SWOT and TOWS Analysis of Qatar National Bank and Mashreq Bank - Essay Example

SWOT and TOWS Analysis of Qatar National Bank and Mashreq Bank Affiliation SWOT and TOWS Analysis of Qatar National Bank and Mashreq Bank QATAR NATIONAL BANK Strengths Qatar National Bank is by far the Largest Bank in the entire Middle East and most of North Africa in terms of net profit and total assets. The bank has a strong presence in the Middle East which increases its reliability and continues to encourage its growth year by year. Its presence in the Middle East ensures that it progresses as more people gain trust in the bank due to its strong adherence to Sharia laws and its consistent flow of clients. Qatar National Bank has the largest shares in terms of market share, customer base and number of branches in Qatar thus making it the largest bank in the country. One of the most noticeable strengths is that it is the highest rated bank in the world in terms of net profit and total assets owned. This is a major strength as it is one of the reasons why majority of investors and co-operates bank with them. They trust that their money is safe due to the companies’ reputation It is widely distributed since is has its offices and presence in over 15 countries. (The entire middle east and other Arabic countries) The Qatar National Bank is one of the most secure banks in the world. The number of recorded cases of fraud and theft in Qatar national Bank is recorded to be at the minimum. This is mainly because of the sharia laws that they uphold and their tight security when it comes to safeguarding their assets. Weaknesses Although it is the most dominant bank in the middles east and North Africa, it has not exploited the western and westernized countries whose main religion is Christianity such as Americas, Europe and southern parts of Africa. In the last few years the bank has experienced a drop in terms of number of deposits leading to a low deposit growth and inevitably affecting the bank’s operations (Cihak & Hesse, 2008) Since it is an Arabic/Islamic Bank, most western investors and would-be clients in countries such as Germany, The USA and Europe, are resilient to bank with them due to the notion that they might be supporting terrorists or due to their strong diplomatic loyalty to their country. Opportunities Most African countries have a high number of Muslims and Arabs. Due to this the Qatar National Bank has a high opportunity to expand in these areas through acquisitions and promoting more people to join Islamic banking. (Hossain & Leo, 2009) Over the years there has been an increase in the demand for bond market in the Middle East, most Islamic states and Qatar in general. This is a great opportunity for Qatar National Bank to expand as the actions propel the growth of banks Generally, the growth in Islamic banking worldwide is a great opportunity for the bank to grow and if exploited well it will improve the banks performance and overall growth. There is a great opportunity to exploit the western countries. This can be done through campaigns to discourage acts of terrorism and campaigns to unite the eastern and western countries together to eradicate the fear that western clients might have. The growth in mobile technology is a great opportunity to increase the bank’s customer data base with the introduction of mobile banking. Threats Due to the recent introduction of more banks who are offering services at a lower price, their might be a decrease in foreign investments in the Middle East and Qatar which will in the long run affect the bank (Mostafa 2009) The current global markets are uncertain and therefore over reliance on foreign banks for loans and funds poses to be a major threat that might face the bank. MASHREQ BANK Strengths Mashreq bank is globally known and is one of the most productive and effective banks in the United Arab Emirates UAE. It has also achieved recognition by the Banker Middle East Industry Awards as the best regional retail bank in UAE where it received the ‘Best Regional Retail Bank Award Mashreq bank has held its reputation in UAE due to is specialization in retail banking. This reputation has helped the bank in increasing their customer shares in the country and other countries where it has a sturdy presence such as Egypt, Qatar, Kuwait and Bahrain. Mashreq bank has been known to have a high consideration of technology since it is one of the most reliable banks that offer internet banking therefore making it easily accessible worldwide. Weaknesses The bank has not exploited other areas apart from the Middle East; this leaves it to scramble for the saturated markets available in the region. Increase in cyber attacked and other cyber terrorism acts has led to a decrease in the number of users who rely on internet banking. This has caused a drop in the customer shares who relied mostly on internet banking. The bank lacks global tie-ups with other economies especially the western economies since it has very little presence in these countries. Opportunities The growth in mobile technology is a great opportunity to increase the bank’s customer data base with the introduction of mobile banking. Mashreq bank has a high opportunity to develop in Islamic states and other emerging economies due to the growth and demand of Islamic banking. Most African countries have a high number of Muslims and Arabs. Due to this the Qatar National Bank has a high opportunity to expand in these areas through acquisitions and promoting more people to join Islamic banking Mashreq had a high chance of growing if it targets commercial and corporate organizations to bank with them. Threats The current regulations in the Middle East pose as a threat since they will affect the banking operations negatively. Due to the high rise of prices in United Arab Emirates, there is a decrease in real estate market investments which might affect the bank negatively. The uncertainty of the global economy is another threat since there is no clear prediction of what will happen to the global economy hence the bank might be affected by a negative reaction of the global economy (Ramanathan 2007). TOWS ANALYSIS OPPORTUNITIES (O) THREATS (T) STRENGTHS (S) - The banks as two of the most successful banks in the Middle East should ensure that they use that to their advantage. - Since they both have a large customer share in the Middle east they should take up the opportunity to expand their services to western countries to increase their net profit. -They should ensure that they are not kicked out of the top spot by the upcoming banks that pose as a threat to ensure their success. -They should look at increasing their trust and reliance in western countries to ensure that their customer shares in the Middle East are not interfered with. WEAKNESSES (W) They both should look up ways to better their services in terms of security to attract more customer shares who use both internet and mobile banking. They should ensure that the western countries and westernized countries are exploited to ensure their success and development in terms of total assets and customer shares. They should ensure that the services they offer will not be interfered with by the new regulations that are being imposed in the Middle East by changing some of their strategies They should ensure that they are not over-reliant on western economies and banks for their funds and loans so that they are safe during a western economic crisis. References Akhtar, M. H., & Nishat, M. (2002). X-efficiency analysis of commercial banks in Pakistan: A preliminary investigation [with Comments]. The Pakistan Development Review, 567-580. Bader, M. K. I., Mohamad, S., Ariff, M., & Hassan, T. (2008). Cost, revenue and profit efficiency of Islamic versus conventional banks: international evidence using data envelopment analysis. Islamic Economic Studies, 15(2), 23-76. Cihak, M., & Hesse, H. (2008). Islamic banks and financial stability: an empirical analysis. International Monetary Fund. Hossain, M., & Leo, S. (2009). Customer perception on service quality in retail banking in Middle East: the case of Qatar. International Journal of Islamic and Middle Eastern Finance and Management, 2(4), 338-350. Mostafa, M. M. (2009). Modeling the efficiency of top Arab banks: A DEA–neural network approach. Expert Systems with Applications, 36(1), 309-320. Ramanathan, R. (2007). Performance of banks in countries of the Gulf Cooperation Council. International Journal of Productivity and Performance Management, 56(2), 137-154. Read More