: Branchless Banking case study
2. Improving business portfolio management of Direct Branchless
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Direct Branchless
Strengths First Direct: Branchless Banking | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Direct Branchless in First Direct: Branchless Banking Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Direct Branchless are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Ability to lead change in Sales & Marketing field
– Direct Branchless is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Direct Branchless in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Superior customer experience
– The customer experience strategy of Direct Branchless in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Training and development
– Direct Branchless has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in First Direct: Branchless Banking Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Diverse revenue streams
– Direct Branchless is present in almost all the verticals within the industry. This has provided firm in First Direct: Branchless Banking case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Direct Branchless digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Direct Branchless has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
High brand equity
– Direct Branchless has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Direct Branchless to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Highly skilled collaborators
– Direct Branchless has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in First Direct: Branchless Banking HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Successful track record of launching new products
– Direct Branchless has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Direct Branchless has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Sustainable margins compare to other players in Sales & Marketing industry
– First Direct: Branchless Banking firm has clearly differentiated products in the market place. This has enabled Direct Branchless to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Direct Branchless to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Direct Branchless has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Ability to recruit top talent
– Direct Branchless is one of the leading recruiters in the industry. Managers in the First Direct: Branchless Banking are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses First Direct: Branchless Banking | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of First Direct: Branchless Banking are -
Workers concerns about automation
– As automation is fast increasing in the segment, Direct Branchless needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Lack of clear differentiation of Direct Branchless products
– To increase the profitability and margins on the products, Direct Branchless needs to provide more differentiated products than what it is currently offering in the marketplace.
High bargaining power of channel partners
– Because of the regulatory requirements, Jean-Claude Larreche, Delphine Parmenter, Christopher H. Lovelock suggests that, Direct Branchless is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study First Direct: Branchless Banking, is just above the industry average. Direct Branchless needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Slow to strategic competitive environment developments
– As First Direct: Branchless Banking HBR case study mentions - Direct Branchless takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study First Direct: Branchless Banking, in the dynamic environment Direct Branchless has struggled to respond to the nimble upstart competition. Direct Branchless has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Interest costs
– Compare to the competition, Direct Branchless has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Direct Branchless is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study First Direct: Branchless Banking can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High operating costs
– Compare to the competitors, firm in the HBR case study First Direct: Branchless Banking has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Direct Branchless 's lucrative customers.
Products dominated business model
– Even though Direct Branchless has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - First Direct: Branchless Banking should strive to include more intangible value offerings along with its core products and services.
Low market penetration in new markets
– Outside its home market of Direct Branchless, firm in the HBR case study First Direct: Branchless Banking needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities First Direct: Branchless Banking | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study First Direct: Branchless Banking are -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Direct Branchless to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Direct Branchless to hire the very best people irrespective of their geographical location.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Direct Branchless can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, First Direct: Branchless Banking, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Creating value in data economy
– The success of analytics program of Direct Branchless has opened avenues for new revenue streams for the organization in the industry. This can help Direct Branchless to build a more holistic ecosystem as suggested in the First Direct: Branchless Banking case study. Direct Branchless can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Manufacturing automation
– Direct Branchless can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Direct Branchless can use these opportunities to build new business models that can help the communities that Direct Branchless operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Developing new processes and practices
– Direct Branchless can develop new processes and procedures in Sales & Marketing industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Learning at scale
– Online learning technologies has now opened space for Direct Branchless to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Direct Branchless in the consumer business. Now Direct Branchless can target international markets with far fewer capital restrictions requirements than the existing system.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Direct Branchless can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Direct Branchless can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Direct Branchless in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Direct Branchless can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Low interest rates
– Even though inflation is raising its head in most developed economies, Direct Branchless can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Direct Branchless can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats First Direct: Branchless Banking External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study First Direct: Branchless Banking are -
Regulatory challenges
– Direct Branchless needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Sales & Marketing industry regulations.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Direct Branchless.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Direct Branchless in the Sales & Marketing industry. The Sales & Marketing industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Direct Branchless will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Direct Branchless needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Direct Branchless in the Sales & Marketing sector and impact the bottomline of the organization.
Increasing wage structure of Direct Branchless
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Direct Branchless.
High dependence on third party suppliers
– Direct Branchless high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Consumer confidence and its impact on Direct Branchless demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Shortening product life cycle
– it is one of the major threat that Direct Branchless is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Stagnating economy with rate increase
– Direct Branchless can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Direct Branchless with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Weighted SWOT Analysis of First Direct: Branchless Banking Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study First Direct: Branchless Banking needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study First Direct: Branchless Banking is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study First Direct: Branchless Banking is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of First Direct: Branchless Banking is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Direct Branchless needs to make to build a sustainable competitive advantage.
