Lending Loop: FinTech Disruption in Canadian Banking SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Lending Loop: FinTech Disruption in Canadian Banking
Lending Loop, a Canadian marketplace (peer-to-peer) lending start-up, was founded in 2014 and launched to the public in 2015. It competed with other peer-to-peer lenders to challenge the Canadian chartered banks and other financial companies for part of the Canadian small-business lending market. Without an established regulatory regime in place, it operated according to its lawyers' interpretation of securities law. The founders needed to scale their business quickly and strategically to gain a first-mover advantage in the industry and to position their company as a major stakeholder for future regulatory decisions.
Swot Analysis of "Lending Loop: FinTech Disruption in Canadian Banking" written by Jean-Philippe Vergne, Parker Cumming includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Peer Lending facing as an external strategic factors. Some of the topics covered in Lending Loop: FinTech Disruption in Canadian Banking case study are - Strategic Management Strategies, Entrepreneurship, Financial management and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Lending Loop: FinTech Disruption in Canadian Banking casestudy better are - – digital marketing is dominated by two big players Facebook and Google, there is increasing trade war between United States & China, central banks are concerned over increasing inflation, technology disruption, talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing energy prices,
wage bills are increasing, geopolitical disruptions, etc
Introduction to SWOT Analysis of Lending Loop: FinTech Disruption in Canadian Banking
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Lending Loop: FinTech Disruption in Canadian Banking case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Peer Lending, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Peer Lending 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 Lending Loop: FinTech Disruption in Canadian Banking can be done for the following purposes –
1. Strategic planning using facts provided in Lending Loop: FinTech Disruption in Canadian Banking case study
2. Improving business portfolio management of Peer Lending
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Peer Lending
Strengths Lending Loop: FinTech Disruption in Canadian Banking | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Peer Lending in Lending Loop: FinTech Disruption in Canadian Banking Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Peer Lending in the sector have low bargaining power. Lending Loop: FinTech Disruption in Canadian Banking has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Peer Lending to manage not only supply disruptions but also source products at highly competitive prices.
Ability to lead change in Leadership & Managing People field
– Peer Lending 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 Peer Lending in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Leadership & Managing People industry
– Lending Loop: FinTech Disruption in Canadian Banking firm has clearly differentiated products in the market place. This has enabled Peer Lending to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Peer Lending to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Peer Lending has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Peer Lending 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.
Superior customer experience
– The customer experience strategy of Peer Lending in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High brand equity
– Peer Lending has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Peer Lending to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Operational resilience
– The operational resilience strategy in the Lending Loop: FinTech Disruption in Canadian 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.
Cross disciplinary teams
– Horizontal connected teams at the Peer Lending 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.
Analytics focus
– Peer Lending 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, Parker Cumming 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.
Highly skilled collaborators
– Peer Lending 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 Lending Loop: FinTech Disruption in Canadian Banking HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Training and development
– Peer Lending has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Lending Loop: FinTech Disruption in Canadian 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
– Peer Lending is one of the most innovative firm in sector. Manager in Lending Loop: FinTech Disruption in Canadian Banking Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses Lending Loop: FinTech Disruption in Canadian Banking | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Lending Loop: FinTech Disruption in Canadian Banking are -
No frontier risks strategy
– After analyzing the HBR case study Lending Loop: FinTech Disruption in Canadian Banking, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People 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.
Slow decision making process
– As mentioned earlier in the report, Peer Lending 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. Peer Lending 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Peer Lending is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Lending Loop: FinTech Disruption in Canadian Banking can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Lending Loop: FinTech Disruption in Canadian Banking, is just above the industry average. Peer Lending 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.
High cash cycle compare to competitors
Peer Lending 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 Peer Lending is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Peer Lending needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Peer Lending to focus more on services rather than just following the product oriented approach.
Low market penetration in new markets
– Outside its home market of Peer Lending, firm in the HBR case study Lending Loop: FinTech Disruption in Canadian Banking needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High bargaining power of channel partners
– Because of the regulatory requirements, Jean-Philippe Vergne, Parker Cumming suggests that, Peer Lending 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.
Lack of clear differentiation of Peer Lending products
– To increase the profitability and margins on the products, Peer Lending needs to provide more differentiated products than what it is currently offering in the marketplace.
Interest costs
– Compare to the competition, Peer Lending 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Lending Loop: FinTech Disruption in Canadian Banking, in the dynamic environment Peer Lending has struggled to respond to the nimble upstart competition. Peer Lending has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities Lending Loop: FinTech Disruption in Canadian 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 Lending Loop: FinTech Disruption in Canadian Banking are -
Learning at scale
– Online learning technologies has now opened space for Peer Lending 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.
Loyalty marketing
– Peer Lending 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Peer Lending 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, Lending Loop: FinTech Disruption in Canadian 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.
Leveraging digital technologies
– Peer Lending 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Peer Lending can use these opportunities to build new business models that can help the communities that Peer Lending operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Creating value in data economy
– The success of analytics program of Peer Lending has opened avenues for new revenue streams for the organization in the industry. This can help Peer Lending to build a more holistic ecosystem as suggested in the Lending Loop: FinTech Disruption in Canadian Banking case study. Peer Lending can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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 Peer Lending 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Peer Lending 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
– Peer Lending can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Lending Loop: FinTech Disruption in Canadian 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.
Better consumer reach
– The expansion of the 5G network will help Peer Lending to increase its market reach. Peer Lending 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Peer Lending 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Peer Lending is facing challenges because of the dominance of functional experts in the organization. Lending Loop: FinTech Disruption in Canadian 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.
Building a culture of innovation
– managers at Peer Lending 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 Leadership & Managing People segment.
Threats Lending Loop: FinTech Disruption in Canadian Banking External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Lending Loop: FinTech Disruption in Canadian Banking are -
Regulatory challenges
– Peer Lending 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 Leadership & Managing People industry regulations.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Peer Lending 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 Lending Loop: FinTech Disruption in Canadian Banking .
Shortening product life cycle
– it is one of the major threat that Peer Lending is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Peer Lending.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Peer Lending can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Stagnating economy with rate increase
– Peer Lending 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.
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 Peer Lending business can come under increasing regulations regarding data privacy, data security, etc.
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.
Increasing wage structure of Peer Lending
– 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 Peer Lending.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Peer Lending with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Peer Lending 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Peer Lending in the Leadership & Managing People industry. The Leadership & Managing People 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.
Technology acceleration in Forth Industrial Revolution
– Peer Lending has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Peer Lending needs to keep up with the evolution of technology in the Leadership & Managing People sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Weighted SWOT Analysis of Lending Loop: FinTech Disruption in Canadian 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 Lending Loop: FinTech Disruption in Canadian 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 Lending Loop: FinTech Disruption in Canadian 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 Lending Loop: FinTech Disruption in Canadian 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 Lending Loop: FinTech Disruption in Canadian 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 Peer Lending needs to make to build a sustainable competitive advantage.
