Part an important role in terms of supporting

Part
a) Commercial Analysis

Barclays plc, one of
the largest multinational banking and financial services institutions, is
headquartered in London and operates in Europe, Africa and the Middle East, the
Asia Pacific region, and the Americas. It offers credit cards, wholesale
banking, investment banking, wealth management, and investment management
services.

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Barclays plc has two divisions, Barclays UK and
Barclays International: the former focuses on UK retail banking operations, the
UK consumer credit card business, UK-based wealth offerings, and corporate
banking for smaller businesses, while the latter encompasses the Corporate and
Investment Bank (CIB) business and the Consumer Cards & Payments (CC&P)
business. In addition, the Group Service Company, Barclays Services Limited,
also plays an important role in terms of supporting those two divisions; this
includes the Operations and Technology departments.

 

The strategy of
Barclays PLC Group is to build on strength as a transatlantic consumer,
corporate and investment bank, anchored in two homes markets of the UK and US,
with global reach. The group also announced the following actions to materially
progress the restructuring and lay the foundations for increased stability and
improved performance:
• the creation of two clearly defined divisions,
Barclays UK and Barclays International, consistent with the regulatory
requirements of ring-fencing in the UK
• the sell-down of our 62.3% stake in Barclays
Africa Group Limited (BAGL) to a non-controlling, regulatory deconsolidated,
position
• a one-time increase to Barclays Non-Core, with
a plan to accelerate the run down.

 

With more than 300 years of history and banking
experience, Barclays has operations in 50 countries and territories, employing
approximately 120,000 people.  A SWOT
analysis for Barclays plc in its current form is provided below.

 

One of the strengths of Barclays plc is its strong
brand presence in the UK. Barclays plc was the first bank in UK to launch
credit cards, and this has embedded its brand name in customers’ minds. In
addition, its sponsorship of the English Premier League brings Barclays immense
popularity both in the UK and around the world.

Barclays also challenges competitors by means of
constant innovation, such as its implementation of Pingit, the first UK app to
use phone numbers to allow payment by phone. 
Its Voice Security service, launched in 2016, was another leading
product, with over 750,000 personal customers so far, most of whom have offered
extremely positive customer feedback.

 

The worst weakness experienced by Barclays is its
history of controversy. Barclays has been involved in accusations of money
laundering, a “dark pool” lawsuit that referenced manipulation of
investors using false marketing information, and other financial scandals. The
firm’s brand image was damaged by all of these scandals. Another disadvantage
for Barclays is its control systems: Barclays has been fined due to a failure
to minimise the risk of these systems being used to facilitate financial crime.

Further, Barclays has previously been criticized for giving excessive bonuses
to members of its Board of Directors.

 

There remain many opportunities for Barclays plc.

The most obvious one is the market opportunities available in the growing
markets in developing and emerging economies such as China, which offer a
substantial pool of potential customers. In addition, plans to increase welfare
services globally should ethically revitalise the brand. The blockchain
revolution may also speed up trade finance to Barclay’s advantage. Blockchain
based systems use ledger technology to ensure that all parties can see details,
transfer titles, and transmit shipping documents and other original trade
documentation through a secure decentralized network, speeding up trade
transactions and reducing the costs for global companies while lowering the
risk of fraud.

 

One of the threats for Barclays plc is the dynamic
political picture, including the risks of Brexit. Barclays’ UK operations are
likely to be damaged as a result of Brexit, and its international operations
may be hit in the short run due to uncertainty within the political landscape.

Events such as unfavourable military or political developments have dramatic
impacts on financial markets. In 2016, for example, sterling experienced a
sharp decline of about 20% in value against the US dollar after the Brexit
vote. As share prices in Barclays plc correlate to currency rates, the
situation for Barclays may worsen. For banking industries, competition is also
currently particularly fierce. Banks now offer a suite of services based on
taking deposits and lending money, but all of these, whether insurance, mutual
funds, or fixed income securities, are also offered by non-banking financial
service companies that offer substitutable services. On the lending side of the
business, Barclays also faces competition from unconventional sources such as
Sony, General Motors, or Microsoft, which all offer favourable financing terms
to customers who purchase big ticket items. 
If 0% financing is provided, far fewer customers will seek loans from
the bank at 5 to 10% interest rates.

