Key Macro and Micro Environmental Issues in the UK Banking Sector

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KEY ISSUES IN BUSINESS
ENVIRONMENT

Table of Contents
Introduction.......................................................................................................................................2
Identify and description of the key macro issues in the business environment in relation to the
banking sector...................................................................................................................................2
Explain the potential impacts at the micro level for the 2 issues identified above in relation to
banking subsector..............................................................................................................................4
Description of the personal challenges faced for carrying out the tasks...........................................5
Suggestion of appropriate ways of overcoming the challenges.........................................................5
Conclusion.........................................................................................................................................5
References.........................................................................................................................................5

Introduction
The sector or the industry which is studied here could be the banking sector and the banking
subsector of UK. The banks are the financial institutions which is providing a broad range of
financial services and products which is including the retail banking, loans, credit and debits
cards and the money transmissions. The banks are also linked with the insurance companies
with life, health, property and casualty and reinsurance interests. The banks are also engaged
primarily with the life and health insurance along with the fire, accident, marine, automotive,
malpractice and other classes of non-life insurances which is to be provided by the banks.
The study is based on the identification and the description of the macro issues in the
business environment in relation to the banking sector in the UK. This is applied with the
help of the PEST model. The study is also focusing on the explanation of the potential
impacts at the micro level for the identified 2 issues in relation with the banking subsector.
The study is illustrating the personal challenges to be faced in carrying out the tasks and the
suggestions of the various ways of overcoming the challenges to be faced.
Identify and description of the key macro issues in the business
environment in relation to the banking sector
There are around 350 monetary companies are present there in the UK. There is around 51
percent of the balance sheet of the banking sector reflects the UK ownership. The regulatory
capital ratio of the banking sector is said to be 20.5 percent at the end of 2017 with the equity
capital of £432 billion. The MFI credit growth in the UK in 2017 has been 3.7 percent for the
private non-financial businesses. The deposits have grown by 7.7 percent in 2017 (Khilji
Tarique and Schuler 2015). It is seen that the total contribution of tax to the government
finances has been £35.4 billion, out of which £18.1 billion is for the UK which is
representing 48 percent of the profits for the banks. The banking sector in the UK comprises
of more than 400,000 employees which is 1.6 percent of the total UK workforce and it is
generating the tax receipts of £18.4 billion having the contribution of 4 percent of the gross
value (Khilji Tarique and Schuler 2015). The identification of the key macro issues can be
explained with the help of the PEST model in relation to the banking sector of UK.
Political: The political factor is influencing the banking companies or the firms to be able to
operate within the banking sector in the UK market. The political condition and the
environment of UK is quite good and stable. The government of UK has been passing some
of the new banking regulations and policies which are affecting the banking operations within
the sector in UK. UK has a federal political structure which is different from the unitary

political system. In the UK there is a parliament for Scotland and an assembly for Wales. It is
seen that UK has left EU so the political pressure on the UK government is now huge and
they are developing and implementing new policies and legislations which are not healthy for
the banking sector in the UK. The new tax policies generated and the tariffs on the banking
products and services have been changed affecting the business environment.
Economic: Due to the issue of Brexit in the UK there have been changes in the economic
policies laid down by the UK government. The Breixt issue has changed the entire
complexion of the economic structure of the UK. The stringent economic policies laid down
in the Parliament in the UK (Hamilton and Webster 2018). The Brexit issue has brought
down the economy of the UK and the growth has slowed down considerably as well. This is
actually reducing down the spending power of the customers. The people of UK are trying to
save their costs and want to save their money hugely. The reduction of the spending power of
the people of UK is making the banks not to work out the capital they have it which is
slowing down the profitability of the banks which are operating in the UK.
Social: It is seen that the UK population is changing as the population of the UK is ageing the
people of the UK are focusing much more on the savings of the money they have it in their
entire life. They are cutting down their spending which illustrating the changing the lifestyle.
They are also reducing down their spending on the products and services which are costly to
them now. In UK there has been high rise of internet to be taking place and this is actually
changing the way they are leading their life now. They are now much more knowledge of the
banking products and services which the banks of UK provides to them. The social and
cultural awareness has been huge now as there has been diversity in the culture taking place
which relishes the dynamic changes in the needs and demands of the people of the UK
(Hamilton and Webster 2018). So the dynamic changes in their needs and demands for the
financial products and services have been affecting the business operations of the banks
within the banking sector in the UK.
Technological: This is the factor which is highly influencing the business operations of the
banks working within the banking sector in the UK. In UK the people have been changed as
they are now become much more tech savvy and he rapid use of internet provides the
motivation for using the technology to be applied in their daily lives (Hamilton and Webster
2018). Most of the large banks and the other banks which are operating in the UK are
developing and implementing the block chain technology. The banks are also using the

