Background of CIMB Group

CIMB Group Holdings Berhad (MYX: 1023) is a Malaysian universal bank headquartered

in Kuala Lumpur and operating in high growth economies in ASEAN. CIMB Group is an

indigenous ASEAN investment bank. CIMB has a wide retail branch network with 1,080

branches across the region.[3]

The group operates under several entities, which include CIMB Investment Bank, CIMB Bank,

CIMB Islamic, CIMB Niaga, CIMB Securities International and CIMB Thai. The group's business

activities are primarily in the areas of Consumer Banking, Wholesale Banking,

comprising Investment Banking and Corporate Banking, Treasury & Markets, and Group

Strategy & Strategic Investments, with its core markets being Malaysia, Indonesia, Singapore

and Thailand. CIMB Islamic operates in parallel with these businesses, in line with the group's

dual banking model.

The group has over 40,000 employees located in 18 countries, covering ASEAN and major

global financial centres, as well as countries in which its customers have significant business

and investment dealings.

The group's geographical reach and its products and services are complemented by

partnerships. Its partners include the Principal Financial Group, Bank of Tokyo-Mitsubishi

UFJ, Standard Bank and Daewoo Securities, among others.

STRENGTHS

 One of the largest financial services providers in ASEAN.

CIMB Group being Malaysia’s fifth largest banking and one of Southeast Asia’s leading

universal banking groups by assets in ASEAN, they has proved their worth as one of the

major player in the financial market to their customers with approximately 12 million

customers.

CIMB long history of enlistment in the Bursa Malaysia has further solidified their position

as one of the leading universal banking groups in the industry. With its strong market

position, it directly builds trust on behalf of its current and potential customers to use

the services offered by the CIMB. They also have the widest retail branch network

across the ASEAN region (Malaysia, Indonesia, Thailand, Singapore, Brunei, Myanmar,

Cambodia, Laos, and Vietnam) with total 1,080 retail branches and operate under

several corporate entities.

 Embracing diversity.

CIMB Group believes on their diverse workforce that has been one of the success factors

in the group’s progress over the years. They recognize the value of diversity and

embrace it wholeheartedly. The different culture and background bring forth a wealth

of skills, talents and perspectives on which CIMB grow and learn.

Thai teams showing the way Customer Experience project. Indonesian team plays a

major role in creative and marketing efforts, Singapore team in cost management and

the Malaysia team in investment banking. When combined with a healthy culture of

openness, diversity becomes a advantage, with openness and trust, CIMB Group can

create a safe space for a diverse workforce to embrace different ways of thinking so that

creative ideas can from and grow. This is leads CIMB Group to breakthrough innovations

and great solutions to move a company to improvements.

 Diversification of products and services.

CIMB Group offers consumer banking, commercial banking, investment banking, Islamic

banking, and asset management products and services (CIMB Annual Report 2015).

CIMB Group was operate under several corporate entities that include CIMB Investment

Bank, CIMB Bank, CIMB Islamic, CIMB Niaga, CIMB Securities International and CIMB

Thai (CIMB, Our Business, 2011). CIMB have served their customers across the ASEAN.

The diversifications lead them to increase in profits as well as attracting potential

investors. This diversification that provide by CIMB Group is the strength of this

Malaysian Banking Company.

 Higher returns.

CIMB Group has the positive performance on the profit in year 2017. The profit

percentage was increase from 2015 until 2017. CIMB Group reported a record net profit
 of RM 4.5 billion for year 2017, which is increase 25.6% from 2016 net profit. In 2016

net profit up 4.5% to RM 3.6 billion from 2015 net profit which is RM 2.8 billion.

CIMB Group has the higher return every year from 2015 until 2017, best on the income

statement. Positive performance on the return is the strength of this company.

WEAKNESSES

 Core business focusing on ASEAN countries and limited market growth.

CIMB may be the leading bank in Southeast Asia but when the competition from global

market tried to enter ASEAN market will put CIMB into vulnerable. The disadvantage of

CIMB as days passed there are many there are growing banks around the world

because they only exists in the ASEAN countries. Nowadays, customers are seeking for

services that are convenient for them, for example the customers from Malaysia will find

it hard for them to access for CIMB services when they intended to travel overseas

which not in ASEAN. When they are plan to travel or have job duties to the country

which did not provide CIMB, they need to deal within their country first regarding the

money transaction, exchange of currency and so on.

 Changes in organizational culture.

Because of the merger, the CIMB must endure the changes in its organizational culture.

People who work in CIMB must adapt to new environments because there have been

changes. Besides, the employees have to make themselves comfortable with the new
 management that may be different from before. This mergers and acquisition done by

CIMB also means that there will be hiring on new employee or being relocated. This

change tends to make the employees nervous as the risk of being unemployed would

always present in their mind.

OPPORTUNITIES

 Collaboration and strategic alliances.

In today’s economic climate, many organizations are taking a look at collaboration, with

collaborations and strategic alliances offer ways to lower cost and create efficiencies.