 

Strengths provide the foundation for its
opportunities. A strong global presence is the primary condition for expanding
markets in emerging economies, and innovative technology facilitates
international services. Barclaycard Germany’s innovative products, the fully
digital Express-Kredit, together with its exceptional services leads the
market, for example. However, weaknesses raise the level of risk posed by
threats. To mitigate this link, Barclays should try to perform at its best
consistently to prevent competitors taking advantage of it.

In conclusion, Barclays plc is one of the few banks with the
capabilities of being the market leader in the industry. However, there exists
several factors that limit its scope. Some of these factors can be controlled
by the bank while others are uncontrollable. The current situation of the group
is above average, but it has not fully exploited its potential. Its many years
in service provide it with a brand that is trusted globally. However, the
increasing competition, brought about by the openness of the global market,
demands Barclays to increase its product differentiation and after sale
services so as to boost customer loyalty. The bank also needs to increase its
significance in low income areas to increase its market share and significance.

Barclays may try to invest on employee motivation in order to guarantee their
loyalty and commitment to the bank.

 

Part b) Literature review on Accountability

According to Schedler, there are two distinct
pillars of accountability: answerability and enforcement. The answerability
dimension denotes the ways in which public officials and agencies provide
information about their actions and decisions to justify them to the public and
to those specialised accounting bodies that have the authority to monitor their
conduct. The enforcement dimension describes the capacity of an accounting
party to impose sanctions on the accountable party in case of manifest
misconduct in office. These aspects frequently go together, but some exercises
in accountability involving only one of them do exist. For example, ombudsmen
would have no more than a mandate to investigate and issue recommendations
without the corresponding power of enforcement, while individuals cannot
generally interrogate an electoral candidate in person, having to use their
votes to reward or punish them. (Schedler,
Diamond, and Plattner, 1999)

 

Bendell defined corporate accountability as
“the ability of those affected by a corporation to regulate the activities
of that corporation”. He also identified the challenges, including the
problematic role of intergovernmental mechanisms and courts, in delivering
corporate accountability. In contrast to Schedler, Bendell believed that
accountability did not mean ” being held to account” (enforceability) but
“giving to account” (answerability) for some individuals and organizations
engaged in corporate responsibility issues. In his report, he cited the
Institute of Social and Ethical Accountability as an instance. It focused on
voluntary standards for companies to aspire in their relations with
stakeholders. In the extensive documentation on the standard for organizational
accountability, AA1000, the only definition offered was as follows: “The AA1000
definition of accountability is an accountability of organizations to their
shareholders. The nature of this accountability is defined by the
organization’s engagement with its stakeholders”.     

 

Trivedi stated that, when there is no
accountability, non-performers thrive, communication breaks down,
territorialism increases, and individuals fall victim to blaming each other for
the non-achievement of goals or results. The key point of accountability is the
pressure to take responsibility for one’s action, including mistakes. When
mistakes occur, the focus should be on what can be done to solve the problems
this creates and on learning from the experience, rather than blaming others
and playing victim to circumstances. Trivedi used a case to illustrate the
importance of individual accountability. A major and particularly tragic
outbreak of food-borne illness occurred in Canada that was linked to the
Toronto-based Maple Leaf Foods company, which was headed by Michael McCain.

Nobody wants to be held accountable in such a severe crisis, and McCain could
have blamed others for the situation, as the Canadian food safety system could
have been accused of having insufficiently strict safety guidelines. Instead, as
the head of the organisation, he chose to take full responsibility and resisted
the urge to blame others (Trivedi,
2013).

 

Part c) Control issues

Barclays plc has suffered from at least one data
breach, which was first reported by The Mail on Sunday.

The Mail on Sunday said that an anonymous
whistle-blower approached the paper and handed over a memory stick containing
files with the details of over 2,000 Barclays’ customers, claiming that this
was just a sample from a stolen database of up to 27,000 files. He told the
newspaper that he wanted to put a stop to an “illegal trade that is going on
all the time in the city”. The leaked data included confidential personal
information such as passport and national insurance numbers, as well as savings
and health information. Those affected included doctors, scientists,
businessmen, a musician, and a cleaner, who were believed to have been
customers of the now-defunct Barclays Financial Planning business, a programme
that was fined £7.7
m in 2011 and ordered to pay up to £59 m in compensation for miss-selling
investment funds to more than 12,000 customers. The report also noted that this
data had been sold to “rogue city traders” where it was worth millions in the
black market because it allowed unsuspecting individuals to be targeted for
investment scams.

