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.
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).
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 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.
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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
2020 and beyond
Start Project and implement post 2020
Artificial intelligence and virtual reality
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.
It can be summarized from the above report that innovation is very crucial for any Businessorganisation 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. Road map is essential for company as it helps them to design the path for company so that they can bring or innovate in their working operation accordingly. Besides this, Porters five forces model is important for company as it shows the intensity of competition and how company can take the advantage of it so that they can perform better as compare to their competitors.
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.
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