Retail Banking Case Study: Barclays Bank Plc Strategic Analysis

This case study examines Barclays Bank Plc's retail banking operations, focusing on its strategic responses to internal and external drivers within the competitive UK banking sector. The analysis covers Barclays' business segments, including personal banking, and its adaptation to digital transformation, regulatory changes, and evolving customer needs. The study explores the impact of strategic drivers such as national regulations, competitive pressures from Fintech and other new entrants, and demographic shifts. It highlights Barclays' efforts to enhance service quality, digital platforms, and risk management. The case study provides insights into Barclays' financial performance, market position, and strategic initiatives, including its expansion plans in the US market and the development of a customer-centric organizational culture. The study also provides recommendations for Barclays to sustain its growth and improve its position within the industry.

Retail Banking
Case Study of Barclays Bank Plc
Student Details
1-1-2020

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Table of Contents
Introduction................................................................................................................................2
Case Background.......................................................................................................................2
Strategic drivers.........................................................................................................................3
Internal strategic drivers.........................................................................................................4
External Strategic Drivers......................................................................................................6
Impact on Barclays.....................................................................................................................7
Importance of service quality in the Banking Sector.................................................................8
Recommendations for Barclays...............................................................................................10
Conclusion................................................................................................................................12
References................................................................................................................................14

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Introduction
The retail banking sector is expanding an is focused on the digitalisation of the business
operations. As with the improved focus on the quality of service provided to the customer, it
is required that the organisation focus upon improving the product and service quality and
provide the customers with more innovative and quality services within the industry. The
change is required within the retail banking sector so that the customers can be provided with
the quality services and the organisation can lead within the competitive environment. IN the
retail banking sector, few large institutions effectively evaluating the customer requirements
and introducing innovations within their business operations are leading within the industry.
The report focuses on analysing the changes made in the operations of the Barclays Bank Plc,
due to the impact of the internal as well as external strategic drivers. As the organisation's
industry has implemented several changes within its operations to meet the needs and
requirements of the customers. In respect to the changes made by the competitors, Barclays
has implemented certain changes within its business operations and its products and service.
The report effectively analyses the changes within the retail banking sector and how
effectively Barclays has responded to those changes within the industry.
Case Background
Barclays is an investment bank based in the United Kingdom; it also focusses on providing
financial services to its customers. Barclays has four major segments of its business entity
including personal banking, wealth management, corporate banking and investment
management. Barclays has more than 4750 branches and operates in around 55 countries.
Barclays has a diversified business model, and the organisation believes that such business
model helps the organisation in producing long-term outputs for business stakeholders

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through leveraging the resources and business relations. The diversified business model of
the organisation provides its stakeholders with a mix of revenue sources
Barclays Bank holds a strong position within the UK retail banking, as of 2018 Barclays has
23 million individuals and around a million of small business in the market. Barclays
provides its clients with a wide range of products and services within its retail banking
segment. In 2018, Barclays recorded a consumer deposit of US$14bn and was listed among
top ten-credit card issuers within the US market. Barclays has developed relations with
clients and has entered into certain partnerships which have promoted the organisation as
being the leader within the UK retail market (Barclays Plc, 2019).
Barclays management has identified major changes that were required to transform the
banking segment and has developed strategies for the transformation of the banking
operations at Barclays. The strategy developed at the Barclays Bank complies with
government regulatory policies introduced in 2018 and has changed the way the activities
were conducted within the organisation. Along with the adoption of the regulatory
framework, Barclays adopted the digitalisation of the banking services and has made
extensive investments in technology developments and has entered into partnerships with the
technology providers to gain a competitive advantage within the industry (Barclays, 2020).
Strategic drivers
Strategic Business drivers include the key factors and support activities that help the
company to define and achieve its business goals and also represents the influence of the
factors on the business operations and the organisational performance within the industry.
Such strategic drives can be classified as internal as well as external, as there are certain key
factors including the national regulations or the competitive conditions of the industry which

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influence the internal operations of the organisations, and external factors include global
trends, global and national macroeconomic conditions.
Internal strategic drivers
National regulations and the supervisory codes influence the business operations in every
sector, as the government develops rules and regulations to protect the interest of the
customers, employees and other stakeholders of the business organisation. Therefore, it is
required that the business organisations focus upon changing legal rules and regulations and
the introduction of new policies within the industry so that they can work accordingly within
the industry. The national regulators at the UK introduced a regulation which includes that
from January 2019, the banks within the UK were required to establish a core retail banking
facility separate from investment banking as well as from the international banking activities
(Global Legal Insights, 2019).
The implication introduced by the government highly influenced the stakeholders of the
organisations and also the banks were required to restructure their business activities to
comply with the changes in the Financial Services Act 2013. Such regulations were
developed to improve the service quality that is being provided to the retail customers within
the industry. The banks were required to digitalize their banking operations so that the
customers can effectively engage within the banking transactions and can get the services as
per their needs and requirements.
Competitive factors within the industry are the key factor that has resulted in bringing
changes within the UK Banking sector and has also led towards the reform of the
organisations operating within the industry. The retail banking industry of UK has undergone
many changes since the financial crisis of 2008, and most of the changes were made to regain
the customer’s trust and to provide them with improved service experience with the

