The Co-Operative Bank

The Co-operative Bank

The Co-operative Bank (Co-op Bank) is a commercial bank founded in 1872 in Manchester, the United Kingdom. Once was a department of the Co-operative Wholesale Society (CWS), the banking business was separated as a legal entity in 1971 because of its continuously expanded banking activities.

Value Chain

Different from manufacturing industries, the banking business is customer-driven, which resulted in a different value chain of banking industry when compared to other manufacturing industries, starting from the marketing side:

Marketing (Advertising, Branding, Sales supports)  Sales (Acquisition, Offering, Multichannel management)  Products (Funding including credits and deposits, Investment, Services, e.g. account management)  Transactions (Payments, Clearing and settlement, etc.)

There are also other support activities participating whole processes, including risk management, technology development, human resources and firm infrastructure.

Porter’s Five Forces Framework

Suppliers and customers in the banking industry are the same, both including individuals and corporates to supply or loan money. Since individuals and corporates are price-sensitive but can choose from a wide array of banks to deal with their money, the bargaining power of both suppliers and customers is high.

Threat of new entrants is low considering the high barriers to entry due to the government regulations and the requirement of a great amount of money to operate banking businesses.

Threat of substitutes is medium. Banks feel increasing pressure from other financial institutions such as insurance companies and stock markets in terms of financing and investing actions.

Competitive Rivalry in the banking industry is high, since there are countless players providing homogenous services on the market. Other participants on the financial services markets are also a resource to intensify the competition.

SWOT Analysis

Strengths of Co-op Bank include its long history, deposits over 300 million GBP in 1971, various kinds of products and services for customers, issuing successful and influential card products in UK and Europe, variable, broad-based retail clearing bank, consolidated personal and corporate account processing tasks, ground customer base and innovations as the first new settlement bank.

Weaknesses are its market position as only a small player in the UK’s market, as well as the high cost-to-income ratio, indicating problems in its cost management system to reduce total costs.

Opportunities exist in the expanded international market as well as the internet banking which provide more chances for the bank to innovate and