Banking Industry Analysis and Trends

This assignment is a comprehensive analysis of the banking industry, focusing on its current state, trends, and future prospects. It explores topics such as technology management, innovation adoption, and the impact of Brexit on the sector. The assignment also delves into specific bank services, competition in the UK banking industry, and the role of blockchain in reshaping the banking sector. Additionally, it touches upon the minimum requirements for face recognition and open banking initiatives.

MANAGING
INNOVATION IN
BUSINESS

EXECUTIVE SUMMARY
Innovation refers to way of doing things more efficiently as things are done in the past.
This project is a continuation of CW1 in which innovation related to banking industry is done.
Main purpose of this project is to determine the significance of innovation in the banking
industry. For this project, Barclays Plc is taken for consideration which is one of the biggest
banks and financial institutions in the UK. The company offers a range of products and services
to its customers like Corporate Banking, Investment Banking, Wealth and Investment
Management, Mortgages, etc. to its customers. The purpose of this company is to generate long-
term and effective sustainable returns for its shareholders. In addition, the company wants to
create opportunity for each of its customer to ensure appropriate and specialised services.
The agenda of this report is to determine the future of the industry in 2020 and beyond.
To achieve this, future industrial trends and innovations are analysed and their opportunity as per
the banking sector of the country are evaluated.
Another purpose of this report is to analyse Barclays' innovation requirements for 2020
and beyond. Detailed analysis is performed to determine various innovation that could fulfil
these requirements for a distant future. For this, Robot Assistance, Facial Recognition
Authentication Technology and Artificial Intelligence and Virtual Reality are chosen as the most
appropriate innovations.
Lastly, the report determines a road map for implementation of innovation within the
company. For this purpose, Facial Recognition Authentication Technology has been chosen as
the most appropriate innovation for Barclays as per its innovation capabilities to fulfil future
innovation requirements in 2020 and beyond.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
Future of industry 2020 and beyond.......................................................................................4
Organisations innovation requirement 2020 and beyond.......................................................6
Barclays Timeline for Future Innovation...............................................................................9
Road map for future innovation:............................................................................................9
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Innovation refers to introducing new changes in the products or services of a company to
develop better solutions to meet new and unique requirements (Biemans, 2018). In other words,
it is a process of uncovering different and unique ways to do same thing. For this report,
Barclays PLC is taken for consideration which is one of the largest bank in United kingdom and
headquartered is London. The main aim of this firm is to provide effective products and services
to its clients in a diversified manner which ensures its resilience across the economic cycle. The
company has recently undergone strategic restructuring in the period of 2017-18 and is currently
focusing on profitability (Our strategy, 2018). With the country experiencing drastic changes
after the events of Brexit, Barclays too is expanding its existing subsidiaries like Barclays Bank
Ireland (BBI) to effectively provide its offerings to its client after the anticipated departure of the
UK from European Union in March 2019 (Preparing for Brexit, 2018). The future plans of the
organisation beyond 2020 involves expansion in different locations, for instance, Dublin to
accomplish its Irish operations and provide its banking and financial services to the clients in the
country (Barclays reveals expansion plans for Dublin, 2018). The main aim of this report is to
find out how company uses different types of innovation to gain competitive advantage or
sustainable business performance. According to research, Barclays is holding 18th number in
valuable banks in the world (Banking 500 2018, 2019). Main purpose of this giant is to become
the market leader of banking industry by beating various brands like JP Morgan or Deutsche
bank etc. (Barclays' Competitors, Revenue, Number of Employees, Funding and Acquisitions,
2018). Different types of services this bank offers is private banking, wealth advisory,
investment services to big companies etc. Future of the bank will be predicted that how
company can opt different types of strategies to enhance their business operations as Brexit is
seen as a threat to banks in the UK. Moreover, explanation behind opting innovation as a
marketing tool will be explained. At last, road map of an organisation for future innovation will
also explained.
MAIN BODY
Future of industry 2020 and beyond
Innovation and technology are the important factors through which any company can
gain competitive advantage over other competitors. Banking industry is one of the most

