Following the takeover of National Westminster Bank in 2000, the Group’s global business has continued to grow. In addition to a strong UK presence, we have offices in Europe, the USA and Asia. By the end of 2002, we were the second largest bank in Europe and the fifth largest in the world by market capitalisation.

In the UK, the RBS branch network covers the nation and boasts a pedigree of great variety and distinction. Our history is very much the history of banking in the British Isles for the past four centuries – we can trace our roots back to the 16th Century through the amalgamation of more than 200 private and joint-stock banks.

The Royal Bank of Scotland was founded in Edinburgh by Royal Charter in 1727 and for several decades we traded solely from our head office in the city’s Old Town. However, in 1783, we opened our first branch office in Glasgow and went on to develop a large network of offices throughout Scotland during the 19th Century. 

In 1874, The Royal Bank of Scotland opened a branch office in London and from the 1920s developed, by acquisition, a major presence in England. Banks which joined the Group during these years included Drummonds (established c.1712), Williams Deacon’s Bank (established 1836), Glyn, Mills & Co (established 1753) and Child & Co (established c.1580), with business in London, north-west England and overseas.

By 1970, following The Royal Bank of Scotland’s merger with the Edinburgh-based National Commercial Bank of Scotland (comprising the former National Bank of Scotland, established 1825) and the Commercial Bank of Scotland (established 1810), we accounted for more than 40 per cent of Scotland’s banking business.

Under the Williams & Glyn’s Bank banner, we also had a large and growing presence in England and Wales. In 1985, Williams & Glyn’s merged fully with the Group’s Scottish clearing bank which, thereafter, traded throughout Britain as a single entity – The Royal Bank of Scotland.

During the 1980s, the Group diversified. We set up the innovative car insurance company Direct Line in 1985 and acquired Citizens Financial Group (established 1828) of Rhode Island in the USA in 1988. Both were to prove highly successful ventures.

During the early 1990s, we refocused on our core business of retail banking, acquiring the private bank of Adam & Company (established 1983) in 1992. We launched Direct Banking in 1994 and it quickly became Britain’s fastest growing 24-hour telephone banking operation. Then, in 1997, we announced the UK’s first on-line banking service, as well as embarking on joint financial services ventures with Tesco and Virgin Direct.

In 2000, in the biggest takeover in the history of British banking, the Royal Bank acquired National Westminster Bank plc to create a huge group with a highly diversified portfolio of services for personal, business and corporate customers.

National Westminster Bank had been formed in 1968, when National Provincial Bank (established 1833), along with its subsidiary District Bank (established 1829), and Westminster Bank (established 1836), agreed to merge. This combined bank, which began trading in 1970, could also trace its history back down the centuries through its own lineage of prestigious constituent banks.

From the late 1970s, National Westminster Bank had grown rapidly, extending its activities beyond domestic retail banking by developing overseas and merchant banking interests. In 1995, the bank was restyled NatWest Group to reflect the positioning of the company as a portfolio of businesses.

After the merger of the Royal Bank and NatWest, the businesses of the two groups were combined, and the enormous task of integrating our IT systems began. Scheduled to be completed in 2003, it was the largest project of its kind ever attempted, and was actually finished in November 2002 – four months ahead of target.

NatWest’s retail bank continues to operate as a distinct and separate brand on the high street.

http://www.rbs.com/about-rbs/heritage/our-story.ashx

The Royal Bank of Scotland Group (RBS) is one of the largest financial institutions in the world. It is a global business with a range of operations in Europe, North America and Asia Pacific. RBS has centres in thirteen European countries, sixteen North American states and eight major Asia Pacific cities.

RBS is one of the world’s leading financial services companies providing a range of retail and corporate banking, financial markets, consumer finance, insurance, and wealth management services. It serves more than 36 million customers world-wide and employs more than 140,000 people.

In addition to the provision of a full range of banking services under The Royal Bank of Scotland and NatWest brands, RBS also includes Citizens Financial Group, Ulster Bank Group, Coutts, Direct Line, Churchill and around 40 other brands.

Read more: http://www.thetimes100.co.uk/case-study–motivating-through-total-reward–106-258-1.php#ixzz16a8OuA4O

RBS is one of the first banks who introduced mobile banking as a service in 1953. RBS also provides its services in the rural areas in the UK (rbs.co.uk, n.d). RBS is the most well-known financial unit, working with almost 36 million people. RBS provides its service globally with branches located worldwide. The group operates with its two subsidiaries, The Royal and Natwest and it is one of the world’s largest banking service group (thetimes100.co.uk, n.d).

http://www.researchandmarkets.com/reportinfo.asp?report_id=542044&t=d&cat_id=

Analysis of External Marketing Environment

Political

The RBS has opportunities overseas, and can improve its business in the global market, but the UK government is not very supportive thus decreasing the chances of expanding. The business has got the offer from the G-20 meeting about the reduction of interest rates. This political disturbance can cause the change of the strategy and planning of the business, making it risky, time consuming to recover (RBS Report 2009).

