Barclays Bank SWOT Analysis
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Published: Tue, 04 Jul 2017
Barclays was started by the British Empire and it characterizes as the British banking from twentieth century. Barclays appeared as the largest bank of Britain in 1950. Due to the ferocious competition in 1980 and because of its lending policies Barclays banking became imprudent. Later on Barclays built its empire in 50 countries.
Innovation and adoption of good marketing strategies leaded the Barclays as one of the largest banks all around the world. Main objective of Barclays is to give value to the customers and clients. Barclays has employed almost 135,000 workers in 50 countries. It offers devoted services to small and medium businesses. Barclay’s income before tax is approximately 7 billion. This profit returns shows the good portfolio management of business. Services that are providing by bank are unique and innovative.
Ambition of Barclays is to become one of the leading banks in all over the world and to provide the services to the financial industry globally. Meaning thereby, providing full and innovative retail and wholesale services to the customers. Barclay’s strategy focuses on the identification of needs of customers and then providing them services accordingly. Barclays follows the principle of making profit, investing that profit and hence growing.
BARCLAYS SWOT ANALYSIS
Strength of the company is taken as the internal element. The strength factor represents and focuses those elements within the company that become the strong points of that pertaining company. Barclays is founded in 1896 and it is enjoying benefits from the strong penetration exists in the banking industry. Barclays is providing its services in 50 different countries. Barclay’s group is one of the leading and rapidly growing groups in the world. Main strength of Barclays is that in banking sector and by asset base it is the third largest bank. And in market capitalization perspective it is third largest bank in United Kingdom. Barclays has the wide customer’s base and strong growth base in all over the world.
Barclays networking for the distribution is very strong and it has multi-channels available for distribution networking. Branches, automatic teller machines, online banking services, on phone banking services and its relationship managers are all considered as its sources and channels of networking.
Barclay’s workers and employees are more innovative and are more passionate towards their work. One of the strength factors of the bank is its operational efficiency. Physical and financial resources available to banks are very good. Its operations are well diversified. Barclays diversified operations include the retail banking, consumer lending, home financing, lending to small and medium enterprises, corporate banking, banking in investments and asset management.
Barclays was the first bank that launched and introduced the credit cards in United Kingdom and till then Barclays brand name has embedded in the minds of the customers. Strong brand name has become the strength of the Barclays bank now. Bank has carried out its operations in credit card line with the help of the sponsorship that was provided by the English premier league.
Financial performance of Barclays bank is very good. It takes help of technology for improving its banking services as it gives response electronically to the queries of clients. Barclays provides innovative financial services to the clients by using the information technology. It is providing online security so that thefts and frauds will be prevented. For this security Barclays bank is using different software. Fraud cases will be avoided by using the software.
Barclays bank is geographically diversified bank and it performs its business operations in different countries. Branches of Barclays are widely spread in all over the worlds. Bank takes the benefit from the geographical diversification and it spreads its risks widely across the countries and gets advantage of the economies of scales.
Opening of new branches of Barclays bank and renovation of the branches in different countries will attract the clients and will enhance and boost the performance of Barclay’s banks. Barclay applies different marketing tools like product mix and gives importance to the services that are provided to clients and hence focuses more on the customer relationship management.
Weaknesses are the internal factor of the company. Company is affected adversely because of the presence of these elements. Company should try to eradicate these negative factors in order to enhance its business performance. Impairment charges in Barclays bank are very high. These charges occur due to the impairments of loans, more chances of bankruptcy and poor loan recovery management. Bank efforts for the recovery of loan from businesses and credit cards are not good.
Barclays brand image has affected a lot by the unethical activities and wrong promotion of bank through advertisement. Barclays was also fined for these unhealthy and adverse promotions. More controversies and questions arouse due to that brand image. Due to this deteriorating and bad brand image, Barclay’s performance has affected a lot. Investors give more importance to the ethical issues and after these unhealthy activities many investors drew their investments back from the bank.
Bank’s capital ratio is less than the average industry ratio. Bank can face difficulty in the case of financial crises due to this low capital ratio. Due to the inefficiency of operations, bank has low return on assets and less profit margins.
Moreover Barclays cost on income is more as compare to other banks. More cost income ratio of bank represents the inefficiency of the business operations of the bank. Barclays failed to cope up with the integration between information technology, business processes and brand. It did not gain success in the planned synergies and outcomes.
Barclays has fewer branches in the region of Asia. Banking industry is emerging and growing in Asia. Barclays did not take these openings in account and this is considered to be the strategic negligence of the bank. Bank can avail opportunity by opening the branches in Asian countries. Bank is paying large bonuses and incentives to its directors and this has become the source of criticism.
Bank’s dividend policy is less attractive to the investors and as Barclays is paying fewer dividends to its investors. Bank’s marketing strategy is not up to the mark and people are less aware of the bank due to the absence of marketing campaigns and promotions. Barclays are paying less consideration towards the adoption of the modern technology and equipments. Sales promotions of Barclays are not striking the customer’s attention they need to be improved.
Opportunities are external factor for the company. As the name indicates this element identifies the opportunities available in the market for the company. Company can gain competitive edge on other companies by availing and utilizing the opportunities available to it. Numerous opportunities are available to Barclays due to the increase trend of globalization. Banks are performing their operations globally and Barclays can take benefit from this positive outlook of globalization. With the growth of the global banking industry Barclays being the leading and well positioned financial institution can exploit the financial market by expanding its deposit base.
Barclays can take advantage of emerging economies by strengthening its positions in the retail and commercial banking operations in those growing economies. Diverse opportunities for the growth of revenues are available in United Kingdom for Barclay. Trend of corporate lending is also increasing and Barclays can exploit this opportunities by giving more loans to corporate sector. Operational efficiency of Barclays can be increased by applying the good asset management principles.
