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

1. 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.
2. Vulnerable to risk: Since this sector deals with finances, it is the most
risky sector which can change the fate of any business/Industry.
3. High NPA’s: Rise in Retail & corporate NPA’s (Non-performing assets)
is the single major issue this sector is going through worldwide.
4. 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.
5. 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

 1. 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.
2. 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.
3. 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

1. 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.
2. Stability of the system: Failure of some weak banks has often
threatened the stability of the system.
3. Competition: Competition from NBFC’s (Non-banking financial
companies) like insurance companies & mutual fund companies can
affect the business of Banks.