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<p align="justify">Standard Bank Group, commonly known as Standard Bank (SB), is the financial services group based in Johannesburg, South Africa. The bank was incorporated in 1862 as the African Subsidiary of the British Standard Bank. It is the biggest bank in Southern Africa based on the assets. The bank has a history of operations for 157 years. It has operations in 20 African Countries; in addition, SB has 50,000 employees and has been listed on the Johannesburg stock exchange for 50 years (Standard Bank, 2021). SB provides a range of services, including personal and business banking, corporate banking, investment banking and wealth management. The bank has its importance in society and plays a vital role in uplifting the community and sponsor creative and art projects. SB is also partner with the prestigious MIT on innovative housing and food projects, addressing the needs of nations through positive development. Porter&#8217;s five forces model is a valuable tool to identify threats and opportunities the Standard Bank Group faces in the financial services sector.</p>
<h2 align="justify">Competitive Rivalry in the Market</h2>
<p align="justify">The global financial services sector is highly competitive as there are banks and institutes with massive capital operating in the industry. However, the South African financial services sector is dominated by &#8220;big five&#8221; banks and the industry becomes highly concentrated. After the 2001-02 currency crisis, further concentration happened, and the banking sector is in a state of monopolistic competition. Thus many banks are competing and offering similar products and services. The main competitors of SB are Absa Group, First Rand and Ned bank. In the latest fiscal year, 2020, SB has brought in $10.5 billion in revenues and made a profit of $799 million (Forbes, 2021). In the same year, Absa Group has reported $357.1 million and reported revenue of $8.2 billion (Forbes, 2021). First Rand is the second largest bank in South Africa, with $7.8 billion in revenues and $923 million (Fortune, 2021). Ned Bank is one of the largest banks in South Africa; it has reported revenue of $5.9 billion and a profit of $222 million (Fortune, 2021). These banks dominate the industry, but the market remains in the static state of monopolistic competition.</p>
<h2 align="justify">Threat of Substitutes</h2>
<p align="justify">As of now, the threat of substitutes for the financial services industry remains low. However, many banks and financial services companies are operating in the saturated sector. The lack of product differentiation has made this difficult for companies to compete on products. Africa is on the brink in emerging markets to take advantage of the technology boom and the educated young generation to make the continent&#8217;s needs met. The African companies raise $1.35 billion in 2020, $350 million more than the preceding year (Henderson, 2021). These companies are expanding in payments processing and tapping the untapped market share as there is a significant population that does not have access to financial services. Therefore, there is a severe potential for these firms to grow. However, for now, the threat of substitution remains low.</p>
<h2 align="justify">The Threat of New Entrants</h2>
<p align="justify">There are some inherent barriers to entry in the sector, including but not limited to high capital requirement, regulatory framework and presence of established corporations in the industry. The primary impediment is the requirement of high capital to start operations. When an industry has monopolistic competition and offered products are similar, requiring aggressive advertisements and promotions to gain new customers. There are strict compliance requirements to adhere to, especially related to the conduct of the institutions. The financial policy address avoids the scenarios where a failure of the financial system can lead to economic instability (Coetzee &; De Beer, 2016). Another deterrent is the presence of the established companies that hold a significant market share. Therefore, the threat of new entrant remains low.</p>
<h2 align="justify">Bargaining Power of Buyers</h2>
<p align="justify">Consumers usually have higher bargaining power in the financial services sector, and the state of the competition has enabled them to exercise moderate buying power. The industry is in monopolistic competition, and all the competing banks are offering similar products. The products are identical at the core, and all the apparent differentiation is superficial. Banks holds no power due to low switching cost. Customer can switch easily from one bank to another due to the lack of brand loyalty, which puts the competitors in a fierce acquisition state, and firms feel pressure to increase the volume of the business. If the industry competes for the market share, customers have higher bargaining power (Masocha et al., 2011). Customers also prefer better services at a best-suited price for them. Therefore, consumers can exercise moderately to high bargaining power.</p>
<h2 align="justify">Bargaining Power of Suppliers</h2>
<p align="justify">Suppliers&#8217; power depends on factors such as concentration, the importance of supplies for the customer&#8217;s supply chain, and the nature of supplies. The essential sources of inflows are retail customers, institutional investors and financial experts. The individuals have moderate bargaining power as they are necessary for the business, but the individual customer cannot affect the potential business. However, the institutional investors exercise high bargaining power due to their required rate of return and any additional caveats attached with the money they deposit. Few institutional investors can pose a forward integration risk; this risk is high when: the suppliers&#8217; industry has less return than the buyers&#8217; industry. Suppliers can exercise high bargaining power when their inputs are essential for the business (Dess, 2006). High-skilled business and finance graduates are in abundance; from the perspective of the supply and demand principle, they have low bargaining power. Therefore, suppliers have moderate to high bargaining power.</p>
<h2>References</h2>
<p>Coetzee, Johan &; De Beer, Jesse. (2016). Financial Regulation in the South African Banking Industry.<br />
Dess, G. G., Lumpkin, G. T. and Eisher, A. B (2006). Strategic Management. Text and cases. International edition. London: McGraw-Hill.<br />
Forbes. (2021). Absa group. Available at: https://www.forbes.com/companies/absa-group/?sh=54fe06905eb4<br />
Forbes. (2021). FirstRand. Available at: https://www.forbes.com/companies/firstrand/?sh=45a685a741cb<br />
Forbes. (2021). Nedbank Available at: https://www.forbes.com/companies/nedbank/?sh=233ca28247b4<br />
Forbes. (2021). Standard bank group. Available at: https://www.forbes.com/companies/standard-bank-group/?sh=7c2d08f421c0<br />
Henderson, R. (2021). Fintech Bright Spot Africa Catches Up in Bumper Funding Year. Available at: https://www.bloomberg.com/news/articles/2021-05-06/fintech-bright-spot-africa-plays-catch-up-in-bumper-funding-year<br />
Masocha. R., Chiliya. N., and 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 />
Standard Bank. (2021). Who we are. Available at: https://www.standardbank.com/sbg/standard-bank-group/what-we-do/our-business</p>
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