Porter 5 Forces Analysis
Student Name: Dan Kaltz
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Date: 10th May 2013
Porter 's 5 Forces Analysis of the Retail Banking Industry in Australia
Retail banking can be defined as an industry where financial institutions offer mass market banking in which individual customers use local branches of larger commercial banks. Services offered include savings and checking accounts, mortgages, personal loans, debit/credit cards.
Retail banking aims to be the one-stop shop for as many financial services as possible on behalf of retail clients. Some retail banks have even made a push into investment services such as wealth management, brokerage accounts, private banking and retirement planning. While some of these ancillary services are outsourced to third parties, they often intertwine with core retail banking accounts like checking and savings to allow for easier transfers and maintenance.
When applying the Porter Five Forces in analysing industry competitiveness and how it relates to the retail banking industry, the following outcomes have been found.
Threat of new entrants
Current Rating - (Low) – Future Rating - (Med)
It would be very difficult without the access to large capital for the average person/company/organisation to start up a bank. However with the popularity of Credit Unions, Building societies and the evolution of the internet, there are many traditional banking services such as providing mortgages, car loans, paying bills, on which online entrepreneurs can enter this market segment (www.billbuddy.com.au OR Aus POST). Banks would be fearful of losing part of their traditional revenue raising, because it is a good source of fee-based revenue.
Another threat to traditional banking is companies offering other financial services. What would it take for an insurance company to start offering mortgage and loan services? Not much. Also, when applying the threat of entry formula to a regional bank, there is a huge possibility
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Date: 10th May 2013
Porter 's 5 Forces Analysis of the Retail Banking Industry in Australia
Retail banking can be defined as an industry where financial institutions offer mass market banking in which individual customers use local branches of larger commercial banks. Services offered include savings and checking accounts, mortgages, personal loans, debit/credit cards.
Retail banking aims to be the one-stop shop for as many financial services as possible on behalf of retail clients. Some retail banks have even made a push into investment services such as wealth management, brokerage accounts, private banking and retirement planning. While some of these ancillary services are outsourced to third parties, they often intertwine with core retail banking accounts like checking and savings to allow for easier transfers and maintenance.
When applying the Porter Five Forces in analysing industry competitiveness and how it relates to the retail banking industry, the following outcomes have been found.
Threat of new entrants
Current Rating - (Low) – Future Rating - (Med)
It would be very difficult without the access to large capital for the average person/company/organisation to start up a bank. However with the popularity of Credit Unions, Building societies and the evolution of the internet, there are many traditional banking services such as providing mortgages, car loans, paying bills, on which online entrepreneurs can enter this market segment (www.billbuddy.com.au OR Aus POST). Banks would be fearful of losing part of their traditional revenue raising, because it is a good source of fee-based revenue.
Another threat to traditional banking is companies offering other financial services. What would it take for an insurance company to start offering mortgage and loan services? Not much. Also, when applying the threat of entry formula to a regional bank, there is a huge possibility