Defend or attack: when do companies’ strategies employ aggressive or defensive tactics when faced with digital transformation in banking : A two nation comparison between the Swedish and the South African bank environment

Abstract: In today's fast-paced and technology-driven society, the banking industry is undergoing a big change in digital transformation. Therefore, the purpose of this thesis is to investigate the reason behind the differences in digital banking product development between South Africa and Sweden, and what reasons there are behind the differences in the two environments. Banks are presented with the strategic choice of pursuing offensive or defensive transformation paths to navigate the evolving path. Offensive transformation is when leveraging innovative technologies to gain a competitive edge and enhance customer experiences. Whereas, defensive transformation focuses on staying relevant to the market, and ensuring regulatory compliance. The findings in this study are that both banks are in their core quite similar, but due to differences in their respective banking environments and conditions, they are strategically acting differently. The South African market bears a resemblance to a market under development, with regard to its lacking of digital development. The South African banks are more customer-driven compared to the Swedish. The Swedes possess, due to their conditions a larger control over their customers. This leads South African banks to be more aggressive in their strategies, while Swedish banks tend to be more defensive. However, both banks use a mix of defensive and aggressive strategies when they need to compete or stay relevant in the market. The reasons for these differences lie in the lack of infrastructure. This means that South African banks have less control over digital development compared to Swedish banks. South Africa relies on the customer’s demand to be strong enough for them to invest in product development. The Swedish bank has a more favorable market condition, where investments in product development are most likely also successful in neighboring markets.