competitive industries in which products and services changes automatically by time and
company operating in their industry have to change their business operations accordingly. By
2020, the banking sector of the country will be going through a lot of structural changes. With
emergence of new technologies and innovative methods of banking and provision of financial
services, the industry will witness a modification in its landscape beyond 2020 (BANKING 2020:
A VISION FOR THE FUTURE, 2018). Various types of innovation which will be the future of
banking industry in 2020 and beyond is given below.
Block chain technology
This technology is emerging so fast in banking industry as rate of fraud transactions,
donation to terrorism, money laundering, etc. is increasing steadily. To stop this, Bank of
England has introduce this technology in their system by opening real time gross settlement
system (RTGS). As according to Accenture, banking industry would save up to 20 billions
dollars by 2022 by implementing block chain (Blockchain is Reshaping the Banking Sector,
2018). This technology would assists banking industry to reduce their fraud transaction, crime
rate through online and time deductions in transactions. For instance, by implementing block
chain, multiple servers would be made for every transaction done by the single user so that
hacker wont be able to attack every servers as it is time consuming in nature. This technology
could be a future opportunity for the Banking Sector of the UK. Country's leader of FinTech,
Bank of England is planning to introduce a new payment system which will be compatible with
Block Chain. This would ensure a better future position for the organisation and would help to
attract more FinTech companies for their financial services (Blockchain is Reshaping the
Banking Sector. 2018).
Less infrastructure
Due to fast moving conditions, people are changing too as now they don't prefer to visit
for their banking operations instead they are more than happy to use technology to solve their
problem. Most of the banks like Bank of England, Lloyd's Banking Group, Royal Bank of
Scotland Group etc is investing on their online technology like online bank in which customer
can conduct all their transaction through one click on the phone (RBS to close 162 branches with
loss of 800 jobs, 2019). This is an emerging trend which is quite an ongoing opportunity for the
industry as it is making the work of customers easier, hence, increasing their trust and favourism
towards the banking sector in 2020 and beyond.

Artificial Intelligence as a colleague
AI is one of the most popular tech in every industry but when it comes to banking then it
becomes essential part of it. In the recent past, banking industry have been facing criticism due to
loss of job as most of the clerical work is done by robots only. Most of the banks are working on
robots so that they can act like colleague, advisor or consultant. Advantage of using robots is,
 Cost advantage as it requires one time investment and robots efficiency is more than as
compare to humans.
 Robots can manage everything in every time i.e., it is 24/7 available and productivity of
robots wont decreased after working regularly for countless hours.
For instance, Swiss Bank UBS is planning to implement Artificial Intelligence in its
operations which would ensure improvisation in traders' performance. In this manner, the firm
could enhance its functioning and could establish better performance standards for other
companies (How Artificial Intelligence is transforming the banking industry. 2018). In other
words, it might develop the potential of becoming an effective market leader by implementation
of AI and automation in 2020 and beyond. AI could effectively be contributing to the industry as
it would ease the role of human resources in the operations and could effectively aid companies
in achieving their organisational objectives in a technologically advanced manner.
Organisations innovation requirement 2020 and beyond
Every company requires to implement change in their system so that their quality and
quantity of services would be improved (Chesbrough and et. al., 2014). Some approaches which
Barclays is planning to bring in their business operations so that they would be able to grab more
market and customer share is explained below,
Robot Assistance
Robot is becoming essential day by day as it provides highest quality of work which
workforce or human being can not provide. Every customers in the bank needs to accomplish
their operations without any hassle or waiting in the queue. Barclays is planning to increase their
investment on chatbots and make them more advanced so that customers problem would be solve
without involving human . For instance, customer can chat or talk with the chatbots through
technology like phone or computer and they can change their information like passwords, pin
code of ATM, advice on different kind of shares etc. It would increase the profitability and

quality of services provided to the customers as robots can handle high numbers of customers at
the same time so that customer does not have to wait for the queue.
Facial recognition Authentication technology
In the recent past, bank have faced many security breach due to which customer's trust
have been decreasing on a daily basis. To tackle this situation, Barclays PLC is planning to
launch facial recognition technology in which money can not be withdrawn through machine
without face of bank holder which is registered in the bank. One account would have two
authorised faces and third person can not withdrawn any some of money on behalf of the
authorised bank account holder. Moreover, if there is any kind of technical breakdown then
person can withdraw money through finger print or pin code. This technology is helpful for
banking industry as it would decrease the number of frauds faced by industry and on the other
side, customer will be save from any fake transaction done by other person as UK faces more
than 1,820,726 fraud cases in 2016 (FRAUD THE FACTS 2017, 2017).
Artificial intelligence and Virtual reality
Due to busy and hectic schedule of millennials, they does not prefer to visit nearby bank
for their problems related to bank operations and due to this reason, customers are switching
their bank operators and prefers to get service from those bank who has better customer
engagement. To take it as an opportunity, Barclays Plc is planning to launch virtual reality
software in which customer can contact to their customer executives through VR equipments so
that customer can solve their problem by sitting at home. This would be beneficial for industry as
they will provide higher quality of services to their customers so that their trust will remained on
bank. On the other side, this technology would enhance customer experience engagement with
ease as customer would be able to operate their bank accounts and services with their phone
application.
Porters five forces model
External environment plays an important role in the working of organisation as it is
directly linked with them. It is important for Barclays to analyse and monitor the external
environment which they can not control but instead they have to modify their products and
services accordingly. Different types of forces are explained below,
Threat of new entrants: It refers to chances of entering new bank in to the UK market.
Banking industry requires huge amount of capital which includes opening branches in different

