Pestle Raport Lloyds Banking Group
It operates in several countries and provides products and services such as retail commercial banking, wholesale banking and evanescence. Their headquarters is stationed in London. After the acquisition of HOBOS, Lloyd became the leading retail bank in the KICK with core brands being Lloyd TTS, Halifax and Bank of Scotland (Market Line 2012). In this report will start to analyses the external environment by conducting a PESTLE analysis for Lloyd banking Group PL. The PESTLE analysis contains multiple external factors that can influence the company, this includes: Politics, Economics, Social, Legal and Environmental.
All this factors have each their importance for the company and can have different impacts, depending on the situation. In the end of the report, will write about three significant challenges that Lloyd are facing at the moment. At the end of the reports there will be a conclusion. 1. 1 Visionњ Lloyd Banking group’s vision is to become Auk’s top bank for costumers and shareholders. To achieve their goals and the will make strategies that are simple and agile to the organization and be responsive at the same time.
They will also focus n products and services with good values and deliver stable and sustainable profits for the shareholders (Lloyd Banking Group, 2013) 2. Political and Economical: In the recent years there has been a lot of focus on the recession 2008. A lot of the attention has been set upon the financial sector and the banks, mainly on how they handled the crisis and the system that didn’t prevent it from happen (Key Note, 2012). Several factors were discussed, one of them were about how banks contributed to the financial crisis with a “rapid expansion in global finance”.
The crisis where a shock for many and brought up some ever weaknesses to the financial regulation and supervision in the UK (COED, 2011 such as the Northern Rock scandal in 2008 (Hymn Song Shin, 2009) As a result Of the recession, the government developed a “rescue pack” to stimulate the economy and decided to spend ban pound to buy stakes in three banks, Royal bank of Scotland, Lloyd TTS and HOBOS (BBC, 2008). But seeing the damage of the crisis and the current situation of the economy it became clear that the recession would be deeper than originally anticipated.
In march 2009, the Financial Services Authority (IFS) stated several assumptions, which were not forecast but worst-case scenarios that brought to the conclusion that Lloyd bank would need additional capital from the government (IFS, 2009). In March 2009 Lloyd PL made a deal with the UK government that consisted of the redemption of Preference shares and the “asset protection scheme” (Lloyd Banking Group, 7. March 2009). But after “initial discussions about joining the scheme Lloyd paid EH. Ban without joining it” (BBC, 2012) In the following years the bank retail lending market grew in the UK by 2% in 2011.
In 2016, it is estimated the UK lending market ill have a value of $2,417. 8 billion, an increase of 27. 8% since 201 1. It is said that after the recession the UK retail lending market has remained stable with a strong recovery. Due to the Mood)/s (credit rating agency) downgrading of several UK banks, including Lloyd bank, have caused them to higher the rates of the consumers and even stricter lending policies in the retail lending marked, resulting in a Strong level Of rivalry (Marked Line 2012). . Social: Cultural aspects, health consciousness, population growth and emphasis on safety are many of the social factors that need to be considered by an organizations. One of the current biggest factors, not just the banking industry, is the aging population (Key Note, 2012). With an aging population there are several challenges, one of them is a demanding quality healthcare provision. In order to solve the challenge it is important to find innovative solutions that are efficient and at low cost.
One incentive supported by Lloyd was to develop a modern hospital in Stockholm with high level of patient care as well as contributing to medical research. This was the first public private partnership (APP) in Sweden. The Project Finance team at Lloyd has also a throng track record of working closely with Kansas to help with projects such as street Lighting and the Essex Building Schools. (Lloyd bank commercial, 201 0) There are also other challenges considering cultural differences. In some countries there can be different social norms that the company needs to consider to be able to conduct business in a way the local community accepts.
In the foreign markets such as Asia, Lloyd has had success with adapting to the culture by building on family values and trust. According to Camel (201 2), Lloyd has “been in the vanguard of leading a strategy that economies the value of Asian businesses to the British economy”. But there has not all been success along the way, according to the Telegraph (201 2), Lloyd has aimed to strengthen the bank by cutting 15. 000 jobs by 2014. In March 2013 Load’s total cuts has been up 8550 jobs. Lloyd has also received furious reactions from the trade union Unite for proportioning cuts instead of focusing on job security and customer service.
