Barclays Bank: Detailed Market Structure and Industry Analysis Report

This report offers a comprehensive analysis of Barclays Bank, beginning with its historical overview and evolution from its founding in 1690 to its current status. The report details the bank's products and services, including retail, commercial, investment, and wealth management offerings, highlighting its focus on customer financial security and diverse lending options. A significant portion of the report is dedicated to examining Barclays' market structure, tracing its shift from a monopolistic structure to an oligopoly within the UK banking sector, and comparing its market share with key competitors like RBS and HSBC. The analysis explores the characteristics of both monopolistic and oligopolistic market structures, discussing how Barclays adapts to market challenges, government regulations, and evolving customer behaviors. Furthermore, the report touches upon the nature of the industry and Barclays' operational strategies in different market structures, emphasizing the company's adaptation to technological changes and its expansion strategies in the banking sector.

Barclays Bank

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................3

INTRODUCTION
There are a lot of factors which can affect the functioning and operations of an
organization which have to be analysed so that there is going to be a good business
understanding and planning and decisions can be taken accordingly. Barclays Bank is having its
headquarter in London, United Kingdom and the bank was founded in 1690 which is 329 years
ago. The net income of the bank is £3.354 billion which is a great factor and the experience
which the company has gained of the years is going to help the organization to be able to operate
effectively in the market (Marko, 2019). The report consists of market structure, market
transformed and government intervention in detail of Barclays Bank.
TASK
1. Barclays Bank Overview
History of the Bank:
Bank was founded in the year the year 1690 in London by goldsmith banker family and
later on James Barclay join as a partner in the organization. Company has achieving higher goals
in all good and worst situations such as multiple financial crises, international conflicts, and the
agricultural, industrial and now technological revolutions. Company is divided into four kinds of
business personal banking, corporate banking, wealth management, and investment management.
Company has multiple offices all around the world.
Products and Services:
Company deals in banking and its product are Retail Banking, Commercial Banking,
Investment Banking, Wholesale Banking, Private Banking, and Wealth Management. Company
provided services related to all form of banking for example wealth planning. In wealth planning
company focus on trust and bonds services which help customer for future financial security,
Wealth protection and insurance from upcoming threat such as accident, bankruptcy etc. It also
provided services such retirement planning and pensions which help customer after job
retirement. Company also has tailored investment solutions in which s Discretionary portfolio
management where buy and sell’s decision made by highly trained portfolio manager in the
organization and hence help in financial growth of the customer. It also provide services such as
Advisory and execution-only services, Managed funds and Impact investing expertise to clients
and hence attract large number of customers. Company provide various lending option such as
loan against mortgages, portfolio finance and bespoke. This helps clients facing problems related
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to money and provide interest according to it. Company has flexible and easy banking option
which attracts large number of United Kingdom customers (Lu, 2020). There are variety of
services it provide in regular banking such Everyday banking services, Savings accounts, Award-
winning app and online banking. However, tax rules and investment fluctuation can impact on
financial planning of customer and bank.
2. Market and structure of Barclays Bank Since it Foundation
Bank started its operation in 1690 in London with limited number of customers.
Professionaly founder John Freame and Thomas were gold smith and with small connection they
started expanding business. They finance Pennsylvania Land Company in America and also
involved in various company in The Great Britain. They sold silver to royal mint and latter on
become official banker. They had £1,100 in national stock (Barclay Bank, 2018). Later Frame’s
son in law David Barclay joined the organization and he has strong background in understanding
and implementation of banking (MacKenzie, 2019.). David Barclay and latter successor decision
help in increasing fortune of the organization and expanded business globally. In the 2018 report
company describe various challenges faced by its customer such as continuing uncertainty,
modest economic growth and volatile exchange rates (Tahri, 2018). However, low interest rate of
the organization increases its overall profit and attracts large number of customer. Company also
faced problems for example competition in British banking market, customer behaviour and
regulatory expectations etc and this effect in its business policy and procedure. However, these
challenges unable to stop growth of the company and it pay profit before tax of £1,548m.
Company’s quality services and solution to customer help in overcoming from such challenges.
