Economic Impact of Innovation on HSBC and Barclays

This report examines the economic impact of innovation on the financial performance of HSBC and Barclays. It reviews the progression of technological advancements used by the banking sector in the UK over the past 10 years. It investigates the published annual reports of the banks and compares yearly statistics to see the performance rate. It also examines additional factors, both positive and negative, which are caused by the implementation of innovative products/services.

Examine the economic impact of innovation on
the financial performance of HSBC and Barclays

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
1.1Background of study...............................................................................................................1
1.2 Research aims and objectives................................................................................................1
1.3 Rationale of research.............................................................................................................2
1.4 Significence of research.........................................................................................................2
1.5 Methodology used in the research.........................................................................................3
CHAPTER 2....................................................................................................................................4
LITERATURE REVIEW................................................................................................................4
REFERNECES................................................................................................................................6

INTRODUCTION
1.1Background of study
Innovation is the buzzing word of 21st century as it can be observed that it is taking place
at wide level in the banking field across the globe. Technology advancement make banking
operations more innovative in nature. There are number of banks like HSBC and Barclays that
are involved in upgrading their technology base. This innovation make relevant banks different
from the competitors. With passage of time banks are giving due importance to upgradation of
technology base at the workplace. Huge advancement happened in the technology in past couple
of years which change entire shape of banking field across the globe. In the current report detail
analysis of innovation is done by the business firms like HSBC and Barclays bank is done and
number of areas where they introduced new technology is identified (Akhisar, Tunay. and
Tunay, 2015). It can be said that these are one of the largest bank across the globe and play an
important role in promoting innovation in the banking field. Apart from this, in the report
innovation that takes place in the last 10 years in the UK wil be described in detail. Along with
this, in the report economic impact that innovation of technology have on these firms will also be
discussed in detail. In past time period, many researches were carried out on the innovation that
is done by the banking sector firms in their infrastructure. It was identified in these researches
that performance is heavily affected by the introduction of new technology because firm comes
in condition where it can provide service to the customers at rapid pace in the short time period.
Thus, it can be said that in past lots of innovations were done and in future also lots of
improvements can be observed in same.
1.2 Research aims and objectives
Aim and objective of research are given below.
Aim: To examine the impact of technological innovation on the financial performance of HSBC
and Barclays.
Objectives of research
o Review the progression of technological advancements used by the banking sector within
the UK for past 10 years.
o Investigate published annual reports of the banks, compare yearly statistics to see
performance rate.
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o Examine additional factors (both positive and negative) which are caused by
implementation of innovative products/services.
Research questions
What level of technological advancements happened in the banking sector within the UK for
past 10 years?
What variation comes in the yearly statistics to see performance rate?
What additional factors (both positive and negative) are caused by implementation of innovative
products/services?
1.3 Rationale of research
It was important to conduct the current research study because with passage of tome
more and more banks are innovating their technology base up to great extent so that better
services can be offered to the custoemers and enhance their satisfaction level to great extent. In
order to do this study broadly it become necessary to identify the developments that happeened
in the technology base of the nation banks. It can be said that there is huge importance of the
present research study (Obay, 2014). Main focus of the present study is on identifying variation
that comes in the performanace of banks after innovation of technology. It was also very
important to find out the negative sides if any are there in respect to implementation of
innovation of technology. It can be said that it was necessary condition to explore the every
aspect of innovation of technology. It can be said that there are number of reasons due to which
it become important to carry out research related work.
1.4 Significence of research
It is one of the important section of the present researcvh study. Merely preparation of
research report is not sufficient, it is very important to communicate significence of research to
the audience. Main significence of the present research study is that it help one in understanding
the positive and negative sides of the innovation that is going on in the banking field. Thus, one
can come to know advantages as well as disadvantage that firm and other relevant entiities have
to bear due to innovation in technology base (Reis, Ferreira. and Monteiro Barata, 2013).
Through this research one will come to know about performance of the banks and its associaton
with the firm performance will alslo be explored. Thus, present research study will help one in
identifying whether there is any relationship between performance of the banks and advancement
of technology. Current research report will give one an overview of technology advancement that
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happened in last 10 years. Hence, it can be said that there is huge significence of the present
research study for the readers because it is not just giving brief overview of the innovation that
happened in the technology sector but also cover varied aspects of same. It can be said that there
are multiple dimensions in respect to innovation of technology in banking sector that are covered
in the report.
1.5 Methodology used in the research
In the current research study literature review will be done in respect to research subject.
In this regard in respect to topic varied literature like research papers will be download from the
internet and will be reviewed. Data that is related to the Barclays and HSBC bank will be
