<p style="text-align: justify;">Bank Rakyat Indonesia (BRI) is a financial services company based in Indonesia. The bank is among the largest banks in Indonesia, and it was the second-largest bank in the country based on assets in 2010. The bank was incorporated in 1895, and the state government holds its majority shares; it is headquartered in Jakarta, Indonesia.</p>
<p style="text-align: justify;">The bank has championed itself on providing microfinancing services to its massive retail clientele. It has 4,000 branches and outposts in a suburban and rural area and has 30 million retail clients. BRI is the only bank in the world to own and operate a satellite. BRI has a strong corporate culture, and its mission is to create optimal values and benefits for stakeholders with due observance of sustainable financial principles (BRI, 2021). Porter&#8217;s five forces model is used to assess the business and financial risk BRI is exposed to in the market.</p>
<h2 style="text-align: justify;">Bank Rakyat &#8211; Competitive Rivalry in The Market</h2>
<p style="text-align: justify;">The banking industry in Indonesia is a monopolistic or collusive oligopoly, and the competition has further decreased after the introduction of Indonesian banking Architecture. The major competitors of BRI are Bank Negara Indonesia (BNI), Bank Mandiri and Bank Central Asia (BCA). BRI is the largest bank in the country; it has reported $10 billion in revenues and $1.3 billion in profits (Forbes, 2021). BNI has reported $5 billion in revenues and $225.6 million in profits, and it recorded a year-on-year decrease of 79.4%, mainly due to pandemic (Forbes, 2021). Bank Mandiri has recorded same revenue as the preceding year at $8.6 billion and earned profit of $1.2 billion (Forbes, 2021). In the same period, BCA has recorded $6 billion in revenues and reported $1.9 billion in profits (Forbes, 2021). Therefore, the industry is in monopolistic competition.</p>
<h2 style="text-align: justify;">Bank Rakyat &#8211; Threat of Substitutes</h2>
<p style="text-align: justify;">The threat of substation is assessed as low to moderate in the industry. The industry is an integral part of society and is the cornerstone of the business community. However, until now the sector has remained steady in the Indonesian market due to a lack of regulatory support and hindrance. The technology companies are exploiting the deficiency in traditional banking systems with the lack of digital presence. They are trying to push incumbents to evolve or left behind. Banks are adapting fast to this threat and are either spending on research and development adapting change or acquiring digital platforms for integration in their ecosystem. Indonesia&#8217;s Bank Jago got into a strategic partnership with ride-hailing and digital payment services firm Gojek, paving the way for the former to become the first fully digital bank in the country (Kaur, 2021). Therefore, the threat of substation is moderate.</p>
<h2 style="text-align: justify;">Bank Rakyat &#8211; Threat of New Entrants</h2>
<p style="text-align: justify;">The threat of new entrants is considered to be low to moderate in the industry. Every industry has a different level of ease and difficulty for newcomers to be able to enter it. It is also associated with the interaction of market members, or more are aggregated (Widyastuti et al., 2013). The primary barrier is the requirement of capital at inception and subsequently for running smooth operations. It is difficult for many newcomers to raise such an amount of financing at a reasonable cost. Another deterrent is the regulatory framework, which already discourages new entrants. Lastly, the competition in the market and potential for growth affects the decision of aspiring businesses. Few larger banks control the market, and there is a state of oligopoly, which makes it difficult for the new entrant. Therefore, the threat remains low.</p>
<h2 style="text-align: justify;">Bank Rakyat &#8211; Bargaining Power of Buyers</h2>
<p style="text-align: justify;">The buyers&#8217; power is directly associated to the competition, buyers&#8217; concentration and availability of better alternatives. In the Indonesian banking industry, buyers have moderate bargaining power. That is attributed to the concentration in the banking system that leads to a lack of competitiveness in the market. The retail consumers are not concentrated and therefore cannot impact business individually. Despite low switching cost, the market is concentrated, and few more prominent players control it; it does not provide the customer with many benefits to switching. It is found that there has been a monopoly or oligopoly in the banking sector in Indonesia. It will support collusion and reduce the level of company efficiency (Hamza &; Kachtouli, 2014). Due to market concentration, banks have more leverage over consumers. Therefore, buyers have moderate bargaining power in the industry.</p>
<h2 style="text-align: justify;">Bank Rakyat &#8211; Bargaining Power of Suppliers</h2>
<p style="text-align: justify;">Suppliers can exercise higher bargaining power depending upon the factors such as suppliers&#8217; concentration, their importance to the business, and the nature of products or services provided by the supplier. The primary sources of supply can be categorized into retail customers, institutional investors, and expert human resources. Retail consumers have more power in the presence of better alternatives and low switching cost. However, in Indonesia, bank concentration and oligopoly reduce their bargaining power. The bloc investors only invest in matching their desired portfolio and requiring a high rate of return, therefore, having higher bargaining power. Supply chain risk increases if over-reliance on a single source of supply or supplier has high importance (Dada et al., 2007). Financial experts are in abundance and therefore do not pose higher bargaining power. Thus, overall, suppliers have moderate bargaining power.</p>
<h2 style="text-align: justify;">References</h2>
<p>BRI. (2021). About us. Company info. Available at: https://bri.co.id/en/info-perusahaan<br />
Dada, M., Petruzzi, N. C., &; Schwarz, L. B. (2007). A newsvendor’s procurement problem when suppliers are unreliable. Manufacturing &; Service Operations Management, 9(1), 9-32.<br />
Forbes. (2021). Bank Central Asia. Available at: https://www.forbes.com/companies/bank-central-asia/?sh=3023f3db6f9e<br />
Forbes. (2021). Bank Mandiri. Available at: https://www.forbes.com/companies/bank-mandiri/?sh=3d43e31b741c<br />
Forbes. (2021). Bank Negara Indonesia. Available at: https://www.forbes.com/companies/bank-negara-indonesia/?sh=7541981f5ba7<br />
Forbes. (2021). Bank Rakyat Indonesia (BRI). Available at: https://www.forbes.com/companies/bank-rakyat-indonesia/?sh=602f23964564<br />
Hamza, H., &; Kachtouli, S. (2014). Competitive conditions and market power of Islamic and conventional commercial banks. Journal of Islamic Accounting and Business Research, 5, 29-46.<br />
Kaur, D. (2021). Here’s how digital banks in Indonesia will gain a foothold this year. Available at: https://techwireasia.com/2021/05/heres-how-digital-banks-in-indonesia-will-gain-a-foothold-this-year/<br />
Widyastuti, Ratna &; Armanto, Boedi. (2013). Banking industry competition in Indonesia. Buletin Ekonomi Moneter dan Perbankan. 15. 401. 10.21098/bemp.v15i4.433.</p>