Last time we discussed the SWOT analysis of an American multinational financial services corporation, Visa. This time, we will discuss the SWOT Analysis of Discover.
Discover Financial Services is an American financial services company that owns and operates Discover Bank. It is also the fifth-largest credit card brand in the United States. It was introduced by Sears in 1985 with the mission to help people spend smarter, manage debt better and save more so people can achieve a brighter financial future.
Another aspect that made Discover more demanding is its marketing efforts and online services. Marketing is changing to digital marketing and if you are also interested in digital marketing – check out our Free MasterClass on Digital Marketing 101 by the CEO and Founder of IIDE, Karan Shah.
If you want to learn more about how Discover becomes a successful brand. In this blog, we will learn the SWOT analysis of Discover and try to find what you are looking for. Before that let us learn more about the Discover brand, founding, products, financial status and competitors.
Being the leading digital bank and payments services company, Discover financial corporation is a bank holding company specializing in credit cards, home loans, auto loans, banking, and savings products. Its headquarters are located in Riverwoods, Illinois, U.S.
Discover is a credit card brand issued primarily in the United States which also offers check and saving accounts, personal loans, home equity loans, student loans and credit cards.
Discover is a subsidiary of Sears (the largest retailer in the U.S.) which was introduced in the year 1985. When it was introduced, Discover did not use to charge an annual fee and was offering a higher than the normal credit limit which was something big in the credit card industry.
|Origin||Riverwoods, Illinois, U.S.|
|No. of Employees||17,600+|
|Market Cap||$33.57 Billion (2021)|
|Annual Revenue||$12.95 Billion (2020)|
|Net Income/ Profit||$1.14 Billion (2020)|
Products of Discover
Discover has been in the financial services company for more than a century and deals in:
- Payments systems
- Credit cards
- Consumer banking
Close Competitors of Discover
Discover competes on a global level with many other financial companies. The top 5 competitors of Discover are:
- Capital One
- Ally financial
Now that we understand the company’s core business, let’s delve into the SWOT Analysis of Discover.
SWOT Analysis of Discover
Talking about Discover’s business, let’s understand how this corporation can cater to different individuals using SWOT analysis. SWOT analysis of Discover helps us to understand companies through the lens of internal and external factors. Strength and weakness are based on internal factors whereas opportunities and threats rely on external factors of the bank.
To better understand the SWOT analysis of Discover, refer to the infographics image below:
Below is a step-by-step detailed guide to help you with the SWOT analysis of Discover.
Strengths of Discover
Discover Financial Services has numerous strengths that help it to thrive in the marketplace. These strengths not only help it to protect the market share in existing markets but also help in penetrating new markets. Some of the strengths of Discover are:
- Brand Reputation: Discover has been in the business of banking since 1985. Also, with the variety of credit cards and loan facilities it provides, it is established as one of the leaders in the industry. This helps the corporation to gain a reputation and get recognized easily.
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- Successful Acquisitions: Discover is famous for several acquisitions such as the acquisition of the greenwood trust, pulse, diners club international and many more. Such acquisitions give the financial institute a certain edge over its competitors.
- Work Culture: Discover’s employees work culture is different where it promotes its employees to work and live. This helps the company to be ahead of the competition in terms of award-winning workplaces.
- 100% U.S. Based: Discover is a 100% U.S. based financial facility. It only provides its products and services to the citizens of the U.S. This represents that Discover is a good corporate citizen and serves its community only.
- The leading Issuer of Credit Cards: One of the biggest roleplay that allowed Discover to establish itself as a leader is due to its facility of issuing credit cards.
- Initiatives Satisfying Customers: Discover with its frequent initiatives such as loan facilities for students on good grades, financially supporting black-owned restaurants, the discover college commitment with my college plan has been able to achieve a high level of customer satisfaction among present customers and good brand equity among the potential customers.
