HSBC Bank Porters Five Forces Analysis 2018
Jonathan. K. Kush is the lead business writer at 123 Writing. He holds a BA (Hons) degree in Business Administration from the University of Brighton, UK. As a Market Research Analyst by profession, Jonathan has nearly a decades experience in market research and business analysis. His passion includes studying markets and industry trends to understand their impact on company strategy, performance and ways firms can mitigate their environment to outcompete rivals.
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The UK banking industry is highly oligopolistic with the biggest four banks Lloyds Banking Group, Barclays, RBS and HSBC bank, also referred to as the “Big Four” controlling a combined market share of 77.17% for current accounts in the UK’s banking industry. This analysis shows how HSBC bank is affected by competitors and other substitutes like Fintech companies. It also highlights various market opportunities for the bank such as development of a fintech company to reduce competition and facilitate its growth. Below are competition and BCG analyses for HSBC bank.
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HSBC Bank Strategy Case Study
Key Learning Outcomes
By the end of the case, students should be able to:
- Analyse the UK banking industry and how the five forces have affected the fourth biggest bank in the UK – HSBC, and rivals and the impact on industry structure, attractiveness, and profitability.
- Understand how HSBC has managed to defend against intense competition from Lloyds, Barclays, RBS and new fintechs and the strategies it uses to create 'blue oceans' that are defensible, helping it capture and maintain competitive advantage.
- To apply strategy business models and frameworks such as Porters five forces to real company cases.
1.0 INTRODUCTION
The UK banking industry is highly oligopolistic with the biggest four banks Lloyds Banking Group, Barclays, RBS and HSBC bank, also referred to as the “Big Four” controlling a combined market share of 77.17% for current accounts in the UK’s banking industry. HSBC is the biggest bank in UK in terms of assets and one of the largest banking and financial institutions in the world with over 1.89 trillion GBP in assets in 2017 and over 7500 offices across 80 countries across Europe, Middle East, North Africa, Asia, North America, and Latin America (Annual Report 2017).
Established in 1865 with its headquarters in London, HSBC bank has many subsidiaries such as First Direct, M&S bank, and HSBC bank Bermuda, among others. In 2017, HSBC bank had an annual revenue totaling $51.445billion with a profit $11.88billion up from $3.45billion in 2016 (Statista 2018). In addition, its profit margin increased by 11.56% from 6.57% in 2016 to 18.13% in 2017, the second highest among UK banks (Orbis 2018).
In terms of market share based on current accounts, HSBC bank had a market share of 12.35% with competitors RBS, Barclays and Lloyds having 18.52%, 18.52% and 27.78% respectively as shown in table 1 below (Varyani 2017).
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