Firms seeking to enter a new industry may face barriers to entry which can be categorised as strategic or structural. In the context of the banking industry, existing firms within the sector may have some cost advantages in that they have existing systems to undertake financial transactions and therefore may have superior technology relative to new entrants.

There may also be switching costs for consumers which make it difficult to attract new clients and/or clients may have contractual obligations to their existing financial provider and find it difficult to change to a new entrant. Many individuals are also used to their current service provider and may be reluctant to switch firms and learn how to use new software/programs.

Another significant factor is that users may be unsure about the quality of the service a new provider may be able to deliver and may therefore decide not to switch. These factors make it difficult for a new firm to build up its client base.

In this sector, clients may have considerable brand loyalty as they have banked with the same firm for a number of years and whilst it may not directly block entry, it can make success much more difficult. Advertising tactics to attract customers are a feature of the banking sector.

In the financial services sector, there will be regulatory obligations that the firm must meet. They will need a banking licence in order to exist and this could be difficult to secure as there are strict regulations around the operations of firms in this sector.