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<p align="justify">Citigroup or Citi is an American financial services company with a multinational presence. The company is headquartered in New York City, the famed financial hub of the world. The bank was founded in 1998 by the merger of Travelers Group and Citicorp. As of 31 December 2020, Citi is the 4th largest US bank based on assets (Federal Reserves, 2020). It is among the top four banking institutes of America, and it also makes the part of bulge bucket, which consists of the nine largest investment banks. The bank operates in the domain of consumer and institutional finance as well as investment management. The bank has committed $ 1 trillion to sustainable finance by 2030 in line with United Nations&#8217; sustainable development goals; additionally, Citi has committed $250 till 2025 and $500 billion till 2030 for their investment in environmental finance (Citigroup, 2021). Porter&#8217;s five forces analysis is a valuable tool to assess the business and financial risk Citigroup is exposed to in the global financial services sector.</p>
<h2 align="justify">Competitive Rivalry</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. Citi has massive importance due to its vast presence; it is part of the top bank banking contingent. Its main rivals are Wells Fargo (WF), Bank of America (BOA), and JP Morgan Chase. In 2020 Citi is ranked at 31 among the Fortune 500 global companies; it has reported $88.8 billion and a profit of $11.3 billion (Fortune, 2021). WF made a profit of $19.5 billion on revenue of $103.9 billion (Fortune, 2021). In the same financial year, BOA earned $93.7 billion and a profit of $17.8 billion (Fortune, 2021). In 2020, 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). Therefore, the financial services sector is highly competitive.</p>
<h2 align="justify">Threat of Substitutes</h2>
<p align="justify">The better offering in terms of price and acceptable quality seems a good alternative. The threat of substitutes is moderate to low in the financial services industry. The technological progress in the US has imploded the startups offering similar products at better prices. Traditional banks are already fighting eroding profitability; now, they have to adapt to digital innovation or risk losing ground (Masocha et al., 2011). These startups are trying to disrupt the settled but poised for progression segment of the society. The traditional banks are moving fast, taking advantage of a massive financial war chest to acquire potential competitors and integrate more digital products in their offerings. The only reprieve for the incumbents is that newcomers only offer one-off products instead of bundled services compared to a variety of the services provided by banks. There is a moderate to low threat to traditional financial services institutes.</p>
<h2 align="justify">The 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 inherent obstacles associated with the industry, one of them is the regulatory regime, and the other is the capital requirement. It is one of the highest regulatory sectors in the world, with stringent monitoring by regulators. The reasons for these regulations are to avoid another financial crisis due to mismanagement of assets. The layered financial requirements have higher compliance costs. In these dynamic, uncertain times, banks have to bear high compliance costs (Spierdijk et al., 2017). Another deterring factor for the newcomers is 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">Consumers&#8217; bargaining power depends on the industry&#8217;s situation, usually in financial services, they have high bargain power. Consumers are aware of their impotence, and they make that count while dealing with the institutes. After the dawn of the digital revolution, consumers are more accepting of digital technology and prefer digital products over conventional ones. Digital platforms offer discounted and tailored services and give traditional institutes tough competition; thus, convenience and customer services prioritize. Fintech has immense growth potential, and it can help include the left out the population of society into the financial services ecosystem (Chen, 2016). It isn&#8217;t easy to retain new customers, and it even more challenging to keep existing ones. It has increased competition in an already competitive market. Moreover, the products and services offer is exact at the core, and there is virtually no switching cost. Therefore, buyers have higher bargaining power.</p>
<h2 align="justify">Bargaining Power of Supplier</h2>
<p align="justify">The bargaining power of the suppliers depends upon underlying factors such as suppliers’ products, suppliers’ concentration, the buyers’ reliance on the supplier, and the nature of the product. The primary sources of inflows are customer deposits and loans from other institutes. Another form of supply is financial experts. Financial institutes have higher bargaining power because their deposits are subjected to high-risk premiums and strict due diligence, and they require a more increased rate of return, in the process, reducing the margins. Consumers are aware of their importance as a source of supply for the banks and can impact the banks&#8217; bottom line. When suppliers are aware of their importance to the business and can sell their products to anyone else, it reduces customers&#8217; importance for the supplier (Reichenbachs, 2017). According to the demand-supply theory, there are more financial experts than available vacancies; they do not possess higher bargaining power. Overall, suppliers have moderate to increased bargaining power.</p>
<h2 align="justify">References</h2>
<p>Chen, L. (2016). From fintech to fin life: the case of fintech development in China. China Economic Journal, 9(3), 225-239.<br />
Citigroup. (2021). About. ESG. Citi The Sustainable Development Goals. Available at: https://www.citigroup.com/citi/about/esg/citi-the-sustainable-development-goals.html<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). Citigroup. Available at: https://fortune.com/company/citigroup/fortune500/<br />
Fortune. (2021). JPMorgan Chase. Available at https://fortune.com/company/jpmorgan-chase/fortune500/<br />
Fortune. (2021). Wells Fargo. Available at: https://fortune.com/company/wells-fargo/fortune500/<br />
Masocha, R., Chiliya, N., &; Zindiye, S. (2011). The impact of technology on competitive marketing by banks: A case study approach. African Journal of Marketing Management, 3(3), 68-77.<br />
Reichenbachs, M., Schiele, H., &; Hoffmann, P. (2017). Strategic supply risk: exploring the risks deriving from a buying firm being of low importance for its suppliers. International Journal of Risk Assessment and Management, 20(4), 350-373.<br />
Spierdijk, L., Shaffer, S., &; Considine, T. (2017). How do banks adjust to changing input prices? A dynamic analysis of US commercial banks before and after the crisis. Journal of Banking &; Finance, 85, 1-14.</p>
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