report on TSB Bank (Term Paper Sample)

TSB BANK STRATEGIC REPORT Table of Contents TOC \o "1-3" \h \z \u 1.Introduction to TSB Bank PAGEREF _Toc176754260 \h 3 1.PRESTCOM Analysis PAGEREF _Toc176754261 \h 3 1.1.Political Factors PAGEREF _Toc176754262 \h 3 1.2.Technological PAGEREF _Toc176754263 \h 4 1.3.Organisational PAGEREF _Toc176754264 \h 4 2.SWOT Analysis PAGEREF _Toc176754265 \h 4 3.Key Service Marketing Challenges PAGEREF _Toc176754266 \h 5 3.1.Inseparability PAGEREF _Toc176754267 \h 6 3.2.Perishability of Output PAGEREF _Toc176754268 \h 6 3.3.Intangibility PAGEREF _Toc176754269 \h 6 3.4.Variability PAGEREF _Toc176754270 \h 7 4.Analysis of Service Marketing Challenges PAGEREF _Toc176754271 \h 7 4.1.GAPS Model of Service Quality PAGEREF _Toc176754272 \h 7 5.Recommendations PAGEREF _Toc176754273 \h 9 5.1.Educate Management on Customer Expectations PAGEREF _Toc176754274 \h 9 5.2.Close Internal and External Communication Gaps PAGEREF _Toc176754275 \h 9 6.Conclusions PAGEREF _Toc176754276 \h 10 7.References PAGEREF _Toc176754277 \h 11 Introduction to TSB Bank TSB Bank is a British retail bank with one of the most trusted customer brands stretching to the beginning of the savings bank movement. In the financial servicesbanking sector, TSB boasts of a committed workforce that offers a range of banking services to millions of customers across the UK. Based in Edinburgh, Scotland, the bank has a multi-channel model that includes telephone, full digital and national branch banking services in addition to a range of other approaches such as in store pop-ups, mobile money confidence experts and video banking (TSB Bank, 2024). Among the retail banking services offered by the financial institution include personal loans, credit/debit cards and savings and current accounts. The bank has 587 branches spread across Scotland, Wales and England, and its expansion has led to it employing 8060 employees (Grupo Banco Sabadel, 2016). The management of the financial institution actively adopts a convenience-based positioning strategy that informs its multi-channel model. It believes that by creating a multi-channel proposition, it offers superior services to more of its customers more of the time. The banking sector in the UK is home to one of largest banks in the world, HSBC, and prides itself of system efficiency with an increase in total assets in 2022 following a slight decline in 2021 (Statista, 2024). Moreover, the industry has recently witnessed significant trends and developments such as changes in consumer behaviour towards online banking, and a reduction bank branches. The paper examines TSB Bank’s internal and external environment, its service marketing challenges in the next three years and provides recommendations to overcome them. PRESTCOM Analysis Political Factors A major political issue is affecting TSB is Brexit that changed interactions in the banking sector between the UK and the European Union. TSB can no longer serve European customers directly from the UK (European Central Bank, 2023). Moreover, UK’s relationship with China remains complex since it has imposed trade restrictions and sanctions on some Chinese companies and individuals. This increases TSB Bank’s compliance costs since it must fulfil reporting requirements and undertake greater due diligence to ensure the legality of transactions. Technological Technological developments such as the integration of artificial intelligence (AI) and regulation changes to promote new entrants in the banking industry, and the development of new products and services challenge TSB to continue innovating and adapting its products to attract and retain customers (Polireddi, 2024). Along with opportunities offered, new technologies can introduce new risks such as loss of data and service disruption from malicious activities. Organisational TSB Bank has developed an inclusive culture where everyone feels valued. As at 2023, 42% of the senior leaders were women, 5% from the LGBTQ+ community and 18% consisted of people with disability (TSB Bank, 2024). Every year, TSB reviews how it rewards its workforce to ensure it is fair, and there is a good balance of variable and fixed elements as well as benefits. SWOT Analysis Strengths Weaknesses Strong Digital Infrastructure –Due to technological development as exemplified in the PRESTCOM analysis, TSB has implemented new digital approaches in its banking services that include Mobile Money Confidence, and video banking. The TSB Mobile Banking app has new features that include contactless controls, and cheque deposits that adds convenience to customers (TSB Bank, 2024). Significant Presence in the Domestic Market – TSB’s multichannel model includes 587 branches that serves 5 million commercial banking customers across Britain (Grupo Banco Sabadel, 2016) which has helped in reducing its compliance costs compared to if it were operating in the domestic market as explained under political factors in PRESTCOM. Quality Mortgage