Strength and weaknesses of the First Direct bank_Swot analysis

First Direct was the first bank to operate as a branchless bank and is an innovative bank in England. There is need therefore to use the SWOT analysis of the bank and the origins of were it erupted from. These are the Strengths, Weakneses, Opportunities and Threats.

Strengths

• They had highly motivated and skilled staff. This was evident as they analysed on how to recruit, train and motivate their staff. They would recruit on after a wide search of candidates, enhance them with skills and motivate them with financial incentives (as according to McGregor ‘s theory X). They therefore were hiring people that were fast, efficient and with good personalities. With the expertise human resources, they can operate efficiently and able to provide their customers with the best service quality.

• First Bank ‘s strength also entailed them having to be utterly low cost. This can be in comparison with the other competing banks in terms of their bank charges. The use of low costs enables them to penetrate into the market and therefore a growth strategy. They can acquire new clients and increase their customer base and hence retain the current customers (loyalty).

• Building a strong brand is essential as some people who may be potential clients may not be aware of the bank since it has no branches. After enhancing a good corporate image by their brand name, they can acquire more customers in the market and even acquire from Midland (which was their buyout). From a strong brand image, they can trust the institution and therefore become loyal.

• Efficient information systems were instrumental in keeping the costs down. This is advancement in new technology that deters costs from growing and enables the bank to operate profitably. New technology was used by First Direct to carry out their operations over the phone and this made work to be done faster. 

• There is also direct customer contact and this helps in creating strong relations with their customers. They would use human operators rather than machines to perform all the functions. This creates strong customer relationship management, which is important in the banking sector for it to prosper.

• Another strength for the bank was in its structure. They were able to cut their costs by reducing their fixed costs and carry their operations at one center. They would not be stifled on their growth opportunities as they cut some costs.

• The bank was growing as evidenced by the acquiring of new customers. They were acquiring about 125 000 new customers a year and this signified growth. They also build new facilities to accommodate the growth. They also lost a few customers (about 2 to 3%) and this shows there were able to retain customers.

• The Midland (which was First Bank buyout) was the first to introduce charge free banking and personal loans. This shows being innovative.

• They were able to offer quality service therefore were able to enhance positive word of mouth. This made them to acquire about one third of customers. They also did service quality as 75% of their calls were answered in 20 seconds and this shows faster response.

• Another strength was that after research, they were able to satisfy their customers. This was analysed from the year 1994 to 1995 were there was a significant rise in satisfied customers.

• First Direct was able to integrate their systems and therefore eliminate the repetition of the whole conversation and there was internal coordination. This shows a great deal of efficiency.

• They were able to adopt the Yorkshire accent which was recognised as easy to understand and therefore able to accommodate most people. They would then acquire a larger customer base.

• First Direct were able to convey a sense of professionalism as they wore business formal wear. This will help them to be labeled as a focused entity and therefore clients will come to them.

• They had a call centre that was able to operate 24 hours a day during the day and night. This is a business strength as they can be able to serve their clients despite what time. They attract more clients as they used the special telephone number were local rates were used for international calls. This makes them superior from others.

• First Direct also used expertise overnight that would attend to any customer enquiry signifying great customer service. This makes them differentiate them from others and therefore can be able to grow and get a greater share in the market.

• They were able to do service recovery as when things went wrong, they tried to go overboard to recover customers. This was strength as they would be able to retain more customers who would become loyal and therefore their customer base will increase.

• The use of direct mail is another strength and this produced a high call volume. They were able to bring in nearly one half of new customers.

• The workers were more than willing to work overtime at night. They were putting in 14 hour shifts of which these are over the normal working hours.
• First Direct’s advertising claims enabled them to pass on savings to customers through their branchless bank. They were able to offer free annual charges for their customers.
• They operated under core values that entail responsiveness, openness, right first time, respect and contributing. This shows that they were able to offer service quality to their clients.

WEAKNESSES

Although it had more strengths, as any normal institution, it also had weaknesses in that:

·         They had difficulty in acquiring new customers in the first place, that is at the early stages. They had to first publicise themselves so that they become popular and therefore assured of a customer base.

·         There was lack of publishing final accounts and is a weakness. A good company should be able to publish their accounts and attract investors.<

div>

·         They replaced more qualified and experienced staff with less qualified staff. This is a weakness as it has a risk of inefficiency in using less experienced staff and loses their customers.

·         They employed 2400 individuals instead of 4000 and this indicates a shortage of human resources. With few people they might not be able to operate at full capacity and therefore the business will flap.

·         However no premium was paid to the night and weekend shifts and this has risk of increasing employee turnover. This is a weakness, as they have to retain customers to operate efficiently without disturbances.

·         They also recognised that its management methods might not necessarily be appropriate in the future. This is a weakness as the management have a myopic mind.