UBI Banca (UBI) SWOT Analysis / TOWS Matrix / MBA Resources
S&Ls/Savings Banks
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for UBI Banca (Italy)
Based on various researches at Oak Spring University , UBI Banca is operating in a macro-environment that has been destablized by – increasing inequality as vast percentage of new income is going to the top 1%, wage bills are increasing, increasing energy prices, increasing commodity prices, geopolitical disruptions, increasing transportation and logistics costs, customer relationship management is fast transforming because of increasing concerns over data privacy,
there is backlash against globalization, central banks are concerned over increasing inflation, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that UBI Banca can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the UBI Banca, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which UBI Banca 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 UBI Banca can be done for the following purposes –
1. Strategic planning of UBI Banca
2. Improving business portfolio management of UBI Banca
3. Assessing feasibility of the new initiative in Italy
4. Making a S&Ls/Savings Banks sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of UBI Banca
Strengths of UBI Banca | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of UBI Banca are -
Diverse revenue streams
– UBI Banca is present in almost all the verticals within the S&Ls/Savings Banks industry. This has provided UBI Banca a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Ability to lead change in S&Ls/Savings Banks
– UBI Banca is one of the leading players in the S&Ls/Savings Banks industry in Italy. Over the years it has not only transformed the business landscape in the S&Ls/Savings Banks industry in Italy but also across the existing markets. The ability to lead change has enabled UBI Banca 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
– UBI Banca has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. UBI Banca 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.
Cross disciplinary teams
– Horizontal connected teams at the UBI Banca 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
– UBI Banca 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 S&Ls/Savings Banks industry. The technology infrastructure of Italy is also helping it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Superior customer experience
– The customer experience strategy of UBI Banca in S&Ls/Savings Banks industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– UBI Banca is one of the most innovative firm in S&Ls/Savings Banks sector.
Digital Transformation in S&Ls/Savings Banks industry
- digital transformation varies from industry to industry. For UBI Banca digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. UBI Banca 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.
Low bargaining power of suppliers
– Suppliers of UBI Banca in the Financial sector have low bargaining power. UBI Banca has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps UBI Banca to manage not only supply disruptions but also source products at highly competitive prices.
High switching costs
– The high switching costs that UBI Banca 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.
Effective Research and Development (R&D)
– UBI Banca has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – UBI Banca staying ahead in the S&Ls/Savings Banks industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Learning organization
- UBI Banca 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 UBI Banca is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at UBI Banca emphasize – knowledge, initiative, and innovation.
Weaknesses of UBI Banca | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of UBI Banca are -
Lack of clear differentiation of UBI Banca products
– To increase the profitability and margins on the products, UBI Banca needs to provide more differentiated products than what it is currently offering in the marketplace.
Products dominated business model
– Even though UBI Banca has some of the most successful models in the S&Ls/Savings Banks industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. UBI Banca should strive to include more intangible value offerings along with its core products and services.
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 UBI Banca supply chain. Even after few cautionary changes, UBI Banca is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left UBI Banca vulnerable to further global disruptions in South East Asia.
Low market penetration in new markets
– Outside its home market of Italy, UBI Banca needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Employees’ less understanding of UBI Banca strategy
– From the outside it seems that the employees of UBI Banca 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.
Need for greater diversity
– UBI Banca 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.
High cash cycle compare to competitors
UBI Banca has a high cash cycle compare to other players in the S&Ls/Savings Banks industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
High bargaining power of channel partners in S&Ls/Savings Banks industry
– because of the regulatory requirements in Italy, UBI Banca 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 S&Ls/Savings Banks industry.
Compensation and incentives
– The revenue per employee of UBI Banca is just above the S&Ls/Savings Banks industry average. It 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, UBI Banca is slow explore the new channels of communication. These new channels of communication can help UBI Banca to provide better information regarding S&Ls/Savings Banks products and services. It can also build an online community to further reach out to potential customers.
Slow to strategic competitive environment developments
– As UBI Banca is one of the leading players in the S&Ls/Savings Banks industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the S&Ls/Savings Banks industry in last five years.
UBI Banca Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of UBI Banca are -
Loyalty marketing
– UBI Banca 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, UBI Banca can use these opportunities to build new business models that can help the communities that UBI Banca operates in. Secondly it can use opportunities from government spending in S&Ls/Savings Banks sector.
Use of Bitcoin and other crypto currencies for transactions in S&Ls/Savings Banks industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for UBI Banca in the S&Ls/Savings Banks industry. Now UBI Banca can target international markets with far fewer capital restrictions requirements than the existing system.
Learning at scale
– Online learning technologies has now opened space for UBI Banca 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.
Using analytics as competitive advantage
– UBI Banca has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in S&Ls/Savings Banks sector. This continuous investment in analytics has enabled UBI Banca to build a competitive advantage using analytics. The analytics driven competitive advantage can help UBI Banca to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Low interest rates
– Even though inflation is raising its head in most developed economies, UBI Banca 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.
Leveraging digital technologies
– UBI Banca 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 UBI Banca 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 UBI Banca to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– UBI Banca can develop new processes and procedures in S&Ls/Savings Banks industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the S&Ls/Savings Banks industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. UBI Banca 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. UBI Banca 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.
Building a culture of innovation
– managers at UBI Banca 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 S&Ls/Savings Banks industry.
Creating value in data economy
– The success of analytics program of UBI Banca has opened avenues for new revenue streams for the organization in S&Ls/Savings Banks industry. This can help UBI Banca to build a more holistic ecosystem for UBI Banca products in the S&Ls/Savings Banks industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, UBI Banca 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 UBI Banca to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats UBI Banca External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of UBI Banca are -
Stagnating economy with rate increase
– UBI Banca 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 S&Ls/Savings Banks industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, UBI Banca may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of S&Ls/Savings Banks sector.
Environmental challenges
– UBI Banca 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. UBI Banca can take advantage of this fund but it will also bring new competitors in the S&Ls/Savings Banks industry.
Shortening product life cycle
– it is one of the major threat that UBI Banca is facing in S&Ls/Savings Banks sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. UBI Banca needs to understand the core reasons impacting the S&Ls/Savings Banks industry. This will help it in building a better workplace.
Increasing wage structure of UBI Banca
– 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 UBI Banca.
Technology acceleration in Forth Industrial Revolution
– UBI Banca has witnessed rapid integration of technology during Covid-19 in the S&Ls/Savings Banks industry. As one of the leading players in the industry, UBI Banca needs to keep up with the evolution of technology in the S&Ls/Savings Banks 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 to S&Ls/Savings Banks industry are lowering. It can presents UBI Banca with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the S&Ls/Savings Banks sector.
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 UBI Banca 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 international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, UBI Banca 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 UBI Banca prominent markets.
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.
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 UBI Banca.
Weighted SWOT Analysis of UBI Banca Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at UBI Banca 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 UBI Banca 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 UBI Banca 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 UBI Banca 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 UBI Banca needs to make to build a sustainable competitive advantage.
