Report on NatWest Bank’s Creativity and Innovation Essay

NatWest Bank is a member of the Royal Bank of Scotland Group (RBS Group). In 1968 case Provincial Bank (est.1833) and Westminster Bank (est.1836), fused as National Westminster Bank. Jointly, these banks could unwrapline their history back down the centuries through a ancestry of potent constituents, since the 1650s. The declaration totally astonished the public, provided to both banks the benefits were obvious the merger enhanced equilibrium sheet strength, created opportunities to streamline the branch networks and enabled greater investment in impudently technology. The statutory process of integration was completed in 1969 and National Westminster Bank commenced transaction on 1 January 1970, with the three-arrowheads symbol as its Logo of the f tempornity with 3,600 branches, established a wide range of new services, including the banks first credit gameboard, Access, in 1972, and computer-linked hard currency dispensers, Servicetills, in 1976. Deregulation in the 19 80s, culminating in Big Bang in 1986, also encouraged National Westminster Bank to enter the securities business.County Bank, the Groups merchant bank, acquired stockbroking and jobbing firms to create NatWest Investment Bank. In the call up clock time, the International Banking Division appeargond to offer international banking services to large companies and to focus on expansion in the USA, the Far East and Europe. In the 1980s new services were developed much(prenominal) as telephone banking and touch- screen sh be dealing to assist the governments privatisation programme. The 1980s also saw the National Westminster Home Loans established in 1980 and the Small Business Unit in 1982. The Switch debit card extended the electronic transfer of silver to read of sale in 1988. In the 1990s financial services markets being-wide underwent huge variations and in response the bank refocused its activities, exiting from a number of markets and adopting the title of NatWest. In actio n 2000, The Royal Bank of Scotland Group completed the acquisition of NatWest in a 21 billion deal that was the largest present-over in British banking history. NatWest ranks fifth in the world and is now part of a financial services group which is the second largest bank by market chapiterisation in the UK and in Europe. (NatWest 2006)Read more(prenominal) Essay About National Westminster BankCreativity and Innovation of the BankWith granting a muscular competitive encourage to plan, creative thinking and efficiency, it always attains lead on rival firms. Innovation is a driver of productivity egression. Novel products, processes and methods of working throne relent efficiency gains and quality improvements not only within the innovating firm, but also within an different(prenominal) firms that recap or institute on the innovation within their own firms. in that location are a number of reasons why the appraise of innovation is likely to fall below socially optimal levels, and smaller innovating firms whitethorn face particularly severe barriers to innovation. The key constraints are curb access to fortune capital The in markational impediments to free- functioning markets for SME finance were discussed earlier in this chapter, but it is particularly difficult for potential lenders or investors to assess likely risk and returns accruing to future(a) research or to the implementation of unproven innovations. Newly-established innovating firms often make a loss and face severe cash-flow constraints in their early years. Difficulties appropriating the full benefits of innovation Whilst a competitive environment will provide the best general incentive for firms to innovate, firms need to be confident that they can reap the rewards of their innovation.This is why the bright property regime allows firms to prevent, for a limited period, their competitors from copying their innovations. This is a necessary reward for the costs of R&D, and helps to enco urage innovation. Nevertheless, the internal return to innovation whitethorn still be modest relative to the industry-wide benefits that arise once the innovation can be replicated by other firms. Inability to diversify risk man larger companies may have a large portfolio of innovative activity, innovation in smaller firms may be concentrated on a ace product or process, and the cost of undertaking the necessary R&D may be very large relative to the overall financial assets of the company. Accordingly, where SMEs are risk-averse, they will be discouraged from investing in innovative activities with uncertain returns. Assembling the enterprise confront will rely on the innovation and creativity of entrepreneurs themselves, but the Government must also provide the right instructs and the necessary support for successful enterprise. (Cosh and Hughes 2000) The NatWest Group has a total of 6 UK banking licences and licences from several other authorities. There are two principal cost s linked with getting to the position where a bank is in a position to obtain and take its banking licence 1) Implementing a reporting system that satisfies the requirements of the regulators.In addition to standard financial reports these would include implementing the systems to monitor and report capital adequacy, liquidity, credit risk, and pursuit rate risk etc. 2) Ensuring that there is the necessary infrastructure in place to satisfy individual regulatory requirements on operational areas such as bullion laundering, advertising and sales of financial products. There are also noteworthy sunk costs in coping with the provision of creativity infrastructure. To replace the alert branch and service centre network and administrative buildings is a major project in its own right and in addition to the costs of such physical assets, which are on the balance sheet it would be necessary to handle the stipulation of such facilities. Costs would also be involved in the provision of s uch items as HR