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Porter'S Five Force Analysis: State Bank of India
Porter'S Five Force Analysis: State Bank of India
Threats of
new
entry
Threats of
Substitute
Top Performing Public Sector Top Performing Private Top Performing Foreign
Banks Sector Banks Banks
Andhra Bank HDFC Bank Citibank
Allahabad Bank ICICI Bank Standard Chartered
The banking industry is highly competitive. The financial services industry has been around for
hundreds of years and just about everyone who needs banking services already has them.
Because of this, banks must attempt to lure clients’ away from competitor banks. They do this
by offering lower financing, preferred rates and investment services. The banking sector is in a
race to see who can offer both the best and fastest services.
2. Buyer Power: High
With the emergence of larger number of players in the Banking Industry, the switching cost of
the buyer has gone done significantly. The onus is now on the effectiveness and speed with
which the services are provided to the customers. Financial institutions - by offering better
exchange rates, more services, and exposure to foreign capital markets -work extremely hard to
get high-margin corporate clients. Options in the Auto Finance Sector also give the customers
more power to decide upon the kind of financing. Introduction of specialized products for
Women and Students etc. also show that the buyer power is high in this Industry.
As you can probably imagine, there are plenty of substitutes in the banking industry. Banks offer
a suite of services over and above taking deposits and lending money, but whether it is
insurance, mutual funds or fixed income securities, chances are there is a non-banking financial
services company that can offer similar services. On the lending side of the business, banks are
seeing competition rise from unconventional companies.
trust in big name, well known, major banks who they consider to be trustworthy .
COMPETETIV BUYER SUPPLIER THREATS THREATS OF
E POWER POWER OF NEW SUBSTITUTE
RIVALRY ENTRANTS
Services industry has Customer Most people Impossible for The bank’s largest threats of
been around for deposits. still prefer to new banks to substitution are not from rival
hundreds of years, and Mortgages stick with their enter the banks but from non-financial
just about everyone and loans. current bank. industry offering competitors.
who needs banking Mortgage- the trust and full The industry does not suffer
services already has backed range of services any real threat of substitutes
them. Because of this, securities. as a major bank, as far as deposits or
banks must attempt to Loans from it is fairly easy to withdrawals, however
lure clients away from other open up a insurances, mutual funds,
competitor banks. financial smaller bank and fixed income securities
institutions. operating on the are some of the many
regional level. banking services that are also
offered by non-banking
companies.
More likely to see Financial It is successful 215 new banks investment services, and
further consolidation in services in their opened greater conveniences than
the banking industry. industry has attempt their rival
Major banks tend to been around because they
prefer to acquire or for years, managed to
merge with other and just make switching
banks than to spend about costs very low
money marketing and everyone in terms of
advertising. who needs time and
banking capital.
services
already has
them.
INDUSLND BANK
AXIS BANK