YES BANK: Mainstreaming Development into Indian Banking SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of YES BANK: Mainstreaming Development into Indian Banking
YES BANK, founded in 2003 and highly successful, has consistently been profitable meeting the Indian government's Priority Sector Lending (PSL) requirements, unlike virtually all other private sector banks, which view PSL activity as a necessary but loss-making part of their portfolio. To do this, YES BANK created a distinct Development Banking practice, under the purview of the Corporate Finance division. But now, the Development Banking team is contemplating going to the Board to take the concept one step further: pro-actively investing in PSL-qualifying activities not as a matter of regulatory compliance but as business. Should the bank devote significant financial and human resources into an ambitious Financial Inclusion Program to serve previously unbanked rural populations through a rapid expansion of its branch network and the use of nonbank business correspondents? In addition, should the bank commit part of its scarce capital to Tatva Capital, a private equity venture focused on renewable energy, clean technology, waste management, water & sanitation, food & agribusiness, affordable housing, healthcare, education & livelihood creation? Is the Board ready to incorporate development banking into the mainstream of the bank, or will this turn out to be a major error in judgment?
Swot Analysis of "YES BANK: Mainstreaming Development into Indian Banking" written by Michael Chu, Namrata Arora includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Psl Bank facing as an external strategic factors. Some of the topics covered in YES BANK: Mainstreaming Development into Indian Banking case study are - Strategic Management Strategies, Growth strategy, Sustainability and Finance & Accounting.
Some of the macro environment factors that can be used to understand the YES BANK: Mainstreaming Development into Indian Banking casestudy better are - – increasing government debt because of Covid-19 spendings, increasing transportation and logistics costs, challanges to central banks by blockchain based private currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is increasing trade war between United States & China, geopolitical disruptions,
cloud computing is disrupting traditional business models, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of YES BANK: Mainstreaming Development into Indian Banking
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in YES BANK: Mainstreaming Development into Indian Banking case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Psl Bank, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Psl Bank 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 YES BANK: Mainstreaming Development into Indian Banking can be done for the following purposes –
1. Strategic planning using facts provided in YES BANK: Mainstreaming Development into Indian Banking case study
2. Improving business portfolio management of Psl Bank
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 Psl Bank
Strengths YES BANK: Mainstreaming Development into Indian Banking | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Psl Bank in YES BANK: Mainstreaming Development into Indian Banking Harvard Business Review case study are -
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Psl Bank digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Psl Bank 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.
Training and development
– Psl Bank has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in YES BANK: Mainstreaming Development into Indian Banking 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.
Innovation driven organization
– Psl Bank is one of the most innovative firm in sector. Manager in YES BANK: Mainstreaming Development into Indian Banking Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Psl Bank has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Psl Bank 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.
Ability to lead change in Finance & Accounting field
– Psl Bank 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 Psl Bank in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that Psl Bank has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Operational resilience
– The operational resilience strategy in the YES BANK: Mainstreaming Development into Indian Banking 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.
Superior customer experience
– The customer experience strategy of Psl Bank in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Strong track record of project management
– Psl Bank is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Learning organization
- Psl Bank 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 Psl Bank is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in YES BANK: Mainstreaming Development into Indian Banking Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Analytics focus
– Psl Bank 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 Michael Chu, Namrata Arora 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.
Effective Research and Development (R&D)
– Psl Bank 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 YES BANK: Mainstreaming Development into Indian Banking - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses YES BANK: Mainstreaming Development into Indian Banking | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of YES BANK: Mainstreaming Development into Indian Banking are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study YES BANK: Mainstreaming Development into Indian Banking, it seems that the employees of Psl Bank 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.
Capital Spending Reduction
– Even during the low interest decade, Psl Bank 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.
High cash cycle compare to competitors
Psl Bank 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.
Increasing silos among functional specialists
– The organizational structure of Psl Bank is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Psl Bank needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Psl Bank to focus more on services rather than just following the product oriented approach.
No frontier risks strategy
– After analyzing the HBR case study YES BANK: Mainstreaming Development into Indian Banking, it seems that company is thinking about the frontier risks that can impact Finance & Accounting 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the YES BANK: Mainstreaming Development into Indian Banking 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 Psl Bank has relatively successful track record of launching new products.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study YES BANK: Mainstreaming Development into Indian Banking, in the dynamic environment Psl Bank has struggled to respond to the nimble upstart competition. Psl Bank has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow decision making process
– As mentioned earlier in the report, Psl Bank 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. Psl Bank 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.
High operating costs
– Compare to the competitors, firm in the HBR case study YES BANK: Mainstreaming Development into Indian Banking 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 Psl Bank 's lucrative customers.
Workers concerns about automation
– As automation is fast increasing in the segment, Psl Bank 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 bargaining power of channel partners
– Because of the regulatory requirements, Michael Chu, Namrata Arora suggests that, Psl Bank 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 YES BANK: Mainstreaming Development into Indian Banking | 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 YES BANK: Mainstreaming Development into Indian Banking are -
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. Psl Bank can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Creating value in data economy
– The success of analytics program of Psl Bank has opened avenues for new revenue streams for the organization in the industry. This can help Psl Bank to build a more holistic ecosystem as suggested in the YES BANK: Mainstreaming Development into Indian Banking case study. Psl Bank can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Psl Bank is facing challenges because of the dominance of functional experts in the organization. YES BANK: Mainstreaming Development into Indian Banking 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.
Manufacturing automation
– Psl Bank 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.
Building a culture of innovation
– managers at Psl Bank 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Psl Bank can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Psl Bank 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, YES BANK: Mainstreaming Development into Indian Banking, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Buying journey improvements
– Psl Bank can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. YES BANK: Mainstreaming Development into Indian Banking 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.
Leveraging digital technologies
– Psl Bank 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.
Loyalty marketing
– Psl Bank 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.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Psl Bank to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Better consumer reach
– The expansion of the 5G network will help Psl Bank to increase its market reach. Psl Bank 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 Psl Bank 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.
Threats YES BANK: Mainstreaming Development into Indian Banking External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study YES BANK: Mainstreaming Development into Indian Banking are -
High dependence on third party suppliers
– Psl Bank 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.
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 Psl Bank in the Finance & Accounting sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Psl Bank 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 YES BANK: Mainstreaming Development into Indian Banking .
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. Psl Bank 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.
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.
Technology acceleration in Forth Industrial Revolution
– Psl Bank has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Psl Bank needs to keep up with the evolution of technology in the Finance & Accounting 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Psl Bank with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Stagnating economy with rate increase
– Psl Bank 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 Psl Bank 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study YES BANK: Mainstreaming Development into Indian Banking, Psl Bank 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 .
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 Psl Bank business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Psl Bank 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. Psl Bank can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Psl Bank 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.
Weighted SWOT Analysis of YES BANK: Mainstreaming Development into Indian Banking 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 YES BANK: Mainstreaming Development into Indian Banking 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 YES BANK: Mainstreaming Development into Indian Banking 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 YES BANK: Mainstreaming Development into Indian Banking 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 YES BANK: Mainstreaming Development into Indian Banking 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 Psl Bank needs to make to build a sustainable competitive advantage.
