Case Study Description of FleetBoston Financial: Online Banking, Portuguese Version
As the ninth largest bank holding company in the United States in 2000, FleetBoston Financial Corp. provided a myriad of financial services, including retail banking, loan origination, and brokerage accounts. This case explores how FleetBoston responded to the Internet and the rise of new competition from both within and outside the banking industry. The majority of the case acquaints students with how customers interact with financial services, how these firms make money, and what are their challenges and opportunities. The majority of retail banking customers are unprofitable, making for a unique operating environment in which innovations are consistently aimed at reducing costs. Because customer behavior contributes directly to costs, innovations center on providing lower cost channels for customer transactions. Unfortunately, each new channel increases overall costs, and banks are still faced with reducing costs. In addition, the Internet has given rise to new competitors, many with lower cost structures and revenue potential outside banking.
Authors :: Frances X. Frei, Hanna Rodriguez-Farrar
Swot Analysis of "FleetBoston Financial: Online Banking, Portuguese Version" written by Frances X. Frei, Hanna Rodriguez-Farrar includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Fleetboston Banking facing as an external strategic factors. Some of the topics covered in FleetBoston Financial: Online Banking, Portuguese Version case study are - Strategic Management Strategies, Competition, Customers, Disruptive innovation, Entrepreneurship, Internet, IT, Operations management and Technology & Operations.
Some of the macro environment factors that can be used to understand the FleetBoston Financial: Online Banking, Portuguese Version casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, supply chains are disrupted by pandemic , banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing transportation and logistics costs, increasing commodity prices, geopolitical disruptions, increasing energy prices,
talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of FleetBoston Financial: Online Banking, Portuguese Version
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in FleetBoston Financial: Online Banking, Portuguese Version case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Fleetboston Banking, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Fleetboston Banking 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 FleetBoston Financial: Online Banking, Portuguese Version can be done for the following purposes –
1. Strategic planning using facts provided in FleetBoston Financial: Online Banking, Portuguese Version case study
2. Improving business portfolio management of Fleetboston Banking
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Fleetboston Banking
Strengths FleetBoston Financial: Online Banking, Portuguese Version | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Fleetboston Banking in FleetBoston Financial: Online Banking, Portuguese Version Harvard Business Review case study are -
Strong track record of project management
– Fleetboston Banking is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Fleetboston Banking digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Fleetboston Banking 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.
Successful track record of launching new products
– Fleetboston Banking has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Fleetboston Banking 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
– Fleetboston Banking is one of the most innovative firm in sector. Manager in FleetBoston Financial: Online Banking, Portuguese Version Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Sustainable margins compare to other players in Technology & Operations industry
– FleetBoston Financial: Online Banking, Portuguese Version firm has clearly differentiated products in the market place. This has enabled Fleetboston Banking to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Fleetboston Banking to invest into research and development (R&D) and innovation.
Analytics focus
– Fleetboston Banking 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 Frances X. Frei, Hanna Rodriguez-Farrar 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 Fleetboston Banking in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Operational resilience
– The operational resilience strategy in the FleetBoston Financial: Online Banking, Portuguese Version 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.
Ability to recruit top talent
– Fleetboston Banking is one of the leading recruiters in the industry. Managers in the FleetBoston Financial: Online Banking, Portuguese Version are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Organizational Resilience of Fleetboston Banking
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Fleetboston Banking does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Technology & Operations field
– Fleetboston Banking 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 Fleetboston Banking in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Fleetboston Banking 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 Fleetboston Banking is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in FleetBoston Financial: Online Banking, Portuguese Version Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses FleetBoston Financial: Online Banking, Portuguese Version | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of FleetBoston Financial: Online Banking, Portuguese Version are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the FleetBoston Financial: Online Banking, Portuguese Version 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 Fleetboston Banking has relatively successful track record of launching new products.
Low market penetration in new markets
– Outside its home market of Fleetboston Banking, firm in the HBR case study FleetBoston Financial: Online Banking, Portuguese Version needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Need for greater diversity
– Fleetboston Banking 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 bargaining power of channel partners
– Because of the regulatory requirements, Frances X. Frei, Hanna Rodriguez-Farrar suggests that, Fleetboston Banking 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.
