The bank of New York Mellon Corporation is an American financial and banking services company. This holding company is headquartered in New York. BNY Mellon is famous as an investment company. It provides the investment management, wealth management, and investment services. It helps the individuals and institution to succeed in the market across the globe. BNY Mellon has successfully maintained its position from over 100 years in Asia Pacific. The company was the first financial institution of US there for investing in the potential region. Currently, the bank has 14,000 employees and operates in 17 locations (BNY Mellon, 2019).
The company is working in the intense competitive industry. As local, international, non-financial service providers, other financial service providers etc. all are competing. BNY Mellon must have its industrial analysis. Porter five forces model will help the company in identifying the external factor analysis of the industry. It will help in determining the opportunities and threats for the company in order to grow. Here is the detailed Porter five forces analysis of Bank of New York Mellon;
Bargaining Power of Buyers
Bargaining power of buyers in BNY Mellon case is high. As the company is famous for its investment services, consumers look forward for more returns in less time. Hence, when customers are no longer brand loyal, they will switch to other investment companies for safer returns. This lowers the switching cost for them. Moreover, there are many companies operating in the investment and wealth management areas. Higher the choices available to the consumers, more power of bargaining they will have. It is necessary for BNY Mellon to increase the customer base in order to maintain the market position (Finch, 2010).
Bargaining Power of Suppliers
The bargaining power of the suppliers is moderate, as main suppliers in this are labour forces and technology or infrastructure. However, software providers have relatively more bargaining power because of the technicalities and specialization involved. During the sustainable growth of the economy, businesses look forward towards updating infrastructure. The scarcity of factors of production for serving the asset managers become the main component again. Furthermore, consumers are known to be a major supplier too, because they bring the cash in the business. Hence, it is necessary for the BNY Mellon to maintain good relationship with its suppliers. And provide best services in order to grow (Koroma, 2019).
Threats of New Entrants
BNY Mellon is facing low threats from the new entrants. This is mainly because of strict rules and regulation which are pushed in financial and regulatory bills. The uncertainty regarding financial services future and managing the revenue fees are high. This makes it difficult for the new firms to achieve economies of scale. New firms have to bring initial start-up costs, which are way too high. As the big companies are already operating in the industry, it is difficult for the new firms to compete with them on such high level (Murphy, 2018).
Threats from the Substitute Products
BNY Mellon is facing the threat from the customers as they can switch to other competitor’s investment business. However, irrespective of this threat, BNY Mellon is not facing any threat of substitute products. The company offers the dedicated and expert asset management services for preserving and increasing the assets. It also provides the services of asset servicing and custody which are mandatory for business operations. Its rivals also offer the same services, but the riskier art is managing own assets, as it is time consuming. Ease, peace of mind, and low expense in managing assets makes the customers invest more (Finch, 2010).
Rivalry of Existing Players
The financial and banking industry is highly competitive. There are not only thrifts, credit unions, banks and physical businesses operating in the industry. But entities are involved which offer financial services by delivery channels like internet. Companies compete on different factors like interest rates, customer services, broad range of services and products, customer convenience, and geographical locations. The asset management is main revenue generator for BNY Mellon, and this depends of the fees and strong performance in the market. There are many investment firms, advisory firms which individuals can easily access. Hence, it is necessary for BNY Mellon to work towards customer care more (Koroma, 2019).
References
BNY Mellon, 2019. Who we are? [Online], Available at: https://www.bnymellon.com/apac/en/who-we-are/our-story/index.jsp#companyprofile, [Accessed on: 25th December, 2019].
Finch, S. 2010. Bank of New York Mellon. [Online], Available at: file:///C:/Users/CC/Dropbox/Business%20Law/bankofnewyorkmellon.pdf, [Accessed on: 25th December, 2019].
Koroma, P. 2019. PORTERS FIVE FORCES MODEL IN BANKING INDUSTRIES ECOBANK SIERRA LEONE LTD. [Online], Available at: https://www.academia.edu/31072899/PORTERS_FIVE_FORCES_MODEL_IN_BANKING_INDUSTRIES_ECOBANK_SIERRA_LEONE_LTD?auto=download, [Accessed on: 25th December, 2019].
Murphy, E. 2018. Bank of New York Mellon Corp Porter Five Forces Analysis. [Online], Available at: https://www.essay48.com/term-paper/12786-Bank-of-New-York-Mellon-Corp-Porter-Five-Forces, [Accessed on: 25th December, 2019].