Porters Five Forces Key Stakeholders

Threat of
New Entrants

New Banking Licenses

New type of licences such as Payment

Banks, Small Bank, etc.

Bargaining Power of Suppliers

Equity Share Holders

Institutions that Provide

Capital through Debt Issues

Retail Depositors

Outsourcing Vendors such as

Xerox (for printing), Monster
(for HR), Visa (for Internet
Payment Processing)

Bargaining Power of Buyers

Intra-Industry
Rivalry

Public Sector Banks such as SBI, PNB,

Syndicate Bank, Indian Bank

Foreign Banks such as Citi, HSBC, DBS

Private Banks such as HDFC Bank,

ICICI

Technology Providers such as

Infosys
Threat of
Substitutes

NBFCs such as DHFL, IDFC, Indiabulls

Micro Finance companies such as SKS

and Bandhan

Private Money Lenders

Retail Borrowers

Corporate Borrowers

Non-fund based services,

such as, Guarantees, Letters
of Credits, Collection of Bills,
Lockers, Safe Custody facilities

Porters Five Forces- Analysis

Barriers to Entry

Rivalry in the Industry

License required as per RBI norms; largely a

consolidated market
Regulatory restrictions on minimum equity, capital
adequacy norms, etc.
Guidelines as per BASEL II norms to ensure ample
liquidity and trust
Extensive Branch Network and IT networks, and thus
High Capital Expenditure
Existing Partnerships with Insurance, Remittance
Agents, and Vehicle Manufacturers
High

Consolidated market due to each large players

Although Growing Industry, players offer similar

Industry
Competitors

offerings
High exit costs due to the costs incurred in
establishment of physical branches and IT
Infrastructure
Brand Identity is of utmost importance, as
banking is a play on trust
Switching costs for consumer is low
High

Bargaining Power of Supplier

Interest rates largely dependent on the repo rates
(decided by RBI) and the lending rate offered by banks

Debt market in India also largely regulated with

Intensity
of Rivalry

presence of large government institutions; majority of

these are not allowed to invest in equities

Bank Deposits are considered a safe investments for

low risk retail investors

Similar product offerings, coupled with similar

interest rates on loans

Low switching costs

Increased access to information through
penetration of mobile and internet

Banks provide large volume of services to outsourcing

service providers

Bargaining Power of Buyer

Large number of players

Low
Threat of Substitutes
NBFCs are not allowed to accept retail deposits
and thus this increases their cost of funds

Microfinance have presence in rural and semiurban areas

Low

Medium

SWOT Analysis
Strengths

Widespread network 651 branches and 20 extension

counters (as on March 2008) across 29 states and 3 UTs
Good rural presence creating robust distribution network
158 branches in semi-urban and rural
Efficient multi-channel delivery by use of IT processes like
Seamless Electronic Transfer to Axis Bank (SETU)
Consolidated In-house Transacting processing providing
scale benefits and allowing higher time for customers
Internal Risk Management measureslimits monitored
and reviewed regularly by risk management committee
Product innovation like low-cost ATMs that also sell MFs
Credit Risk Management measures like following BASEL II
norms and indentifying Key Risk Indicators
Strategic alliances Remit2India, Hyundai, Bajaj Allianz,
IIFCL for fee-based income
Capital Adequacy Ratio high at 11% (above 9%
benchmark), coupled with decline in cost to income ratio
to 45.03% from 50.69% in 2004-05

Opportunities

Expansion in rural areas; leverage initiatives like Channel

Finance Hub, internet enabled procurement transactions
Going to foreign markets and exploring the new economies
Social media banking
Mobile banking across mobile phones like tie-ups with
carriers like mobile service providers for payment
SME financing and VAS (Insurance) another area of interest
Benchmark itself to international best practices

Weaknesses
Gaps While it has presence in corporate, wholesale
banking, treasury services, retail banking, 80% of revenues
from retail
Foreign branches constitute only 8% of total assets
Outsourced Key Value Chain Processesrecruitments,
personalized cheque books thereby creating a risk
Only recently the bank started focusing its attention towards
personal banking and rural areas
Increasing provisions and NPAs NPAs increased from 1.03
to 1.07%
While business per employee is the highest at 10.24 cr (14%
higher than the next best) the profit per employee is 20%
less than competition
Lesser no. of branches compared to its competitors
Low rank of 22 (ICICI 4) in the most trusted service brands

Threats
Knowledge management portal provides business
information, business plans, proposals, policies, etc. that may
be leaked to competitors
RBI Policies
New banking licenses issued by the Reserve Bank Of India
Foreign banks entering the domain
Government schemes are most often serviced only by
government banks like SBI, Indian Bank, PNB, etc.
ICICI and HDFC are imposing strong threats
Image of the bank still under the shadow of the UTI debacle

Source: http://www.strategicmanagementinsight.com/tools/bcg-matrixgrowth-share.html

Useful webpage:
http://www.strategicmanagementinsight.com/tool
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