Increase in mergers, acquisitions and renovations in banking industry give the positive opening to banks. Barclays can utilize this opportunity as investment banking industry is expected to expand and it can increase its operating cash flows by making acquisitions. Due to off shoring of financial institutions cost of investment has decreased. Banks are opening their branches in those countries that are less costly to obtain the cost efficiencies. Barclays can fortify its working in Asian banking industries like in Indian market in order to achieve the cost efficiencies and to gain more profit and return margins.
Objective of Barclays is to provide the good services to customer worldwide. This objective provides lots of opportunities to Barclays like cross-selling its products across many countries. Barclays can exploit, expand its branches, avail opportunities and set its operation in the Asian banking industry. Barclays can use high tech-technology by adding more websites that contains sufficient information of Barclays banking.
Provision of welfare is also ceased in those countries where the cost to the government has increased but Barclays can make use of the trend of provision by itself. Barclays can attract more investors by formulating good dividend policies and by providing good returns to the shareholders. Use of good marketing strategy like product mix enhances the efficiency of the business and Barclays can use the tools and techniques of good marketing strategies for grabbing the customer’s attention. Barclay can also take hold of other bank’s customer by providing good services that conforms to the need of the customer.
Cost efficiencies can be gained by Barclays through the opening of branches in the low cost locations like in Asian countries. Integration of business processes with the information technology can provide more synergy and success to the bank. Barclays can strengthen its brand image by conducting more marketing campaigns, advertisements and promotions.
Threats are also the external element of the company. Threat factor in the SWOT analysis diverts the attention of the company towards the pertaining risks in market. Company has to avoid these threats by taking precautionary measures against them. Financial markets have become volatile in recent few years. This financial threat affects the investment opportunities in markets. Investors are hesitant to invest in financial institutions due to the financial volatility. Barclay’s revenues from investments are also affected by this unstable market behavior.
Interest rates fluctuations discourage the consumer to take the services of credit cards. When interest rate fluctuates rapidly then consumer becomes conservative and does not take the credit card borrowings. Barclay’s credit card facilities are also affected by these fluctuations as many consumers are not availing the credit card borrowings now.
Barclays has also threat from other foreign banks as these banks can take high proportion and percentage of the total assets within the banking industry and can decrease the market shares of Barclays bank.
Barclays has to face many challenges before acquiring the similar size bank or institution as it has failed to acquire the Royal bank of Scotland and there are chances due to this reason that workers of Barclays bank will resist the integration and acquisition of bank.
Internet and online banking frauds are increasing with the increase in the awareness of the technology. These frauds are done through system hacking, emails and through telephonic calls. Barclays can suffer a lot from this threat in future.
Barclays can be sued as it is famous of making wrong investments from its deposits and from other investments. Barclays has to give proper consideration towards these decisions in future. Bank can go in the state of bankruptcy if these wrong investments decisions of Barclays will continue in the future.
More threats are present to bank due to the vicious competition in the banking industry as customers can go to other banks for the same product because of the other banks specialized approach. Customers are demanding more innovative products and it has become difficult for the bank to cope up with these rapid innovations. Bank has to go for online products and different products mix for gaining the customers attention towards its products.
Expansion of branches in Asian countries seems to be risky for Barclays and this situation depicts that other financial institutions in banking industry are in more strong positions than Barclays. Barclays is also facing threats from investment as Barclay’s dividend policy is least attractive to the investors and it is not giving good dividends to investors on their shares. Barclays can face difficulty in gaining the investors’ attention if it will not amend its dividend policy.
Barclays can face threat in terms of its customer service from other competitors like if competitors are advertising their customer services and their care about the customers then Barclays can lose it customers and to retain the customers Barclays has to provide higher level of services than its competitors.
CONCLUSIONS AND RECOMMENDATIONS
Barclays is one of the largest financial service groups in United Kingdom. Barclay’s image has become imprudent due to its ineffective policy structure. It was founded in 1896. In market capitalization perspectives and asset base it is third largest bank in United Kingdom. Barclays has good availability of human and financial resources. Barclays has launched and introduced the credit cards first time in United Kingdom. Launching of credit card has embedded the good brand image of Barclays in all over the world.
Barclays networking of distribution channels are very strong. Banks branches, online banking services and its customer relationship management are considered as its networking sources. Bank has branches in different countries so it can take benefit of diversifications and can spread its risks widely across these countries. Barclays can take advantage from acquisitions and mergers and can increase its operating cash flows. By off shoring Barclays can gain and enjoy the benefit of cost efficiencies. This cost efficiencies can be availed by opening branches in low cost locations like in Asian countries.
Barclays should improve its loan recovery management and should reduce the chances for the loans impairments. Bank should pay heed on its advertisement as its brand image has affected a lot by adverse promotions. Banks should improve its asset management operations and its profit margin ratio. Dividend policy of Barclays in not efficient and its dividend payout ratio is not good. Investors demand good return on their investments and if they do not get good dividends then there is large probability that they will draw out their investments bank. Also sales promotions of Barclays are not grabbing the customer attentions.
Barclay’s investment opportunities have adversely affected due to the high volatility in financial markets. Investors are taking out their money from market due to interest rates rapid fluctuations. Barclay’s revenues are also affected by this market volatility. Barclays should make use of high and more innovative technologies as fraud cases in banking industry is increasing. Barclays should improve its strategic decisions because it is famous of making wrong investments. Bank can suffer a great loss due to these wrong investment decisions. Bank should provide more innovative products and good services to customers. It should give more importance on the customer relationship management for the retention of loyal customers.
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