Barriers to Entry for Mashreq

I. Can IT/IS build barriers to entry?

Mashreq is a leading bank in the UAE as well as in many other countries around the Middle East. It has enough power to influence some of the market outcomes and factors such as new-market entries; thereby establishing barriers that would create difficulties for new entrants to compete with Mashreq.

In regard to Mashreq, definitely yes; IT/IS does build barriers to entry. Mashreq smartly utilize its IT capabilities and ensures that it constantly invests in improving and developing innovative IT services that would lead to an outstanding level of service quality, convenience and efficiency for its customers. This not only enriches Mashreq customers’ brand loyalty but also improves Mashreq’s reputation; thereby impeding competitors from entering the market. A new entrant is likely to experience difficult times to find better ways since large initial capital investments are required and Mashreq offers tough competition for them to survive even if they enter the market. For instance, consider Mashreq’s mobile and online banking services. Competing with Mashreq’s wide variety of convenient online services is posed as a potential threat to new market entrants to survive in the competitive world. In fact, this factor may drive them out of competition especially when most of the customers would prefer Mashreq because of these features and since it is a reputable bank. In addition, the mobile banking feature significantly differentiates Mashreq from its competitors; they have a competitive advantage in this field which also acts as one of the barriers to entry created by IT. Implementing a system service such as mobile banking requires large investments in the IT infrastructure. Hence, a new entrant who has limited capital and financial capabilities will be unable to compete and survive in the banking industry, especially when they have competitors like Mashreq to contend with.