Barclays launched an internal investigation after
the report was published and said it would write to the customers involved. The bank also had reported the theft to the police
and to regulators. A spokeswoman for The Financial Conduct Authority
(FCA) said “Barclays have contacted us, and we will be working with them to
understand exactly what has happened and that steps consumers may need to
take.”

The whistle-blower described a
world in which scammers worked from so-called “spank shops”, renting offices
and peddling products that were either fraudulent or sold at inflated prices to
unsuspecting, and often elderly or inexperienced, investors. As interest rates reached
all-time low after the banking collapse, people began to more frequently
withdraw their money from the comparative safety of savings accounts to chase
higher returns on their investments. Many of these were thus seen as soft
targets for these rogue brokers. When investors in the firms concerned began to
suspect they had been duped, the trading floors were shut, and according to the
whistle-blower, computers were wiped, paperwork destroyed, and desks cleaned
with bleach to remove DNA traces. Once their details had
been bought by rogue traders, they were persuaded to buy rare earth metals that
did not actually exist. The
whistle-blower, a former commodities trader, had been asked to sell on the
data, which he said could fetch up to £50 a file from those operating boiler
room scams.

The initial investigations undertaken by
Barclays plc showed that this leak was isolated to their Barclays Financial
Planning Business, which had ceased operating in 2011; all of the data appeared
to be from 2008 or earlier. Barclays spokesman said “This appears to be
criminal action and we will co-operate with the authorities on pursuing the
perpetrator”. The Information Commissioner’s Office that
is able to fine organisations up to £500,000 for failing to protect private
data had announced “It’s crucial that people’s personal information is
properly looked after. We will be working with the Mail on Sunday this week to
get further details of what has happened here, as well as working with the
police.”

To address the problem, the following three
controls could be implemented.

·     
Proper access controls: Data should only be accessed by those
with the need to access and view it. If data is not ‘live’, that is, if it has
expired in any way, user access to the information should be monitored and
controlled, though there should be no super-user monitoring, as with the
latter, if access controls are properly configured, a super user, or, more
likely, someone with super-user rights may manage to access data. It is important to
protectively monitor sensitive data areas that should not be accessed by
admins, as well as to monitor critical areas to ensure the ability to rapidly
identify potential breaches. This control is a type of preventive control, based
on the theory of segregation of duties.

·     
Encryption: Another method of preventive controls. The data
leaked in this case was from a subsidiary that had closed its doors in 2011,
with most, if not all, of it originating from pre-2008. Unless the data was in
active use, which is unlikely, it should have been stored in an encrypted
manner to ensure that if access control failed, or a super user gained access
to it, it would not have been in a format that could be easily copied. Cyber
security is a necessary investment. Barclays should apply a more advanced
encryption system so that if data breach happened, it is more time-consuming or
more difficult for enemies to decrypt.    

·     
Continuous monitoring policy: Many organisations find that, over
a period of time, their assumed security positions do not reflect the reality
on the ground when their systems are audited. In light of this, it is
recommended that each organisation maintain a continuous view of its
information security policy. In this case, it was reputationally damaging for
Barclays to discover a breach due to a whistle-blower, and across the industry,
data breaches are usually discovered and alerts raised by third parties. By
ensuring that data controls are continuously monitored, an organisation is more
likely to be able to act in a timely manner on its own recognisance. Implementing
the continuous monitoring policy is an example of detective controls,
identifying problems that already existed. It is a review as well.

 

Barclays plc has failed to meet the required
standards of corporate accountability. Back in June 2013, Barclays plc signed
up to the Equator Principles, a set of voluntary social and environmental
guidelines for private banks. As a result of this positive step, it received a
cautious welcome from many NGOs and UK media outlets. In December of the same
year, however, Barclays gave a loan to the National Hydropower Power
Corporation (NHPC), an Indian company that was building part of the Narmada
Dam. In 2004, Barclays had assisted with project finance for the Omkareshwar
Dam, another part of the Narmada Dam project. This project has been one of the
most controversial world dam projects, involving the building more than 30
major dams and the resettlement of two million people. No independent
environmental impact assessment has been carried out for this work, nor has
there been any informed participation of local communities. The project has
thus violated Indian federal and state laws and policies with regard to natural
habitats, cultural property, and involuntary resettlement (Friends of the Earth, 2005), and thus
funding the projects is a breach of Equator Principles.  This suggests that Barclays signed up to
enjoy the prestige of the group only to continue business as usual, which is
possible due to the guidelines’ status as voluntary principles. (Pippard, Dodds, and Pippard, 2013).

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