Organization has various competitors in the market, namely, RBS,HSBC Bank, Santander,
LIoyds Banking group etc. .Barclay yearly revenue in the year 2018 is £6.6 billion which is
higher from his main competitor Royal Bank of England. However, RBS’s growth rate is faster
than Barclay (Trefis Team, 2020).
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Figure 1: Market Share of Barclay bank
Source: Statista Research Department, 2020
Market structure of Barclay bank:
Barclay bank operates in oligopoly market structure. Company face challenges from 5 to
6 banks and hence this structure can be categorized as oligopoly. Company is united with
different banks in UK such as RBS, HSBC Bank, Santander, LIoyds Banking group to strong
hold on market and hence competition remain between this group and this group share almost
75% of UK banking market (Mordor Intelligence, 2019). Company is one of oldest banking
organization in UK and hence large number of loyal customers it has. Again government rules
and regulation are setup by suggestion from Union of bank in which Barclay is one of the
important members in this group. In this relatively small bank organization come to gain market
share and hence stop outside to foothold in the business. This types of organization has influence
on government, customers and employees and in banking sector of UK old banking organization
are oligopoly in market structure. Barclay bank running its business from last 300 years and
hence strong financial capacity to stop any upcoming threats from new entrants and again day by
day its interest rate, repo rate etc changes to attract customers as much as it can. This oligopoly
structure bank offer product that are high unique and different from others and also fluctuate
price according to new organization so it not possible to root out such company. Colonies and
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capitalism in UK another factors of oligopoly of Barclay bank. However, innovation and
creativity chances in banking sector decrease in oligopoly structure. Company faces many
challenges in the beginning of the business but with times its profit share continuously increasing
and merging of small organization become profitable for the organization. Product and services
Barclay and other banks in oligopoly are similar but frequent changes are made by them
according to customer trend and taste. Barclay purchase small finance company which are rising
in UK and hence increase market and customer share in the country. Company’s market has
highly talented and skilled banker construct policy to influence market and decrease competition
from oligopoly bank as well as new entrants (Dalla and Varelas, 2019.). Company is divided in
2016 in two parts, namely Barclays UK and Barclays International and it each part has more
autonomy in working and hence it able to gain large market share with oligopoly structure as
well as defeat member in this oligopoly. Company decided that it further divide organisation in
small segment in UK to increase quality, efficiency and productivity which help in gaining large
number of customer with high market share.
3. Company’s Market Structure History
Barclay in the beginning started business with market structure of monopolistic and it
lends money to businesses and merchants in UK with minimum interest and for longer period
and hence visionary approach of the company differ its beginning era. In the era of colonialism
and capitalism company lends money with easy process and build strong relationship with UK
customer. With time company use various policy such as large amount of investment in
advertising to attracting customer, fluctuating interest rate, domestic loan, industrial loan etc and
hence it become advantage for the company to gain large market share with unique quality of
products. In the year 1896, 20 small banks merge to establish Barclay and company limited. This
gives another opportunity to expand its business by providing various types of loan and hence
gain market in monopolistic structure. Company has over time merged with various bank and in
the end become one of the four top banks in UK. However, one of the main reasons behind
success of bank is Quakerism.
Continuing business is not possible in monopolistic structure at globally or nationally
after the formation of Union of banks. Top level banks in this organization become barrier for
the new entrant and hence according to changing world company has change its market structure
to oligopoly. Company has four more other competitors in the market, namely RBS, HSBC
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Bank, Santander and Lloyds Banking group. Barclay and all this banks joins hand whenever new
entrants comes in business and change policy related to interest, schemes etc to though out new
organization. Barclay and this four companies influence government policy related to banking
sector and hence to gain and control large market share in United Kingdom. However,
Competition between this banking organization and Barclay remain high and they change
interest rate, provide different kinds of loans and and liberty in paying back to influence large
number of customer. But in times of threat join their hand to remain oligopoly market structure
in Britain.
Barclay Bank Characteristic of Monopolistic structure:
Monopolistic Market competition refers to different firms with slightly different types of
product which they offer to customer. As in the beginning company is small in size and hence to
expand business, it has to offer unique products such as co signer loan rather than mortgage.
There are number of characteristic associated with monopolistic structure as discussed below.