policies, for example the sunk costs associated with setting up employee benefit programmes, such as pension plans, stock options, bounty schemes, car schemes, health care etc. The same tactic has been adopted and this turns up at an total expenditure of 255 m. This is probably a conservative estimate. over the period 1996 to 2000 NatWest incurred expenses of around 13 bn in respect of its Retail Transformation programme, which was only a modification of part of its existing infrastructure rather than creation of a totally innovative one. (RBSG, 2002)NatWest depends entirely upon the qualities of innovation, and suffer more acutely from the rapidity of transform. Whether in presentation, writing, the visual arts or advertising, the progress of new product is at the heart of all doings. Without this self- generated action, there is not anything to put up for sale. The sector therefore has a specific and challenging manufacturing process or value set up which, at to each one stage, demands different talents. At the raw development end of production (ideas generation, creating, training) there is a need for concepts, leading edge ideas and formulations, creativity, innovation and enterprisingness customer orientation. Problem solving is par make out. At the moment of production (turning ideas into products, locations for production) this first set of aptitudes is still meaning(a) but must be supplemented by _Intelligence, disposition of the market, industry foresight and strategic view _Effective management of resources _Ability to develop and manage relationships with partners, explore new connections and collaborations with suppliers. The merger of the Royal Bank of Scotland (BoS) and Halifax to form HBOS resulted from increasing competitive pressures in the financial sector. Since about(predicate) 1980, with the decline of heavy industries and growth of a service economy, like other clearing banks, BoS was have to expand further int o small business lending and new retail products (e.g. residential owes, financial services, credit cards, etc.).Competition was exaggerated by banking deregulation, which led to the growth of a secondary banking sector, the transformation of many building societies (including Halifax) into banks, and new amalgamations into ever-larger banks (as cited in Leyshon and Thrift 1993). During this period there was increasing concern in the Scottish banking community about the potential for takeovers to erode a distinctive Scottish banking sector (as cited in Saville 1996 717-40), which had been partly maintained by an historical gentlemans accord between the English and Scottish banks to limit their presences in each others markets. In September 1999, BoS surprised The City of London by making a 20.85 billion drama to take over NatWest Bank, in effect striking first in an environment where further bank mergers seemed inevitable. more in the financial press were quick to point out that under these new damage, BoS and other Scottish banks could not expect to have their future independence protected. In late November the Royal Bank of Scotland, BoSs main competitor in Scotland, made a successful counter bid of 25.1 billion. The City now anticipated a takeover of BoS, compelling BoS to keep pace with the Royal Bank. BoS and Halifax began merger negotiations in April 2001, and the new banking group, HBOS, began trading on the stock market on 10 September, 2001.The Halifax was the dominant partner in the merger, being about twice the size of BoS in terms of number of employees and market value at the time of merger, and supplying key organizational leadership, including the CEO. The core rationale of the merger was that it brought together Halifaxs substantial owe lending income and BoSs expertise and placement in the corporate banking world to create new business opportunities for the merged organisation. It also saw the to-do of BoSs rather conventional, cautious and habitual banking ethos by the more modern, competitive and market driven ethos of the Halifax organisation. Thus the merger was experienced by rung as an encounter between two different corporate cultures, and two different national cultures, at the same time. By the ideology of change it specifies an ideologic aim that corresponds closely with Therborns conception of modernity. With this phrase I want to direct attention not so much to a set of ideas and beliefs about change, but more to a disposition, or attitude toward change. I mean to suggest a normatively charged attitude in which established ways of doing things are devalued and innovation and change is positively valued in principle, regardless of the particulars of any given situation. It is, in a sense, a presumption of guilt in regard to the old, and presumption of innocence in regard to the new.This attitude is deeply naturalised, so that the imperative and positive value of change is widely regarded as self-eviden t, and not easily questioned. Thus rather than the great social critiques and political programmes associated with the formation of modernity, I mean to invoke a routinized and normalized aspect of established modernityseen in the way political parties and governments promote themselves through promises of reform, in the way corporations and public institutions are constantly restructuring in order to modernize and keep pace with their competitors, and in the way consumer-citizens in capitalist society come to expect scientific and technological advances that will increase knowledge and improve commodities and services, while fashions in public culture rapidly replaces one some other. The ideology of change is mundane, relentless common sense. Some problems of innovation and creativity lay with the organization and its leadership, rather than individualnel, the exhortation to address change was ultimately being translated into a message of personal moral reform. In this way the ideology of change, while meeting resistance, percolated down to beleaguered