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NSB Group SWOT Analysis of Banking Industry in Sri Lanka
- 1. Aquinas University College Faculty of Undergraduate Studies BA in Business Administration Year - 2016 Group Assignment Group Members : B/BA/AQ/15/002 B/BA/AQ/15/004 B/BA/AQ/15/005 B/BA/AQ/15/011 B/BA/AQ/12/13/020 B/BA/AQ/12/13/021 Subject : Strategic Business Management Lecturer : Mr. Nalin Anthony
- 3. Proud heritage over 180 years which begins in 1832 Channeling the idle money in every corner of the island towards the development process Licensed Specialized Bank by the Banking Act No. 30 of 1988 The 3rd largest bank in Sri Lanka in terms of deposits Serves 18 million plus account holders via 5000 plus service points Only local bank received AAA Fitch Ratings for 13th consecutive year
- 4. The most reliable and sought-after choice for savings and investment solutions Providing customers with total financial solutions to optimize their savings and investment needs, while meeting the expectations of all the stakeholders In conducting day-to-day business: respond promptly and act creatively with trust, mutual respect and integrity
- 8. Political Factors Opportunities Threats •Moderate intervention by Gvt •Opening up North & East •Improving physical & social infrastructure •Developmental projects in the rural areas •Increase branch networks by 1.5% •Removing the stamp duty of 1.5% on the usage of credit cards for local purposes whilst increased the stamp duty on foreign purchases to 2.5% • Tough rules & regulations of CBSL • Ceasing leasing activities • Limitation of pawning percentage to 5% from the total loans • Increase in the effective tax rate • Potential entrance of Indian banks and financial companies( ECTA ) • Imposing taxes on large cash withdrawals
- 9. Economical FactorsOpportunities Threats • Economic growth by 4.8% in the 2015 • Government revenue increased to 13.0% of GDP in 2015 from 11.4% in 2014 • Upper middle income status • Inflation remained low • Personal Loans and Advances increased by 18.3% • Introduction of new economic activities •Global Financial Crisis & the European Crisis •Tightened international financial market conditions •Delay in the policy responses after general elections •Domestic savings declined to 22.6% of GDP •Slowdown in the growth of demand for traditional export markets •Earnings from exports contracted by 5.6% in 2015
- 10. Social Factors Opportunities Threats •Increasing ageing population •Education level of youth is at a higher level •Local youth tend to seek white collared jobs •Increase number of higher education institutes •Higher life expectancy •Increase in self employment and courage of disabled people •High women employment • High unemployment in certain regions • Increase in ageing population would affect in youth banking product to decline • Environmental pollution is continued • Emergence of green concepts
- 11. Technological Factors Opportunities Threats • Telephone density increased to 128.7 • No of mobile telephone connections increased by 10.2% • Internet penetration rate has increased • ‘Google Loon’ project • Customer Service Index • Increase in virtual distribution networks • Automation of more processes • POS banking • Mobile banking app • Facilitating customers to have video conferencing • Fraudulent transactions occur via virtual banking channels • Digital counterfeiting • Cross-selling is impossible since customers use virtual banking services • Mobile service providers entering into financial services
- 12. Conclusion • The banking industry & NSB is facing a WIN or LOOSE situation. • There are a lot of favourable macro environment factors but at the same time there are threats. • It all depends on how the bank will use these opportunities and threats strategically.
- 15. 2010 2015 LCB 22 25 LSB 9 9 High customer loyalty High switching cost for customers High capital requirement Highly regulated Network of distribution channels
- 16. SCORE CARD Factors Favourable Unfavourable High customer loyalty High switching cost for customers High capital requirement Highly regulated Strong network of distribution channels Favourable
- 18. Financial sector CBSL LCBs LSBs LFCs Specialised Leasing Companies Primary Dealers Pension and Provident Funds Insurance Companies Rural Banks Stock Brokers Unit Trusts
- 19. SCORE CARD Factors Favourable Unfavourable Large dependence on individual buyers Many alternative companies for buyers Low dependence on few large buyers High switching cost of buyers Multi-banking customers Unfavourable
- 20. Customer Deposits Institutional deposits Loans from banks S U P P L I E S
- 21. SCORE CARD Factors Favourable Unfavourable No substitutes for supplies(funds) Many substitutes for suppliers to switch Suppliers serve multiple industries No other suppliers as a bank Unfavourable
- 22. SCORE CARD Factors Favourable Unfavourable Few close substitute for banking products Many number of other substitutes in the market Attractive price levels of substitutes Lack of security of substitutes Low perceived quality of substitutes Favourable
- 23. BOC People’s Commercial NSB Total assets 1,329,020 1,026,769 797,257 779,466 Total deposits 933,966 793,342 529,266 554,060 [Rs. Mn] Commercial NSB Savings 210,929,920 141,598,527 FD 272,279,968 412,461,735 Demand 45,120,866 --- [Rs. 000]
- 24. SCORE CARD Factors Favourable Unfavourable Few close competitors Huge close competitors Oligopoly structured industry Strong exit barriers and committed fixed cost Aggressive marketing of competitors Unfavourable
- 25. SCORE CARD Factors Favourable Unfavourable Threat of new entrants Power of buyers Power of suppliers Threat of substitute products Rivalry among the existing firms 40% Favarouble 60% Unfavarouble
- 29. Opportunities Opening up of the North and the East. Improving the physical and social infrastructure of the country. Development projects taking place throughout the rural areas. Government proposals to increase the banking culture in the country. Government’s plans for improving public transportation. Growth of Sri Lankan economy by 4.8% and low inflation. Country is gradually moving to upper middle income status. Personal Loans and Advances increased by 18.3%.
- 30. Increasing ageing population. Education level of youth is at a higher level. Higher life expectancy necessitates higher savings over the working life to support old age. Increase number of higher education institutes and the trend of studying abroad. Increase in self employment and courage of disabled people. Many women entering into labour force. Trend of obtaining life style loans by middle income earners.
- 31. Telephone density and number of mobile telephone connections increased by 10.2%. Sri Lanka’s internet penetration rate has increased. Increase in virtual/ online distribution networks. Automation of more processes. POS banking service has added greater convenience to customers. Mobile banking app can use as a great tool to attract the youth segment.
- 33. THREATS • Tough rules and regulations • Increase in the tax rate • encouragement of credit cards • Global Financial Crisis • Domestic savings declined to 22.6% of GDP • Increase in ageing population • Fraudulent transactions • Digital counterfeiting • Cross-selling • Mobile Service Providers entering into financial services Eg: Dialog EZcash
- 35. • Promoting EASY card due to increasing credit card usage • Introducing an integrated system with postal network • Promoting BUDDHI loan due to increasing interest on higher education and trend of studying abroad. • Issuing travel cards • Speeding the processes of foreign remittances • Introducing core banking • Reducing paper work and manual processes • Introducing mobile banking app • Due to the increasing ageing population and increasing working women population, develop or re-launch the existing products with added benefits