Events such as the Global Financial Crisis (GFC) of 2009 and the more recent failing of European economies have shaken consumer confidence leading to conservative attitudes about money. ANZ identifies in particular factors such as low credit growth, funding challenges and new regulation. However they have indicated that these potential threats to the industry represent an opportunity for them provided that they can make structural changes that allow them to be leaner and more innovative (The Asian Banker, 17 February 2012). The article goes on to describes several changes to senior management, including the creation of a new CEO role to head up the new division of Global Wealth and Private, which are aimed directly at supporting the super regional strategy. Porter’s Five Forces Model Porter’s Five Forces allows managers to analyse the external environment by examining five major factors: the level of rivalry between organisations in an industry, the barriers to entry into an industry, the power of suppliers, the power of buyers, and the threat of substitute products (Waddell et al, 2011). By analysing an industry using this tool, managers can identify both opportunities and threats that exist in that industry. The banking industry in Australia is competitive, dominated by 4 large banks but also with quite a few smaller bank and non-bank organisations. Rivalry between the ‘big four’ is particularly intense. There is little in real terms to separate them in the eyes of the average consumer as any changes made by one in terms of interest rates, product offerings or services areis generally quickly matched by the other three. Each of the big four banks possesses such large resources and market share that this poses significant barriers to entry to the banking industry. Even so, there are many smaller but equally well established bank alternatives, such as…
Bank of America is one of the leading financial companies in the world. When dealing with assets, it is the second largest. Bank of America has a profit of 31.61%. The factors that hurt the bank would be due to customers closing accounts without making the bank aware and making sure that they have a system in place for when they received checks written in large sums to be cleared. Another weakness would be holding on to the customers ' direct deposit to cover debts that they may have. Also they have experienced problems with their online banking as well as human resource errors (Bank of America)…
The large banks have been able to enhance their margins by offering a full range of services to retail, small and large corporate customers. Owing to their national focus, they can access funds more cheaply than the regional banks and can often offer funds to their customers at a slight premium because of the additional services provided. The large banks also have greater access to the international markets for funding because of their size and consequent reputation – which is often a key factor in the Euro-markets for…
In the United States, we continue to enjoy the longest economic expansion in our nation’s history, and, following passage of financial modernization legislation, banks and other financial institutions now enjoy unprecedented strategic opportunities.…
There are two major types of customer in banking industry. Firstly, individual customers do not pose a very big threat as there is “medium-high switching cost” like if a person has mortgage, car loan, credit card, saving account and particular mutual funds, there is quite hard for them to switch all product to another banks.…
There are a number of threats that come into play where a bank is concerned. The first and probably the most common is robbery. Bank robberies take place all the time all over the country. Lately almost every time I tune into the local news there has been a bank robbery somewhere and the police are always looking for the suspect. I guess the economy is the reason why people are robbing banks so much. Another…
Barriers to entering the banking industry include regulators such as the Financial Services Authority. Banks have a number of regulations they have to meet in order to get a banking licence. This takes a lengthy period of time to comply to prove “that they have the integrity, financial and managerial resources necessary to run a bank, that they are worthy of the trust that people expect to be able to place in the bank that holds their deposits and in many cases, their life savings” (Buckle & Thomson, year:page no). (The UK financial system: theory and practice By Mike Buckle, John L. Thompson) Thus it is very costly. Likewise this is not the only cost, when banks start-up they need a wide range of specialist contractors, buildings, and I.T. For example Tesco Bank recently built a new building in Glasgow creating 200 new jobs, thus it is pricey. However unlike some “barriers such as asset specificity” (Wengler, 2006:176) banks tend not to have this problem because although the buildings are costly and they have a lot of highly…
The lack of loyalty to the entire bank could affect the effectiveness (and profitability) of the bank.…
* Banks are not the only problem in the financial sector. Capital market is small and do not offer a competitive alternative bank borrowing.…
the last two decades without any solutions in sight to bank failures and crisis. The paper…
3. Possible closure of local banks due to merging/acquisition and emergence of a bank holding company.…
may lead to a banking crisis that may culminate into an economic crisis is also…
The continuous increase in non-traditional competitors such as retailers and mobile service providers offering similar or even better and cheaper services than traditional banking is and will continue to be challenges to the banking industry as banks may find it difficult to attract new or retain existing clients.…
The grip of nationalism is tightest in banking. Banks may feel safer retreating to their home markets, where they understand the risks and benefit from scale.…
Bank’s wish for increasing profit: Banks have to increase their profits to create new markets, to protect and develop their market shares and to survive on the basis of intense competition and demographic chance levels.…