The SWOT analysis of Banking industry

Strengths in the SWOT analysis of Banking

 Banking is as old as Human race : Banking industry is the driving force to any nation.
It helps in shaping the life of human race may be some time merely by Exchange (which
was called barter system), or by transaction or by facilitating advances.
 Source of employment & GDP growth : There is a consensus among economists
that development of the financial system contributes to economic growth. Financial
development creates enabling conditions for growth through either a supply-leading
(financial development spurs growth) or a demand-following. It is this industry which
continuously works to secure financial stability, facilitate international trade, promote
employment, & reduce poverty around the world.
 Hedge from risk : Whether it is natural calamity or man-made calamity banks mitigate
the after effect of the destruction by providing financial support to the victims to stand –
up & lead a peaceful life again.
 Diversified services: Banking industry offer services from CASA to insurance, to loan,
to investment.
 Connecting People: With the advent of new age technological advancement Banks have
made the life of the common man easier. People can transact on real time basis in many
places.
 Changing from mere savings & loan facilitator role: Top priorities of banks now days
include regulatory compliance, improving asset quality, enhancing customer centricity,
focusing on digital convergence, and tackling competition from non-banks. Banks are
therefore making business and technology investments to change their business models.

Weaknesses in the SWOT analysis of Banking

 Lack Of coordination: The global banking industry faces short-term uncertainty due to
the debt crises that challenge several major economies. Industry assets stand at $143
trillion (2013)&the EU is the largest regional market, with over 57% of the global
 market. Volatility in different market/Currencies has created problems for the banks in
order to work properly across the borders.
 Vulnerable to risk: Since this sector deals with finances, it is the most risky sector
which can change the fate of any business/Industry.
 High NPA’s: Rise in Retail & corporate NPA’s (Non-performing assets) is the single
major issue this sector is going through worldwide.
 Can’t reach to Under-penetrated market: Due to several conflicting objectives of
government & banks which goes hand in hand, rural areas of developing nations are still
not in the shadow of banks. Although PMJDY (PradhanMantri Jan DhanYojna)
implemented by the Indian banks got acknowledged by World Bank for financial
inclusion but the Idea is not fully capitalized even in the home country.
 Structural weaknesses such as a fragmented industry structure, restrictions on capital
availability and deployment, lack of institutional support infrastructure, restrictive labor
laws, weak corporate governance, Political pressure and ineffective regulations.

Opportunities in the SWOT analysis of Banking

 Expansion: Penetrating to the rural markets & bringing the rural masses under the
purview of organized banking will be the objective of the Banks in decades to come.
 Changing Socio-cultural & demographic factors: Given the demographic shifts
resulting from changes in age profile and household income, consumers will increasingly
demand enhanced institutional capabilities and service levels from banks.
 Rise in private sector banking: Banking Industry across the world is highly regulated
&lead by PSU’s with their respective central banks. With the advent of private sector
banks this sector is going through structural & functional changes mainly due to the
adaptation of the advanced technologies & increased competition thereby benefiting to
the end customers.

Threats in the SWOT analysis of Banking

 Recession: It is one of the major threats to the financial system of the nation. Traumatic
shock of Economic crises & collapse of the several businesses can affect the banks and
vice-versa.
 Stability of the system: Failure of some weak banks has often threatened the stability of
the system.
 Competition: Competition from NBFC’s (Non-banking financial companies) like
insurance companies & mutual fund companies can affect the business of Banks.