Weaknesses of Discover
Weakness is the area where Discover Financial Services can improve upon. Some of the weaknesses of Discover are:
- Risk & Hazards: Discover is highly exposed to risk and fraud. The internal analysis gives insights into Discover’s weak transaction system that sometimes lead to major duping payments and due to this problem, customers doubt the veracity of the company and its products thus Discover transactions might lead to chaos at times.
- Probe and Expansion: Investment in research and development are a little less as analysed by the continuous growth of players in the financial industry. Although Discover spends a ransom amount of money on probe and expansion, it backslides to compete with its competitors in the industry concerning innovation.
- Decreasing Profits: Discover’s net profit of $1.14 Billion is considerably low as compared to annual revenue of $12.95 Billion. It is also low in comparison with one of Discover’s competitors – Visa which is enjoying net profit in two digits.
- Limited Global Reach: One of the reasons for Discover’s lowering net profit could be the company limiting its global reach through operating in the US only, while its other competitors such as Visa are recognized globally for their services.
- Lower Current Ratio: There occurs a problem in the current ratio where there are more liabilities than the available assets. This leads to a mismatch in the financials of the company.
Opportunities for Discover
Opportunities are potential areas of focus for a company to improve results, increase sales, and ultimately profit.
- Technological Developments: Technology comes with numerous benefits among many departments. Operations can be automated to reduce costs. Technology enables better data to be collected on customers and improves marketing efforts.
(Discover Launches Click to Pay, Sources: Discover)
- Click to Pay: Discover has recently grabbed the opportunity to launch its first seamless and consistent payment experience through a mobile app called Click to Pay. By this, customers can easily do online transactions or they can send money to their family members living abroad from any part of the world more securely and conveniently.
Honestly speaking, digital transformation has made it easy for people to do whatever they want, no matter wherever they are. Not only Discover’s Click to Pay, other online payments, scan payment facilities and UPI transfer facilities have also made our life sorted from the fuss of cash payments. People have understood the benefits of digitalization and the easement of online working, which is why businesses and brands are continuously learning and implementing various digital marketing skills to establish their online business and bring the relief of doing business in their life.
- New Industry: Discover opens up new markets in the industry due to concessions with the government. This has helped Discover to frequently release relieving loan facilities for its customers on a no-fee agreement. Discover proved itself as an emerging player entering the market and providing its range of services.
- Fall in the Inflation Rate: The low inflation rate has bought more security in the market thereby enabling credit at a low-interest rate to the customers of Discover. All the players in the market are now feeling secure as the inflation has now come down and now they can purchase things easily because the demand is now on the lower side.
Threats to Discover
It is an environmental factor that can be harmful to a company’s growth. Some of the threats to discover are:
- Competing Environment: The highly competitive environment in the financial market is very much dangerous for Discover. It has big rivals, including Mastercard as well as digital payments companies such as PayPal and they are also the most established companies in the prevailing market. Thus Discover has to make its USP if they want to survive in the market.
- Competitor’s Promotional Messages: Competition’s increased marketing has posed a danger to Discover. Customers are assaulted with many messages on most platforms, and there is more clutter than ever. Discover’s promotional communications will be less effective as a result of this.
- Competitors Market Ruling: In 2004, Visa and Mastercard violated antitrust regulations with anticompetitive practices which caused certain damages to Discover. Also, big retailers like in 2014 Walmart ended their relationships with Discover to continue its bonding with Mastercard. Such shifts of clients and monopoly games will no longer take the market of Discover to dissolve.
This ends our detailed SWOT analysis of Discover. Let us conclude our learning below.
As we saw during the entire analysis, Discover is a name that doesn’t rely on one strength, weakness, opportunity, or threat, but it gets affected by so many different situations. Discover has always been a competitive player in the market and will continue to be.
Also, one point not to miss out on is that Discover is in line with its marketing effort. It has created a customer base for itself by tapping into the digital era and creating a social media presence on several platforms. If you are interested in learning digital marketing, don’t forget to check out IIDE’s 3 Month Advanced Digital Marketing Course.
We hope this blog on the SWOT Analysis of Discover 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.
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