automation technology for gaining access of the information related to the financial products
and services which are to be delivered to the people of the UK. The banks in the UK are also
adopting the various digital marketing techniques for the marketing of their financial products
and services which are to be delivered to the people. The most of the large banks operating in
the UK have their corporate websites and use new technologies in order to understand the
fact that this exploits new opportunities for the technological development in the banking
sector to be taken place as well.
Explain the potential impacts at the micro level for the 2 issues identified
above in relation to banking subsector
The 2 of the issues which has been identified above and selected could be the economic and
the technological issues. The economic and the technological issues which are identified
above are related with the banking subsector of UK. According to Hamilton and Webster
(2018) the micro environment is defined as the environment which is within the sector or
business organizations around which the business organizations operates. At the micro level
it is consisting up of the COSMIC elements and they are the competitors, organization,
suppliers, market, intermediaries and customers. So the potential impacts of the banking
subsector at the micro level for the two issues identified above are explained below
Economic Issue
In the context of the economic issue, it is found that there has been huge number of
competitors within the banking subsector. The small and large players are providing tough
competition within the banking subsector. The organization itself mainly the banks within the
subsector have been providing wide range of potential financial products and services to the
customers. The suppliers who are there in the banking subsector would like to enhance their
profit margin and it is important to develop close and valuable personal relationships with the
suppliers (Kopnina and Blewitt 2018). This will help in making the reliable and effective
service delivery to be done for the products delivered to the customers. The UK banking
subsector is having a strong market which is encouraging the growth of this sector to be
taking place. The intermediaries within the banking subsector are the insurance agents,
brokers, real estate holding and development; REITs both retail and residential have been
reducing their commissions or the brokerage remunerations which they get it now due to the
slowing down of the UK economy as well. The customers within the subsector has been

enhancing as they are provided with huge range of products with the prompt and reliable
service delivery to be done.
Technological Issue
In the context of the technological issue, it is seen that the firms which are operating with the
subsector of banking has the tough competition to be present in the market as the competitors
are using new technological instruments and processes which might create problems for the
employees working within the banking subsector (Craig and Campbell 2012). The companies
operating within the banking subsector might be having the issue of how they are operating
and using the new technologies to be implemented for the better access of the financial
products and services. The suppliers could not be able to recover from the negative effects of
the new technologies have on them as there might be the lack of understanding to be taken
place. They could not be able to deliver the products and services at the right time to the
client. The UK market is having huge technological growth and development to be taking
place which is affecting the business operations and the processes of banking subsector
operating in the UK market (Hillary 2017). So this is important to identify the fact that the
intermediaries are not equipped and undert5and the technological growth and use of new
technologies. The customers are much more advanced and have the understanding of the
technological equipments and the use of the internet helps in making them highly connected
technologically with the banking subsector now.
Description of the personal challenges faced for carrying out the above
tasks
I have been facing the different type of challenges which I needed to overcome for carrying
out the above two tasks mentioned above. I am facing the biggest challenge of analysis and
gathering of the reliable and valid data for the research is to be made on the banking sector in
UK. I have been operating and looking for the information gathering from the huge number
of corporate websites and other data gathering sources and the selection of the best websites
and specific sources has been the challenge for me. I have been also facing the challenge of
gathering of the type of data and recognizing that which of the types of data would be
required for carrying out the above two tasks mentioned above (Bocken et al. 2013). I also
face the challenge of the quality of the data gathered from the business environment as there
are huge amounts of data to be collated and gathered and from the pool of data the reliable
and valid data is to be fetched by the market researcher. I also found the challenge of making

the proper planning and execution of the ideas when the market research is being done by
them. I found the challenge of communicating properly with the market advisors as they are
truly professionals who do not want to communicate and share their market research
strategies with them. I also face the challenge of keeping up to date with the changing
environment as the information is always getting updated which creates problem for me to be
able to get out of it at anytime if I wanted it.
Suggestion of appropriate ways of overcoming the challenges
There are different ways of overcoming the challenges to be taken place. There is the urgent
need of using the automation of the web data extraction to be taken place which is important
for the future of the researchers. The web data extraction helps in saving the time and costing
of the market researcher. The manual errors could be reduced as well. There is also the need
of focusing on the development of the data and gathering from the social media where the
opinions of the different varieties of people are there to be studied (Hamilton and Webster
2018). There is the need of introducing face to face meetings and discussions to be taken
place with the senior market researchers for gathering their advice or suggestions.
Conclusion
From the study it is evident that the banking sector and the subsector in the UK has been
facing the economic and the technological issues right now and it will have the good
prospects in the future to be able to have sustainable growth. It is concluded that the
performance of the banking sector of the UK is not so good currently but it can improve in
the future as well.
References
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Bocken, N., Short, S., Rana, P. and Evans, S., 2013. A value mapping tool for sustainable
business modelling. Corporate Governance, 13(5), pp.482-497.

Cavusgil, S.T., Knight, G., Riesenberger, J.R., Rammal, H.G. and Rose, E.L.,
2014. International business. Pearson Australia.
Craig, T. and Campbell, D., 2012. Organisations and the business environment. Routledge.
Hoffman, A.J. and Bansal, P., 2012. Retrospective, perspective, and prospective: Introduction
to the Oxford handbook on business and the natural environment. In The Oxford handbook of
business and the natural environment.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford
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Hillary, R. ed., 2017. Small and medium-sized enterprises and the environment: business
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Khilji, S.E., Tarique, I. and Schuler, R.S., 2015. Incorporating the macro view in global talent
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