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 - – banking and financial system is disrupted by Bitcoin and other crypto currencies, cloud computing is disrupting traditional business models, increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs, wage bills are increasing, competitive advantages are harder to sustain because of technology dispersion, digital marketing is dominated by two big players Facebook and Google,
central banks are concerned over increasing inflation, supply chains are disrupted by pandemic , 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 -
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.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Peer Lending digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Peer Lending 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.
Effective Research and Development (R&D)
– Peer Lending 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 Lending Loop: FinTech Disruption in Canadian 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.
Strong track record of project management
– Peer Lending is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High switching costs
– The high switching costs that Peer Lending 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.
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.
Learning organization
- Peer Lending 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 Peer Lending is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Lending Loop: FinTech Disruption in Canadian Banking Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
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.
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 recruit top talent
– Peer Lending is one of the leading recruiters in the industry. Managers in the Lending Loop: FinTech Disruption in Canadian Banking are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Ability to lead change in 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.
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 -
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.
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 Peer Lending supply chain. Even after few cautionary changes mentioned in the HBR case study - Lending Loop: FinTech Disruption in Canadian Banking, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Peer Lending vulnerable to further global disruptions in South East Asia.
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.
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.
High operating costs
– Compare to the competitors, firm in the HBR case study Lending Loop: FinTech Disruption in Canadian 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 Peer Lending 's lucrative customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Lending Loop: FinTech Disruption in Canadian 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 Peer Lending has relatively successful track record of launching new products.
Workers concerns about automation
– As automation is fast increasing in the segment, Peer Lending 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.
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.
Capital Spending Reduction
– Even during the low interest decade, Peer Lending 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 Lending Loop: FinTech Disruption in Canadian Banking HBR case study mentions - Peer Lending 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.
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.
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 -
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Peer Lending 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. Peer Lending 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.
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.
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. Peer Lending 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 Peer Lending in the consumer business. Now Peer Lending can target international markets with far fewer capital restrictions requirements than the existing system.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Peer Lending can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Peer Lending in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
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.
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.
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.
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.
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.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Peer Lending 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 Peer Lending to hire the very best people irrespective of their geographical location.
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 -
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.
High dependence on third party suppliers
– Peer Lending 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.
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 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 .
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.
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.
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.
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.
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.
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. Peer Lending needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Lending Loop: FinTech Disruption in Canadian Banking, Peer Lending may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
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.
Consumer confidence and its impact on Peer Lending 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 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.