This can create a challenge for Lloyd to perform sufficiently, depending on where the biggest cuts are made. The Telegraph (2012) also reports that Lloyd bank has exercised a callback’ by “striping 13 directors of about 2 million pounds in bonuses as a penalty for a financial scandal”. Lloyd states that the “decision is based entirely on the principle of accountability and can build pop trust with the customers. 4. Technological: Technology has aided banks to reach the next doorstep in customer service.
Some by overcoming the geographical and physical barrier that helps the bank to reduce the recourse and volume constraints that existed in the former models. Many have benefited from the technology expansions, including the stakeholders. The technology has given expansion of the livery channels, products innovation and efficiency enhancement (Sinai, 201 1). Since the late sass’s the number of homes with high speed Internet in the UK have increased dramatically. Because of the British public has enables the banks to use Internet banking and give the customers the availability to use the baking services from their own home (Key Note, 2012).
Internet banking has been in many cases presented as an answer to many of the disadvantages of a traditional branch, providing the many benefits such as cost savings and reputation enhancement (Awkwardness, 2000). Mobile Phone banking as another banking service provided for the customers. The technology allow the customers to check their balance, make transfers to between their account, and make payments. This is a perfect tool for the banks to communicate with customer and with the increased security there is even more reason the use it (Key Note, 2012).
A survey conveyed in 2010 revealed that the customer prefer mobile service than the traditional branch- based and telephone banking. 37% of the Auk’s mobile phone customers use mobile banking as the convenience and the time saving benefits it follows by sing the services (Computing, 2010). A recently developed technology innovation is the contactable payment push. In 2011, Lloyd announced that they are launching the contactable payment push to the majority of the customers, this is an efficient alternative for customers making small purchases. With this technology there is no need to remove your card from your wallet to make a payment.
While some skeptics claims that this is an unsafe solution, Lloyd TTS claims that the system offers the same secure technology level as the “chip and pin” (allotrope, 2011 However, despite he undertaking of the new technology, The Retail Bulletin (2012) reported from the findings in a survey that only 5% of the customers were using the contactable payment options. In addition, 30% of the bank customers were concerned about the security of the transactions, which gives the banks a challenge to convince the consumers about the security implementations (The Retail Bulletin, 2012).
In October 2012, Lloyd announce that they are launching its customer disability program and that they will continue to develop technology to help their customers in as many ways as possible. Some of the new technology releases were; text services for sign language (for deaf customers), tanking cash machines, specialized staff to help disabled staff and more consciousness around the disabled customers needs (Lloyd Banking Group, 2012). In 2011/12 Lloyd banking group were given a award as the best employer for disabled people (Disability standard, 2012). . Legal: There are certain regulations that are made by the government to make demands, restrictions and guidelines for the banks. The regulations have forced the banks to adjust themselves to how they conduct business and help revert injustice. There are four broad classifications on that measures the government regulations. First is the extent of government ownership of banks, second is the intensity of government direct regulation, which further includes preconditions, ex-ante, on-going and ex-post regulation.
The third is the amount of measures to empower outside investors to monitor banks, and the last is the comprehensiveness of explicit deposit insurance (Tao, 2003) A lot has happened since the financial crisis in 2008, which has scarred the reputation of the banks and revealed that the existing regulations of the uncial institutions such failed to prevent the banking crisis. Like all large businesses, banks are under the regulation of the OFT and the competition commission. The office of fair-trading enforces consumer protection law and competition law (OFT, 2013).
While the Competition Commission (C) ensure that there are healthy competition between companies in the KICK. (Competition Commission, 2013). In the I-J, the ‘tripartite system” is a concept, which concerns banking regulations, these regulations involve a sharing responsibility between the Financial Services Authority (IFS), the Treasury and the Bank of England (Financial Times Lexicon, 2013). Until the banking crisis, the ELK banks has not been engaged in aggressive regulation and only been intervened when necessary (Economics Online, 2009).
The argument that were raised against a strict regulatory culture was about problem could have been caused as a result as the global banks might have been forced to other countries with less restrictions, which ultimately would have lead to job losses (Reuters, 2009). Furthermore, in order to maintain financial stability, in 2009 the Banking Act was formed which gave the tripartite” organizations more power to deal with the crisis. This includes the ability to put (if necessary) a bank under temporary public ownership (Economics online, 2009). In 2005 Lloyd TTS were involved in an insurance scandal.