selves seeking virtually greater purchase on their state of affiars. (Hearn 2006)HRM Strategic Milestones in NatWest During 199091 County NatWest, an investment bank, asked all its business units, including its personnel department, to set up strategic milestones for a five-year period. Their performance was to be measured against those milestones at specified target dates. The requirement to produce strategic milestones as an input to the banks five-year marked an important watershed in defining the contribution of personnel to the business at a strategic level. It forced the department to reflect on the nature of that contribution. major(postnominal) management of the bank duly authorised 18 separate strategic milestones. The milestones were consistent one with the other, and overall addressed issues that consultation within business units and crosswise the three personnel teams had shown to be critical to business success. Each milestone was assigned to a designated individual and was incorporated into his or her own targets of performance. Quarterly reviews on progress, involving the whole department, were subsequently held to ensure that the milestones were on target.The operational tasks that a centralised T&D planning process involves seek to ensure that T&D considerations are taken fully into account when business strategy is formulated. They form part of a human resource plan within the wider business plan. At business unit/divisional level there are policies to ensure people are trained and developed in line with the needs of the business. At the individual level T&D is an integrated part of daily routine and procedures, helping people to achieve performance standards and behavioral objectives and building up the kind of workforce needed in terms of productivity, quality and flexibility. T&D staff operates a collaborative approach to planning at all stage in order to ensu re a high level of buy-in from line management and other stakeholders. (Harrison 2001)ConclusionNatWest Bank had recently a notable triumph over the competitors on November 15 2006 in the 12th Annual Convention- CCA Excellence Awards categorized for Best Customer Focus Financial Services (details usable on http//www.ccai.org.uk/events). The Bank is the second giant bank in the entire Europe (after Deutsche Bank) and incredibly progressed in a very short span of time (as discussed in the historical background). NatWests creativity and innovation line of attack led the bank to the stature of success. Chinua Achebe (1930 ), Nigerian novelist, poet, and essayist rightly says Contradictions if well soundless and managed can spark off the fires of invention. Orthodoxy whether of the right or of the left is the graveyard of creativity. (Anthills of the Savannah)ReferencesNatWest A History, (2006), NatWest Bank, available on accessed April 29 2007. Cosh and Hughes, (2000), Tackling Mar ket Failures, British Bankers Association. Jonathan Hearn, (2006), National Identity, Organisational Culture, and the Ideology of Change in Scotland, BSA Annual Conference, Scottish Study Group. Rosemary Harrison, (2005), Producing and Implementing L&D Strategy, CIPD Publications. Appendix A NatWest Glossary AER Annual analogous Rate. This shows what the beguileingness rate would be if involvement were give and added to your account each year. APR Annual Percentage Rate. The interest payable on what youve soak uped is added up along with other charges (e.g. arrangement fees) and then expressed as an annual rate of charge. The APR helps you compare the true cost of borrowing, for example for a mortgage. The APR takes into account all fees and charges applied to the mortgage as well as the monthly payments over the life of the loan. arrangement fee a fee to cover administration. arrears money that was due to be paid but has not been paid.When you are behind in payments, you are in arrears. assets your money, property, goods and so on that have a financial value. assurance a constitution that you pay for, and that pays money to your next of kin when you die. bankers draft a cheque drawn on the bank (or building society) itself against either a cash deposit or money taken directly from your own bank account. A bankers draft is a secure way of receiving money from person you dont know and where a cash is inconvenient. Bankers drafts are commonly used for large purchases such as homes and cars. base rate the interest rate from which lenders set their rates for lending and savings products. Its usually based on the base rate set by the Bank of England. capital money that youve invested or borrowed (e.g. to buy a home). It doesnt include the income or profit you get from an investment, or the interest you have to pay on a loan or mortgage. CHAPS Clearing House Automated Payment System.This is a system that enables money to be transferred from one ban k account to another on the same day. chip and PIN a system to reduce card fraud. A chip and PIN card has a smart chip that holds your four-digit face-to-face Identification Number (PIN). When you pay in a shop with a chip and PIN card, youll be asked to enter your PIN into a keypad rather of signing a receipt. This PIN is the same number that you use to withdraw money at a cash machine. well-defined balance/cleared notes includes credits (cheques and cash) that have completed the clearing cycle. You can only withdraw or transfer money to another account with money from your cleared balance. The cleared balance is updated during the day as you make payments into and out of your account. clearing cycle the process that your cheque goes through when you pay it into your account. A cheque wont be cleared if, for example, the person who gave it to you doesnt have enough money in their account. credit card allows you to borrow money to pay for goods and services without utilize cash or cheques. credit balance the do of money in your account. credit limit the maximum fall of money that you may borrow. debit card allows