Comerica Incorporated SWOT and PESTLE Analysis

Strength

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Weakness

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Opportunity

1. Increase in lending limits after enactment of EGRRCPA: The Economic Growth, Regulatory Relief and Consumer Protection Act (EGRRCPA) passed in 2018 brought about some recalibration of the financial framework hit by crisis. The new act amended section 165 of Dodd-Frank Act, which raised the asset thresholds which in turn determined the use of high standards for bank holding companies. Under EGRRCPA bank holding companies which had less than $100 billion of consolidated assets (Comerica) were not required to maintain the Dodd-Frank standards barring few. As a result of this Comerica is not subject to “Dodd-Frank Act supervisory and company-run stress testing” nor is it required to file a resolution plan. It not submitted to an internal liquidity stress testing and buffer requirements. They are also not needed to run stress testing requirements. The company is also exempted from paying the supervision and regulation fee for the assessments under Dodd-Frank Act. This has allowed the bank to achieve better freedom in terms of administration and functioning. It has also caused the bank to allow an increase in lending limits for its interested parties.

2. Scope of considerable growth in corporate and investment banking sector of Mexico: The corporate and investment banking industry has been majorly impacted by a stronger private sector and an increasing international significance in the trade sector in Mexico. The revenue from corporate and investment banking industry has reported a growth of 6% consistently over the last decade. A major factor behind this is the transaction banking which increases by 9% yearly. Lending revenues witnessed an increase by 3% too. Despite ripe conditions for growth, penetration in the Mexican market (measured as GDP) has been far below than what one may observe it’s in Latin American counterparts. The Mexican GDP/ total volume is 39% while it stands at 50% for Latin American markets. The pillars of the Mexican economy are – services, retails, wholesale trade, construction and manufacturing. They together account for 70% of commercial bank’s lending volume. Large firms have a share of about 80% the remainder is accounted by the small and medium sized enterprises. With such a huge scope of growth in the Mexican market, Comerica is bound to succeed.

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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

1. Redefining customer satisfaction through human like artificial assistance: In recent times, many financial institutions and banks have spent a lot of capital for digital-and-analytics transformations, aiming to improve customer’s experience in engagements with the bank- be it via physical mediums or virtual mediums like mobile and web channels. A hassle free experience can be of significant value to the customer and by extension to the bank. A McKinsey survey (2018) about the US retail banking customers reports that the banks with the most reported customer satisfaction grow 84 percent faster in deposits than the banks with the low satisfaction ratings. Three reasons which encourage banks to improve customer engagements are: rising consumer expectations, disintermediation by non-banking institutions and increasingly human like formats of AI. A redesigned customer engagement system would give the AI bank “a deeper and more accurate understanding of each customer’s context, behavior, needs, and preferences”. This redesigning can be achieved by adopting a comprehensive, data driven approach to understand how customers engage with banks, upgrade its present staff to include people who would be better accustomed to the new technologies, formalize capabilities which would allow dealing with non-financial institutions and services among others. Recognizing the need of the hour, Comerica uses voice artificial intelligence tools to automate most of its call center’s interactions with consumers since 2018 and has achieved a 50% improvement in customer support efficiency. The bank underwent major digital transformation between 2016-2018 to enable growth in earnings and revenues. The bank launched a new technology strategy called TechVision 2020, its key initiatives include providing high systems availability, improving cyber security, modernize its computing, enable a richer customer experience etc. The bank has also implemented voice-based authentication.

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Legal

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Environmental

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