<p style="text-align: justify;">Swedbank is a banking group based in Sweden. The bank was incorporated in 1820 and is headquartered in Sundbyberg, Sweden. It operates in the following segments retail banking, financial services, and assets management. The bank has operations in Sweden and the Baltic European states Estonia, Latvia, and Lithuania. It operates in these regions through its subsidiaries Swedbank Estonia, Swedbank Latvia, and Swedbank Lithuania. The bank is the third-largest bank in Sweden based on assets, and it has total assets worth SEK 2,408,228 million in 2019 (Norrestad, 2020). Swedbank has almost 7.3 million private customers and 547,000 corporate clients (Swedbank, 2021). It has a longstanding history and is one of the primary banks in the country, it employees 15,000 individuals. Porter&#8217;s five forces model is used to assess the business and financial risk Swedbank is exposed to.</p>
<h2 style="text-align: justify;">Swedbank &#8211; Competitive Rivalry in The Market</h2>
<p style="text-align: justify;">The Swedish banking sector is competitive; the HHI banking sector concentration index is 16, which is average in Europe. It shows a delicate balance of large and small banks in the market to keep it competitive (Copenhagen Economics, 2018). The three major competitors of the Swedbank are Danske Bank, SEB AB and Svenska Handelsbanken. Swedbank has earned a profit of $1.4 billion on revenue of $6.4 billion in 2020(Forbes, 2021). Danske Bank, which competes for business in the Nordic region in the financial year 2020, has reported a revenue of $20.9 billion and profits of $617.5 million (Forbes, 2021). In the same year, SEB AB has reported $7 billion in revenue and $1.7 billion in profits (Forbes, 2021). Svenska Handelsbanken, the most prominent Swedish bank, has reported $6.5 billion in revenue and earned $1.7 billion (Forbes, 2021). Therefore, the market is competitive.</p>
<h2 style="text-align: justify;">Swedbank &#8211; Threat of Substitutes</h2>
<p style="text-align: justify;">The threat of substitutes remains moderate for short to medium term. The financial services industry has evolved over time, and however, there is still potential for improvement. The traditional banking companies face threats from the new fintech companies. These companies are using technological advancements and deriving benefits from their emergence. These companies are improving service delivery and automating tedious tasks to remove inefficiencies. The Swedish fintech scene is vibrant, and Sweden is the home to the most successful fintech company Klarna valued at $5.5 billion (Anjou et al., 2021). However, traditional banks are responding well, improving good service quality, and are en route to be the most digitally leading country. Therefore, the threat remains low to moderate in the short term.</p>
<h2 style="text-align: justify;">Swedbank &#8211; Threat of New Entrants</h2>
<p style="text-align: justify;">The threat is assessed to be low in the Swedish banking sector. There are caveats associated with entry into the industry. These are mainly the established incumbents, capital intensity, the potential for growth, and stringent regulations. New businesses face difficulty breaking into the market due to the established incumbents; they have their presence through a network of branches and have a significant market share. Incumbents can retain their customers by adapting and properly aligning themselves, and therefore it discourages new business (Dan et al., 2016). Another barrier to entry is the requirement of high capital, which proves challenging to raise for everyone. The sector is highly regulated globally; even though there is an encouraging environment for companies to start operations, they still need to comply with strict regulations. Therefore, the threat is considered to be low to moderate.</p>
<h2 style="text-align: justify;">Swedbank &#8211; Bargaining Power of Buyers</h2>
<p style="text-align: justify;">The bargaining power of customers is assessed to be strongly moderate to high in the industry. It is gauged by the buyers&#8217; concentration, state of competition, switching cost, and brand loyalty. Groups do not bind the buyers as most of them are individuals; unless banks depend upon few corporate clients, the bargaining power remains low. There is mild brand loyalty in the Swedish market; however, there is no negative cost associated with switching banks. Therefore, it serves as a cost for business as it may lose customers relatively quickly. Low switching is one reason for customers&#8217; higher bargaining power (Vyas &; Raitani 2014). There are ample options to choose from; it yields consumers with higher bargaining power. Therefore, consumers have higher bargaining power.</p>
<h2 style="text-align: justify;">Swedbank &#8211; Bargaining Power of Suppliers</h2>
<p style="text-align: justify;">Generally, suppliers hold moderate bargaining power. Supplier’s risk is considered high in the presence of higher forward integration risk, suppliers&#8217; concentration, and specialized nature of supplies. However, the risk of forward integration is low as suppliers cannot quickly move into the business. Other risks are dependent upon the unique factors attached with supplies. The human resources required for business are in access then demand; thus, they cannot exercise higher bargaining power. Institutional investors bring significant funds to the business, and their investment is industry independent. They are aware of their importance and therefore yield higher bargaining power. When suppliers know their importance, they can exercise higher bargaining power (Dess, 2006). Therefore, suppliers have moderate to high bargaining power.</p>
<h2 style="text-align: justify;">References</h2>
<p style="text-align: left;">Anjou, M., Löfquist, J., Vinterskog, I. (2021). Sweden – a flourishing Fintech start-up scene in spite of regulatory hurdles. Available at: https://www.ibanet.org/article/69789E67-A676-43BD-917B-A407B2753257<br />
Copenhagen Economics. (2018). Competition in the Swedish Banking Sector.<br />
Dany, O., Goyal, R., Schwarz, J., van den Berg, P., &; Scortecci, A. (2016). Fintechs may be corporate banks’ best “Frenemies”. The Boston Consulting Group.<br />
Dess, G. G., Lumpkin, G. T. and Eisher, A. B (2006). Strategic Management. Text and cases. Internationaledition. London: McGraw-Hill.<br />
Forbes. (2021). Danske Bank. Available at: https://www.forbes.com/companies/danske-bank/?sh=768d68754242<br />
Forbes. (2021). SEB AB. Available at: https://www.forbes.com/companies/seb-ab/?sh=567bc8a15162<br />
Forbes. (2021). Svenska Handelsbanken. Available at: https://www.forbes.com/companies/svenska-handelsbanken/?sh=512b88ef31ff<br />
Forbes. (2021). Swedbank. Available at: https://www.forbes.com/companies/swedbank/?sh=5cdd90507501<br />
Norrestad, F. (2020). Largest banks in Sweden 2019, by assets. Available at: https://www.statista.com/statistics/693888/leading-banks-assets-sweden/<br />
Vyas, V., &; Raitani, S. (2014). Drivers of customers’ switching behaviour in Indian banking industry. International Journal of Bank Marketing.</p>