Economical

Economical factors affect many businesses but mostly financial businesses. The economical situations of a country can be good or bad and can have great impact on banks. i.e. the recession had a great impact on most banks around the world. Globalisation is a very risky movement; RBS faces many risks with globalisation such as, market risk, difference in interest rates, credits crunch problems and foreign currencies.

The recession was a great impact in the banking sector; the credit crunch caused the Royal Bank of Scotland major problems. It was really hard for RBS to cope with the problems. The major problems were: pending loans, credit ratings, and recovery of issued loans (Smithson, 1998).

According to RBS report 2009, the credit risk asset plays the dynamic role in the bank business. In 2005, the risk asset of RBS was 708.78 billion pounds and decreased in 2008 to 539.2 billion. In 2009, the risk was decreased even more to 498.2 billion pounds. By exploring the bank’s risk it is important to understand the rle of credit risks and the challenge the business faces (RBS Report, 2009).

Social

The Royal Bank of Scotland is a very known bank in the UK, therefore, RBS can be seen as socially responsible to the society. RBS has made positive actions to the society. In 2009, the bank had donated almost 7 billion pounds to the society, which was about 3% of its income in a year. This social action creates a great positive image for the company and to the society.

In 2010 RBS spent 3.6 billion pounds on the pay of bankers, although RBS was not in a great position to pay that money they still acted socially responsible (BBC News, 2010).

RBS has been influenced by the socio-cultural factors; many customers do not use ATMs and still prefer talking face to face with employers at the bank. This affects the banking environment and the operations of the bank.

Technological

In the modern era is so much competitive, new technologies are coming like flood so that the problem for the business to adapt those technological changes in the existing business. Especially, in the banking sectors revolution of the internet banking is proved itself as a milestone innovation. Because of this invention gave the gift of swift banking. On account of that; RBS was first bank which connect it’s all five branches in the London to its main branch. In 70’s the Scottish bank connected all branches to the main branch, this increased the speed of bank in the processing of the business. To develop the cross banking in western region RBS launched online bank system, at the end of 1997 Royal Bank of Scotland covered total online service. The milestone achievement of RBS was the take-over of the Nat West bank, this is the bank which brought the use of IT in the broader sense and made the history. So that the challenges in the technological sectors are very competitive, that’s why RBS need to update their technology, and new innovation to be competitive in the market place (BBC News ,2010)

Technology has great influence on various kinds of organizations whether banks or any kind social welfare organizations. In RBS technology has great effect on the working environment. Basically all banks use computers no one keeps data manually so the bank has to be constantly in touch with the modern ways of task performance. RBS is always willing to introduce new computer systems for keeping its staff up to date. The intranet facility is playing an important role in enhancing the knowledge of staff. It is due to technology that bank staff keeps in touch with the customers via e – mail; ATMs and online banking is possible due to technology. In this way technology is playing its key role in and is helping management to further improve its functions.

Value Chain:

RBS should be able to identify its main competences to compete effectively, this can be done by using the Value Chain Model.

The internal changes of RBS are due to firm infrastructure activity which include organisational structure, strategic planning, financial and quality control. Firm infrastructure is critical to reduce cost and add value. RBS is able to increase its market share, due to the acquiring of Natwest and uniting with BSCH. The linkages between activities are very crucial because they ensure the integrated effort and goal achievement.

Analysis of Strengths and Weaknesses

Strengths

For the implementation of the any kind of the strategy organisation need to understand their power points because on the basis of that they can decide the further activities for the business. Likewise; this report will light on the strength of the RBS.

The company is a oldest one which having the experience in the business of the banking with the excellent staff.

The skilful employees and the trust in the eye of the customers, the conveniences provided by the company are well-intentioned and this is responsible for good revenue earning.

The organisation having real trust in customers and the services offer by the Royal Bank of Scotland are really appreciable.

The traders of the company have the excellent skill of market, and these skills are useful to enhance the revenue of the firm.

Bank is running the regional centres in globally which is useful to resist the impact of the other competitors (RBS, n.d).

RBS has a special department called Fraud Risk Management (FRM). The staff of FRM verifies the customers at various stages in order to reduce the occurrence of fraud in the banks.

RBS provides a very strong customer service. On the main entrance of the bank there is a special greeter desk which is responsible to properly guide the customer. SMS and Internet banking is also available to facilitate customers’ requirements.

The bank follows a policy called KYC ( Know Your Customer), this is used to enable bank staff to know their customers better in relation of their daily activities so that they can prevent or protect them from falling into any illegal actions.

Successful acquisitions: the acquisition and relatively painless integration of NatWest had a positive impact on RBS growth, ensuring it remains the fastest growing company in the industry, averaging growth of around 15% a year compared with 10% for its closest competitor – HBOS. RBS has the ability to integrate acquisitions with a relative lack of disruption and it is a great advantage for the group.

Brand strategy: as opposed to some of its competitors (e.g. HSBC), RBS operates a multi-brand strategy. The company operates under numerous well-known brand names, which allows the company to appeal to many different segments of the market.

