Virgin Money: Analysis of Financial Services Industry

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A financial market refers to a market in which individuals and entities trade financial commodities at a value. Financial markets can either be categorised as a general market or specialized market. In a general market, there are several commodities traded while in a specialized market, only one specific commodity is traded (Hamilton 2004, p. 36). The financial market in the United Kingdom has experienced a massive growth over the past decade. Although the government has invested in this industry, most of the banks in this kingdom operate independent of government’s control. Schwalbe (2005, p. 87) reports that the industry is very developed, with institutions that not only operate in this country but also in other major countries all over the world.

Barclays bank, a major industry player in this country, has spread its branches to almost every country across the world. It has experienced a positive growth for the past three decades, making it one of the world’s strongest financial institutions (Armstrong, Harker, Kotler & Brannan 2009, p 65). HSBC is another giant financial institution in this country. Ranked as the world’s top financial institution in 2010, it is the leading bank in this region. It offers various financial solutions to individuals and corporate bodies. There are other major financial institutions in this country such as Riyal Bank of Scotland Group, Lloyds Banking Group and Standard Chartered Bank among a host of other firms (Kotler 2003, p.17).

This industry is very big and has enjoyed a positive growth except the little interruptions caused by the world economic recession that hit the United States of America and other world economies. Many new banks have been introduced to the economy, as the existing ones seek new markets. As Blackwell, Miniard and Engel (2006, p.102) state, this industry is the driving force behind the economy of the United Kingdom. A report by Gorchels, Marien, Edward and West (2004, p.140) indicate that this industry is expected to grow at about twenty percent in the next five years. This is a healthy growth. Some of the local banks such as Standard Chartered Bank have concentrated on economies outside United Kingdom. They do this to ensure that they increase their market share outside the country (Kurtz 2008, p. 57).

These financial institutions offer various products and services to their customers. The customer can have fixed deposit accounts, current accounts, savings accounts, salary accounts, group accounts, corporate accounts, children’s accounts, business accounts among others. Their customers have access to loan services as long as they meet the laid down requirements. These institutions allow their customers other services such as money transfer, payment of workers, foreign exchange, keeping of valuables such as certificates and precious metals such as diamond and gold. This range of products has developed out of necessity. The institutions have been keen on identifying customer needs and responding to them appropriately. The housing market largely depends on the banks to finance its development.

Virgin Money is getting into a market that is very developed. The players in this industry are very advanced, with most of them having branches all over the world. Although the Virgin Group is developed with a good reputation across the world, the banking sector in the United Kingdom is very competitive. Its slogan of fairness, transparency and honesty is very charming. However, the market share that is already with these giant firms may not be taken easily. The firm brings to the market online, over the phone, through-our-high-street- stores banking services that other major players offer. Their services are not anything new. With banks such as HSBC keen to tame market competition, this firm faces one of the strongest competitions in this industry. However, this company has a number of strengths and opportunities. The brand ‘Virgin’ is very strong and is known to offer customers the best quality. It is known to be very responsive to customer needs and is always time conscious. Its large financial base will also enable it compete effectively with other developed firms in the industry. Other business units such as the airline section of the can sustain operations of this bank.

Recommendations to the Management of Virgin Money

Virgin Money is getting into a highly competitive market. The financial institutions in this country are very developed and competition is very rife. The market is very large as well as financial institutions. United Kingdom has been one of the destinations of many investors. They come to this country either to invest in various industries locally or as import-export firms. This requires proper financing. Virgin Money stands a chance of winning some of these investors or other customers that may need banking solutions. However, there are some considerations that should be taken before substantial success can be achieved in this market. The management of this firm should make the following considerations as it strives to remain relevant in this market.

  • The bank should give a lot of emphasis on corporate banking. The previous researches have predominantly pointed out the fact that many corporate bodies are not satisfied with the pace at which some of the present banks handle their financial matters. Some of these banks are just slow in responding to their issues while others they always seem overwhelmed by pressure from these corporations. The management should therefore capitalise on this fact and create a positive relationship with these corporate bodies. Top in the list should be its sister branch, the Virgin Airline. The proceeds from this airline’s banking operation will be very vital to the success of this firm in this industry.
  • The management should consider new trends brought about by technological changes. Technology is changing very fast, which brings in new requirements in the banking sector. Mobile phones have redefined the way businesses carry their activities. Mobile banking has increasingly gained relevance in this market and it will be important if the management considers its adoption in its operations. Online banking will also give it a competitive edge. It is worth noting however, that these services are already offered by other financial institutions in this industry. It would therefore be advisable for the Virgin Money to consider how to design their marketing approach to make their services unique.
  • The brand ‘Virgin’ is very popular among tourists and other frequent users of airplanes. They have good memories of the type of services they received from this airline, and therefore have some attachment towards the brand. The management of the Virgin Money should consider appealing to this market segment as they will most likely have a positive response to the bank’s offerings. This will give it a competitive edge in the market.
  • The bank should consider other financial institutions as partners other than competitors in this industry. As Kabani (2009, p. 97) says, gone are the days when firms considered one another as rivals in the same industry. It is important that this institution develops a positive relationship with other financial institutions so that they can work as a team in this market. This is important in lowering the costs associated with rivalry.
  • The management of this firm should realize the fact that their employees are the most important asset of the organisation. They are the driving force and if they have a positive attitude towards work, are self motivated and have the necessary qualifications, the firm can benefit a lot. For this reason, the management should consider having a team of employees who understand financial matters, have the drive and determination to take the firm to the next level (Klein 2009, p 78). This team should then be remunerated appropriately and necessary motivation given to them. This will improve their effectiveness.

Key Market Segments

This firm stands a better chance of gaining market share within this country. As stated in the above recommendations, the main target of this firm should be the corporate bodies. Past scholars have reported that this market segment is not very pleased with the current modalities put in place by other banking firms. This is an opportunity for this bank. It should develop its systems to respond to issues raised by these corporate bodies.

Travellers, tour and travel agencies and hospitality industry can also be another attractive market segment. This is because they form part of customers of the Virgin Airline. They have experienced the services of Virgin Group hence they know how effective the firm can be. They can easily be attracted by this bank because it will be easy to convince them that their travelling payments can easily be paid by the bank to the airline since the two are sister firms.

List of References

Armstrong, G, Harker, M, Kotler, P & Brannan, R 2009, Marketing: An introduction, Prentice Hall, New Jersey.

Blackwell, D, Miniard, W & Engel, F 2006, Consumer Behavior, Cengage Learning, New York.

Gorchels, L, Marien, E & West, C 2004, The Manager’s Guide to Distribution Channels. McGraw-Hill, New York.

Hamilton, A 2004, Handbook of Project Management Procedures, TTL Publishing New York.

Kabani, S 2009, The Zen of social media, An Easier Way to Build Credibility, Generate Buzz, and Increase Revenue, Ben Bella Books, Dallas.

Klein, H 2009, ‘Customer Engagement Strategies’, The three keys to engaging C-suite executives, Issue. 2, no. 1, pp 78.

Kotler, P 2003, Marketing Insights from A-Z: 80 Concepts for every manager, John Wiley and Sons, New York.

Kurtz, D 2008, Contemporary Marketing: Designing Customer Oriented marketing Strategy, Cengage Learning, New York.

Schwalbe, K 2005, Introduction to Project Management, Course Technology, New York.

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