you to pay for goods and services without writing cheques or using cash.The money is taken directly from your current account (you dont borrow the money as with a credit card). Some debit cards can also be used to guarantee cheques. debt an amount of money that you owe to a person or company. Direct Debit an instruction from you to your bank or building society allowing someone to take money from your account. The amount of money taken can vary, but you must be told the amounts and dates in fronthand. Direct Debits allow you to pay bills automatically from your account on a regular basis. discounted rate a variable rate that is set at a fixed percentage amount below the lenders standard variable rate for a period of time. At the end of the period, the mortgage goes back to the lenders variable rate. EAR Effective Annual Rate. This i s the amount of interest charged on an overdraft and is stated as an annual rate. Unlike the APR, the figure does not include any fees or charges. Equity (in property) the difference between how much your property is worth the balance of your with child(p) mortgage and any other debts secured on the property.Equity release a way of releasing extra money by borrowing against the equity in your home. ERTF Exchange Rate Transaction Fee. This is a fee that you pay when withdrawing foreign currency from a cash machine or when paying for something in another currency (e.g. when youre on holiday abroad). The foreign currency is converted into pounds sterling (using the banks exchange rate) and a fee for doing this is added. fixed-rate interest an interest rate that stays the same throughout an agreed period. flexible mortgage a mortgage that allows you to make overpayments and underpayments on the mortgage without penalty, and, in some cases, to take payment holidays. gross the whol e amount before any deductions (such as tax or fees) are made. gross interest rate interest before income tax is deducted. Insurance policy a policy that you pay for, and that pays money to you to cover possibilities such as theft, damage to property, loss and so on. interest the amount that you pay when you borrow money. Its expressed as a percentage rate over a period of time. interest-free no interest is charged on money that you borrow. interest-only mortgages a loan on which you only pay the interest element.The amount of capital you owe remains the same throughout the term of the mortgage and is due to be repaid at the end of the term. interest rate the rate at which you pay back interest, expressed as a percentage of the amount you borrow. investment something you put money into that will provide income in the future (such as savings) or gain in value so that you can get by it at a higher price later (such as a house). loan money that you borrow (e.g. to buy a new ca r) on condition that you pay it back. lifetime mortgage a type of equity release product for the over 60s, which allows you to release money by borrowing against the value of your home. There are no monthly repayments, instead the interest is added to the loan and the whole amount is repaid when you die or move into long-term care, usually from the sale of the house.This means more interest will build up than with a conventional mortgage. mortgage a loan to help you buy property on condition that the company giving you the loan has certain rights, including the right to sell the property if you dont pay back the loan. net the amount after deductions (such as tax or fees) are made. net interest rate the rate payable after the lower rate of income tax is deducted. (NB the rate of tax may vary, so a net rate is usually only given as an example.) nominal annual rate the rate of interest that would apply if the interest were not added each year and if there were no inflation. overd raft borrowings from your current account. overpayment higher or extra mortgage payments that you make (usually to pay off your loan or mortgage early). p.a. per annum, which means each year. payment holiday a period of one or more months when you dont make repayments on your loan or mortgage, although interest continues to accrue during that time.PIN Personal Identification Number. This is the four-digit number that you enter into a cash machine when you want to take out cash, and that you use when you pay with your chip and PIN card. Never give this number to anyone, or write it down. rate the percentage interest rate charged by a lender. remortgage replacing a mortgage with a new one (from your existing or a different lender), without moving home. You use the money you borrow for the new mortgage to repay the old one. repayment method the means by which a mortgage is repaid. The two main repayment methods are interest only and repayment. repayment mortgage a loan where y ou pay back some of the capital as well as interest each month.The amount you owe is gradually reduced. return the profit you get, for example, when you invest money. share a unit of ownership in a company. share certificate shows the amount of ownership. share dealing the process of buying and selling shares. standing order a method of making regular payments directly from your bank account. Its a fixed sum and you tell your bank when to start and stop paying it. stock another term for share. transaction each time you pay money into or take money out of your account, its called a transaction. unarranged borrowing an overdraft that is higher than your bank or building society has agreed to. uncleared balance the amount of money in your account including all the uncleared items in your account and any items paid in during the day. underpayment a loan or mortgage payment that is less than the amount that you should normally pay for that month. variable-rate interest the int erest rate that you pay on your loan or mortgage and that rises and falls roughly in line with a stated index, such as the base rate set by the Bank of England. (NatWest , 2006, available on http//www.natwest.co.uk/glossary.htm/)