Detailed SWOT Analysis of AU Bank – A Small Finance Bank In India

Updated on: Jan 7, 2022
SWOT Analysis of AU Bank - Featured Image

  Hey there!

My name is Aditya Shastri and I have written this case study with the help of my students from IIDE's online digital marketing courses in India.

Practical assignments, case studies & simulations from Business Review helped the students from this course present this analysis.

Building on this practical approach, we are now introducing a new dimension for our online digital marketing course learners - the Campus Immersion Experience.

If you find this case study helpful, consider leaving a comment below.

In our last blog, we discussed the SWOT Analysis of Bajaj Finserv, one of the flourishing NBFC in India. In this blog, we will dive into an in-depth SWOT analysis of AU Bank – A Small Finance Bank in India.

AU is a scheduled commercial bank that serves financial services to inferior and middle-income people and micro and small businesses that have limited or no access to standard banking and finance channels. The bank is ranked at 257th among the Fortune India 500 Companies, enabling a convenient banking experience with many industry-first initiatives.

AU Bank is now developing into a digitally-led bank with a pan India presence. The scope for digitally focused fields such as digital marketing is on the rise. If you want to stay up to date, check out our Free MasterClass on Digital Marketing 101 taught by Karan Shah, the CEO and Founder of IIDE.

Before we dive into the SWOT analysis of AU Bank, let us first check out its history.

Digital Marketing Academic Challenge 2024 - DMAC

About AU Bank

SWOT Analysis of AU Bank - Founder of AU Bank – Mr Sanjay Agarwal
(Founder of AU Bank – Mr Sanjay Agarwal, Source: The Hindu Business Line)

AU Bank was founded by Sanjay Agarwal as a private limited company and was later publicly listed. AU Small Finance Bank was founded in 1996 in Jaipur as AU Financiers. It is a non-deposit taking Non-Banking Finance Company (NBFC). It has worked particularly well to fund the economic growth of the under-serviced, lower and middle-class individuals. 

The Bank offers loans, deposits, payment products and services. In addition, it has strived to diversify into savings products such as deposits, payments banking, distribution of third party products and additional credit products, establishing its position as a comprehensive provider of financial products and services.

Quick Stats on AU Bank
Founder Sanjay Agarwal
Year Founded 1996
Origin Jaipur, Rajasthan, India/td>
No. of Employees 23,486
Company Type Public
Market Cap Rs.38,311.25 Crore (2021)
Annual Revenue Rs.3817 Crore (2021)
Net Income/ Profit Rs.1170.68 Crore (2021)


SWOT Analysis of AU Bank - AU Bank Range of Services

Products & Services by AU Bank

With over 300+ branches across 10 states in India, AU Bank offers a wide range of services namely:

  • Personal Banking
  • Online Banking
  • Internet Banking
  • Business & Corporate Banking
  • Insurance
  • Vehicle & Housing Loans

Competitors of AU Bank

AU Bank, being a small finance bank has the following set of competitors:

  • Equitas
  • Manappuram Finance
  • Muthoot Microfin
  • Kinara Capital
  • Bajaj Finserv

Now that we have an understanding of the company, let us dive into an in-depth SWOT analysis of AU Bank.

SWOT Analysis of AU Bank

SWOT analysis is a framework used to assess a company’s competitiveness and make strategic plans. SWOT analysis assesses internal and external factors as well as current and future potential. SWOT analysis is a strategic planning tool that AU managers can use to perform situational analysis of their organization.

To better understand the SWOT analysis of AU Bank, refer to the infographic below:

SWOT Analysis of AU Bank - SWOT Infographics of AU Bank

So from the following SWOT Analysis of AU Bank, let us first have a look into the strengths of AU Bank.

Strengths of AU Bank

Strengths are the positive points of the organisation that help it to grow its position in the market and lead to the company’s success. Here are the strengths of AU Bank:

  • Healthy Customer Base: In 2017, AU Bank had a total of 280,349 active loan accounts and has been growing ever since. It has also listened to its customers’ financial needs and built strong relationships with them through one-on-one contact.
  • Broad Range of Portfolio: One biggest strength that AU Bank has is that it offers a wide range of financial and consulting services to its customers ranging from investment banking, asset management, private banking and insurance, which give it an edge among other Small Finance Banks.
  • Talent Management: AU Bank has a highly skilled workforce. This is due to their excellent training and learning programs. Human resources are an integral part of the success of AU Small Finance Bank in the consumer financial services industry.
  • Strong Brand Recognition: AU Bank’s products and services are highly recognized in the consumer financial services industry for the last 25+ years. This allowed the company to charge a premium compared to its competitors in the consumer financial services industry.
  • Government Support: In November 2017, the Reserve Bank of India added the bank to its list of commercial banks, reducing the cost of short-term funding and improving the ability of banks to serve, further enhancing the bank’s growth prospects.
  • Limited Competitive Overlap: AU Bank has little geographical overlap with other small financial banks, limiting competition among existing players.

