SWOT Analysis for Financial Institutions
A SWOT analysis is a tool that businesses can use to determine their strengths, weaknesses, opportunities and threats. Financial institutions can particularly benefit from a SWOT analysis because it allows your business to see where it can improve and plan more efficiently, as well as where it can capitalize on its strengths. It also allows you to break down goals and objectives into manageable chunks, a time-saver in an economic climate mired by slow or stagnant growth.
A strength is something that your financial institution does particularly well. For example, you might be highly adept at a particular kind of mortgage, you might have some of the best bonds experts in-house or you may have alliances with larger banks that your customers find to be attractive. Identifying these strengths allows your company realize its competitive advantage. These are the areas of the business that can be marketed as unique to your company or as selling points to potential customers.
A weakness is a competitive disadvantage. These are aspects of the business that the financial institution lacks, does poorly or otherwise hampers its performance. Examples might include not being able to service particular kinds of customers, not offering popular financial instruments, or lacking personnel with necessary subject matter expertise. Identifying weaknesses as part of the SWOT analysis helps your company develop goals and plans to address these areas of deficiency.
Opportunities are areas that your financial institution can seize to better position itself for future success. You might be able to extend your company's brand name to new products or account types, or serve additional customer groups by opening a new branch or taking market share from rivals. Opportunities are not always immediate goals, and the SWOT allows you to better formulate medium and long-term plans.
Threats are potential attacks on the financial institution. Unlike weaknesses, which emanate primarily from within the company, threats are external forces that seek to edge you out of the marketplace or which would in some way damage your ability to operate the financial institution. Common threats include the entry of new competitors, the emergence of a product or service that is similar to what you offer, and a shift in the regulatory or legal climate which forces you to change the way you offer financial products or give advice on accounts. Knowing what the real and perceived threats are allows you to formulate a strategy to prevent them from having a catastrophic effect on your business.
Originally published at: http://smallbusiness.chron.com/swot-analysis-useful-tool-financial-institutions-67528.html
This article was written by Jeremy C Bradley.