First Interstate BancSystem (FIBK) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for First Interstate BancSystem (United States)

Based on various researches at Oak Spring University , First Interstate BancSystem is operating in a macro-environment that has been destablized by – increasing government debt because of Covid-19 spendings, wage bills are increasing, talent flight as more people leaving formal jobs, geopolitical disruptions, there is increasing trade war between United States & China, cloud computing is disrupting traditional business models, central banks are concerned over increasing inflation, challanges to central banks by blockchain based private currencies, supply chains are disrupted by pandemic , etc

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Introduction to SWOT Analysis of First Interstate BancSystem

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that First Interstate BancSystem can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the First Interstate BancSystem, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which First Interstate BancSystem 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.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of First Interstate BancSystem can be done for the following purposes –
1. Strategic planning of First Interstate BancSystem
2. Improving business portfolio management of First Interstate BancSystem
3. Assessing feasibility of the new initiative in United States
4. Making a Regional Banks sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of First Interstate BancSystem

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Strengths of First Interstate BancSystem | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of First Interstate BancSystem are -

Superior customer experience

– The customer experience strategy of First Interstate BancSystem in Regional Banks industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Learning organization

- First Interstate BancSystem 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 First Interstate BancSystem is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at First Interstate BancSystem emphasize – knowledge, initiative, and innovation.

Organizational Resilience of First Interstate BancSystem

– The covid-19 pandemic has put organizational resilience at the centre of everthing First Interstate BancSystem does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.

Successful track record of launching new products

– First Interstate BancSystem has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. First Interstate BancSystem 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.

Innovation driven organization

– First Interstate BancSystem is one of the most innovative firm in Regional Banks sector.

Highly skilled collaborators

– First Interstate BancSystem has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Regional Banks industry. Secondly the value chain collaborators of First Interstate BancSystem have helped the firm to develop new products and bring them quickly to the marketplace.

Effective Research and Development (R&D)

– First Interstate BancSystem has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – First Interstate BancSystem staying ahead in the Regional Banks industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

High brand equity

– First Interstate BancSystem has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled First Interstate BancSystem to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

Sustainable margins compare to other players in Regional Banks industry

– First Interstate BancSystem has clearly differentiated products in the market place. This has enabled First Interstate BancSystem to fetch slight price premium compare to the competitors in the Regional Banks industry. The sustainable margins have also helped First Interstate BancSystem to invest into research and development (R&D) and innovation.

Diverse revenue streams

– First Interstate BancSystem is present in almost all the verticals within the Regional Banks industry. This has provided First Interstate BancSystem 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 recruit top talent

– First Interstate BancSystem is one of the leading players in the Regional Banks industry in United States. It is in a position to attract the best talent available in United States. The firm has a robust talent identification program that helps in identifying the brightest.

Low bargaining power of suppliers

– Suppliers of First Interstate BancSystem in the Financial sector have low bargaining power. First Interstate BancSystem has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps First Interstate BancSystem to manage not only supply disruptions but also source products at highly competitive prices.

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Weaknesses of First Interstate BancSystem | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of First Interstate BancSystem are -

Workers concerns about automation

– As automation is fast increasing in the Regional Banks industry, First Interstate BancSystem 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.

High operating costs

– Compare to the competitors, First Interstate BancSystem has high operating costs in the Regional Banks industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract First Interstate BancSystem lucrative customers.

Need for greater diversity

– First Interstate BancSystem 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.

Skills based hiring in Regional Banks industry

– The stress on hiring functional specialists at First Interstate BancSystem 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.

Compensation and incentives

– The revenue per employee of First Interstate BancSystem is just above the Regional 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.

Interest costs

– Compare to the competition, First Interstate BancSystem 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.

Slow to harness new channels of communication

– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, First Interstate BancSystem is slow explore the new channels of communication. These new channels of communication can help First Interstate BancSystem to provide better information regarding Regional Banks products and services. It can also build an online community to further reach out to potential customers.

