A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships
In February 2017, Scotiabank's vice-president of digital enablement was sitting in his office at Scotiabank's Digital Factory in downtown Toronto. He was reflecting on his recent introduction to the financial technology (fintech) company Kabbage, and on how successfully the partnership was progressing. Scotiabank's vice-president was considering what opportunities the bank should pursue next, specifically in the area of blockchain. The Scotiabank-Kabbage partnership provided a valuable guideline for future partnerships. At the partnership's launch, the group head of Canadian banking at Scotiabank said that the partnership with Kabbage set "an example of how banks and fintechs are working together to provide customers with a better banking experience." However, all partnerships did not work in the same way. How could Scotiabank devise an effective partnership strategy, considering the unique contexts in different sectors and geographic markets?
Authors :: Jean-Philippe Vergne, Mary Weil, Ying-Ying Hsieh
Swot Analysis of "A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships" written by Jean-Philippe Vergne, Mary Weil, Ying-Ying Hsieh includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Scotiabank's Kabbage facing as an external strategic factors. Some of the topics covered in A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships case study are - Strategic Management Strategies, and Global Business.
Some of the macro environment factors that can be used to understand the A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships casestudy better are - – talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing energy prices, there is backlash against globalization, competitive advantages are harder to sustain because of technology dispersion, digital marketing is dominated by two big players Facebook and Google, increasing government debt because of Covid-19 spendings,
wage bills are increasing, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Scotiabank's Kabbage, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Scotiabank's Kabbage 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 A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships can be done for the following purposes –
1. Strategic planning using facts provided in A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships case study
2. Improving business portfolio management of Scotiabank's Kabbage
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Scotiabank's Kabbage
Strengths A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Scotiabank's Kabbage in A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships Harvard Business Review case study are -
Ability to recruit top talent
– Scotiabank's Kabbage is one of the leading recruiters in the industry. Managers in the A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships 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 Global Business field
– Scotiabank's Kabbage 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 Scotiabank's Kabbage in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Scotiabank's Kabbage 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 Scotiabank's Kabbage is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Successful track record of launching new products
– Scotiabank's Kabbage has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Scotiabank's Kabbage 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.
Strong track record of project management
– Scotiabank's Kabbage is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Training and development
– Scotiabank's Kabbage has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships 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.
Superior customer experience
– The customer experience strategy of Scotiabank's Kabbage in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Organizational Resilience of Scotiabank's Kabbage
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Scotiabank's Kabbage does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High brand equity
– Scotiabank's Kabbage has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Scotiabank's Kabbage to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Highly skilled collaborators
– Scotiabank's Kabbage 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 A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Analytics focus
– Scotiabank's Kabbage 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 Jean-Philippe Vergne, Mary Weil, Ying-Ying Hsieh 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.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Scotiabank's Kabbage digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Scotiabank's Kabbage 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.
Weaknesses A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships, in the dynamic environment Scotiabank's Kabbage has struggled to respond to the nimble upstart competition. Scotiabank's Kabbage 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, Scotiabank's Kabbage 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.
Capital Spending Reduction
– Even during the low interest decade, Scotiabank's Kabbage 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.
Aligning sales with marketing
– It come across in the case study A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships 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 A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships can leverage the sales team experience to cultivate customer relationships as Scotiabank's Kabbage is planning to shift buying processes online.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships, it seems that the employees of Scotiabank's Kabbage 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.
Low market penetration in new markets
– Outside its home market of Scotiabank's Kabbage, firm in the HBR case study A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Increasing silos among functional specialists
– The organizational structure of Scotiabank's Kabbage is dominated by functional specialists. It is not different from other players in the Global Business segment. Scotiabank's Kabbage needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Scotiabank's Kabbage to focus more on services rather than just following the product oriented approach.
Slow to strategic competitive environment developments
– As A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships HBR case study mentions - Scotiabank's Kabbage 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 A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships, is just above the industry average. Scotiabank's Kabbage 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Scotiabank's Kabbage 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.
Need for greater diversity
– Scotiabank's Kabbage 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.
Opportunities A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships | 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 A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships are -
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. Scotiabank's Kabbage can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Global Business industry, but it has also influenced the consumer preferences. Scotiabank's Kabbage can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Learning at scale
– Online learning technologies has now opened space for Scotiabank's Kabbage 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.
Leveraging digital technologies
– Scotiabank's Kabbage 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.
Developing new processes and practices
– Scotiabank's Kabbage can develop new processes and procedures in Global Business 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Global Business industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Scotiabank's Kabbage 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. Scotiabank's Kabbage 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Scotiabank's Kabbage can use these opportunities to build new business models that can help the communities that Scotiabank's Kabbage operates in. Secondly it can use opportunities from government spending in Global Business sector.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Scotiabank's Kabbage can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Scotiabank's Kabbage is facing challenges because of the dominance of functional experts in the organization. A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships 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.
Creating value in data economy
– The success of analytics program of Scotiabank's Kabbage has opened avenues for new revenue streams for the organization in the industry. This can help Scotiabank's Kabbage to build a more holistic ecosystem as suggested in the A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships case study. Scotiabank's Kabbage can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Manufacturing automation
– Scotiabank's Kabbage can use the latest technology developments to improve its manufacturing and designing process in Global Business 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Scotiabank's Kabbage 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 Scotiabank's Kabbage to hire the very best people irrespective of their geographical location.
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 Scotiabank's Kabbage in the consumer business. Now Scotiabank's Kabbage can target international markets with far fewer capital restrictions requirements than the existing system.
Threats A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships are -
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. Scotiabank's Kabbage 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.
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 Scotiabank's Kabbage in the Global Business sector and impact the bottomline 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 Scotiabank's Kabbage in the Global Business industry. The Global Business 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Scotiabank's Kabbage 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 A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships .
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships, Scotiabank's Kabbage may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Global Business .
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 Scotiabank's Kabbage business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Scotiabank's Kabbage 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.
Environmental challenges
– Scotiabank's Kabbage 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. Scotiabank's Kabbage can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Scotiabank's Kabbage with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Technology acceleration in Forth Industrial Revolution
– Scotiabank's Kabbage has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Scotiabank's Kabbage needs to keep up with the evolution of technology in the Global Business 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.
Regulatory challenges
– Scotiabank's Kabbage 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 Global Business industry regulations.
Stagnating economy with rate increase
– Scotiabank's Kabbage 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.
Weighted SWOT Analysis of A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships 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 A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships 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 A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships 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 A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships 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 A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships 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 Scotiabank's Kabbage needs to make to build a sustainable competitive advantage.