Case Study Description of Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers
Capitec Bank was a new bank established at the end of apartheid to offer banking services and loans to the large numbers of low-income potential customers newly opened to economic progress and aspiration by the end of the discriminatory system. The banking context was dominated by four major and long-established banks characterized by conservative legacy practices. Capitec planned to create an innovative offering to serve the low-income market and to migrate this offering into higher income groups. At the same time, the competitive context began to change, as other banks sought to attract lower-income clients as well. The case examines Capitec's strategic options for survival and expansion in this context.
Swot Analysis of "Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers" written by Helena Barnard, Gwen Ansell includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Capitec Income facing as an external strategic factors. Some of the topics covered in Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers case study are - Strategic Management Strategies, and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers casestudy better are - – increasing government debt because of Covid-19 spendings, competitive advantages are harder to sustain because of technology dispersion, there is backlash against globalization, increasing commodity prices, increasing energy prices, increasing transportation and logistics costs, supply chains are disrupted by pandemic ,
digital marketing is dominated by two big players Facebook and Google, wage bills are increasing, etc
Introduction to SWOT Analysis of Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Capitec Income, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Capitec Income 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 Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers can be done for the following purposes –
1. Strategic planning using facts provided in Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers case study
2. Improving business portfolio management of Capitec Income
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Capitec Income
Strengths Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Capitec Income in Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Capitec Income 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.
Innovation driven organization
– Capitec Income is one of the most innovative firm in sector. Manager in Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High brand equity
– Capitec Income has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Capitec Income to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Low bargaining power of suppliers
– Suppliers of Capitec Income in the sector have low bargaining power. Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Capitec Income to manage not only supply disruptions but also source products at highly competitive prices.
Training and development
– Capitec Income has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers 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.
Effective Research and Development (R&D)
– Capitec Income has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Learning organization
- Capitec Income is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Capitec Income is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Capitec Income is one of the leading recruiters in the industry. Managers in the Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Ability to lead change in Strategy & Execution field
– Capitec Income 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 Capitec Income in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that Capitec Income 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.
Analytics focus
– Capitec Income is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Helena Barnard, Gwen Ansell can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Superior customer experience
– The customer experience strategy of Capitec Income in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Capitec Income has relatively successful track record of launching new products.
Slow to strategic competitive environment developments
– As Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers HBR case study mentions - Capitec Income 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers, is just above the industry average. Capitec Income 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers 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 Capitec Income 's lucrative customers.
Need for greater diversity
– Capitec Income has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers, in the dynamic environment Capitec Income has struggled to respond to the nimble upstart competition. Capitec Income has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High cash cycle compare to competitors
Capitec Income has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
No frontier risks strategy
– After analyzing the HBR case study Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Low market penetration in new markets
– Outside its home market of Capitec Income, firm in the HBR case study Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers, it seems that the employees of Capitec Income don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Capital Spending Reduction
– Even during the low interest decade, Capitec Income has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Opportunities Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers | 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 Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers are -
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 Capitec Income in the consumer business. Now Capitec Income can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Capitec Income can develop new processes and procedures in Strategy & Execution 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Capitec Income 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, Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Capitec Income can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Capitec Income 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 Capitec Income to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help Capitec Income to increase its market reach. Capitec Income will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Learning at scale
– Online learning technologies has now opened space for Capitec Income 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Capitec Income 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Capitec Income can use these opportunities to build new business models that can help the communities that Capitec Income operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Buying journey improvements
– Capitec Income can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Manufacturing automation
– Capitec Income can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Capitec Income in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Capitec Income can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers are -
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Capitec Income can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Increasing wage structure of Capitec Income
– 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 Capitec Income.
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 Capitec Income.
High dependence on third party suppliers
– Capitec Income 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.
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. Capitec Income needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Capitec Income with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Capitec Income can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers .
Regulatory challenges
– Capitec Income 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 Strategy & Execution industry regulations.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers, Capitec Income may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Consumer confidence and its impact on Capitec Income 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.
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.
Environmental challenges
– Capitec Income needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Capitec Income can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Weighted SWOT Analysis of Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers 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 Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers 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 Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers 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 Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers 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 Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers 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 Capitec Income needs to make to build a sustainable competitive advantage.