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Porters Five Forces model Essay

In the banking industry rivalry among its competitors is a pretty common game. A few larger banks always dominate larger markets offering more locations and faster paced technologies for those consumers. Usually in a these larger areas larger banks can thrive because the expectation level of personalization is much lower since consumers don’t feel the need to frequent a location or rely on individuals to help them. While as areas grow smaller in population Small Community banks emerge with a fewer number of larger entities to compete with these banking giants being able to offer a more personalized approach allowing people to rely more on human interacting with technology, not only relying on the technology. Most banks primary function is to lend money of the deposits they gain, so most generally the most competitive is incentives for consumers to keep money on deposit and lower rate loans for consumers to take out.

The potential for new competitors is not so common that it happens frequently but in today’s market groups of individuals with large resources who are frustrated with too much structure and to high of fee structures from larger institutions have formed smaller banks or credit unions to supply a need for better priced products, with hopefully a more home town approach with dealing with its customer base. Most markets are set competition mainly coming from outside banks wanting to tap into growing areas to capitalize on possible wealth of clients in that area or high traffic spots that business in that area have attracted.

Other areas of new competition doesn’t come directly from a “NEW” bank but a bank buying out certain branches or absorbing the institution as a whole. This usually changes the dynamic that that competitor usually giving them more resources to utilize and make them more of a competitive force in the banking industry. Sometimes this can also work opposite and help out other banks in the area. If the “NEW” bank has processes or other items that are not favorable to the community they are in, that company could by an asset to lose it down the road when the client moves business due to not liking the new bank they are at.

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