analyzed by using ratio analysis method. Appriopriate research approach will be taken in the
present research. Along with this, research design will be choosen for the present study from
various available alternatives. There are three sort of research designs namely experimental,
descriptive and exploratory research design. Out of these options exploaratory research design
will be used because in the current research study from starting relevant literatures are reviewed
and broad understanding is developed about technology innovation that is done by the business
firms. It can be said that research methodolgy is prepared in proper manner in the present
research and it will be very helpful in conducting the research study.
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CHAPTER 2
LITERATURE REVIEW
Review the progression of technological advancements used by the banking sector within
the UK for past 10 years
According to Lewis, (2013) innovation in technology is happening at rapid pace across
the nations. It can be observed that there are number of nations where focus is on
advancement of the current technolog base. This is because technology make human life easy
to live and ensure safety of performnace of activities. In the banking field lots of technology
innovation takes place at fast rate. These innovations highly transform the mentioned industry
and bring lots of changes in same. It can be said that technology advancement bring big
change in the banking operations. In last 10 years many big changes comes in the UK banking
sector in terms of innovation. Analytics is using at wide level by the banks in the UK to solve
business problems. Number of trends in respect to innovation of banking operations can be
observed in the UK and use of analytics is one of them. Under this banks are either creating
their inhouse data analytics team or are taking help of the third party. By using analytics lots
of things are done in the business like fraud detection and customer segmentation etc. apart
from this, lots of hidden facts are identified by using data mining methods. It can be said that
there is huge importance of data analytics for the business firm. Increasingly banks are using
analytics in their business. Use of analytics lead to less cost in the business and effeciency in
the busines operations. Hence, it can be said that there is advancement in the banking sector of
UK.
As per view of Cornaggia and et.al., (2015) social value chain is the new concept that is
introduced in the market. As per this new concept banks of the nation ask general public to
give proposal about changes that need to be made in the product line. Bank of UK think that
correct advise is given then in that case they must do innovation in the product. Few banks are
doing this and they successfully are innovating their business operations. It can be said that
there is significent importance of such kind of concepts for the banks.
Contrary to this Van der Boor, Oliveira and Veloso, (2014) state that practice of taking
opinion from public in respect to innovation in the product is not so successful idea because
people does not have much knowledge about variation that must be brought in the product. It
can be said that it depends on the firm that which option it choose. There is need to select this
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option as part of innovation strategy with due care. This is because if same will not be done
then in that case firm may move in wrong direction.
Accoriding to Bultum, (2014) recent trend that is going on the market is that increasingly
firms are using concept of artificial intelligence in the business for prediction purpose. It can
be observed that use of artificial intelligence is increasing in the UK banks. UBS in the UK is
offering real time portfolio analytic serviceson personalized basis to those clients that have
high portfolio by using IBM Watson. This is one of the big innovation that is done by any
bank of the UK in decades. It can be observed that when someone ask portfolio details from
the portfolio manager then it take long time to prepare portfolio details. But this software
enable firms to provide immediate details to the customers about their products. It can be said
that use of artificial intelligence by UBS bank enable it to provide much better services to the
customers.
As per views of Gheeraert, (2014) in the UK banks bank of things like internet of things
is the new concept that emerges in the curren time period. Under this varied things will be
interlinked to each other. For example it is possible that your bank account may be linked to
car and automatically car according to requirment place order for replacement of product to
spare part repairer and on single click from side of client automatically amount deducted from
bank account. Like same lots fo things are evolved under bank of things in the banking
industry of UK. This is the one of the latest trend that is going on in UK. In UK Barclays
bank in partnership with Hitachi group launch new biometric reader for the customers under
which one simply needs to put its thumb on machine and same will be recognized and wil get
direct access to the bank account and can make payment in seconds. Interesting fact is that
one does not need to use ID or passwords for login. By doing so Barclay bank ensured that
transactions through its banks are safe and no one can access individual account without
taking its permission.
Investigate published annual reports of the banks, compare yearly statistics to see
performance rate.
Examine additional factors (both positive and negative) which are caused by
implementation of innovative products/services.
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REFERNECES
Books and Journals
Akhisar, İ., Tunay, K.B. and Tunay, N., 2015. The effects of innovations on bank performance:
The case of electronic banking services. Procedia-Social and Behavioral Sciences. 195.
pp.369-375.
Bultum, A.G., 2014. Factors affecting adoption of electronic banking system in Ethiopian
banking industry. Journal of Management Information System and E-commerce. 1(1). pp.1-
17.
Cornaggia, J. and et.al., 2015. Does banking competition affect innovation?. Journal of
Financial Economics. 115(1). pp.189-209.
Gheeraert, L., 2014. Does Islamic finance spur banking sector development?. Journal of
economic behavior & organization. 103. pp.S4-S20.
Lewis, M.K., 2013. Off-balance sheet activities and financial innovation in banking. PSL
Quarterly Review. 41(167).
Obay, L., 2014. Financial innovation in the banking industry: the case of asset securitization.
Routledge.
Reis, J., Ferreira, F. and Monteiro Barata, J., 2013. Technological innovation in banking
services: an exploratory analysis to perceptions of the front office employee. Problems and
Perspectives in Management. (1). pp.34-49.
Van der Boor, P., Oliveira, P. and Veloso, F., 2014. Users as innovators in developing countries:
The global sources of innovation and diffusion in mobile banking services. Research
Policy. 43(9). pp.1594-1607.
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