According to Michael Porter, the intensity of competition in the market in any manufacturing

industry is influenced by the following five competing forces:

1. Supplier strength is reflected in the following characteristics:

- The level of concentration of suppliers

- The importance of the quantity of products to suppliers
- The difference of suppliers
- Influence of inputs on cost or product differentiation
- Conversion costs of enterprises in the industry
- The existence of alternative suppliers
- the risk of enhancing the integration of suppliers
- Cost of supply versus total industry income.

2. The risk of substitution is shown in:

- The conversion costs in using the product

- The trend of using substitute goods of customers
- Correlation between price and quality of substitutes.

3. Accession barriers are expressed in:

- The absolute cost advantage

- Understanding the market oscillation cycle
- Access to inputs
- Government policy
- economies of scale
- Capital requirements
- Characteristics of trademarks
- The costs of switching the business
- Access to distribution channels
- Ability to retaliate
- Exclusive products.

4. Customer strength is shown in:

- Bargaining position
- Number of buyers
- Information acquired by the buyer
- Characteristics of trademarks
- Sensitivity to price
- product differentiation
- The concentration of customers in the industry
 - Availability of alternative goods
- Engines of customers.

5. The level of competition is shown in:

- Barriers if you want to "escape" from the industry

- Concentration of the industry
- Fixed Costs / Value Added
- The growth of the industry
- Excess capacity
- Difference between products
- Conversion costs
- Characteristics of trademarks
- The diversity of competitors
- Screening status in the industry.

The market-oriented economies and the global market place have enhanced the competition for

funds and market share thereby cutting down the spreads of the banks, a part from declining

spread, banks are also witnessing a faster growth in their expenses when compared to their

revenues predominant in these expenses are the raising salary expenses and loan-loss expenses.

banks are responding by introducing new product lines and developing the existing services into

more sophisticated ones,in order to offset the rising expenses.let us examine the influence of the
competitive forces using Michael Porter's model for banking industry.

1. Rivalry Among Existing Firms: Competition among banks has increased drastically

since the Commencement of liberalization.New products, free pricing and market forces

are collectively acting upon the spread of the bank.

2. Potential Entrants: With the liberalization of the financial sector, the influence of these

forces on the banking industry is being felt to a larger extent, with the DFI's diversifying

into universal banking activities and with the entry of new banks in the private sector, the
threat from the new entrants is gradually increasing .
 3. Threat from Substitutes: In addition to the threat from the new entrants,banks are also

exposed to competition from the other financial intermediaries offering substitute

product. These include the non-banking finance companies.etc the new entrants and the

substitute products are adding on to the already existing competition from the present

players.

4. Bargaining Power of Buyers: With the level of competition , both from within and

outside the industry. increasing , the borrower is naturally placed with greater

bargaining power with the opening of other financial market .the money market and the
overseas capital market , the avenues for raising funds have widened for the borrower.

5. Bargaining Power of Suppliers: The introduction of new financial products and greater

access to other financial markets have enhanced the investment opportunities of the
depositors who from the major sources of funds for the banking sector.

Power of suppliers:

- Customer deposit
- Advance and loan
- Mortgage-backed securities
- Advances from other monetary organizations

By using these four main providers, the bank make sure that they have the fundamental assets
required to benefit their clients’ getting needs while keeping up enough money to meet
withdrawal desires. The energy of the providers is to a great extent in view of the market, their
energy is regularly considered to vacillate between medium to high.

Power of buyers:

The individual doesn’t posture a lot of a danger to the finance and banking industry, however
one central point influencing the influence of puchasers is generally high exchanging costs. On
the off chance that a man has one bank that handle their account needs, debt, reserve
investments, checking, so forth, it can be a tremedous bother for that individual to change to
another bank. To attempt and persuade clients to change their bank they will customarily bring
down the cost of exchanging, however, the vast majority still to stay with their present bank. The
web has enormously expanded the simplicity and decreased the cost for shoppers to look at the
costs of opening/holding accounts and in addition the rates offered at different banks.

Availability of substitutes:

Several banking industry’s biggest dangers of substitution are not from opponent banks but
rather from non-monetary challengers. The business does not endure any genuine danger of
subtitutes similar to credits or withdrawals, however insurances, joined finances, and salary
securities are facilities of the many banks that are additionally offered by non-banking
organizations. There is likewise the danger of installments strategy substitutes and advances are
moderately high for the business.

Competitive Rivalry:

The banking industry is considered exceptionally viable. The finance related industry has been
around for a long time, and pretty much everyone who needs banks account benefit as of now
has them. Along these lines, banks must evdeavor to draw customers far from contender banks.
They do this by offering financing, higher rates, venture services, and more higher services than
their opponents. The bank rivalry is frequently a race to figure out which bank can offer both the
best and speediest facilities, yet has made banks encounter a lower ROA. Given the way of the
business it will probably observe advance solidification in the banking industry. Big banks have
a tendency to like to procure or converge with different banks than to burn through cash
showcasing and publicizing.

Hence the forthcoming of bankig industry is extremely hard to state. One might say that the both
venture and retail banking is confront transformational challenges. The administrative change
proposed by government is broad and its effect is additionally unverifiable. Affter the money
related emergency, the banks are stressing on repairing its equilibrium reports, attemping to
reinforce their capital, improving the liquidity position or more all recapturingtrust and certainty.
The recuperation of bank divivions is broadly reliant upon the approach and change moves made
by government. Achievement of banking division relies on upon appropriate risk taking. Banks
need to evaluate their monetary development alongside their capability of taking danger. It has
been noticed that the world economy is growing progressively. Subsequently, a compelling
administrative system, improve exploit will help the bank indistry to accomplish reasonable
development in future.