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 transportation and logistics costs, banking and financial system is disrupted by Bitcoin and other crypto currencies, challanges to central banks by blockchain based private currencies, technology disruption, cloud computing is disrupting traditional business models, increasing government debt because of Covid-19 spendings, increasing household debt because of falling income levels,
geopolitical disruptions, wage bills are increasing, 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 -
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.
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.
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.
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.
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.
Innovation driven organization
– UBI Banca is one of the most innovative firm in S&Ls/Savings Banks sector.
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.
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.
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.
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.
Strong track record of project management in the S&Ls/Savings Banks industry
– UBI Banca is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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.
Weaknesses of UBI Banca | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of UBI Banca are -
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.
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.
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.
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.
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.
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.
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.
No frontier risks strategy
– From the 10K / annual statement of UBI Banca, it seems that company is thinking out the frontier risks that can impact S&Ls/Savings Banks industry. 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 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.
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.
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.
UBI Banca Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of UBI Banca are -
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.
Buying journey improvements
– UBI Banca can improve the customer journey of consumers in the S&Ls/Savings Banks industry by using analytics and artificial intelligence. It 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.
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.
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.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, UBI Banca is facing challenges because of the dominance of functional experts in the organization. UBI Banca can utilize new technology in the field of S&Ls/Savings Banks industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
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.
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.
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.
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.
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.
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.
Threats UBI Banca External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of UBI Banca are -
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.
High dependence on third party suppliers
– UBI Banca 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.
Easy access to finance
– Easy access to finance in S&Ls/Savings Banks industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. UBI Banca can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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.
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.
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 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.
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.
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. UBI Banca 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 UBI Banca in S&Ls/Savings Banks industry. The S&Ls/Savings Banks 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.
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.
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.