High operating costs
– Compare to the competitors, firm in the HBR case study FleetBoston Financial: Online Banking, Portuguese Version 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 Fleetboston Banking 's lucrative customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study FleetBoston Financial: Online Banking, Portuguese Version, is just above the industry average. Fleetboston Banking 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 FleetBoston Financial: Online Banking, Portuguese Version HBR case study mentions - Fleetboston Banking 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.
Interest costs
– Compare to the competition, Fleetboston Banking 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.
Lack of clear differentiation of Fleetboston Banking products
– To increase the profitability and margins on the products, Fleetboston Banking needs to provide more differentiated products than what it is currently offering in the marketplace.
Aligning sales with marketing
– It come across in the case study FleetBoston Financial: Online Banking, Portuguese Version that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case FleetBoston Financial: Online Banking, Portuguese Version can leverage the sales team experience to cultivate customer relationships as Fleetboston Banking is planning to shift buying processes online.
Products dominated business model
– Even though Fleetboston Banking 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 - FleetBoston Financial: Online Banking, Portuguese Version should strive to include more intangible value offerings along with its core products and services.
Opportunities FleetBoston Financial: Online Banking, Portuguese Version | 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 FleetBoston Financial: Online Banking, Portuguese Version 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 Fleetboston Banking in the consumer business. Now Fleetboston Banking can target international markets with far fewer capital restrictions requirements than the existing system.
Better consumer reach
– The expansion of the 5G network will help Fleetboston Banking to increase its market reach. Fleetboston Banking 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 Fleetboston Banking 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Technology & Operations industry, but it has also influenced the consumer preferences. Fleetboston Banking can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Using analytics as competitive advantage
– Fleetboston Banking has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study FleetBoston Financial: Online Banking, Portuguese Version - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Fleetboston Banking to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Fleetboston Banking has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Fleetboston Banking 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 Fleetboston Banking to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Fleetboston Banking can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. FleetBoston Financial: Online Banking, Portuguese Version 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Technology & Operations industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Fleetboston Banking 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. Fleetboston Banking 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 Fleetboston Banking in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Technology & Operations segment, and it will provide faster access to the consumers.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Fleetboston Banking is facing challenges because of the dominance of functional experts in the organization. FleetBoston Financial: Online Banking, Portuguese Version case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Fleetboston Banking can use these opportunities to build new business models that can help the communities that Fleetboston Banking operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Fleetboston Banking can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats FleetBoston Financial: Online Banking, Portuguese Version External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study FleetBoston Financial: Online Banking, Portuguese Version are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Fleetboston Banking with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Fleetboston Banking needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
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 Fleetboston Banking.
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 Fleetboston Banking in the Technology & Operations sector and impact the bottomline of the organization.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Fleetboston Banking business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Fleetboston Banking in the Technology & Operations industry. The Technology & Operations 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.
Easy access to finance
– Easy access to finance in Technology & Operations field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Fleetboston Banking can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Environmental challenges
– Fleetboston Banking 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. Fleetboston Banking can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
High dependence on third party suppliers
– Fleetboston Banking 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study FleetBoston Financial: Online Banking, Portuguese Version, Fleetboston Banking may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Technology & Operations .
Shortening product life cycle
– it is one of the major threat that Fleetboston Banking is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Fleetboston Banking 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 FleetBoston Financial: Online Banking, Portuguese Version .
Technology acceleration in Forth Industrial Revolution
– Fleetboston Banking has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Fleetboston Banking needs to keep up with the evolution of technology in the Technology & Operations 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.
Weighted SWOT Analysis of FleetBoston Financial: Online Banking, Portuguese Version 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 FleetBoston Financial: Online Banking, Portuguese Version 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 FleetBoston Financial: Online Banking, Portuguese Version 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 FleetBoston Financial: Online Banking, Portuguese Version 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 FleetBoston Financial: Online Banking, Portuguese Version 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 Fleetboston Banking needs to make to build a sustainable competitive advantage.