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 – technology disruption, increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings, wage bills are increasing, there is increasing trade war between United States & China, central banks are concerned over increasing inflation, customer relationship management is fast transforming because of increasing concerns over data privacy,
digital marketing is dominated by two big players Facebook and Google, talent flight as more people leaving formal jobs, 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 -
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.
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.
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.
Sustainable margins compare to other players in S&Ls/Savings Banks industry
– UBI Banca has clearly differentiated products in the market place. This has enabled UBI Banca to fetch slight price premium compare to the competitors in the S&Ls/Savings Banks industry. The sustainable margins have also helped UBI Banca to invest into research and development (R&D) and innovation.
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.
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.
Organizational Resilience of UBI Banca
– The covid-19 pandemic has put organizational resilience at the centre of everthing UBI Banca does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Training and development
– UBI Banca has one of the best training and development program in Financial industry. The effectiveness of the training programs can be measured in – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
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.
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.
Operational resilience
– The operational resilience strategy of UBI Banca comprises – understanding the underlying the factors in the S&Ls/Savings Banks 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.
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.
Weaknesses of UBI Banca | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of UBI Banca are -
Increasing silos among functional specialists
– The organizational structure of UBI Banca is dominated by functional specialists. It is not different from other players in the S&Ls/Savings Banks industry, but UBI Banca needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help UBI Banca to focus more on services in the S&Ls/Savings Banks industry rather than just following the product oriented approach.
Skills based hiring in S&Ls/Savings Banks industry
– The stress on hiring functional specialists at UBI Banca has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Interest costs
– Compare to the competition, UBI Banca 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.
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.
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.
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.
High operating costs
– Compare to the competitors, UBI Banca has high operating costs in the S&Ls/Savings Banks industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract UBI Banca lucrative customers.
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.
Aligning sales with marketing
– From the outside it seems that UBI Banca needs to have more collaboration between its sales team and marketing team. Sales professionals in the S&Ls/Savings Banks industry have deep experience in developing customer relationships. Marketing department at UBI Banca can leverage the sales team experience to cultivate customer relationships as UBI Banca is planning to shift buying processes online.
High dependence on UBI Banca ‘s star products
– The top 2 products and services of UBI Banca still accounts for major business revenue. This dependence on star products in S&Ls/Savings Banks industry has resulted into insufficient focus on developing new products, even though UBI Banca has relatively successful track record of launching new products.
Capital Spending Reduction
– Even during the low interest decade, UBI Banca 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 S&Ls/Savings Banks industry using digital technology.
UBI Banca Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of UBI Banca are -
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.
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.
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.
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.
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. UBI Banca can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects UBI Banca can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Better consumer reach
– The expansion of the 5G network will help UBI Banca to increase its market reach. UBI Banca 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.
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.
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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in S&Ls/Savings Banks industry, but it has also influenced the consumer preferences. UBI Banca can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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.
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 UBI Banca 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for UBI Banca in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the S&Ls/Savings Banks industry, and it will provide faster access to the consumers.
Threats UBI Banca External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of UBI Banca are -
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 UBI Banca in the S&Ls/Savings Banks sector and impact the bottomline of the organization.
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.
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.
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.
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.
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.
Consumer confidence and its impact on UBI Banca 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 S&Ls/Savings Banks industry and other sectors.
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.
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.
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.
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.
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.
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.
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.