Federal Bank is one of the reputed Indian commercial banks in the Private Sector of India. It is headquartered in Aluva, Kochi. To achieve immense success, the SWOT Analysis of Federal Bank could their major tool. It analyzes the brand’s Strengths, Weaknesses, Opportunities and Threats. Project Report on SWOT Analysis of Federal bank will inform us about the internal and external factors affecting the growth of the bank.
So, let’s first start with learning about federal bank:
About Federal Bank
After completing all the formalities of the Banking Regulation Act -1949, the bank started operating as Federal Bank Limited on 2nd December 1949. This bank has a customer base of 10 million, out of which 1.5 million are NRI customers. With over 1,200 branches, Federal Bank is one of the leading financial institutes in India. It has successfully launched its Representative Offices in Dubai, Qatar, Oman, Abu Dhabi and Kuwait.
The slogan of Federal Bank is “Your Perfect Banking Partner”.
In April 2021, Federal Bank worked hand-to-hand with media conglomerate Network18 and actor/activist Sonu Sood to toughen the fight against the Covid-19 pandemic. They launched a campaign named ‘Sanjeevani – A shot of life’ as a nationwide vaccination awareness campaign. This Collaborative Campaign attracted a lot of people in India.
In the SWOT Analysis of the Federal Bank, the strengths and weaknesses fall under internal factors whereas opportunities and threats fall under external factors
So, without any further ado, Let’s dive into the SWOT Analysis of Federal Bank:
SWOT Analysis of Federal Bank
SWOT Analysis can be defined as a strategic management framework used to help a company or a brand identify its strengths, weaknesses, opportunities, and threats related to business strategies, competition and policies. SWOT Analysis also helps a company or a brand to strategise according to the factors affecting its growth.
Federal Bank’s SWOT Analysis can be analyzed by following points:
1. Strengths of Federal Bank
Strengths refer to the capabilities or available resources that a company uses effectively for its development and overall growth. Federal Bank stands ahead of the competition because of the following strengths:
- Widespread Network: Federal bank has a strong and widespread network.It has over 1,200 branches spread all over India that effectively contributes to the bank’s overall effective and efficient customer services.
- Shareholders fund Utilization: Every bank has its Shareholders fund and it depends on the bank to use it in the best way possible. Federal Bank effectively uses shareholder funds that have helped it have a constant high ROE from the last two years.
- Increased Profit: Federal Bank is reporting groundbreaking records of profit. The bank’s net interest income increased by 9.4% to ₹1,418 crore as against ₹1,296 crore year-on-year.
- Managed Assets: Federal Bank has efficiently managed assets to Generate Profits.
- Increasing Customers: The Bank has a customer base of 10 million and it is expected to grow further in the future.
- Proper Initiatives: Federal Bank organises Innovative Marketing Campaigns and provides amazing offers to its customers.
2. Weaknesses of Federal Bank
Weaknesses in the SWOT analysis of a company are those factors that affect the growth of the company and thwart the company’s process from achieving its goals. There are a few weaknesses of federal bank, that it needs to address:
- Less Penetration: Federal Bank has lesser penetration in the urban market. This is a huge Weakness of the Federal Bank that could cost a price for the Bank.
- No Profits using capital: Every Bank has its own Capital. Capitals should be utilized to generate Profits. But, the Federal Bank is inefficient in producing Profits using its Capital.
- High-Interest Payment: Federal Bank has higher Interest Payments compared to its Earning. This is a major weakness of the bank.
- Declining Revenue: Federal Bank has a declining Revenue every quarter.
- Removed as a Sponsor: Federal Bank was removed from the Principal Sponsor of IPL Team- Kochi Tuskers Kerala in 2011.
- High Volume/Top Loser: Federal Bank is listed on High Volume/Top Losers in Stock Market. And this is a bad part for the Federal Bank in the Stock Market.
3. Opportunities for Federal Bank
Favourable factors that give a company a competitive advantage over other companies are known as opportunities in SWOT. Several opportunities for Federal Bank are:
- Small Enterprise: Federal Bank is a small enterprise Bank that is doing great as a financial institution. So, it has a very probable chance to grow in the near future.
- Rural Probability: If Federal bank offers its services in the rural sector it can be a game-changer for the bank as the rural sector can drive huge revenue and further opportunities for the bank.
- Urban Improvement: Federal Bank has the potential of improving its Urban Service. This can attract huge customers.
- Acquire Assets: Federal Bank can acquire assets of smaller units in smaller regions. This can help the Federal Bank to grow enormously.
- New Schemes: Federal Bank can come up with unique saving account schemes. These New Schemes help a branch to draw a large number of new customers.
- Digital Approach: Today’s World is marching towards Digitalization. Even in the field of Banking, there is huge scope in the Digital Payment System. So, they can launch their Digital Wallet for Digital Payments.
4. Threats to Federal Bank
Threats are the external factors that can cause harm to the company. These factors should be addressed as soon as possible to avoid any major damage to the organisation. The threats to the Federal Bank are:
- Economic Slowdown: The Economic Slowdown is a challenge for the overall Banking Sector in India. Thus, affecting the Federal Bank too.
- Competition: There are many banks in India that come up with innovative marketing campaigns and schemes regularly. The competition in the banking sector is almost cut-throat and the Federal bank needs to come up with innovative ideas in order to survive in the competitive market.
- Rural Reach: Microfinance having large shares in the rural region is a threat to private Banks.
- Technological Threats: Emerging Technology can also be a nightmare for Banks. Cryptocurrency can be a major threat to the Banking System.
- Strict Norms: The rules in the financial sector are getting strict day by day. Operating in such an environment is not a cakewalk and it affects the company’s growth too.
With this, we reach the conclusion of the SWOT Analysis of the Federal Bank.
Federal Bank has always created a benchmark to its business & performance as compared to the other competitor banks in the industry. The bank is one of the leading brands in the banking and financial services sector of the country has always kept its customers on higher priority. It has come upon a long journey and is trusted by thousands of customers. Proper and Strategic SWOT Analysis of Federal Bank has upgraded it to achieve success.
Federal Bank has always impressed its audience through its Unique Marketing Skills and Collaborative Campaigns. We can’t ignore the fact that people have started to shift towards private sector banks, and there’s always space for growth in this area. The Federal Bank should continue thriving in the competitive market by coming up with better policies and innovations.
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