In monopolistic structure each organization has independency to take decision related to
price, quality of product, market and production cost. Independency give chance to expand
business according to company and hence no influence of union like in oligopoly. Company can
enter the market or wind up according to risk and profit without any inference from other
companies and union. Most important feature of monopolistic is that products are different and
hence customers have more choices and company can influence by providing product according
to taste and trend of customer. Marketing process of all organization are different to attract
customer for example after 1990, Barclay highly invested in advertisement of loans scheme to
gain large market share where other company did not make much attention on it and believe on
mouth to mouth publicity. Company can hire any talented and skilled worker which is boycotted
by any other company because of nepotism or any other problem (Rock and Rubinfeld, 2020).
However, in oligopoly union blacklisted worker and customer cannot allow to entertain by any
bank which are member of union. Company can contact can contract with many distributor and
influence them to gain competitive advantage in the market (Arch, 2020). Monopolistic structure
firms can maximize profit and can take quick decision according to changing market.
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Figure 2: Market Share of Barclay bank
Source: Statista Research Department, 2014
In the year 2018 company has 9.88% domestic market share of UK and it becomes 1st
largest bank in terms of assets and on the other side HSBC bank share 6.81% and J.P. Morgan
Securities plc share 5.88% of total market of United Kingdom.
4. Nature of the industry
a. Operating in different market structures
Barclays Bank is having a lot of experience in the market which is why they want to
expand the branch globally but they do not want to select any other market structure. There is a
stability which the bank is having in the present and they need to get in a lot of investment as
well to be able to expand themselves which is why the company does not want to risk their
business at this point of time (Augar, 2018). There are a lot of technological changes as well
which are coming in the banking sector as well which have to be invested and implemented in
the bank for the higher satisfaction of the customers. Barclays bank is having a good functioning
for them and they are also having a good structure which the business has been able to develop
themselves on which is a very good factor for the company. There are a lot of situations which
rise in all the businesses but it is on the structure which the business is following is going to help
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the company be able to operate effectively in the market without getting affected from them and
get a competitive advantage in the market (Adesara, 2016).
The competition in the market is also increasing which is why it is very essential for the
organization to be able to have a stable growth for them in the market. There are a lot of changes
which have to be got in this bank so that their employees can be satisfied and the pressure can be
reduced of the competitive market (Advantage, 2020). Barclays bank is belonging from
monopoly market structure because of the experience and the trust which the organization has
gained of the customers in the market which is why the organization will be able to operate
effectively. There are large profit margins which the company is having and they have set prices
for the services they are providing to the customers as well which are a very good factor for the
organization to be able to control the market as well for a long run. Barclays bank is responsible
and accountable to the government of the country which will have to be well maintained by the
organization to be able to operate effectively in the market (Casu and Gall, 2016). There has to
be a good economic factor in the organization to be able to operate effectively in the market
which is going to be good for the expansion purpose as well for the company.
b. Government interventions
In United Kingdom the GDP of the country is increasing and improving with time
because there are a lot of businesses which are starting up. There are unique ideas which are
developing in the country and they are being promoted and supported by the government so that
there is going to be a growth of the business internationally and the economic factor of the
country can be maintained. The unemployment rate of the country is also improving since the
people are getting a lot of job opportunities which is good for the countries development. The
population needs support therefore the government of United Kingdom have reduced the loan
interest so that the people can have better approach for these loans and be able to pay back the
banks on time (Ouenniche and Carrales, 2018). Government help is a very good factor for the
society which is going to help the people which are a very good factor not just for the
government but the banks as well. There has to be this change so that the organization can have
better operations and this way the bank will also be able to get in a competitive advantage
because the government is going to get in customers for the company as well which is a very
good factor for a long run.
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The government has taken help and put policies for the banks to follow so that the
population of the country can develop and get advantage from this factor. There are a lot of
people who want help to be able to start off their own businesses in the market but they have to
have the right strategy for them to be able to do that which is going to be good for the longer
functioning of the bank in the market (Akana, 2019). There are a lot of local banks which have
developed in United Kingdom which have taken the market share away and for that to be
maintained the organization must follow the policies so that the reputation and brand image
which the company has developed from 329 years can be well maintained.
