Research Into The External Environment Of Barclays Bank Finance Essay
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Published: Mon, 5 Dec 2016
Barclays is a global financial services provider deals with retail and commercial banking, credit cards, investment banking, wealth management and investment management services all over the world. Barclays offers personal banking services to its customers all over the world and provides a variety of other products like loans, debit card, saving account, insurance, online banking etc.
The purpose of this report is to review recent research into the external environment of Barclays Bank and provide strategic recommendations for senior managers of the organisation.
Barclays started its business from london 300 years back, and now Barclays has established enterprises across Europe, Africa, the Americas and the Asia-Pacific region and gives employment to approximately 145,000 people. Barclays has almost 49 million customers and clients worldwide.
Barclays has so many achievements in his name. In 1958 Barclays appointed the UK’s first female branch manager. In 1961 Barclays opened the UK’s first computer center for banking. In 1966 Barclays launches Barclays card, Uk’s first credit card. In 1967 Barclays opened world’s first ATM. In 1986 Barclays was the first British bank to have shares listed on New York Stock Exchange. In 1987 Barclays launched Barclays connect, the UK’s first debit card. In 1995 Barclays was the first financial institution to launch its website. In 1999 Barclays was the first UK bank to offer customers a mortgage in euros to buy a british home. In 2008 Barclays was the first bank in UK to announce a mass roll-out of contactless-enabled debit card. (Barclays, 2010)
1.3 STRUCTURE OF THE REPORT
The first part of this report would examine and analyse the external environment of Barclays Bank, while the second part would give recommendations to mitigate its impact on the internal environment looking at what management structure and strategy that could be used. The final pact of the report would give a conclusion on the findings and limitations of the report’s findings.
2.0 EXTERNAL ENVIRONMENT
Macro (External) Factors are seemingly uncontrolled by companies. They include factors like Political Factors, Economic and Competition Factors, Social Factors, Technological Factors and Legal Factors. Since Barclays Bank comes in Macro Factors, its strategic planning must include an analysis for Macro Factors. This purpose of report both includes SWOT and PEST analysis of tools.
2.1 POLITICAL FACTORS
The Political Factors of a Bank includes measures of government stability and political risk in that country. Banking Sectors are affected by political factors and government rules and regulations, and as Barclays Bank one of the historical bank and has branches all over the world, expected to bond with government rules and feel the heat of politics in business and at time political factors doesn’t allow banks to grow its business. For example the tax for Barclays to do its business in India will not be same as it is in UK. And also different-different country has different- different rules for its banking industry.
According to Treanor report Senior bankers are complaining that political interference is the biggest risk facing their industry despite the billions of pounds of taxpayer money being used to prop up the banking system. One of the bankign leader at Pwc said ” With political interference as the top risk and too much regulation at number three, the concern is that the financial crisis has taken the banking industry’s future out of its own hands.”(Treanor,2010)
Barclays president Bob Diamond also opposed political interference in banking sector. (Treanor, 2010)
The UK Prime Minister said for a more responsible banking, in which he said “banks are the servants of economy and society and never its master”. He said banks should have help UK business by giving them loans. (BBC, 2009)
2.2 ECONOMIC AND COMPETITION FACTORS
Due to the large number of banks in market, Barclays Bank is facing a huge competition in market.
Barclays was rapidly losing market share to Bank of Scotland and mainland European banks according to survey by the Manchester Business School.(Trapp,1992)
Bank of Scotland was regarded as the toughest bank, but it is felt to offer a better service. Smaller banks, such as the Co-op, Abbey National, Bank of Wales and Yorkshire, were considered less aggressive than the main hight street clearers in terms of fees and pricing. (Trapp, 1992)
The Independent (2009) report says ” Barclays Bank faced a new challenge as credit ratings Moody’s cut its rating by two full notches, leading to a one-tenth fall in its share price”. (Robbins,2009)
The existing recession also played a major role in affecting the business of banks. In 2008, Barclays’ profit fell by 14% while variable remuneration fell by 48%. At all level Barclays employees lost in £2bn of personal wealth in 2007 and 2008. (BBC NEWS,2009)
2.3 SOCIAL FACTORS
Social factor plays a major role in bank’s development and bank’s enterprise. Bank should win the heart of its customers to maintain its reputation. It should make a strong bond with customers.
According to BBC News report, in April 2000 Barclays closed its 171 branches, many of them were in rural areas. Because of that Barclays had suffered from a spate of bad publicity. (BBC NEWS, 2000)
On February, 2010 increasing overdraft charges on two million of its account holders created a bit concern for Barclays bank customers. However Barclays said eight million customers with standard current accounts would not be a hit by higher changes, and banks has not changed the rates paid by its credit card customers in UK. However customers reacted angrily against Barclays bank. (Moore,2010)
2.4 TECHNOLOGICAL FACTORS
The modern Technology which making customers life easy in banks, creating big problem regarding the security and privacy of their account details. Customers face problem in loging on and doing online banking. Many customers in country side areas don’t have much knowledge about online banking, bill payments and online transfer funds. Some Customers feel unsecured doing online banking.
