Case Study Description of Breaking Barriers: Micro-Mortgage Analytics
Providing affordable housing to a rapidly increasing low income group population in Urban-Semi Rural India remains one of the biggest challenges as well as opportunities faced by the Housing Finance Sector. Several new housing finance companies such as Shubham Housing Finance have pioneered a "small ticket" loan product to address the market gap. They recognize that these customers are not "high-risk" as perceived by conventional financiers, but "unknown risk". To assess this "unknown risk", they rely on detailed, field-based verification rather than on formal financial documentation. The primary objective of this case is to analyze the past data from these field level interactions and the eventual credit evaluation decision to determine the factors which result in a favorable decision. The application scoring model is expected to deliver a competitive edge to Shubham's operations by enabling faster decisions earlier in the assessment phase, targeting applicants more likely to pass through to the credit worthy status, standardize applicant evaluation across the nation and enable Shubham to offer competitive products. The objective of the case is to predict the probability of loan sanction using the socio-economic attributes of prospective loan applicants by employing techniques such as chi-squared automatic interaction detection (CHAID) and binomial logistic regression.
Authors :: Jitendra Rudravaram, Naveen Bhansali, Swetha Murthy, Sutirtha Roy
Swot Analysis of "Breaking Barriers: Micro-Mortgage Analytics" written by Jitendra Rudravaram, Naveen Bhansali, Swetha Murthy, Sutirtha Roy includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Housing Shubham facing as an external strategic factors. Some of the topics covered in Breaking Barriers: Micro-Mortgage Analytics case study are - Strategic Management Strategies, Entrepreneurial finance, Financial management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Breaking Barriers: Micro-Mortgage Analytics casestudy better are - – supply chains are disrupted by pandemic , increasing household debt because of falling income levels, there is increasing trade war between United States & China, increasing government debt because of Covid-19 spendings, banking and financial system is disrupted by Bitcoin and other crypto currencies, digital marketing is dominated by two big players Facebook and Google, increasing inequality as vast percentage of new income is going to the top 1%,
talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Breaking Barriers: Micro-Mortgage Analytics
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Breaking Barriers: Micro-Mortgage Analytics case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Housing Shubham, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Housing Shubham 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 Breaking Barriers: Micro-Mortgage Analytics can be done for the following purposes –
1. Strategic planning using facts provided in Breaking Barriers: Micro-Mortgage Analytics case study
2. Improving business portfolio management of Housing Shubham
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Housing Shubham
Strengths Breaking Barriers: Micro-Mortgage Analytics | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Housing Shubham in Breaking Barriers: Micro-Mortgage Analytics Harvard Business Review case study are -
Sustainable margins compare to other players in Finance & Accounting industry
– Breaking Barriers: Micro-Mortgage Analytics firm has clearly differentiated products in the market place. This has enabled Housing Shubham to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Housing Shubham to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Housing Shubham in the sector have low bargaining power. Breaking Barriers: Micro-Mortgage Analytics has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Housing Shubham to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Housing Shubham 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 Housing Shubham is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Breaking Barriers: Micro-Mortgage Analytics Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to lead change in Finance & Accounting field
– Housing Shubham 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 Housing Shubham 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
– Housing Shubham has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Housing Shubham 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.
Operational resilience
– The operational resilience strategy in the Breaking Barriers: Micro-Mortgage Analytics 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.
Analytics focus
– Housing Shubham 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 Jitendra Rudravaram, Naveen Bhansali, Swetha Murthy, Sutirtha Roy 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.
Training and development
– Housing Shubham has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Breaking Barriers: Micro-Mortgage Analytics 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.
Ability to recruit top talent
– Housing Shubham is one of the leading recruiters in the industry. Managers in the Breaking Barriers: Micro-Mortgage Analytics are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Housing Shubham digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Housing Shubham 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.
