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 - – there is increasing trade war between United States & China, increasing inequality as vast percentage of new income is going to the top 1%, increasing transportation and logistics costs, increasing commodity prices, wage bills are increasing, central banks are concerned over increasing inflation, cloud computing is disrupting traditional business models,
banking and financial system is disrupted by Bitcoin and other crypto currencies, competitive advantages are harder to sustain because of technology dispersion, 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 -
Operational resilience
– The operational resilience strategy in the Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
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.
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.
Successful track record of launching new products
– Capitec Income has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Capitec Income 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.
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.
Strong track record of project management
– Capitec Income is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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.
Highly skilled collaborators
– Capitec Income 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 Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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.
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.
Diverse revenue streams
– Capitec Income is present in almost all the verticals within the industry. This has provided firm in Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers 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.
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.
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 -
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.
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.
Skills based hiring
– The stress on hiring functional specialists at Capitec Income has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Workers concerns about automation
– As automation is fast increasing in the segment, Capitec Income 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.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Capitec Income supply chain. Even after few cautionary changes mentioned in the HBR case study - Capitec Bank: Leveraging Banking Innovations to Attract Wealthier Customers, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Capitec Income vulnerable to further global disruptions in South East Asia.
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 decision making process
– As mentioned earlier in the report, Capitec Income has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Capitec Income even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Lack of clear differentiation of Capitec Income products
– To increase the profitability and margins on the products, Capitec Income needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
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.
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 -
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Capitec Income 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. Capitec Income 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.
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.
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.
Leveraging digital technologies
– Capitec Income can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
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.
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.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Capitec Income to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Capitec Income can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
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.
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.
Building a culture of innovation
– managers at Capitec Income can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
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.
Shortening product life cycle
– it is one of the major threat that Capitec Income is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
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.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Capitec Income in the Strategy & Execution industry. The Strategy & Execution 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.
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 .
Technology acceleration in Forth Industrial Revolution
– Capitec Income has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Capitec Income needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
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.
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. Capitec Income 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.
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.
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.
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.
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.