In January 2010 many account holders were not able to check balances and transfer money via online banking. Many customers complained on Barclays forum for unable to access account. (Anker, 2010)
Customers who logged into their account in July, 2000 they were able to read the details of other customer’s accounts. Barclays admitted the problem was associated with a software upgrade which went live overnight. (BBC NEWS, 2000)
Barclays bank has signed a deal with F-Secure for 1.6 million licences of the anti-virus program. The basic F-Secure anti-virus will protect customers account and will alert users if any malicious programs installed.
2.5 LEGAL AND CREADIBILITY FACTORS
Banks are regulated by different different agencies and different kind of laws in different countries.
In 1990s, European countries have implemented ‘Single Banking License’ which allowed banks from European Union (EU) countries to branch freely into other EU countries. European Countries implemented numerous regulations for banking industry, to achieve the level of harmonization required for the establishment of a single, competitive market for financial services. However, after that European banks have also experienced a negative effect on competition. (Angelini, 2003)
UK government expected to put pressure on Barclays and other lenders that have turned down government help to join the British Treasury’s latest effort to revive the economy. (Werdigier, 2009).
In March, 2009 Barclays bank obtained a court order banning the Guardian from publishing documents which showed how the bank set up companies to avoid hundreds of millions of pounds in tax. The information was leaked by a person who was working with bank. (Guardian, 2009)
In January, 2006 Barclays and other 22 international companies got a legal action brought by a South African activist group. That legal action was for allegedely benefited companies from doing business in South Africa in the apartheid era. Barclays was forecd to pull out of South Africa in 1986 after protests against its involvement in South Africa during the apartheid regime. (Kollewe, 2006)
Bank should make a strong bond with customers, to make its business and reputation profitable. Bank should should give customers requirement first priority in its business. T
3.1 As mentiond in the first part of the report, how political factor is playing a major role in bank’s business and growth. Different- different countris political stability plays a major role in bank’s deveopment. Banks should keep a track in advance on the political stability of that country, to know how its political change will affect its business. And bank should make a strong bond with governemnt regarding its policies and regulations so that government will help the banks at the time of economy downturn by giving banks special packages to rescue from economy downturn. Banks should make a strong bond with government regarding tax paying.
3.2 Economic and competition factor also plays a major role in affecting banks growth. As mentioned in 2.2 how competition in market plays a major role in company’s share and profit and how that nation economy plays a major role in the growth and development of bank. Banks should involve Fiscal Policy in their policy. Fiscal Policy helps to reduce the rate of inflation and stimulate economic growth in a period of economy downturn. Fiscal Policy aims to stablise economic growth, avoiding boom and bust economic cycle.(Economics help)
For competition factor playing a major role in banks growth. Banks should keep a strong policy on its interest rates which should not affect customer’s requirement and bank’s benefit both.
3.3 As mentioned in 2.3 Social Factor plays a major role in bank’s relations with customers which directly affects banks development and reputation. Banks responsibility towards customers plays a major role in bank’s reputation in market, which affects its business. Banks should give a written letter in advance to customers before taking any major step. Banks should make its customer care department more friendly for customers, so they will not hesitate asking any question to banks.Before increasing its any fee, banks should inform customers in advance. The significance of good customer service costs five times to win a new customers and retaining old customers. And banks should give assurance to customers regarding their funds and account profile and personal details, so that they will more secure regarding their accounts. To inhance its reputatin banks should participate in social causes and should participate in developing poor countries and rural areas. They should make branches and ATMs more convinent for customers in countryside areas as well.
3.4 Technological factor which causing a big concern in winning the trust of customers. The modern technology which is making a customers life easy in doing online bill payments or accessing accounts online at time creat big problems for customers. As mentioned in 2.4 how at time online banking is creating problems for customers and creating problems in relationship with banks. Banks should make its online banking more secured and also give assurance to customers regarding their account details so that customers will not worry about their account profile. Banks should educate people regarding its online banking and telephonic banking. Bank will have to make international banking or internatioanl funds transfer safe for customers and for this they will have educate customers. As mentioned in 2.4, Barclays bank has signed a deal with F-Secure for licence of an anti-virus program which will protect customers account and will alert users if something go wrong with their account.(BBC News,2006). Its banks responsibility to make technology secured regarding customers’ account, and if something happens wrong bank must insure customers that their money is safe.
For a good business banks should start using social media to build trust, loyalty and improve relationships with customers.
Political Factor is palying a major role in Bank’s international market and bank
Barclays protects money for nearly 14 million customers and clients in Africa during the time of economy and climate risk. Barclays operated in Africa for over a century and optimisitc for next 100 years future.
Widespread global presence
Associated with innovation
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