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organisation. The competition within the industry has increased with the digitalisation within
the retail banking sector, as with the digitalisation of the services that are being provided to
the customers, as the competition within the industry is not limited to the branch expansion
and human advisors, the customers has increased the use of digital channels and as a result,
banks are required to compete within the digital world and aims to provide effective services
to the customers (de-Ramon & Straughan, 2019).
With the development of digital banking, the competition within the retail banking has
increased as developing a physical network is no longer required to compete within the
industry (Brackert, et al., 2019). The retail banking sector faces high competition within at
the national and international level, as the major focus of the banks has shifted towards
meeting the customer requirements and to provide them with improved and innovative
service, so that they can effectively attract the customers and can establish themselves within
the competitive business environment (Delloite, 2014).
The retail banking sector is changing and the demographic factors are also a factor resulting
in a change in the banking sector, factors such as the changes in personal wealth, inheritance
and the birth rates affect the retail banking sector as per the industry. The banking industry is
dependent upon the customer requirements and with the increasing competition within the
industry, the organisations are required to introduce innovations within the banking process
so that they can satisfy their customers and can meet the needs and demands of their
customers within the industry (Kabadayi, 2016).
The innovation within the retail banking is focused towards introducing digital banking
options to the customers so that the activities can be made flexible and easy for the
customers, also with changing demographic requirements, the banks are required to focus on
a diverse set of customers having distinctive needs and requirements (Omarini, 2018). The
demographic factors also affect the adoption of the internet banking or the services that are

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being provided to the customers within the industry, the demographic factors such as age of
the customer influences the services that are being provided to the customers as the customers
between age 18 to 35 years show less interest in savings options whereas after 35, people
have established career path and their requirements and their financial concerns begins to
shift. Therefore, such factors such influence the choice of products and services that are being
provided to the customers (McDade, 2016).
External Strategic Drivers
The trends within the UK retail banking sector has transformed the way the retail banking
business was conducted within the nation as well as in the global banking industry. The
increasing competition within the UK retail banking sector, like from the Fintech and other
new entrants required that the traditional organisations focus upon the development of their
products and services so that they can improve their efficiency within the industry. The retail
banking industry faces a challenge to innovate and expand its business activities from
focusing on the product portfolio to understanding the customer requirements and developing
products accordingly. Introduction of the digital banking activities within the industry, and
the use of artificial intelligence and business process automation to improve the customer
service and creating opportunities in the competitive marketplace ( Knight Frank LLP, 2018).
The global trends in the retail banking sector are changing rapidly and is focused on
improving the service quality and providing the customers with innovative products that
satisfy the customer needs and requirements. The organisations operating in the global retail
banking sector involves the use of the advanced analytics, Artificial intelligence, exploring
advanced technologies, acquiring talented and experienced workforce and investments in
innovative initiatives (Marous, 2019). The reversal in the interest rate cycle in the US and
Europe and Japan has resulted in the decrease in the retail bank's margins and profits, despite
of the innovative factors introduced within the global operations.

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Impact on Barclays
Barclays UK banking was focused on personal banking was transferred to Barclays Bank UK
Plc to comply with the legislation and was transferred under the single ring-fencing transfer
scheme. Barclays Bank Plc has also focused on developing an effective digital platform for
its customers within the industry and has continuously introduced changes in its mobile
banking app, “Barclays Mobile Banking” so that the customers can effectively engage in
digital transactions, and with the efforts, Barclays mobile banking application became the
most used banking application in the UK, and Barclays has around 10.8 million digitally
active customers who transact on daily basis using the banking application.
Barclays effectively analyses its internal and external environment and has established
Barclay’s risk management strategy that focuses on the management and governance of the
organisation, organisational competencies and effectiveness, integrity and motivation and
incentives that is being provided to the employees working within the organisation. Such
strategies helped Barclays in effectively analysing the competition within the industry and
developing strategies through which they can compete within the industry (Barclays Bank
Plc, 2018).
Barclays bank plc has reported a decline in profits of more than 80% in the third quarter of
2019, due to the impact of the UK economic uncertainty (Makortoff, 2019). Barclays is
among the largest British banks listed in New York Stock Exchange. The bank has
transformed its business model significantly since the downturn of the economy. Barclays has
a competitive position within the industry in terms of the market share and the customer base,
as if compared with RBS, leader within the UK retail banking industry, it can be analysed
that In 2018, Barclays earned a revenue of £6.6 billion which is nearly 4.5% more as
compared with RBS revenue for the period which is £6.3 billion. However, in terms of

