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Porter’s Five Forces of Maybank

by adamkasi | Oct 28, 2022 | Companies

Ad served by Malayan Banking Berhad, generally known as Maybank, is a

commercial banking company in Malaysia. The bank was

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incorporated in 1960 and headquartered in Kuala Lumpur,
Malaysia. The bank provides community financial services,
sekarang
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corporate banking, global markets, and Takaful and insurance. In
Why this ad? addition to Malaysia, The bank has a strong presence in
Singapore and Indonesia through its subsidiaries. Overall, it has
Bjak mudahkan urusan anda untuk renew a presence in 20 countries with almost 50,000 employees.
roadtax. Hanya pilih opsyen digital sahaja. Maybank is the largest bank in Malaysia based on total assets as Search
of December 2016, and the bank has total assets of almost MR
736 billion (Müller, 2019). Maybank is the country’s most valuable
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bank brand and ranked at 70th place among the world’s most
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valuable bank brands. Porter’s five forces model is used to Brands

assess the business, and financial risk Maybank is exposed to. Companies

Competitive Rivalry in The Market Industries

Porter Five Forces Theories

The financial services market is considered to be highly competitive. The high return on investment has attracted
more players in the market. The major competitors of the Maybank are Public Bank, CIMB and Hong Leong Bank.
During the financial year 2020, Maybank has earned $10.6 billion in revenue and reported a net income of $1.5
billion with an ROE of 7.8% and an excellent profit margin of 14.43% (Nikkei Asia, 2021). In the same financial year,
the Public Bank has earned $4.5 billion and reported a net income of $1.1 billion (Nikkei Asia, 2021). CIMB has
reported annual revenues of $6 billion with a year-on-year fall of 10.5%, mostly attributed to the global pandemic
with a net income of $0.28 billion (Nikkei Asia, 2021). In 2020, Hong Leong Bank earned a profit of $1.9 billion (Nikkei
Asia, 2021). Due to the presence of megabanks, the market is intensely competitive.

Threat of Substitutes
The financial services industry faces immense pressure from the newly minted fintech companies; they take
advantage of the technological advancements. However, the threat is moderate in the foreseeable short period. The
industry has evolved over time but still has enormous potential for improvements to remove inefficiencies and
increase profitability. There are many monotonous tasks that can be automated with little effort; there is an
imminent threat from the fintech companies, which benefit the technology. However, they only provide one-off
product in comparison with the bundle offerings of the incumbents. There is a huge potential for growth in the
global fintech industry that is expected to be valued at $305 billion by 2025 (PR Newswire, 2020). However, despite
the strain on the business, incumbents are taking advantage of the situation and improving on the digital front.
Therefore, the threat remains minimal in the short term.

The Threat of New Entrants

The threat is assessed to be moderate in the industry; it depends upon certain underlying factors such as
compliance environment, a requirement of capital and potential for growth. The financial services industry is one of
the highest regulated countries globally to keep the public safe at large. Therefore, high compliance cost leads to
reduced profitability and acts as a deterrent for the firms operating in the market. Another deterrent is the lack of
differentiation in the products offered; for a new entrant is challenging to gain market share and penetrate the
saturated market. High capital requirement, along with little room for differentiation and innovation, are some of the
unavoidable hurdles for new entrants (BSA, 2017). Established incumbents with a significant market share also
discourage new entrants. Therefore, the threat remains low in the short term.

Bargaining Power of Buyers

The bargaining power of customers is assessed to be strongly moderate to high in the industry. The bargaining
power of the buyers is associated with their importance to the business, concentration of the buyers’ and switching
cost. The industry is highly competitive; consequently, buyers have more options to choose from, they take
advantage of the fact. High competition in the market yields higher bargaining power for the consumer (Masocha et
al., 2011). Digitization has also played a part in enhancing customer awareness, and customer requires more
personalized services at better prices. The lack of differentiation among services offered and the absence of
switching cost make it easier for consumers to move to another service provider. Therefore, buyers have moderate
to high bargaining power.

Bargaining Power of Suppliers

Suppliers hold moderate bargaining power in the financial services industry. When there is a risk of forward
integration, suppliers are concentrated, and the supplies are specialized. However, the risk of forward integration is
low as suppliers cannot quickly move into the business. Risk is weighted according to the importance of suppliers,
and the financial experts hold low bargaining power as they are in abundance and there are fewer vaccines
available. Institutional investors bring ample cash into the business, but that is not without strict terms and a high
rate of return; moreover, they have options to invest elsewhere. They are aware of their importance and therefore
yields higher bargaining power. When suppliers know their importance, they can exercise higher bargaining power
(Dess, 2006). Therefore, suppliers have moderate to high bargaining power.

References
Dess, G. G., Lumpkin, G. T. and Eisher, A. B (2006). Strategic Management. Text and cases. Internationaledition.
London: McGraw-Hill.

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.

BSA. (2017). Review Of Barriers to Entry, Expansion, and Exit in Retail Banking. Available at:
https://www.bsa.org.uk/BSA/files/97/97d78dbb-e8aa-4f8c-8b26-8c7ea7d95ce9.pdf

PR Newswire. (2020). FinTech Industry Report 2020-2025 – Trends, Developments and Growth Deviations Arising
from the COVID-19 Pandemic. Available at: https://www.prnewswire.com/news-releases/fintech-industry-report-
2020-2025—trends-developments-and-growth-deviations-arising-from-the-covid-19-pandemic-301080282.html

Nikkei Asia. (2021). Malayan Banking Bhd. Available at: https://asia.nikkei.com/Companies/Malayan-Banking-Bhd

Nikkei Asia. (2021). Public Bank Bhd. Available at: https://asia.nikkei.com/Companies/Public-Bank-Bhd

Nikkei Asia. (2021). CIMB Group Holdings Bhd. Available at: https://asia.nikkei.com/Companies/CIMB-Group-
Holdings-Bhd

Nikkei Asia. (2021). Hong Leong Bank Bhd. Available at: https://asia.nikkei.com/Companies/Hong-Leong-Bank-Bhd

Müller. (2019). Largest banks in Malaysia as of December 2016, by total assets. Available at:
https://www.statista.com/statistics/830648/malaysia-major-banks-by-total-assets/

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