Barclays Quantitative and Qualitative Research

Barclays

Quantitative and Qualitative Research

Market Research Methodology-Segmentation and IT

Population and Northern and Eastern Europe-Primary and Secondary Research

F. Performance in the Recession

G. Conclusion

Barclays Capital is a global investment bank that provides business advice and investment solutions to the financial and risk management needs of government, corporate, institutional and slso individual clients. The brand name loyalty that the company enjoys is largely the result of meticulous and detailed statistical research in order to penetrate previously untapped markets, but up defunct, but valuable investments (such as Lehman Brothers) and to simple, conservative commitments longterm to the markets and investments that they have committed to.

Barclays Capital has branches in 56 countries (Businesscasestudies.co.uk 2011 1). Barclays Capital is the fourth largest bank in the United Kingdom. Barclays currently employs 78,000 employees. Barclays Capital has approximately 800 international branches placed throughout Europe, Africa and the Middle East which provide a large array of services including current accounts, savings, mortgages and loans to customers. The fundamental principal underlying Barclays Capital's philosophy is to include the interests of all of their shareholders from customers, employees, shareholders and the wider community en route to providing a valued and prosperous group of satisfied stakeholders (Business Case Studies 2011). It has broadened its reach with the addition of Lehman brothers in 2008 in the wake of its bankruptcy.

B. Quantitative and Qualitative Research-Algorithms

Both quantitative and qualitative research is critical to the functioning of Barclays Capital strategies. The quantitative information analysis begins inhouse at Barclays Capital. For instance, in a published paper on economic models and investments published in 2005, David X. Li, Michael Liang

apply cutting edge quantitative analytics to perfect economic models that will predict trends in an investment market (Li and Liang 2005 1-2). In this case a Gaussian mixture (GM)

model predicts accurately trends in baby investment markets that clients might be interested in (ibid).

A good example can be found in our Barclays Capital case study of the quality of the research conducted by the company. In the case study, they talk about surveys of customers being queried on their attitudes toward coffee. This type of a product may seem to be different than investment products. However, experience shows that a financial metric is not always the best approach. Students are a great audience for marketing because the rely heavily on different forms of credit. They wanted a wider variety of products including high-tech gadgets such as laptops and needed a separation between the their borrowing and banking finances. As the case study mentions, they do not respond to incentives and coupons alone. They are more sophisticated, hence the more sophisticated approach of the out-of-house research which captures the soft aspects of the potential clients. After analyzing this in greater detail, one understands the Barclays Capital approach which is to get the potential client hooked at a young age and then servicing them throughout a lifetime. The approach is simple and yet very sophisticated and certainly explains the loving attachment of these customers to the Barclays Capital brand-name that can not be broken easily (Business Case Studies 2011).

Qualitative research occurs out of house. Barclays Capital has always valued and thrived on customer feedback so that the firm can get information about how they actually feel about the services and products, their likes and dislikes and also what they would like from upcoming products. This information frequently does not come up on the qualitative side of research. In this author's opinion, such a customer connection is part of the Barclays Capital mystique and binds the clients to the firm due to their faith in and trust in the service. Obviously, the people who run Barclays Capital value their opinions highly. Certainly, this makes good business sense and displays a deep concern about the client making money. This binds the client to them for the long-term in a brand name loyalty that is hard to break (Businesscasestudies.co.uk. 2011 15).

C. Market Research Methodology-Segmentation and IT

Question four in our executive summary deals with how Barclay's meets the needs of its customer's by extensive market research. What has given Barclay's an edge in the investment banking business is segmentation. Certainly, one size frequently does not fit all and segmentation customizes an investment portfolio for a client. Every market can be further sub-divided into smaller segments. Such a market segment is a part of a larger customer group that share particular financial characteristics. These include various factors such as age, geography, life stages, or occupation. Within personal banking, segments could very well include categories that include students, graduates, "new to work" individuals, mature, older people and families. By defining these different market segments, financial organisations can ensure they are providing products or services to meet the needs of these customers. In addition to this, appropriate promotional techniques can be used to reach the people in the separate segments. Through the vehicle of segmentation, the firm has been able to improvise the appropriate banking offers that investment clients need in different segments. This approach is helping Barclays Capital to improve its market share of the student accounts market (Businesscasestudies.co.uk 2011).

