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 - – increasing inequality as vast percentage of new income is going to the top 1%, challanges to central banks by blockchain based private currencies, increasing energy prices, there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion, banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions,
wage bills are increasing, supply chains are disrupted by pandemic , 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 -
Operational resilience
– The operational resilience strategy in the A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships 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.
Innovation driven organization
– Scotiabank's Kabbage is one of the most innovative firm in sector. Manager in A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
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.
Effective Research and Development (R&D)
– Scotiabank's Kabbage 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 A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Cross disciplinary teams
– Horizontal connected teams at the Scotiabank's Kabbage 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.
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.
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.
Low bargaining power of suppliers
– Suppliers of Scotiabank's Kabbage in the sector have low bargaining power. A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Scotiabank's Kabbage to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Scotiabank's Kabbage is present in almost all the verticals within the industry. This has provided firm in A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships 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.
Sustainable margins compare to other players in Global Business industry
– A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships firm has clearly differentiated products in the market place. This has enabled Scotiabank's Kabbage to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Scotiabank's Kabbage to invest into research and development (R&D) and innovation.
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.
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.
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 -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Scotiabank's Kabbage is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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.
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.
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.
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.
Skills based hiring
– The stress on hiring functional specialists at Scotiabank's Kabbage 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.
No frontier risks strategy
– After analyzing the HBR case study A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships, it seems that company is thinking about the frontier risks that can impact Global Business 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.
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.
Slow decision making process
– As mentioned earlier in the report, Scotiabank's Kabbage 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. Scotiabank's Kabbage 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 Scotiabank's Kabbage products
– To increase the profitability and margins on the products, Scotiabank's Kabbage needs to provide more differentiated products than what it is currently offering in the marketplace.
High bargaining power of channel partners
– Because of the regulatory requirements, Jean-Philippe Vergne, Mary Weil, Ying-Ying Hsieh suggests that, Scotiabank's Kabbage 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.
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 -
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.
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.
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.
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.
Using analytics as competitive advantage
– Scotiabank's Kabbage 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 A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Scotiabank's Kabbage to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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.
Buying journey improvements
– Scotiabank's Kabbage can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships 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.
Building a culture of innovation
– managers at Scotiabank's Kabbage 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 Global Business segment.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Scotiabank's Kabbage 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, A Pathway for Scotiabank's Innovation: Leveraging FinTech Partnerships, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Low interest rates
– Even though inflation is raising its head in most developed economies, Scotiabank's Kabbage 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.
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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Scotiabank's Kabbage in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Global Business segment, and it will provide faster access to the consumers.
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 -
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.
Increasing wage structure of Scotiabank's Kabbage
– 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 Scotiabank's Kabbage.
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.
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 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. Scotiabank's Kabbage needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
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.
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.
Shortening product life cycle
– it is one of the major threat that Scotiabank's Kabbage is facing in Global Business 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, 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 .
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 Scotiabank's Kabbage.
Consumer confidence and its impact on Scotiabank's Kabbage 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.
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.
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.
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.