cities, then investment in IT, hiring workers, etc. (Dawson and Andriopoulos, 2014). Moreover
there are strict rules and regulation which everyone has to follow if they are working in the
banking industry. For instance, banking industry has high learning curve which means that banks
have to spend more time in the market to make their reputation in the mind of customers which
incurs high money. But on the other side, with advancements in technology, new firms could
indulge with innovative technologies and unique methods along with lower cost of services
which could lure customers into adopting their services (Barclays PLC Porter Five Forces
Analysis, 2018). Through innovation in its services like AI and Virtual Reality, this threat could
be easily tackled by the company. So it can be said that threat of new entrants is moderate.
Threat of substitute: Banking industry is very wide in terms of products and services
offered by the bank. Banks offers various services like deposit of money, investment in funds,
wealth management etc but as the time changes, banks also provided loans on every material
customers buys like car financing, house, electronic appliances etc. (18 Types of Bank Services,
2017). For instance, customers can invest in mutual funds or shares instead of saving their
money in the bank accounts as they will get high return while investing in funds. Barclays must
understand the core and immediate needs of customers and enhance their switching costs to
lower this threat of substitutes which is moderate in nature.
Threat of rivalry: It refers to number of competitors does the company has in the market
(Dodgson, 2018). UK financial market is highly competitive in nature as Barclays have to
compete with various big players like bank of England, HSBC, Lloyd's banking group etc.
Competition in the banking industry is based on factors like interest rate on loans and at the time
of depositing, customer services etc. Another aspect which is potentially increasing the
competition in the banking sector of UK is Open Banking. It is paving way for existing
businesses to better connect with their customers, which in turn enhances the scope for
companies like JP Morgan and Bank of England to effectively (Open Banking: Creating
competition in the UK banking industry, 2018). Introducing innovation one of the most effective
ways in which the firm could withstand competition in an appropriate manner. Innovations like
Robot Assistance could aid the organisation in standing ahead of the competition effectively.
Bargaining power of customers: Customers decide their banking operator through
finding and comparing the interest rates provided by the banks in the starting. But after they
become their customers, customers becomes less sensitive to interest rates. The switching cost in

banking industry is high as that's why customers does not prefer to switch their banks on the
basis of return. So it can be concluded that bargaining power of customer before opening an
account is high and then it becomes low. So overall bargaining power of customers is moderate.
Facial recognition could help develop an interest of customers by enhancing security of their
financial resources which would in turn could effectively reduce their bargaining power.
Bargaining power of supplier: In the case of banking industry, suppliers are customers
and central bank of the country where bank is operating (Epstein and et. al., 2015). For instance,
customers are the one who supplies or deposit money in the banks and in return gets interest rate
on the principle amount. Central bank lends money to them so that they can pass the money to
the customers in terms of loans and earn some commission between them. So basically Barclays
works like a bridge between central bank and customers. So banks have to provide high interest
rates to their customer as then only they would deposit their money in the bank. In addition to
this,
Barclays Timeline for Future Innovation
Innovation 2018 2019 2020 and beyond
Robot Assistance Research Start Project Finalise
Facial recognition -------- Research Start Project and
implement post 2020
Artificial intelligence
and virtual reality
-------- Research Start Project and
implement post 2020
Road map for future innovation:
Current report is about Barclays Plc and the organisation needs to formulate a strong
strategic plan to manage the companies current innovations activities and to maintain the future
innovative capabilities (Gassmann and Schweitzer, 2014). A proper road map should be
constructed by the Barclays Plc to create innovative ideas for the future in regard to build the
organisation stronger in the market. Barclays Plc has planned to implement the facial recognition
systems in the banks in which money can not be withdrawn through machine without face of
bank holder which is registered in the bank. There are some elements which are required to be
followed by the Barclays Plc and they are:

 Suggestion: For innovations, it is crucial that effective suggestions are made to ensure
that the future requirements are rightfully met. For Barclays, it is imperative that the
product or service chosen as an innovation develop a competitive and effective industrial
image of the company in market. In addition, it must also help company to enhance their
profitability. For Barclays, out of innovations like Robot Assistance, Facial Recognition
Authentication Technology and Artificial Intelligence and Virtual Reality; Facial
Recognition Authentication could serve as the most appropriate innovation for the
company.
 Reasons: For every suggestion there are different reasons just to increase the level of
efficiency in working organisation. For Barclays, the reason for choosing this innovation
is because facial recognition could help the company in enhancing the security of clients
as well as of the organisation which is the prime arising demand for banking sector in the
future (Jansen, 2017).
 Impact of Changes: While giving any suggestion, impacts should be considered. In
context of Barclays, managers must perform a detailed research regarding the impact of
this change on the company. The first and foremost impact of facial recognition
authentication would be witnessed on the R&D department who would perform extensive
research and market analysis regarding needs of this technology in the market. Another
impact would be on the human resources of the firm who would be measured on the basis
of skills required by the firm to appropriately implement this innovation.
 Feasibility: In this, the area for consideration is practicability that whether company can
perform particular task or not and what can be the possible outcome of that. In context of
Barclays, the managers must judge the condition for operating 'Facial Recognition
Authentication' that when it should be launched how it can be benefited for their
customers. Barclays would judge the feasibility of the innovation on the basis of the cost
required to implement the innovation, resources required to produce the system and
employees required to be hired to fulfil the skills gap.
 Technological Factors: It is also required for Barclays Plc to determine get able
technical staff and resources before implementing the innovative plan of facial
recognition. It will help the Barclays Plc in increasing technological advancement in a
business environment as facial recognition technique will help the customers and staffs in