Ability to respond to the competition

– As the decision making is very deliberative at First Interstate BancSystem, in the dynamic environment of Regional Banks industry it has struggled to respond to the nimble upstart competition. First Interstate BancSystem has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

High cash cycle compare to competitors

First Interstate BancSystem has a high cash cycle compare to other players in the Regional 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 dependence on First Interstate BancSystem ‘s star products

– The top 2 products and services of First Interstate BancSystem still accounts for major business revenue. This dependence on star products in Regional Banks industry has resulted into insufficient focus on developing new products, even though First Interstate BancSystem has relatively successful track record of launching new products.

Low market penetration in new markets

– Outside its home market of United States, First Interstate BancSystem needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.

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First Interstate BancSystem Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of First Interstate BancSystem are -

Reforming the budgeting process

- By establishing new metrics that will be used to evaluate both existing and potential projects First Interstate BancSystem can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.

Manufacturing automation

– First Interstate BancSystem can use the latest technology developments to improve its manufacturing and designing process in Regional Banks sector. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.

Using analytics as competitive advantage

– First Interstate BancSystem has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Regional Banks sector. This continuous investment in analytics has enabled First Interstate BancSystem to build a competitive advantage using analytics. The analytics driven competitive advantage can help First Interstate BancSystem to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, First Interstate BancSystem 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 First Interstate BancSystem to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

Lowering marketing communication costs

– 5G expansion will open new opportunities for First Interstate BancSystem in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Regional Banks industry, and it will provide faster access to the consumers.

Buying journey improvements

– First Interstate BancSystem can improve the customer journey of consumers in the Regional 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

– First Interstate BancSystem can develop new processes and procedures in Regional 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 First Interstate BancSystem 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.

Building a culture of innovation

– managers at First Interstate BancSystem 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 Regional Banks industry.

Use of Bitcoin and other crypto currencies for transactions in Regional Banks industry

– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for First Interstate BancSystem in the Regional Banks industry. Now First Interstate BancSystem can target international markets with far fewer capital restrictions requirements than the existing system.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, First Interstate BancSystem can use these opportunities to build new business models that can help the communities that First Interstate BancSystem operates in. Secondly it can use opportunities from government spending in Regional Banks sector.

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. First Interstate BancSystem can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Leveraging digital technologies

– First Interstate BancSystem 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.

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Threats First Interstate BancSystem External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of First Interstate BancSystem are -

Shortening product life cycle

– it is one of the major threat that First Interstate BancSystem is facing in Regional Banks sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, First Interstate BancSystem may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Regional Banks sector.

Barriers of entry lowering

– As technology is more democratized, the barriers to entry to Regional Banks industry are lowering. It can presents First Interstate BancSystem with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Regional Banks sector.

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 First Interstate BancSystem.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for First Interstate BancSystem in Regional Banks industry. The Regional 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.

Consumer confidence and its impact on First Interstate BancSystem 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 Regional Banks industry and other sectors.

Easy access to finance

– Easy access to finance in Regional Banks industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. First Interstate BancSystem can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

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 First Interstate BancSystem in the Regional Banks sector and impact the bottomline of the organization.

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. First Interstate BancSystem 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.

Environmental challenges

– First Interstate BancSystem 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. First Interstate BancSystem can take advantage of this fund but it will also bring new competitors in the Regional Banks industry.

Increasing wage structure of First Interstate BancSystem

– 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 First Interstate BancSystem.

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.

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 First Interstate BancSystem business can come under increasing regulations regarding data privacy, data security, etc.

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Weighted SWOT Analysis of First Interstate BancSystem Template, Example

Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at First Interstate BancSystem 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 First Interstate BancSystem 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 First Interstate BancSystem 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 First Interstate BancSystem 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 First Interstate BancSystem needs to make to build a sustainable competitive advantage.

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