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<p align="justify">State Street (SS) is an American financial services and banking holding company. It is headquartered in Boston with its operations reaching globally. The bank was founded in 1792. Initially it was name was named Union bank. It is the country’s second-oldest continually operational bank. The bank is considered to manage one of three index funds that dominate corporate America. As of 31 December 2020, SS is the 11th largest US bank based on assets (Federal Reserves, 2020).</p>
<p align="justify">The bank has a culture of diversity and inclusion and it actively promotes an inclusive environment, it is reflected in their policies. It has the policy of strong corporate governance and relies on an established incident management framework to reduce financial risk and oversee other risks affecting business. Porter’s five forces analysis is a useful tool to assess the business and financial risk SS is exposed to in the global financial services sector.</p>
<h2 align="justify">Competitive Rivalry in the Market</h2>
<p align="justify">In the financial services industry, high competition exists globally and the same situation prevails in the context of the USA. United States-based banks dominate on the global scale and have operations domestically and internationally. SS is an important player in the United States financial sector, owing to its long history and importance. Its major competitors are JP Morgan Chase, Bank of America (BOA) and Wells Fargo (WF). In 2020, State Street was ranked 244 on the Fortune 500 global index; it has reported revenue of $12.2 billion and a profit of $2.4 billion (Fortune, 2021).</p>
<p align="justify">JP Morgan Chase was the highest-ranked US bank on the index at the 17 number; the bank has reported revenue of $142.4 billion and profit of $36.4 billion (Fortune, 2021). In the same financial year, BOA earned a revenue of $93.7 billion and a profit of $17.8 billion (Fortune, 2021). WF made a profit of $19.5 billion on revenue of $103.9 billion (Fortune, 2021). The presence of world-leading banks in the sector gave a glimpse of the competition in the industry, the sector is highly competitive.</p>
<h2 align="justify">Threat of Substitutes</h2>
<p align="justify">The threat of substitute always lies in the highly dynamic industry. The availability of alternatives at a better price or quality makes it a viable option. The United States is the global leader in innovation and technological progress; therefore it is a breeding ground for fintech startups. In 2019, US valuations for the US fintech companies reached $18 billion compared to $13 billion in the previous year (Kauflin, 2020).</p>
<p align="justify">These startups are forcing incumbents to evolve or they pose an extinction threat. The traditional brick-and-mortar banks are taking notes and leveraging their market position they are adapting to the change, they are including digital products in the mix. However, for now, the only reprise for the existing institutes is that startups only offer one-off products in comparison to many offered by the traditional institutes. There is a low to moderate threat to traditional financial services institutes.</p>
<h2 align="justify">Threat of New Entrants</h2>
<p align="justify">The threat of new entrants remains moderate to low in the international financial services industry. There are few caveats associated with the new businesses breaking into the industry. One of them is the regulatory regime and the other is the capital requirement. The sector is one of the highly regulated sectors in the world, because of huge consequences in case of any financial misdeed.</p>
<p align="justify">The tangled financial requirements have higher compliance cost. In the US, the smaller banks bear 8.7% compliance cost comparing with their non-interest expense, for larger banks it is 2.7% (Dahl et al., 2016). Another factor that impacts the new entrants in the high capital requirements, the significant amount required at inception and the working capital to keep it floating. However, in the short term, companies in the sector face moderate to a low threat.</p>
<h2 align="justify">Bargaining Power of Buyers</h2>
<p align="justify">Generally, consumers have high barraging power owning to situation and factors related to the industry. The United States is the world leader in technology worldwide and is the breeding ground for innovative technologies. The digital age, coupled with smart devices and high-speed internet spurred technological acceptance in older living generations other than millennials.</p>
<p align="justify">There is stiff competition for customer acquisition and subsequent retention. The services companies have to offer tailored services at the best prices to keep consumers satisfied. Fintech has immense growth potential with an annual growth rate of around 24.8% (Medium, 2020). Thus, it is increasing the competition in already crowded market space. Due to undifferentiated products and series on offer, low switching cost and lack of brand loyalty are the factors that give buyers more bargaining power.</p>
<h2 align="justify">Bargaining Power of Suppliers</h2>
<p align="justify">The bargaining power of the suppliers depends upon few factors depending upon each supplier and what they are offering. Another important factor is the value of the services offered, what they can bring to the business. The main sources of money inflows are deposits and loans from other institutes. Another form of supply is financial experts.</p>
<p align="justify">Financial institutes have higher bargaining power because their deposits are subjected to high-risk premiums and strict due diligence. Consumers are aware of their importance as a source of supply for the banks and can impact the bottom line of the banks. When consumers are aware of their importance to the business, they can exercise high bargaining power (Dess et al.,2005). High skilled business and finance graduates are in abundance, from the perspective of the supply and demand principle, they have low bargaining power. Overall, suppliers have moderate to high bargaining power.</p>
<h2 align="justify">References</h2>
<p align="justify">Dahl, D., Meyer, A., &; Neely, M. (2016). Scale matters: community banks and compliance costs. The Regional Economist, (July).<br />
Dess, G. G., Lumpkin, G. T. and Eisher, A. B (2006). Strategic Management. Text and cases. International edition. London: McGraw-Hill.<br />
Federal Reserves. (2020). Large Commercial Banks. Available at: https://www.federalreserve.gov/releases/lbr/current/<br />
Fortune. (2021). Bank of America. Available at: https://fortune.com/company/bank-of-america-corp/fortune500/<br />
Fortune. (2021). JPMorgan Chase. Available at https://fortune.com/company/jpmorgan-chase/fortune500/<br />
Fortune. (2021). State Street. Available at https://fortune.com/company/state-street-corp/fortune500/<br />
Fortune. (2021). Wells Fargo. Available at: https://fortune.com/company/wells-fargo/fortune500/<br />
kauflin., J. (2020). The 10 Biggest Fintech Companies In America 2020. Forbes. Available at: https://www.forbes.com/sites/jeffkauflin/2020/02/12/the-10-biggest-fintech-companies-in-america-2020/?sh=cb52e5a1259f<br />
Medium. (2020) Fintech vs Traditional Banks: Cooperation or Competition?. Available at: https://medium.com/finwintech/fintech-vs-traditional-banks-cooperation-or-competition-93852e6a7d31</p>
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