making the banking proceedings flexible and easy. For Facial Recognition Authentication
Technology, the firm would at least require AI systems and software of face detections,
technologies like Deep Learning Engines (DLE), Smart Surveillance Engines (SSE) and
Large Scale Surveillance (LSS) (Minimum requirements for face recognition, 2018).
 Approval Process: This is one of the most important aspect for every innovation. It is
simple to have suggestion, its impact and its feasibility but to start this work approval
from member is mandatory. This process is conducted according to relevant policies of
an organisation (Löfsten, 2014). Barclays must organise formal meetings which are
required for the approval of directors of the company.
 Legal aspects: It is important for Barclays to figure out different legal aspects which are
required in functioning the business activities according to the future innovations
strategies (Malhotra and Majchrzak, 2014). Barclays must complete all the legal
requirements which are required to introduce any new technology in banking sector.
Barclays must follow the Banking Act, 2009 in accordance to that they must pass the
resolution to apply changes. As these changes are done for the welfare of customers so
they must take the approval of Bank of England first (Banking Act 2009, 2018).
 Apply the changes: If prior approval is obtained, then it is the responsibility of
management system that how apply changes and from when to start. Barclays must apply
the changes which requires formulation and implementation of Facial Recognition
Authentication technology. Before setting out in the market, the firm must run effective
tests to appropriately launch the same in the market.
 Review the impact of changes: It is most important for every organisation to take a
review of there customer to know what there customer feel about new changes and is it
helpful for them or creating any unwanted trouble (Gassmann and Schweitzer, 2014). In
context of Barclays they can apply following methods to know the review of their
customer.
◦ Barclays bank can personally contact their customer while they visit any their AMT
station.
◦ They can create link on their personal website where they can ask their customer
about facial recognisable techniques in terms of rating out of 5.

The above points of roadmap can help Barclays to find accurate result regarding their
new plans and how they can execute those plan in appropriate manner. It will also motive their
staff if this new technology can provide appropriate outcome.
CONCLUSION
It can be summarized from the above report that innovation is very crucial for any
organisation to sustain in the competitive market for long. Innovating ideas leads to enhance the
overall growth of the company as it would assist them to gain competitive advantage over others.
Banking industry would be experiencing advanced innovation in the future in the year 2020 and
beyond with innovations like Less infrastructure, Block chain technology, etc. Robot Assistance,
Facial Recognition Authentication Technology and Artificial intelligence and Virtual reality
could assist companies in fulfilling the innovation requirements in the year 2020 and beyond.
Porter's Five Force could effectively be utilised to determine industrial attractiveness and
competitiveness. Lastly, each stage of road map could aid companies in developing an effective
structure for implementing innovation within their organisation.

REFERENCES
Books and Journals
Biemans, W., 2018. Managing innovation within networks. Routledge.
Chesbrough and et. al., 2014. New frontiers in open innovation. Oup Oxford.
Dawson, P. and Andriopoulos, C., 2014. Managing change, creativity and innovation. Sage.
Dodgson, M., 2018. Technological collaboration in industry: strategy, policy and
internationalization in innovation. Routledge.
Epstein and et. al., 2015. Managing social, environmental and financial performance
simultaneously. Long range planning.48(1). pp.35-45.
Gassmann, O. and Schweitzer, F., 2014. Managing the unmanageable: the fuzzy front end of
innovation. In Management of the Fuzzy front end of innovation (pp. 3-14). Springer,
Cham.
Jansen, W., 2017. New business models for the knowledge economy. Routledge.
Löfsten, H., 2014. Product innovation processes and the trade-off between product innovation
performance and business performance. European Journal of Innovation
Management.17(1). pp.61-84.
Malhotra, A. and Majchrzak, A., 2014. Managing crowds in innovation challenges. California
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Saunila, M. and Ukko, J., 2014. Intangible aspects of innovation capability in SMEs: Impacts of
size and industry.Journal of Engineering and Technology Management.33. pp.32-46.
Talukder, M., 2016. Managing innovation adoption: from innovation to implementation.
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