CONCLUSION
It is very essential for the business to understand the structure in which the organization
is functioning so that they can have a better decision for themselves for the future. To have a
competitive advantage the organization will have to analyse the market effectively so that there
is going to be a better functioning. There is a lot of interference of the government as well
therefore they have to make the decisions and measures accordingly so that the profitability and
the brand value do not get affected because of this factor.
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REFERENCES
Books and Journals
Adesara, D.N., 2016. Deliberative Study of Financial Management of Barclays
Company. International Journal of Management, IT and Engineering. 6(9). pp.45-51.
Advantage, C., 2020. Corporate Social Responsibility. CSR and Socially Responsible Investing
Strategies in Transitioning and Emerging Economies. p.65.
Akana, T., 2019. Developing a Customer-Driven Credit Card: Testing Consumer-Issuer
Collaboration in the Barclays Ring Community. FRB of Philadelphia Payment Cards
Center Discussion Paper. (19-4).
Arch, L., 2020. “If competition has any virtue, we ought not to have a system that stifles it”:
Competition in London Clearing Banking, 1946–1971. Enterprise & Society.pp.1-38.
Augar, P., 2018. The bank that lived a little: Barclays in the age of the very free market. Penguin
UK.
Casu, B. and Gall, A., 2016. Financial Services and the UK Economy. In Building Societies in
the Financial Services Industry (.pp. 1-21). Palgrave Macmillan, London.
Dalla, E. and Varelas, E., 2019. Regulation & oligopoly in banking: the role of banking cost
structure. Journal of Economics and Business.104.p.105836.
Lu, A., 2020. The Quaker Paradox: A Case Study of David Barclay as a Malevolent Slave
Trading Banker and a Benevolent Abolitionist.
MacKenzie, D., 2019. Market devices and structural dependency: The origins and development
of ‘dark pools’. Finance and Society.5.(1).pp.1-19.
Ouenniche, J. and Carrales, S., 2018. Assessing efficiency profiles of UK commercial banks: a
DEA analysis with regression-based feedback. Annals of Operations Research.266.(1-
2).pp.551-587.
Rock, E.B. and Rubinfeld, D.L., 2020. Does Common Ownership Explain Higher Oligopolistic
Profits?. NYU Law and Economics Research Paper.(20-18).
Tahri, A., 2018. Consumer based brand equity in retail banking industry: a cross analysis of a
domestic and global bank operating in the UK (HSBC vs Barclays) (Doctoral
dissertation, Anglia Ruskin University).
Online
Barclay Bank UK PLC Annual Report. Barclay Bank, 2018 Available through:
<https://home.barclays/content/dam/home-barclays/documents/investor-relations/reports-
and-events/annual-reports/2018/2018-Barclays-Bank-UK-PLC-Annual-Report-
28.02.2019.pdf>
Barclays - a quick history. Barclay Bank, 2018 Available through:
<https://www.archive.barclays.com/items/show/5419>
History of Barclay Bank. Barclay Bank, 2018 Available through: <https://home.barclays/who-
we-are/our-history/>
Largest mortgage lenders in the United Kingdom (UK) in 2018, by market share. Statista
Research Department, 2014, Available through:
<https://www.statista.com/statistics/727348/uk-banks-gross-lending-market-share/>
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Market share of current accounts of leading United Kingdom (UK) banks in 2014. Statista
Research Department, 2014, Available through:
<https://www.statista.com/statistics/387098/uk-banks-current-account-market-share/>
Marko, 2019. Information about Barclays is found here. Available through:
<http://barclays.isfoundhere.com/>
Quakers. Barclay Bank, 2018, Available through:
<https://www.archive.barclays.com/items/show/5405>
Structure and leadership in Barclay Bank. Barclay Bank, 2018, Available through:
<https://home.barclays/who-we-are/structure-and-leadership/>
UK RETAIL BANKING MARKET - GROWTH, TRENDS, AND FORECAST (2020 - 2025).
Mordor Intelligence, 2019, Available through: <
https://www.mordorintelligence.com/industry-reports/uk-retail-banking-market>
Which British Bank Has A More Profitable UK Retail Business: RBS Or Barclays?. Trefis
Team, 2020, Available through: <
https://www.forbes.com/sites/greatspeculations/2020/01/16/which-british-bank-has-
more-a-profitable-uk-retail-business-rbs-or-barclays/#16da8ff91810>
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