Finance

Expanding your commercial awareness (Banking and Finance)

Help with commercial awareness.

By bsynergetic

Resource 19 Mar 2021

This resource will help you to understand more about why commercial awareness is important, how it can be tested, why you should be prepared, and how you can improve your commercial awareness.

What is Commercial Awareness?

Commercial awareness is the understanding of how the industry and company you are applying for operates and makes money. It focuses on understadning and examining the impact external events could possibly have on the industry or particular company. Through understanding the news and the effect of certain events you can predict and analyse challenges a sector may face as well as theorise any possible solutions.

Demonstrating good Commercial Awareness is really important throughout the entire application process as it shows a genuine understanding and interest in the sector and the organisation. However, this shouldn’t stop when you have secured the role, by continuing to build on your commercial knowledge you will be able to fit into the company more easily and contribute to discussions on different topics. It will also help you when networking and meeting new people in your sector.

In the Banking & Finance sector, companies need to be up to date with the news in order to make the safest and most accurate decisions for their business. Employees need to know how the Finance sector operates in order to understand who the major players are and in what regions they are located in, in order for their firm to be able to compete effectively. They also need to know of any recent economic, political or regulatory changes that might have an impact on the industry and be aware of any emerging challenges or opportunities that might exist, such as advances in technology or an upcoming financial crash.

How is Commercial Awareness Tested?

Commercial Awareness may be tested at any stage of the application process. Your CV and cover letter should show an awareness of the company as well as its place within the sector.

Here are some examples of how it may be tested in an interview.

  1. “What are the biggest issues facing (the bank you are applying for) today?”
  2. “Tell me about a current financial news story that interests you and why?”
  3. “How is (the bank you are applying for) different from other Investment Banks?”
  4. “Tell me about a current event that will have an impact on the way this division operates, and why”
  5. “Describe a company you think is doing either really well, or badly, and why?”

Understanding the Company You Are Applying To

It is imperative you have a strong understanding of the company you are applying for, if you have effectively done your research it shows you are genuinely passionate about the opportunity.

Some points you can touch on when researching

  1. Who are their clients?
  2. Who are their direct and indirect competitor?
  3. What about their culture most excites you?
  4. What is the business structure of this organisation and how it fits into the business world?
  5. What is the purpose of the role you are applying to? How does it fit into the department? And how does this department fit into the organisation overall?
  6. How is this bank / organisation different from its competitors? Why do you want to work here in particular?
  7. What are the company’s main priorities?
  8. What is it about the opportunity you are applying for in particular that sets it apart?
  9. What external factors, both global and domestic, could effect the business?
  10. How and why is the event important?

Analysing the News

Commercial awareness is more than just reading or watching the news, you should actively analyse what is happening so that you can fully understand the broadcast and formulate your own opinion. Once you have done this you can understand the external and internal factors that might affect a particular company, or the Banking and Finance sector more broadly.


Below are two methods of analyzing the news which you should try to familiarise yourself with.

PESTLE Analysis

The first is PESTLE analysis, it can be used to examine the external environment for a particular company or organisation.

PESTLE analysis stands for:

Political – Government policy

Economic – inflation and interest rates, labour and energy costs

Social – population, trends, media, culture, ethics

Technological – emerging technologies, current trends

Legal – law, regulations and standards

Environmental – weather, pollution, waste, green ethics

Here is an example of some things you can ask your self when doing a PESTLE analysis of the banking sector as a whole

Political – What is the government’s current economic policy? Has something been announced recently in the budget? The political stability of a country can have an impact on banks, such as the results of the recent election.

Economic – What are the current interest rates. Increases in interest rate have an effect on the profitability of institutions within the banking sector, such as commercial banks and insurance companies. This is because they all have cash holdings from customer’s, or from other business activities. Banks profit off this difference between the set interest rate they pay out to customers and the yield they generate from this cash.

Social – As behaviours in society change, such as the high frequency of online activities, such as online shopping, banks have to adapt to this as well. An increasing amount of banks have created ‘online banking apps’ in order to accommodate the large population that prefers to manage their finances from the comfort of their home rather than visiting their high street bank. In addition, cultural changes can have an effect on buying behaviours, such as loans and mortgages.

Technological – Banks need to keep up with technological changes to remain relevant and competitive. As mentioned above, online banking has become popular, as well as Artificial Intelligence Chatbots that answer basic customer queries. Another common occurrence

has become the use of ‘automated trading systems’ established by traders through a series of algorithms in order for shares to be traded.

Legal – Legal factors are incredibly important, as they dictate how banks can operate. Since the 2008 financial crash, more regulations have been put on the banking industry.

Environmental – Customers focus a lot more on environmental factors nowadays, than they used to. This has led to a demand for banks to reduce their environmental footprint


SWOT Analysis

The second is SWOT Analysis, where PESTLE is for external factors this can be used to look at a company from an internal standpoint.

Strengths – What are the strong points and positives which make the company better than those around, or places it in a good position to compete effectively?

Weaknesses – What are the weaker points where others may have an advantage?

Opportunities – What opportunities exist to allow the subject to excel and advance?

Threats – What could emerge as an issue which hinders the subject? How can this be mitigated?

Bsynergetic offers you ways to expand your commercial awareness throughout our platform

Below are some ideas on activities you can get involved in, and how they will help to expand your commercial awareness.

Find the relevant groups in your sector

  1. We have many groups over a wide range of sectors where you can connect with other students and mentors. Use these groups to share your knowledge and build meaningful connections with other members
  2. A great way to expand your commercial awareness is by discussing recent news stories and events with them.
  3. Discuss your opinion on what you think the impact of a current event will be, and listen to their insight!

Attend Insight Days or events

  1. Use our events page to browse relevant insight days and other events
  2. At these events, you will be able to hear from a range of employers, ask questions and gain a unique insight into each company!
  3. You can also network with other associates, as well as employees from the company.

How to Build Your Commercial Awareness Outside of BSyn

Join your University’s Finance and Investment Society

  1. Here you will become more familiar with financial news and terms, and hopefully become more comfortable discussing them.

Research the company’s website or their social media

  1. This is a great place to see what news stories they are talking about, and what their perspective and position is on them.

Keep up-to-date with financial news

  1. We recommended subscribing to an industry-based publication to keep on top of the daily news. Your university may already have a subscription so check with them first
    1. e.g. Financial Times, The Economist
    2. Morning Brew
    3. Finimize
    4. Deloitte’s Monday Briefing

Podcasts

Podcasts are a great way to keep up to date whilst on the move, it’s a great replacement for music on your walks or journeys. 5/10 mins a day when consistent will have a massive impact on your commercial awareness after a few months.

  1. FT Banking Weekly
  2. Disunomics
  3. Rebank: Banking the Future
  4. Fintech Insider Podcast
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