CIMB Bank has introduced Quick Response (QR) Payment Acceptance at CIMB terminals,

a first-in-the-market QR payment acceptance to accept six major mobile wallets on one

terminal. The six mobile wallet partners to be accepted on CIMB terminal are Alipay,

Touch & Go Digital, Boost, KiplePay, Mcash, and Vcash.. Also CIMB Group and RippleNet

have entered into strategic collaboration to enable instant cross border payments across

its various markets.

With these collaboration and strategic alliance, CIMB Group has opportunity to reach

new markets and increased band awareness.

 Growth in international banking will increase customer base.

technology are rapidly growing in these few years, internet access are provided almost

everywhere throughout the world with the exception of third world countries. Availability

of the access of internet makes it easier to engage in business transaction. Therefore,

there are potential investors that are located in the countries which not have any CIMB

offices could invest through the internet services that are provided by the CIMB Group.

THERATS

 Stiff competition.

As one of the top banks in Asia, CIMB has the chance to compete with other existing

international and national banks. For example, CIMB need to compete with RHB Bank,

Maybank and AmBank. As day goes, there will be more banks growing and increase the

number of competitors for CIMB. As the result of these existing competitors, it causes

the CIMB itself to have a limited market growth. CIMB need to prove that they can stand

out with offers the better service than other existing national and international banks.

Aside from it, the higher number of competitors makes it hard for CIMB to expand its

market share.

 Same business segment.

Another threat that CIMB need to face is the competitors which provide the same

service to the customers. For example, CIMB Islamic bank and at the same time Public
 Bank also provide the Islamic Banking to their customers. As the result, customers have

an option to choose which service they want to use. Besides that, there is also the

opportunity that the existing customer of CIMB may also turn back from CIMB and

choosing another competitor.

 Fluctuation of foreign exchange rate.

As an institution that deals with the exchange rate, CIMB must ready to face the risk of

the unstable foreign exchange rate. This happen because of the foreign exchange rate

always change depends on the current situation all around the world. In addition, this

situation leads to uncertainty because the customer may not be sure how much money

they receive when they are selling abroad, for example this usually happens between

the exporter and importer because the price can be more expensive or cheaper.

On the other hand, it will lead t a lack of CIMB investment by customers. The customer’s

deposits are the largest contribution to the bank. Therefore, when this happens, the

customers feel afraid to invest in CIMB due to the changing exchange rate.
SWOT MATRIX

STRENGTHS (S) WEAKNESSES (W)

S1: One of the largest financial W1: Core business focusing on

services providers in ASEAN. ASEAN countries and limited

S2: Embracing diversity. market growth.

S3: Diversification of products and W2: Changes in organizational

services. culture.

S4: Higher returns,

OPPORTUNITIES SO STRATEGIES WO STRATEGIES

(O)

1. Regional expansion 1. Product and Market

O1: Collaboration and (S1,O2) development (W1,O1,O2)

strategic alliances. 2. Partnership (S2,S3,O1)

O2: Growth in

international banking

will increase customer

base.

THERATS (T) ST STRATEGIES WT STRATEGIES

T2: Same business ASEAN through social

segment. banking (S1, T1)

T3: Fluctuation of

foreign exchange rate.

SO Strategies

SO strategies refers to a firm which their internal strengths to exploit the external

opportunities. In CIMB Group, there are two strategy can be implemented which are regional

expansion and partnership.

SO1: Regional expansion (S1: One of the largest financial services providers in

ASEAN, O2: Growth in international banking will increase customer base)

Being the one of the largest financial service providers in ASEAN countries, CIMB Group could

expand their market by conquering other countries regionally. Taking advantages of the

booming Asian’s economic growth, CIMB Group could start looking towards expanding their

markets to Asia-Pacific countries instead of only ASEAN countries.

Regional expansion strategy used in conjunction which local and global initiatives can

significantly boost a company’s performance. According to Toyah Miller, Internationalization can

enable firms to gain new competencies, boost sales and increase efficiencies. The first step,

CIMB Group can expand their business to all of Asian countries. Half the world’s population

currently lives in the many diverse nations that comprise Asia, the people living in Asian cities

grows by more than 120,000. With figure like these, Asia will not just be the biggest global of

goods and services but also be the bigger global consumer which can be benefit for CIMB

Group to enter this market.

SO2: Partnership (S2: Embracing diversity, S3: Diversification of products and

services, O1: Collaboration and strategic alliances)

wanting to limit the risk associated with such development at a particularly volatile time in the

global outlook. By collaborating with another business, CIMB Group stands to benefit in a

number of areas.

Cross country partnership enable CIMB Group to gain to resources that they would not have

available to them when entering new markets. By tapping into their partners ' existing

relationships –both suppliers and customers–and by adopting existing processes, companies can

ease their workload in order to enter new markets. With partnership, CIMB group can more

expand their product and service diversification which can attract the customers. For example,

by entering new geographies with the support of a local brand will also make companies more

familiar and accessible to potential customers by increasing the likelihood that customers will

trust their business and therefore use their services or products.