To continually compete internationally in the investment banking, the company must strive to perform the customer service function with the highest level of excellence. The need to place major client investments requires the most modern and efficient IT systems. IT information that is available online will allow up-to-date information at the keyboard of Barclays managers. This is a huge advantage when it comes to making timely decisions. The fine-tuning of IT eliminates weaknesses within Barclays Capital's practices, thus preventing failures that can effect customers, thereby reducing excessive and unnecessary costs. This will promote brand loyalty with the company as a an investment advisor that can be relied upon . To accomplish this, Barclays Capital must identify their customer groups and the needs that are associated with each particular group and further develop products and services that will be of a great value to their investors. The business practices that have worked in the past for an investor must be reconfigured to work in the years to come. To accomplish such a continual updating of a customer's portfolio, Barclays Capital stays updated regularly with the high changing world of IT and high technology. This calls for new investments into better and higher levels of technology that can help offer higher levels of service to its customers. Along with the apparent increase in speed that IT will allow Barclays Capital to accomplish routine tasks, technology will also reduce risk of errors and fraud (Hwee 2011).

Population and Northern and Eastern Europe-Primary and Secondary Research

Investment strategies led to large profits the past ten years have been propelled by a penetration in the Nordic sector for the Barclaycard card business. Much of this is based upon primary research, such as was involved in processing new data with regard to the Nordic credit card market. To tap this largely untouched resource, the company partnered with ForeningsSparbanken (now Swedbank) of Sweden in an attempt to target the Nordic and hopefully Eastern European markets. This move by Barclays Capital emphasized its attempt to transform Barclaycard into an international card. This Nordic area appeared to be a great target since the number of cards per person is very low. According to Barclays Capital, it is only 0.1 cards per adult in Sweden and 0.4 in Norway as compared to 1.5 cards per person in the UK. Credit Card demand is rising in the Nordic region according to the Swedish central bank. According to their 2005 statistics, credit cards accounted for sixteen percent of the proportion of outstanding consumer credit balances in Sweden, up from six percent in 2002. Of course, Barclays Capital has set its sights set on growth across all of entire Nordic region (Euroinvestor.fr. 2005).

Examples of specific data in the potential size of the investment market are shown in an EU regulatory report where the merger was approved. The merger was approved in committee with no opposition. Prior to the merger, FSB's market share 40-50% within the general credit card market sector for household customers. Such research showed a huge amount of an overseas, healthy credit card market that Barclays Capital had not previously tapped. FSB also possessed some 15% of the Norwegian market. In both of these countries, the potential customer's are good credit risks with plentiful disposable income to back up their credit card purchases (Office for Official Publications of the European Communities, 2005, 4).

Based upon a secondary analysis of FSB's investment database, Barclays Capital decided to pursue an Eastern European strategy. FSB's holdings in Eastern Europe allowed Barclays Capital and Barclaycard greater access into the East European market. This was accomplished via Estonia's AS Hansabank (now Swedbank). Hansabank holds a very strong position in the Baltic region. However, all of Hansa's Eastern European opportunities were not worth going after, an analysis exercise in secondary sources that helped Barclays stay out of economically troubled, emerging Eastern European countries (Euroinvestor.fr). 2005).

FSB's holdings in Hansabank were 98% (Swedbank 2005). In 2007, Hansabank controlled 62% of the entire Baltic (Estonia, Lithuania and Latvia) card market which is located in a small, but quickly developing market which has a high amount of savings and low credit card usage. The 2006-year, as predicted was a particularly good year for Hansabank. They were first among banks in the credit card market in the Baltic and had the largest sector of the deposit market at 32% to back things up (Hansabank/Swedbank 2007 13).

Needless to say, the market research before entering potential markets is critical in predicting how much of a gamble is involved in that market penetration. The market research prior to the entry into the Nordic and Baltic markets was extensive and meticulous and paid off nicely the next year in 2006.