<p style="text-align: justify;">Hana Financial Group (HFG) is one of the largest groups in the Korean financial services sector. The company was founded in 1971 and is headquartered in Seoul, South Korea. It was initially founded as Korea Investment &; Finance, the country&#8217;s first financial company funded by the private fund. Later, it was converted into a commercial bank and renamed Hana Bank in 1991. The HFG is the most extensive overseas operations in the Korean market, and the bank was converted into a holding company in 2005 (Hana Financial Group, 2021).</p>
<p style="text-align: justify;">The group is considered the third largest among the Korean companies operating in the sector. HFG operates in assets management, commercial and retail banking and insurance segment through its subsidiaries. Porter&#8217;s five forces model is a valuable tool to identify threats and opportunities faced by Hana Financial Group in the Korean financial services sector.</p>
<h2 style="text-align: justify;">HFG &#8211; Competitive Rivalry in The Market</h2>
<p style="text-align: justify;">The South Korean financial services industry is highly competitive and forward-looking. The sector is saturated by massive public and private sector companies competing for the market share. HFG’s major competitions are KB Financial Group (KB), Shinhan Financial Group (SFG) and DGB Financial Group. KB group has reported an annual revenue of $29.4 billion and a profit of $2.8 billion with annual percentage change of 2.1% in 2020 (Fortune, 2021).</p>
<p style="text-align: justify;">Until December 2020, Hana Financial Group has reported revenue of $12.9 billion and earned a net income of $3.1 billion (Nikkei Asia, 2021). In the same financial year, SFG has reported the revenue of $22.9 billion and a net income of $2.8 billion (Nikkei Asia, 2021). The presence of local financial giants and international institutes has increased the competition that has resulted in high rivalry.</p>
<h2 style="text-align: justify;">HFG &#8211; Threat of Substitutes</h2>
<p style="text-align: justify;">The threat of substitutes is assessed to be weakly moderate for the mid-term span. The financial services industry is part and parcel of society and is immensely valuable. The data intensity and the monotonous aspects are bound to be improved owing to technological advancement. Digitization has made convenience a priority for the consumers; therefore, it has created an opportunity for the disruptors to take advantage of the situation.</p>
<p style="text-align: justify;">The financial services industry is facing renewed competition from the hybrid financial and technology companies; they are leveraging technology to unbundle the services offered by the incumbents and provide it as a niche. While competing with the traditional institutes, fintech still has not come up with a natural substitute. Therefore, Financial services are an important part of the business community, and their existence is inevitable in one or another form (McWaters et al., 2015). Hence, there is a low to moderate threat of substitution exists.</p>
<h2 style="text-align: justify;">HFG &#8211; The Threat of New Entrants</h2>
<p style="text-align: justify;">There are few limitations inherently associated with the financial services industry. These limitations act as a deterrent for new entrants in the industry. These include the strict regulatory and compliance framework, capital intensive and established incumbents. However, now most companies breaking into the sector are fintech firms, and they are usually well-founded by venture capital firms. Moreover, there are initiatives in place by the state to support the growth of such companies.</p>
<p style="text-align: justify;">The South Korean government has made fintech one of its top priorities for 2020 (England, 2021). Despite the regulatory push, a strict compliance framework is placed after the 2008 financial crisis and increases the cost. Another deterring factor is the presence of established competitors. Therefore, the threat of new entrants is assessed to be moderate.</p>
<h2 style="text-align: justify;">HFG &#8211; Bargaining Power of Buyers</h2>
<p style="text-align: justify;">Buyers bargaining power is directly proportional to these factors the state of competition in the market, switching cost and availability of better alternatives. The Korean financial services sector is highly competitive, and major players are operating in the segment. There are 25 million financial participating populations, and the services industry is saturated (Bellens, 2018).</p>
<p style="text-align: justify;">Customers are aware of the competition and thus leverage that to gain better price and services. Due to lack of differentiation, there is low or very minimal switching cost among competitors, thus making the consumer exit easier. Fintech companies have pushed the barriers in customer services and convenience that have given customers more leverage in terms of expecting and demanding better services.</p>
<h2 style="text-align: justify;">HFG &#8211; Bargaining Power of Suppliers</h2>
<p style="text-align: justify;">Generally, suppliers have moderate bargaining power in the industry. The suppliers’ ability is directly dependent on the following factors, suppliers’ concentration, and importance of supplies and risk of forwarding integration. There is a low risk of forwarding integration in the services sector, and therefore, suppliers cannot leverage that to increase the cost. There are three major supplies, human resources, retail customers and institutional investors.</p>
<p style="text-align: justify;">Financial professionals lack bargaining power because of the reason that supply exceeds the demand. Institutes invest after due diligence and often require a higher return rate, and sometimes funds have additional caveats attached with them. Therefore, they have higher bargaining power. Retail investors are not concentrating, but low switching cost and available options lend them moderate leverage. Informed suppliers about their importance to the business can use that to their benefit (Dess et al., 2006). Overall, suppliers have moderate bargaining power.</p>
<h2 style="text-align: justify;">References</h2>
<p style="text-align: left;">Bellens, J. (2018). How a social media firm created Korea’s fastest growing bank. Available at:https://www.ey.com/en_gl/banking-capital-markets/how-social-media-firm-created-south-korea-s-fastest-growing-bank<br />
Dess, G. G., Lumpkin, G. T. and Eisher, A. B (2006). Strategic Management. Text and cases. International edition. London: McGraw-Hill.<br />
England, J. (2021). South Korea launches Virtual Sandbox for fintech development. Available at: https://fintechmagazine.com/financial-services-finserv/south-korea-launches-virtual-sandbox-fintech-development<br />
Fortune. (2021). KB Financial Group. Available at: https://fortune.com/company/kb-financial-group/global500/<br />
Hana Financial Group. (2021). About us. Available at: https://www.hanafn.com:8002/eng/info/aboutus.do<br />
McWaters, J., Bruno, G., Lee, A., &; Blake, M. (2015). The Future of Financial Services-How disruptive innovations is reshaping the way financial services are structured, provisioned and consumed. In the World Economic Forum. Junio de (Vol. 2105).<br />
Nikkei Asia. (2021). Shinhan Financial Group Co., Ltd. Available at: https://asia.nikkei.com/Companies/Shinhan-Financial-Group-Co.-Ltd<br />
Nikkei Asia. (2021). Hana Financial Group, Inc. Available at: https://asia.nikkei.com/Companies/Hana-Financial-Group-Inc</p>