Handskelbanken

Threat of new entrants - low

The banking industry is so overloaded that there is hardly any space for newcomers. According to the Swedish Bankers’ Association, from 2000 to 2008 the number of commercial banks has increased from 22 to 31. Four of them are large banks, Including the Handelsbanken. Obviously, it can be said that roughly one new commercial bank enters the market each year in Sweden. With such insignificant number of new entrants each year, hence, the level of threat is considered to be low. In addition, there is another important and huge entry barrier which is trust. Due to the fact that banking industry deals with customer’s financial information and therefore, people are more willing to trust their money to major and well-known banks, who they consider to be reliable and trustworthy. Consolidation can be another reason in this issue. As major banks attempt to execute the merger or acquisition in order to serve all of a customer’s financial needs under one roof. This process poses the difficulty to operate in the market for new banks and compete with big ones. Besides, one of the essential requirements to enter the banking sector is to have high investment capital. Ultimately, the threat of new comers becomes relatively low.

Power of buyers - moderate

Although, there is no much of a threat to the banking sector, high switching cost can be the main factor that has relative impact on the power of buyers. Precisely, it poses a massive obstacle for an individual to switch to another bank, if he or she has one bank that provides service of banking needs such as checking, mortgage, savings and etc. In an attempt to convince and attract clients to switch to their bank, competitors will often try to reduce the price of switching. However, most of the people would still prefer to stay with their current bank. Therefore, it can be said that the bargaining power of customers is moderate.

Power of suppliers

The main suppliers in Handelsbanken are...