Industry Analysis of the Banking Industry (Using Porter’s 5 forces

Competitive Model)

1. Threat of new entrants:

 Low: Regulatory barriers, capital adequacy standards, and brand reputation play
significant barriers to entry. Challenger banks and FinTech companies can be a threat to
incumbents in certain segments due to innovative products and lower costs.

2. Bargaining power of suppliers:

 Low: In the banking industry, suppliers are typically tech providers, CRAs, and other
service providers. They typically have little to no negotiating power due to the abundance
of alternatives and the large size of most banks.

3. Bargaining power of buyers:

 Moderate: Individual customers have little negotiating power, especially when it comes
to retail banking. Large corporate customers and institutional investors, on the other
hand, have a lot of negotiating power because of their large deposits and the ability to
negotiate for fees and interest.

4. Threat of substitutes:

 Moderate: While it is by no means a substitute for traditional banks, FinTech firms and
online payment platforms provide alternative financial services such as money transfers,
payments, and wealth management, which are forcing traditional banks to adapt and
innovate.

5. Firm Strategy, Structure, and Rivalry:

 High: The banking industry is one of the most competitive in the world, with dozens of
players providing a variety of products and services. This level of competition is
especially pronounced in areas such as lending, wealth management, and investment
banking.

Source:
 https://www.researchgate.net/publication/
341037196_Assessing_Attractiveness_of_Banking_Industry_of_Bangladesh_by_Applyi
ng_Porter's_5_Forces_Model
 https://www.investopedia.com/articles/fundamental-analysis/11/using-porters-5-forces-for-stock-
analysis.asp