Porter’s Five Forces Analysis of Lloyds Bank

Lloyds Bank is a British retail and commercial bank. The financial service-providing bank started its business in 1765. Today, we’ll discuss Porter’s five forces analysis of Lloyds Bank; bargaining power of suppliers and buyers; threat of new entrants and substitutes; and intense rivalry as competitive forces in strategic management.

Substitute and Competitors of Lloyds Bank

• Royal Bank of Canada
• RBS
• Halifax
• NatWest
• National Westminister Bank
• HSBC
• Kent Reliance
• Barclays

Porter’s five forces analysis of Lloyds Bank would analyze the bargaining power of suppliers and buyers; the threat of new entrants and substitutes; and intense rivalry as competitive forces in strategic management. Here’s Lloyds Bank Porter’s five forces analysis of financial service-providing firm as follows;

Porter’s Five Forces Analysis of Lloyds Bank

Let’s discuss Porter’s five forces analysis of Lloyds Bank as competitive forces in strategic management and they’re as follows;

Bargaining Power of Suppliers in Lloyds Bank

The bargaining of suppliers is moderate in the financial service-providing firm as competitive forces in strategic management. Some of the main factors impacting the bargaining power of suppliers in Lloyds Bank Porter’s 5 forces analysis of financial service providing firms are as follows;

I-Suppliers

Lloyds Bank receives supplies from the following suppliers to perform its daily operations;

• Anti-fraud and data security software and system
• Regulatory authority and its requirements
• Credit rating agencies
• Financial software vendors
• Tech service providers

The stationary and other items are easily and readily available to banks and financial institutions. They have a lower bargaining power. On the other hand, financial technology, advanced tools and equipment, and regulatory requirements aren’t easily available to the banks. In fact, they need to invest a significant amount of capital resources to make their financial system safe and secure to deal with any digital and cyber attack.

Bargaining Power of Buyers in Lloyds Bank

The bargaining of Buyers is Higher in the financial service-providing firms as competitive forces in strategic management. Some of the main factors impacting the bargaining power of suppliers in the financial service providing firm five forces analysis of Lloyds Bank are as follows;

I-Corporate Companies

According to an estimate, the bargaining power of corporate clients of Lloyds Bank is approximately 48%. It is due to the fact that there are multiple financial service providers available in the market and they all provide various types of financial services. Once they sign the contract, it is highly expensive for the corporate client to switch to other companies.

II-Retail Customers

Lloyds Bank is the leading retail commercial bank in the UK and worldwide. The bargaining power of retail customers of Lloyds Bank is approximately 68%. However, it is due to the fact that there are multiple financial services and banks available in the market and they all provide multiple services to the customers. They could easily switch from one bank to another without incurring any cost; some of the main factors that impact their decisions are as follows;

• Personal experience
• Customer service
• Track record
• Social media

Threat of New Entrants in Lloyds Bank

The threat of new entrants is low in financial service-providing firms as competitive forces in strategic management. Some of the main factors impacting the threat of new entrants in the financial service providing firm five forces analysis of Lloyds Bank are as follows;

I-Large Network

Lloyds Bank has established a very large infrastructure and network of retail chain banks comprising 1700 branches, and 6000 ATMs across the UK and worldwide. On the other hand, the new banks and financial institutions don’t have a solid on-ground position and infrastructure. It makes it highly difficult for them to approach the end consumers and the targeted customers needing financial services.

II-Trust & Confidence

Lloyds Bank has been operating its business in the financial service-providing and banking industry for the past over 260 years. The bank has earned a strong market and brand positioning due to centuries of financial industry experience and earning the trust and confidence of customers. However, the new banks and financial institutions don’t have the luxury of such options.

Threat of Substitutes to Lloyds Bank

The threat of substitute products and brands is higher in the financial service-providing firm as competitive forces in strategic management. Some of the main factors impacting the threat of new substitutes in the financial service providing firm five forces analysis of Lloyds Bank are as follows;

I-Digital Payment Service Providers

Some of the other financial service options are blockchain technology, cryptocurrency, Apple Pay, Payoneer, PayPal, crowdfunding, robo-advisor, investment platform, and others. They all offer digital banking and online transaction services to customers with a seamless experience. Easy availability of multiple financial service options would increase the threat of substitution rate.

Competitive Rivalry in Lloyds Bank

The competitive rivalry among financial service-providing firms is very high in Lloyds Bank as a competitive forces in strategic management. Some of the main factors impacting competitive rivalry in the Lloyds Bank forces analysis of financial service providing firm are as follows;

I-Tough Competition

Lloyds Bank is facing tough competition from competitive banking and financial service-providing firms like Deutsche Bank, Monzo, Santander, and others. They all have established a strong marketing and brand position and a large database of customers. Their market presence is negatively impacting the growth rate and sale of bank services.

II-Differentiation

In order to differentiate itself from its competitors, Lloyds Bank focuses on running proactive marketing and branding campaigns, promotional offers, advanced tech and digital services, and a seamless banking experience. These factors help the company to maintain its competitive position in the market.

Conclusion: Lloyds Bank Porter’s Five Forces Analysis |5 Forces Analysis of Lloyds Bank

After an in-depth study of Porter’s five forces analysis of Lloyds Bank; we have realized that Lloyds Bank is the world’s leading financial service-providing bank. If you are learning about Lloyds Bank 5 forces analysis of a financial service providing firm; then you should keep in mind the abovementioned bargaining power of suppliers and buyers; threat of new entrants and substitutes; and intense rivalry as competitive forces in strategic management.