Services – The bank has one of the most acclaimed mortgage services and recently revamped it by adding a new Mortgage Servicing Hub to its mobile banking app (TSB Bank, 2024) and this highlights the role of technological development explained in PRESTCOM. IT system Vulnerability – One of the major weaknesses that TSB has failed to effectively address is the vulnerability of its IT system as highlighted in PRESTCOM. In 2022, it was fined £49m for an IT meltdown that occurred in 2018, causing widespread disruption and chaos (Edser and Peachey, 2022). Lack of International Presence – While TSB Bank has successfully established itself across Britain where it serves over five million customers (TSB Bank, 2024a), it lacks branches in established and emerging economies such as the United States, Brazil, Germany and France that can be reached through technological innovations as in PRESTCOM. Frequent Restructuring - TSB’s parent company, Sabadell has undergone restructuring severally and this can impact the core operations of the bank. Additionally, TSB is expected to restructure in 2024, a move that will see branches closed, jobs cuts and changes in organisational factors such as women in leadership positions as shown in PRESTCOM (Sillars, 2024). Opportunities Threats Technological Developments – The convergence of banks and technology is quite vibrant with the adoption of contemporary technologies highlighted in PRESTCOM such as artificial intelligence, machine learning and block chain expected to enhance customer engagement, develop new revenue streams and improve risk management in banking (Polireddi, 2024). Emerging Markets – The banking sector of several emerging economies such as Brazil, China and India is growing at extraordinary rates (Hawkins and Mihaljek, n.d.). TSB Bank should look to invest in these countries because they are open to foreign competition particularly through deregulation and such a move would promote UK’s political relationship with other countries unlike what is described in the political dimension of PRESTCOM. Enhanced Customer Service – Improving customer service through improved training and development of employees, personalisation and better personalisation can retain existing customers, and attract new ones and enhance overall organisational dynamics as highlighted in PRESTCOM (Aina and Atan, 2020). Geopolitical Tensions – Geopolitical tensions is a political factor in PRESTCOM occasioned by trade restrictions and sanctions on Russia by the UK and other countries, the Israel-Hamas War and trade sanctions against China have the potential of triggering retaliatory cyber-attacks on financial institutions and the spill over effect is likely to be witnessed on the entire global financial system (KPMG, 2022). Technological Disruptions- With the rise of technological innovations as indicated in PRESTCOM coupled with the quick uptake of digitalisation, TSB Bank may find its existing banking methods obsolete if it fails to invest in research and development and the adoption of new technologies (Omoge, Gala and Horky, 2022). Competitive Threats – The banking industry is increasingly becoming competitive with several players including online banks, traditional banks and fintech companies vying for the market share due to increased technological development as explained in PRESTCOM (Basdekis et al., 2022). Key Service Marketing Challenges Financial products and services pose special types of challenges for TSB Bank that include: Inseparability Financial services are services that are produced and distributed simultaneously because customers are involved in co-production. Therefore, the main concern for TSB Bank in the next three years is that a service is as good as the machine or individual providing it (Grayson, Padgett and Loos, 2024). Therefore, TSB marketers are concerned with the influence of the customer in the production of the service and that other customers impact the service process by interacting with the service personnel or customers. In addition, since customers are involved in co-production, poor task execution by them could hurt productivity, curtail benefits and spoil the service experience (Wirtz and Lovelock, 2018). Perishability of Output Another service marketing challenge that TSB Bank faces is the perishability of output. Financial services cannot be stocked as inventory for use in the future. In case there is no demand, the unused capacity goes to waste and the bank loses the opportunity to create value from the assets (Wirtz and Lovelock, 2018). On the other hand, periods of excess demand results in customers being turned away or asked to come later. Thus, the bank’s service marketers must find strategies to ensure demand levels match the capacity. Intangibility Selling a service is more difficult than selling a product because the benefits of the service can be difficult to communicate to customers. Financial services offered by TSB Bank meet a general mone...