In the process of conducting a political-legal, economic, socio-cultural, and technological (PEST) analysis for a bank, several environmental and regulatory factors are typically considered. Some of the specific things that can affect a bank include local regulations, citizen’s feelings about using banks, and whether the economic climate can support a new financial institution. The analysis can help a bank to determine how to position itself strategically as it determines the best methods for approaching marketing, opportunities, and the development of the business. A PEST analysis for a bank may also be useful in helping to determine whether it is advisable to enter a new market.
The first step of a PEST analysis for a bank is an examination of the political environment. One of the key elements of this task is to determine the overall restrictions and support that can be expected from the government. By studying other banks in the same sector, it can be possible to get an idea of what the current environment is for financial institutions. This is a particularly important step for a foreign bank, as government regulations can vary widely among different countries.
Next, the PEST analysis for a bank will typically be used to determine the economic climate. Important elements to consider include the overall health of the market, interest rates, and inflation. A bank may also find it useful to make projections as to the long-term stability of the economy. The goal is to determine whether another financial institution could thrive in the current and developing economy.
Another part of a PEST analysis for a bank is the examination of socio-cultural aspects that could affect the business. One of the most important aspects of this step is to determine the cultural attitude towards money-related issues. This can include things such as overall feeling about banks, how savings are approached, and general attitudes about loans. A foreign company may wish to determine whether it would be welcomed and trusted by the citizens in the targeted area.
The final step of a PEST analysis is the technological aspect. It is advisable for the bank to determine whether it has the technical resources to effectively serve its customers. This includes having the capacity to upgrade systems and adopt new technologies that are efficient and effective. It is also important that technology enable the bank to serve the customers as they find it most convenient. This means ensuring that systems are not only appropriately updated, but easy for the target customer to use.