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growth rate, Barclays shows a slow and steady growth rate as compared to its competitors
within the industry (Trefis, 2020).
Barclays is adopting strategies to expand its business in the global industry, as the bank is
focusing on expanding its business operations within the U.S, and to expand its business
operations it is focusing on connecting with large retailers before connecting directly with the
customers within the US retail banking industry. Barclays management has focused on
changing the organisational culture and has established a culture that resulted in the growth of
the organisation within the industry. The newly established Barclays had its Barclays UK, a
consumer bank at its main focus area (Bray, 2016).
In 2019, Barclays Bank has achieved a profitable growth within the UK banking sector as
compared to 0% improvement in 2015 to 15.5% increment in 2019. Barclays Bank has
focused on reducing its cost in comparison to the expenses in 2015, which results in the
decline of 12% since 2015, and the bank’s revenue to total expenses has reduced from 100%
to 85% in 2019. As a result, 2019 proved to be the most profitable year for Barclays since
2011, irrespective of its slow growth within the industry (Forbes, 2020).
Importance of service quality in the Banking Sector
The requirement of digitisation of the retail banking sector requires that the customers within
the industry are being provided with satisfied and improved quality services. As the quality of
the service provides to the customers is considered as a critical factor in the success or failure
of the digital banking services. The banks are required to understand the needs and
expectations of the customers, to sustain in the global competitive industry. The bank service
quality is analysed based on the five basic dimensions including the tangibility,
responsiveness, empathy, reliability and assurance. The customers within the industry analyse

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the bank service quality as best if it is reliable and assured, and if the bank has an effective
response rate towards the customer (Shala & Pira, 2017).
The service quality is also linked to customer satisfaction within the industry. As providing a
quality service with innovative products within the industry is required to gain customer
satisfaction within the industry (Nautiyal, 2014). A study conducted on the customer
satisfaction level in Barclays bank shows that Barclay's bank focus on providing quality
services to its customers and the satisfaction level of the customer has shown a positive
response, but the bank is not able to meet with the required expectations and is required to
focus on improving the service quality that is being offered to the customers (Yeoward &
Ashwathnarayana, 2015).
The banking customers within the global business environment requires that the banking
organisations provide them with superior and consistent service experience but still, the
major banks operating within the global economy are facing challenges in providing such
services to their customers (Srinivas, et al., 2019). The banks are required to focus upon the
empathy and the reliability as the major areas which influence the satisfaction level of the
customer within the industry. As the banks are required to develop strategies and policies to
adopt the customer-focus approach within the industry (Lomendra, et al., 2019).
The customer satisfaction is a dependent variable and it depends upon the product and service
quality, and the response of the banks towards the customers within the industry. In case of
retail banking the banks are required to regularly update their customers about the innovative
products and services and are required to connect with the customers to identify their needs
and requirements and accordingly provide them with the products so that their requirements
and the satisfaction level of the customers can be achieved (Paul, et al., 2016).

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Barclays focused on providing the customers with innovative products and service so that the
needs and requirements of the customers can be met. Barclays introduced a Green Mortgage
Product which allows the customers to get loans at the lower interest rate when they are
purchasing a new energy-efficient home, and with the innovative scheme Barclays has
provided loans to around 110,000 customers and the gross lending of the bank has increased
at a rate of 1.5% in 2018. Another example of developing customer-focused products
includes the credit card developed by Barclaycard Consumer UK, which provided its
customers with flexible borrowing and payment solutions as per the needs and requirements
of the customers (Barclays Bank Plc, 2018). An Independent survey conducted to analyse the
bank service quality within the industry, the results provided that the Barclays is required to
focus upon the overall service quality provided to the customers within the global industry
(Barclays, 2019).
Figure 1 Overall service quality 2019 (Source: (Barclays, 2019))
Recommendations for Barclays
Barclays is required to focus upon its banking operations and put more emphasis on the
quality of services that is being provided to its customers so that it can compete within the
industry in terms of customer satisfaction and can promote its business operations as

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compared to its competitors within the national as well as global retail banking sector.
Barclays is required to focus upon its IT services as the success of the digital banking
services depends upon the quality of the IT infrastructure employed by the organisation. In
2019, Barclays has reported a maximum number of IT shutdowns which impacted its
customers and the services that are being provided digitally. As it is directly related to the
customer satisfaction within the industry; therefore, it is required that Barclays focus on such
issues within the organisation so that it can effectively serve its customers within the industry
(Read, 2019).
Maintaining the quality of product and services, and providing the customers with products
that fulfil their needs and requirements are the key requirements of the retail banking sector
and the organisations within the sector are developing strategies through which they can
understand the needs and requirements of the customers and can develop products
accordingly. Barclays is focusing on improving the products and service quality, and the
expansion of the business operations but it is not focusing on the satisfaction level of the
customers, therefore it is required that Barclays focus on customer satisfaction along with the
development of the organisation (Lauchlan, 2016).
Barclays Bank Plc is required to focus upon its products as well as the expectations of its
customers, as Barclays has implemented various strategies to expand and develop its business
operations in the different segment in which it is operating, but still, it is not able to meet the
profit expectations set by the company. The bank has achieved a 9% return on equity in 2019,
but still, Barclays lacks behind the growth rate of its competitors within the industry
(Business Standard, 2019). Barclays is required to develop clear and effective business
strategies that would focus upon the financial as organisational development along with
meeting the customer satisfaction within the industry.