ANZ could use their already huge market share to build switching costs that are substantial enough to cause customer lock-in. Customer lock-in is useful in creating a long-term substantial source of profit for the firm. One way the company could achieve this is through bundling up their products or services. From this, there are two distinct economic effects involved: reduced dispersion of willingness to pay, which is a form of price discrimination, and increased barriers to entry (Varian, 2003).
In as much as IT could be used to create conditions for customer lock-in by major players, ANZ would need to be wary of the role of ‘disruptive technologies’, i.e. low cost and initially low-quality innovations that have the potential to unseat established industry players. According to Varian (2003):
IT has, in many cases, reduced fixed costs over time, leading to more entrants; particularly in industries where there is high demand for variety [banking is an industry with a high demand for variety]…rapid reduction in costs and rapidly growing markets offer a fertile ground for competition and disruptive technologies (p. 9). . Strategic Role of Information Systems in the ANZ Group of Companies.
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