Weaknesses of AU Bank

The weaknesses are the negative points on which the brand must improve upon. For AU Bank, the following are its weaknesses:

  • Not in Country’s Leading: Due to its majority of income coming from loans, retail and personal banking only, it somehow lags in presence in India and other continents compared to leading Indian banks.
  • Declining Market Share: This is due to the consumer financial services industry growing at a faster rate than the company. In such a scenario, AU Bank needs to carefully analyze various trends within the financial sector to understand what to do to drive future growth.
  • Concentration Risk: AU Bank has significant exposure in the four major states that make up about 90% of its loan portfolio.
  • High Cost to Replace Existing Professionals: Few employees are responsible for the knowledge base of AU Bank, and their replacement will take up a lot of time and money for the company.
  • Rising Interest Risk: As the company is primarily wholesale-funded, rising interest rates can negatively impact borrowing costs and thus profitability.

Opportunities for AU Bank

Opportunities are external elements that are in favour of the company and the firm can use it to its advantage to grow. The opportunities of AU Bank are given below

  • Advancements in Technology in the Banking Sector: The banking industry has always functioned based on technology. AU Bank is known for its best-in-class user-friendly digital banking offerings. Thus, AU Bank should continue to adopt the latest technological advances. To draw future generations, they should focus on putting out newer banking and financial service using digital marketing skills.

Wait a minute. You might be thinking that what are digital marketing skills? Well, digital marketing skills include various subparts of digital marketing such as website building, SEO, social media marketing, e-commerce, online reputation and many more. You can check out IIDE 13+ short term courses in digital marketing which includes all of these. These courses can get you up to speed in as little as 5 days in a range of digital skills and expertise. 

  • Growth Potential: AU Bank operates in under-penetrated sectors such as vehicle finance, MSME and small enterprise finances which offers it strong growth potential.
  • Product Growth Potential: The bank is yet to launch several other major lending banking products and hence has greater growth potential. 
  • Expanding the Customer Base in Upper Segments: As customers must move from unorganized operators in the financial sector to licensed players, AU Small Finance Bank has the opportunity to enter the entry-level market.
  • Global Opportunities for AU Bank: A major opportunity for financial service players in the Indian market is the global financial service market, it is inarguably that the global market is worth billions of dollars. AU Bank is mainly focused on the Indian market, which needs to increase its reach outside the Indian market as well making it gain more customers.

Threats to AU Bank

Threats are external elements that could be detrimental to the growth of the company. Threats can be managed but not controlled. The threats of AU Bank are

  • Changing Demographics: The baby boomer generation has retired and the new generation is having a hard time replacing purchasing power. This may increase the profits of AU Bank in the short term, but younger people are less loyal to brands and more open to experimentation, resulting in lower profit margins in the long run.
  • Shortage of Skilled Human Resources: Given the high turnover rate of employees and the increasing reliance on innovative solutions, AU Bank may face challenges in this sector soon.
  • Dynamic Competition: New technologies developed by competitors and the market can pose a serious threat to the industry in the medium to long term. The competition is expected to intensify, especially in the area of liabilities, as the target profile of customers of small finance banks is similar to that of the existing banks.
  • Retention of Key Management Personnel: Developing and retaining key executives can be difficult as multiple new banks, fintech companies, and existing banks are competing for the same talent pool.
  • Regulatory Requirements: After transforming into a small bank, AU Bank must meet several regulatory requirements such as CRR, SLR and higher priority sector lending, which may negatively impact its operating performance during the initial three years of operation.

This ends our detailed SWOT Analysis of AU Bank. Let’s conclude our findings below.

Digital Marketing Academic Challenge 2024 - DMAC

To Conclude

AU Bank is a leading name in the small finance banking industry. In our SWOT Analysis of AU Bank, we can see how it is reliant on its strong relationships with customers and innovation in its products. AU Bank has to consider its competitors to maintain its position in the market.

One way in which AU Bank has an opportunity to tap into potential customers is by increasing its focus on its digital presence by using various digital marketing methods. Since the future is digital, there is an increasing need to have relevant knowledge and skills. 

If you are interested in getting into the digital marketing landscape too, why not try out our 3 Months Advanced Digital Marketing course where you can learn everything about digital marketing in-depth just like this case study. 

We hope this blog on the SWOT Analysis of AU Bank has given you a good insight into the company’s strengths, weaknesses, opportunities, and threats. You can also read our comprehensive study on the SWOT Analysis of JP Morgan Chase.

If you enjoy in-depth company research just like the SWOT analysis of AU Bank, check out our IIDE Knowledge portal for more fascinating case studies.

Thank you for taking the time to read this, and do share your thoughts on this case study of the SWOT analysis of AU Bank in the comments section below.

Share post via

Aditya Shastri

Lead Trainer & Head of Learning & Development at IIDE

Leads the Learning & Development segment at IIDE. He is a Content Marketing Expert and has trained 6000+ students and working professionals on various topics of Digital Marketing. He has been a guest speaker at prominent colleges in India including IIMs......[Read full bio]


Submit a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Related Posts