Nationwide Building Society SWOT and PESTLE Analysis

Strength

1. Enjoys good credit rating for both long term and short-term loans: Long term credit rating of Nationwide, as of 2022, was A+ with Standard & Poor’s, Aa3 with Moody’s and A with Fitch Ratings. Good ratings reflect their capital strengths which includes high-quality liquidity buffer, diverse funding sources and funding arrangements in case of any contingency like financial or economic stress. High and stable rating by different sources shows that the group has adequate liquid assets to fulfill cash outflows in case of market undulations. This increases contractual inflows as investor confidence is built and increases its revenue.

2. Preferred choice for customers in UK: Nationwide is the world's largest building society and also enjoys leadership position as a savings provider and a top 3 provider of mortgages in the United Kingdom. It is also a major provider of current accounts, credit cards, ISAs and personal loans. Nationwide has around 16 million happy customers. The Group is most preferred as it delivers real value to its members. Hence in 2020 more than1 in 6 current account switchers came to Nationwide. This has led to a significant hike in the number of current account openings in 2020 up from 590,000 in 2016 to 759,000 in 2020 as it is the top choice for current accounts. Total current accounts with Nationwide in FY 2021 amounted to 8.5 million. In August 2021 Nationwide joined the fight to entice savers to switch their current account provider, giving a financial incentive to customers who already use one of its services rather than switching to a new one. Following in the footsteps of HSBC and Virgin Money, Nationwide offered £125 to existing clients, including mortgage holders, who moved their current account to Nationwide. For switching over, new customers would be entitled to a £100 bonus. This incentive is expected to further increase the base of current account holders. It has also become UK’s most trusted brand as it maintains its reputation of excellent services. The group benefits from the flexible services it offers like FlexPlus, Current Account Switch Service which allows shift to Nationwide’s current account from other banks, complete personal banking services, personal loans & home insurance. They cater to large consumer base which increases revenue and provides long term sustainable growth. In 2020, Nationwide successfully added one million members, grown retail deposits by £15 billion and mortgage balances by £18 billion. In 2021, Nationwide continued to serve its 16.3 million members, increased the mortgage balances by £2.2 billion and experienced significant hike in net deposit growth to £10.6 billion from £5.7 billion in 2020.

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Weakness

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Opportunity

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Threat

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Political

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Economic

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Social

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Technological

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Legal

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Environmental

1. Supporting environmental stability through diverse initiatives: The Group is aiming at delivering best in class performance for environmental sustainability. It is reducing carbon emissions, diverting waste from landfill, reducing water wastage & electricity consumption. The Group has also cut its electricity consumption by 50% in 2018 as compared to 2016 by using solar energy. Nationwide has also been certified at level one of the Carbon Trust Supply Chain Standard in 2018 for addressing inefficiencies in its supply chain. The total carbon dioxide in tones per FTE has decreased to 1.69 as compared to 3.46 in the baseline year, 2016. It has set strict targets for 2020 which limits carbon emissions to 2015 levels, 5% reduction in water use, waste reduction by 100 tones and at least 80% increase in recycling. In 2020 making a £1 billion loan fund available to incentivize a reduction in the carbon footprint of Britain’s homes was a key initiative of Group to reduce environmental impact. Nationwide joined the Net-Zero Banking Alliance (NZBA) and the Glasgow Financial Alliance for Net-Zero (GFANZ) in 2021, pledging to reduce carbon emissions to zero by 2050.

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