Innovation driven organization
– Housing Shubham is one of the most innovative firm in sector. Manager in Breaking Barriers: Micro-Mortgage Analytics 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
– Housing Shubham is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses Breaking Barriers: Micro-Mortgage Analytics | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Breaking Barriers: Micro-Mortgage Analytics are -
Interest costs
– Compare to the competition, Housing Shubham 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.
Slow to strategic competitive environment developments
– As Breaking Barriers: Micro-Mortgage Analytics HBR case study mentions - Housing Shubham 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.
Aligning sales with marketing
– It come across in the case study Breaking Barriers: Micro-Mortgage Analytics 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 Breaking Barriers: Micro-Mortgage Analytics can leverage the sales team experience to cultivate customer relationships as Housing Shubham is planning to shift buying processes online.
High cash cycle compare to competitors
Housing Shubham 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.
Slow decision making process
– As mentioned earlier in the report, Housing Shubham 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. Housing Shubham 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.
Need for greater diversity
– Housing Shubham 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.
Increasing silos among functional specialists
– The organizational structure of Housing Shubham is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Housing Shubham needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Housing Shubham to focus more on services rather than just following the product oriented approach.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Breaking Barriers: Micro-Mortgage Analytics, it seems that the employees of Housing Shubham 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Housing Shubham 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 Housing Shubham supply chain. Even after few cautionary changes mentioned in the HBR case study - Breaking Barriers: Micro-Mortgage Analytics, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Housing Shubham vulnerable to further global disruptions in South East Asia.
Capital Spending Reduction
– Even during the low interest decade, Housing Shubham has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Opportunities Breaking Barriers: Micro-Mortgage Analytics | 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 Breaking Barriers: Micro-Mortgage Analytics 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 Housing Shubham in the consumer business. Now Housing Shubham can target international markets with far fewer capital restrictions requirements than the existing system.
Low interest rates
– Even though inflation is raising its head in most developed economies, Housing Shubham 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Housing Shubham 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. Housing Shubham 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Housing Shubham can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Better consumer reach
– The expansion of the 5G network will help Housing Shubham to increase its market reach. Housing Shubham 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.
Manufacturing automation
– Housing Shubham can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Housing Shubham can use these opportunities to build new business models that can help the communities that Housing Shubham operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Leveraging digital technologies
– Housing Shubham 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 Housing Shubham 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 Housing Shubham to hire the very best people irrespective of their geographical location.
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. Housing Shubham can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Loyalty marketing
– Housing Shubham 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.
Building a culture of innovation
– managers at Housing Shubham 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 Finance & Accounting segment.
Creating value in data economy
– The success of analytics program of Housing Shubham has opened avenues for new revenue streams for the organization in the industry. This can help Housing Shubham to build a more holistic ecosystem as suggested in the Breaking Barriers: Micro-Mortgage Analytics case study. Housing Shubham can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Breaking Barriers: Micro-Mortgage Analytics External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Breaking Barriers: Micro-Mortgage Analytics are -
Regulatory challenges
– Housing Shubham 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 Finance & Accounting industry regulations.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Housing Shubham in the Finance & Accounting industry. The Finance & Accounting 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.
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 Housing Shubham in the Finance & Accounting sector and impact the bottomline of the organization.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Housing Shubham can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Breaking Barriers: Micro-Mortgage Analytics, Housing Shubham may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Housing Shubham 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. Housing Shubham needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Housing Shubham 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 Breaking Barriers: Micro-Mortgage Analytics .
High dependence on third party suppliers
– Housing Shubham 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.
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.
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. Housing Shubham 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.
Stagnating economy with rate increase
– Housing Shubham 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.
Consumer confidence and its impact on Housing Shubham 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.
Weighted SWOT Analysis of Breaking Barriers: Micro-Mortgage Analytics 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 Breaking Barriers: Micro-Mortgage Analytics 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 Breaking Barriers: Micro-Mortgage Analytics 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 Breaking Barriers: Micro-Mortgage Analytics 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 Breaking Barriers: Micro-Mortgage Analytics 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 Housing Shubham needs to make to build a sustainable competitive advantage.