Distribution channel strategy: RBS is continuously improving the distribution of its products. Its online and Internet-based access offers a combination of excellent growth prospects and its retail direct business also saw growth of 27% in 2002 and 15% in 2003. Another example is Tesco Personal Finance, the UK’s most successful supermarket bank, with over four million customer accounts.

Various sources of income: RBS has many sources of income throughout the group, and this diversity within the group makes the company more flexible and resistant to economic and environmental changes.

Weaknesses

After analysis of weaknesses organisation can transfer it in to opportunity or can eliminate those weakness for the welfare of the firm.

The main issue faced by the RBS is money laundering, because of this problem the RBS was fined by the authority of FSA which controls the banking sectors under the rules and regulation. So that, the money laundering issue would be harmful for the business of RBS(FSA , 2002).

Potential problems with acquisitions: RBS has been successful in its integration of acquisitions such as NatWest, however these transactions also have negative aspects. New costs associated with integration and management systems can leave the group more vulnerable to shifts in the market and the economy.

Porter’s 5 forces:

The competitive environment in which RBS is in can be applied in the Porter’s 5 forces theory.

The threats of potential entrants for RBS is not much, the threats depend on; the barriers to entry. It would be very difficult for new entrants to entry in a scale of economy environment.

There is also a threat to substitutes, which depend on: buyer’s willingness to substitutes, price and performance substitutes and the cost switching of substitutes. At the present time many people use different methods to invest their money rather than deposit money in their bank accounts. In addition to that there are many companies such as IT companies that work with financial organisations, i.e. Risk investment firms. Having said that, threats of substitutes can have a great impact on RBS, and therefore it is very important and must not be ignored by the company.

RBS has a very powerful competition to keep up with; this is because the structure of the competition is a complex structure- equal size of competitors, i.e. HSBC. Switching costs are relatively low for customers, and the exit barriers are very high.

Analysis of Opportunities and Threats

Opportunities

Every business looks for the growth and for that they need to crack the opportunities available in the market. Likewise; the RBS seeking the opportunities present in the market. Due to recession the manufacturing organisations are in the trouble if the RBS persue these customers they can make the good business from them. As a planning they are baring the one billion pounds funds for these kinds of manufacturer who got impact of recession on the business. In UK there are 168,000 manufacturing organisations. So this is really good opportunity for the RBS.

RBS is looking hopefully towards the strategy of flexible loan plan, the interest rates of this

loan is very less and competitive price.

New banking investment provision is a healthy planning for the flow of current cash and it is

also useful to generate the revenue for the organisation. This could be the respectable

opportunity for RBS if they implement it properly(Marketing Teacher , n.d).

Emerging markets: since there is more investment demand in the United States, Japan and the rest of Asia, RBS should concentrate on these markets, especially in view of low global interest rates.

Central and Eastern European new EU members: growth is picking up with exports and private consumption. Also, because of their size, the new EU member states are a profitable investment target.

Focus on improvements in European and U.S. operations: RBS has increased its European operations with the purchase of the European motor insurance business of All State Corporation, which gave it access to the German and Italian markets. It also strengthened its U.S. operations through the acquisition of the regional retail and commercial banking operations of

Pennsylvania-based Mellon Financial Corporation. Further acquisitions are planned in the near future to achieve further aggressive growth in these markets.

RBS have come up with NSBC, this can still be recognised as an opportunity for growth in terms of customer quality service.

Threats

The threats are really harmful the business so that organisation must overcome the threats for the existence. As well as to face the threats organisation need counter strategy to beat them.

The interruption of government side is not good for the business.

Many obligations about the interest rates, many external factors are pressuring RBS to reduce the interest rates.

In the recession many investors are withdrawing their money.

The throat cutting competition and the new technological innovations in the baking sectors e.g- mobile banking, internet baking etc.

These kinds of threats are going to impact the business of Royal Bank of Scotland, so they need to aware of these threats and should try to overcome these threats (RBS Report , 2008).

High exposure to investment banking and therefore negative performance in 2002. There is also an increase in competition and threats to the banking industry from other companies. i.e Competitors such as HSBC may offer better deals.

CONCLUSION:

In this way this report is follow the empirical study of the business challenges of the RBS in the financial sector. The RBS is the giant bank in the global market place as well as the in domestic market. The customers of bank are very loyal with bank; Bank also provides the various facilities to retain the customers. The credit risk of the business is decreasing in the recent time of period, which good sign for the business. This report is well-meaning for understanding the challenges in the market. The SWOT analysis gives the picture of the business in the broader perspective. So that; the business need to understand the Challenges and, RBS must formulate the strategy for the sound business. The problem of money laundering held with the business show the weak point in the business this kind of problems effect on the brand name of the business. So that RBS must learn from these types of consequences in the market. So that according to discussion in the report the RBS should update the technological changes and the relationship with governmental authority possessions on their business policy are not good for the business. After overcoming the challenges the business need to enhance their growth in the market. The loss of the business in the recession, the down fall in the business, so that they need appropriate strategy for their business.