Strategic partnerships are also an effective way to gain efficiency by integrating the skills of

another company, whether that is technical, regulatory, or digital. The best relationships of this

kind work for the benefit of each party, but also for the benefit of the end user. By ensuring the

strategic interests of the companies are aligned, both players can offer their respective

customers better service while simultaneously increasing their businesses.

WO Strategies

WO strategies are aim at improving internal weaknesses by taking advantage of external

opportunities. There are two strategies for CIMB Group which is product and market

development.
WO1: Product and market development (W1: Core business focusing on ASEAN

countries and limited market growth, O1: Collaboration and strategic alliances, O2:

Growth in international banking will increase customer base)

CIMB Group can grow by leveraging their product and service knowledge to reach new

customers. With core business only focusing on ASEAN countries, CIMB Group can make

collaboration in order to growth international. For identified potential market as opportunities,

CIMB Group need to do research to validate that the market that want to enter is attractive or

not, is CIMB Group can adapted with that new markets and how CIMB Group maintain the

current competitive advantage in this new market.

There is several ways for CIMB Group to grow their business. Firstly, increase present

customers’ rate of use by increasing the size of purchase, maximizing the rate of product

obsolescence and offering incentives for increased use. Secondly, attracting the competitors’

customers. CIMB can lure customers away from the competitors by establishing differentiation

of product and service and increasing advertising efforts. Thirdly, CIMB Group can attract the

non customers to using their product or service that they offer. This process can be done by

offering trial uses of products, adjusting the price up or down and promoting other uses to

attract these customers. Lastly is developing new products. In this case, CIMB Group can

establish new service or partnership to make new product and service to leverage the band

recognition.

ST Strategies
 ST strategies use a firm’s strengths to avoid or reduce the impact or external threats.

The ST strategies can be used by CIMB Group is strengthening position in ASEAN through social

banking.

ST1: Strengthening position in ASEAN through social banking (S1: One of the largest

financial services providers in ASEAN, T1: Stiff competition)

Southeast Asia is among the countries with the world most social media users such as Facebook,

Twitter and Instagram. This provides a good opportunity for CIMB Group to utilize the potential

social media users in ASEAN to experience social banking via social network. For example in

2012, CIMB Bank has introduced the OctoPay application for Facebook, a feature which the

bank being the first in ASEAN to apply it. OctoPay is an extension of the CIMB Clicks Internet

banking portal that resides on Facebook and allows CIMB Clicks members who are also using

the social networking service to perform a limited number of banking task right within the

Facebook interface. This is the good strategy for CIMB to make them in strength position in

ASEAN , so with these type of approach CIMB Group can gain more brand recognition and can

compete with another financial service providers.

The worldwide digitization of businesses has caused major disruptions in traditional industries.

The twists of what technology has done to other business have now affected the banking

industry, where the Internet has led to competition from financial technology (fintech)

companies. CIMB Group need to notice this change, like payment gateways from other e-

commerce platform have seen the disintermediation role between customers and merchants no

longer constricted to the domain of credit/debit card banks. The brick-and –mortar part of the

business will continue to grow and CIMB Group needs to strengthen and improve on compliance
cost and enhance its customer experience. With work together with fintech companies, CIMB

can innovate its products and service offerings, also opened up its network and made available

its source code to its digital infrastructure to external developer which can make CIMB Group

strengthening their position in ASEAN.

WT Strategies

WT strategies refer to defensive tactics directed at reducing internal weaknesses and

avoiding external threats. Joint venture is one of WT strategy that can implemented by CIMB

Group.

WT1: Joint venture (W1: Core business focusing on ASEAN countries and limited

market growth, T1: Stiff competition)

As CIMB Group core business focusing on ASEAN countries, they are faced with stiff competition

among national and international banks that have a larger customer based compared CIMB

Group. For those international banks such as Standard Chartered have a wide coverage of

customers from all over the world. By joining venture with those international banks, CIMB

could reduce their competitors as well as gaining access to customers internationally and the

knowledge of those international banks.

Joint venture is not like a partnership, this is focuses on a single project or undertaking. By joint

venture, both of companies will get the benefit but also comes with its share of side effects as

well. There are several advantages of a joint venture. First, CIMB Group has the opportunity to

gain new insights and expertise. Second, both parties share the risks and cost, means that
CIMB Group are not alone when bearing the costs of its failure, because they share the

expenses and also support the losses. Next is the firm are more likely to succeed, CIMB Group

chances of success will become higher as they already riding with a renowned brand, as a result

CIMB credibility will also vastly improve. Next is build relationship and networks and get to save

money by sharing advertising and marketing cost. The last one is international joint venture

eliminate the risk of discrimination, this is the great opportunity for CIMB Group to corporate

with other firm from different countries and combine their strengths.