BANKINGreal2
BANKING SECTOR IN THE UNITED KINGDOM
INDUSTRY OVERVIEW
EXECUTIVE SUMMARY
One of the key factors of the world economy is the banking industry. The number of major banks ruling the world is quite a few, so in order to narrow the scope of the research, this report focuses only on the banking industry in the UK. The main players here are Barclays, HSBC, RBS, Lloyds, NatWest, Citigroup and JPMorgan Chase. The report will provide the insights of key trends and developments based on SWOT & PEST analysis, as well as Michael Porter’s five forces and competitive strategy model.
KEY TRENDS AND DEVELOPMENTS
Based on the beauty of SWOT analysis- internal scrutiny of the organisation’s capabilities, followed by environmental scanning to identify appropriate opportunities and threats (In,J, 2009)- we made the following analysis:
Internal Strengths
Record high annual returns for the major banks in the UK
General decreases in transaction and trading fees- results in higher returns
Increase in the number of ATM machines
Increased market share and more opportunities for banks to grow
New telecommunication systems, including fibre optic telecommunication and Internet, facilitate mobile- and online banking
(Barclays,2012)
Internal Weaknesses
High loan rates, puts people in a defensive position
Low bond credit ratings
Increased number of outstanding junk bonds, high-yield or non- investment grade bonds
Increase in loan-sharking activity, loan offers at extremely high interest rates
Socio-economic situation is weak, preventing an even larger share of borrowers to repay their loans
Increased number of high-risk investment options
External Opportunities
Growing economy, economic trends results in unprecedented growth corresponded with an increased demand for financial services (Morison,1999)
Growing Chinese middleclass, results in a market pull UK is ready for
Brazilians and Indians have begun to appear as consumer culture. UK companies are ready to move in and benefit from
INDUSTRY OVERVIEW
EXECUTIVE SUMMARY
One of the key factors of the world economy is the banking industry. The number of major banks ruling the world is quite a few, so in order to narrow the scope of the research, this report focuses only on the banking industry in the UK. The main players here are Barclays, HSBC, RBS, Lloyds, NatWest, Citigroup and JPMorgan Chase. The report will provide the insights of key trends and developments based on SWOT & PEST analysis, as well as Michael Porter’s five forces and competitive strategy model.
KEY TRENDS AND DEVELOPMENTS
Based on the beauty of SWOT analysis- internal scrutiny of the organisation’s capabilities, followed by environmental scanning to identify appropriate opportunities and threats (In,J, 2009)- we made the following analysis:
Internal Strengths
Record high annual returns for the major banks in the UK
General decreases in transaction and trading fees- results in higher returns
Increase in the number of ATM machines
Increased market share and more opportunities for banks to grow
New telecommunication systems, including fibre optic telecommunication and Internet, facilitate mobile- and online banking
(Barclays,2012)
Internal Weaknesses
High loan rates, puts people in a defensive position
Low bond credit ratings
Increased number of outstanding junk bonds, high-yield or non- investment grade bonds
Increase in loan-sharking activity, loan offers at extremely high interest rates
Socio-economic situation is weak, preventing an even larger share of borrowers to repay their loans
Increased number of high-risk investment options
External Opportunities
Growing economy, economic trends results in unprecedented growth corresponded with an increased demand for financial services (Morison,1999)
Growing Chinese middleclass, results in a market pull UK is ready for
Brazilians and Indians have begun to appear as consumer culture. UK companies are ready to move in and benefit from
References: Barclays, (2007). Barclays PLC Annual report. [online] Available at: http://www.barclays.com/content/dam/barclayspublic/docs/InvestorRelations/Annual Reports/AR2007/2007-barclays-plc-annual-report.pdf [Accessed 16 Oct Barclays.com, (2014). UK Products and services for business | Barclays. [online] Available at: http://www.barclays.com/products-services/gb/sme.html [Accessed 16 Oct. 2014]. BBA,(2013), Annual Report, Available at: https://www.bba.org.uk/wp-content/uploads/2014/05/Annual-Report-2014.pdf BBA Brief, (24 October,2014), Available at: https://www.bba.org.uk/news/bba-brief/bba-brief-24-october-2014/#.VEuVbPl_tz8 [Accessed at 20 Oct 2014] BBC News, (2014) BBC News, (2014). Carney,M, 9th October, ‘UK interest rates remain at record low of 0.5%’. [online] Available at: http://www.bbc.co.uk/news/business-29551534 [Accessed 16 Oct.2014] BBC News, (2014) Corporate social responsibility, (2013), European Banking Federation, ‘CSR across the European banking sector’, Available at: www.ebf-fbe.eu European Banking Federation,(2013), Ravoet, G., ‘European Banking sector Financial Times,(2014). Effort to boost UK banks - FT.com. [online] Available at: http://www.ft.com/cms/s/0/9d6f9a7c-5519-11e4-b616-00144feab7de.html#axzz3GUpO5c3Q [Accessed 18 Oct. 2014]. Mckinsey.com, (2014). Winning the battle for China new middle class. [online] Available at: http://www.mckinsey.com/insights/consumer_and_retail/winning_the_battle_for_chinas_new_middle_class [Accessed 18 Oct. 2014]. Newsroom.hsbc.co.uk, (2014). About HSBC Personal Finance Newsroom | HSBC Bank UK. [online] Available at: http://www.newsroom.hsbc.co.uk/press/about-hsbc-personal-finance [Accessed 16 Oct. 2014]. Office of Fair Trading, (January 2013) taken from Lee Boyce, Customers spared £1bn in overdraft fees from bank charge reforms – but we all pay more if we Porter, M, (2008), ‘The Five Competitive forces that shape strategy’, Harvard Business Review, Available at: www.hbr.org Scholarship.law.duke.edu, (2014) Schooner, H.M,& Taylor, M, (October,2009), “Global Bank Regulation”, Academic Press, ISBN: 978-0-12-641003-7 Telegraph.co.uk, (2012) The WritePass Journal, (2012). Strategic Analysis (SWOT, Porter, PESTEL) of Barclays Group PLC. [online] Available at: http://writepass.com/journal/2012/11/barclays-group-plc/ [Accessed 18 Oct. 2014]. The WritePass Journal, (2012). SWOT, Porter and PESTEL analysis of HSBC Holdings Plc. [online] Available at: http://writepass.com/journal/2012/11/swot-porter-and-pestel-analysis-of-hsbc-holdings-plc/ [Accessed 18 Oct. 2014]. The WritePass Journal, (2012). Strategic Analysis (SWOT, PESTEL and Porter) of Barclays Group Plc. [online] Available at: http://writepass.com/journal/2012/12/barclays-group-plc-2/ [Accessed 18 Oct. 2014]. Weber, O. and Remer S,(2011), Social Banks and the Future of Sustainable Finance, New York : Routledge. Worldfinance.com, (2014). US Treasury announces targeted crackdown on tax inversion. [online] Available at: http://www.worldfinance.com/home/news [Accessed 18 Oct. 2014].