An investigation made by the IFS in 2005 revealed a lack of control around selling payment protection insurance. After further investigations led to a High Court case in 201 1 and ended with Lloyd in 2012 announcing that they have set aside 3. 6 billion pound to customers to compensate of the miss selling of PIP (ADAPT, 2012). 6. Environmental: With all the recent discussion about global warming and how the weather patterns are changing many businesses choose to take actions towards a cleaner planet. As a part of Load’s strategy, responsibility of the environment is something they choose to identify themselves with.
They wish to do this by financing the transition to a low-carbon and resource efficient economy (Lloyd Banking Group, 2012). In the end of 201 1, Lloyd launched their second strategy report. This report includes a one-year plan to how Lloyd will invest in the environment. Some of the incentives includes; EH. M invested in energy saving and carbon reduction projects, a reduction of energy by around 7% in the last two years, recycling and training 650 employees in environment programmer (Lloyd Banking Group, 2011 ) In 201 2 Lloyd Banking Group was listed in the Carbon Disclosure FETES 350 adhering Index for the fourth year running.
They have a long term plan that reach to 2020. The plan is to reduce the use of resources by 30%, resources like energy consumption, paper consumption, total business travel and construction waste. (Lloyd Banking Group, 2012). Until now Lloyd have invested 571 million pound in renewable energy projects, reduced business travel by 7. 3% and trained 600 managers. 7. Three challenges If rest: The Guardian (2011 ) wrote that Lloyd received nearly 2000 formal complaints every day from customers the second half of 2010.
This is a 14% raise since the first half of 2010. As an answer to this case, Lloyd insist that they are improving their performance. In an article from Which? (201 2), it says that the sales culture in the banks have changes the last years, and the staff are feeling more under pressure than ever. According to the research, this effects how they treat the customers and are at the same time damaging the practices in the industry. The staff is reporting that they the pressure is forcing them to sell even if they feel that it are not the best for the customers.
On march 201 3, The Financial Times reports that Lloyd banking group is the bank that attracts most complaints. More than 45. 000 complaints were about Lloyd TTS bank, which is 275% increase from the first half of 2012. Second: In today’s societies there is a great reliance on technology and the availability has never been greater. This reliance means that companies faces the risk it allows using the technologies. As a part of the development, all banks in UK have online services where customers can access their account and make payments and transactions.
After seeing what damage hackers and viruses can make, there are more and more companies that want to insure against the risk (The Times 100). Fraudsters can manipulate technology and find new ways to commit crimes, and this means that there is always a new threats to consider. Technologies like producing fake bank notes have been a big problem. A survey made in 201 2 shows that since 2002 the number of fake mound coins in circulation has risen, which has been calculated that 3% of all coins are fake in the UK (Key Note, 2012).
Third: In March 201 3 a sun,’eye was made with over 4000 account customers on the KICK and Ireland banks. The survey showed a decline in trust between the customers and the banks the past years. The results revealed a problem that rose up from the recession, which is to re-engaging customers. The loyalty to the banks has declined and customers are more often switching banks for new products (Accentuate, 2013). Andrew Bailey (2012), executive director of Bank of England states that there is a challenge ahead for promoting a stable sector to the customers.
The challenge exceeds to both maintaining their profitability and customer satisfaction at the same time, without damaging one another. Accentuate (2013) emphasis that the rapidly changing environment, including technology IS something that needs to take strategic steps towards in order for the banks to thrive. 8. Conclusion: Lloyd Banking Group has experiences a setback since the recession in 2008. They went into an agreement by selling shares to the government in order to template their financial situation.
Since then the banking industry grew with 2% in 2011, and are estimated to have an increase from 2011 to 2016 with 27. 8%. There is a challenge concerning the aging population, especially in health care. Some incentives have been made to have low cost solutions in order to cope with the challenger, but further actions are necessary. Lloyd are offering services such as mobile banking and contactable payments to make it easier for the customers to make payments and transactions. However some of their recent innovations have not been assessed by their customers in a large scale.
