A study of customer choice criteria for multiple bank users (2023)

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Article preview Journal of Retailing and Consumer Services Abstract Introduction Section snippets Literature review Methodology Results and discussion Implications Limitations and conclusions References (32) Bank selection criteria employed by college students in Bahrain International Journal of Bank Marketing Bank selection decisions and marketing segmentation Journal of Marketing Customer preferences for financial servicesan analysis International Journal of Bank Marketing An Examination of the Multiple Bank User Segment Through a Multi-Discriminant Approach Banking services for young intellectuals International Journal of Bank Marketing The use of secondary data in business ethics research Journal of Business Ethics Bank selection criteria of multiple bank users in Hong Kong International Journal of Bank Marketing Customer knowledge and choice criteria in retail banking Journal of Strategic Marketing Comments on bank selection decision and market segmentation Journal of Marketing Management ResearchAn Introduction Three customer values are key to marketing success Journal of Retail Banking Services Attitudes, behaviour and patronage factors of bank customers towards Islamic banks International Journal of Bank Marketing Conventional and Islamic bankspatronage behaviour of Jordanian customers International Journal of Bank Marketing Internet banking Journal of Financial Services Research Islamic bankinga study in Singapore International Journal of Bank Marketing The multiple banking behaviour of Singaporeans International Journal of Bank Marketing Cited by (38) Customer experience in the banking industry Impact of consumer awareness on switching behavior in banking Recommended articles (6) FAQs Videos
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Journal of Retailing and Consumer Services

Volume 12, Issue 4,

July 2005

, Pages 297-306

Author links open overlay panelJamesDevlinaPersonEnvelopePhilipGerrardbEnvelope

Abstract

This paper presents an analysis of customer choice criteria and multiple banking. In particular, the study presents an analysis of the relative importance of various choice criteria for main and secondary banks, highlights differences and considers marketing implications. A quantitative methodology incorporating 495 respondents is employed in the analysis. Findings show significant differences between selecting a first and secondary bank. Recommendations from others are influential and significantly more important in prompting choice of secondary bank. Offering an incentive is also significantly more important in prompting choice of secondary bank, but is less influential in terms of overall ranking of importance. Service expectation and low fees/overdraft charges are less significant in prompting secondary bank choice. Implications for the marketing of main and secondary accounts are explored.

Introduction

This study provides an insight into customer choice criteria and multiple banking. In particular, it presents an analysis of the relative importance of choice criteria in prompting choice of main and secondary banks. A relatively large number of studies have analysed the issue of choice in the context of banking services (cf. Anderson et al., 1976; Martenson, 1985; Boyd et al., 1994; Devlin, 2002) including a number in a particular cultural, ethnic or religious context (cf. Erol and El-Bdour, 1989; Erol et al., 1990; Joy et al., 1991; Kaynak et al., 1991; Gerrard and Cunningham, 1997, Gerrard and Cunningham, 2001).

Far less is known about choice criteria in “multiple banking” settings with Kaynak and Kucukemiroglu (1992) and Gerrard and Cunningham (2001) being the only known studies. In common with those studies, in this analysis, multiple banking is defined as occurring where an individual uses the same product at two or more separate banking institutions. For our study, the common product is a current account, alternatively known as a transactional account. Whilst previous studies will be discussed in the literature review section, both have limitations and have not answered the fundamental question about the extent to which important choice criteria for main and secondary banking institutions differ significantly and the marketing implications which arise from any differences which are found. This study addresses these matters by presenting a detailed comparison of the relative importance of criteria which influence choice of main and secondary banking institutions.

The current study, thus, adds to existing academic understanding of multiple banking, as the question of choice criteria differences in the case of multiple bank users has been largely overlooked in previous studies. As a result, the findings will be of particular interest to academics whose interest lies in the marketing financial services. Practitioners will also be provided with an enhanced understanding of the factors which prompt choice of institution for a secondary account, which will enable them to tailor marketing efforts towards attracting such account holders when formulating strategies to achieve such objectives. The findings of this study should be of value to practitioners, especially those who aim to expand their customer base.

The study proceeds as follows. In Section 2, a detailed literature review is presented, whilst, in Section 3, the methodology for the study is detailed. The results and a discussion of them are outlined in Section 4 and, in Section 5, implications are presented. Finally, in Section 6, limitations are acknowledged and conclusions drawn.

Section snippets

Literature review

The review will deal firstly with the literature pertaining to choice criteria in banking generally, then focus specifically on issues relating to multiple banking. The vast majority of studies, which have sought to establish how consumers choose a particular provider of financial services, have focused on consumers and how they select the bank which will provide them with general banking services. In what may be considered as the seminal study, Anderson et al. (1976) found that, whilst one

Methodology

The data used in this study were generated from responses to questionnaires completed at face-to-face interviews, with questions posed verbally by trained surveyors who noted consumer responses. The data were collected throughout Britain in the early part of 2000. The questionnaire was designed to generate a wide range of data about consumers and their relationships with financial services’ providers and details of their demographics. The data used in this study were taken from responses to

Results and discussion

Table 4, Table 5 show the choice criteria for both main and secondary banks ranked in order of mean importance of each item. Visual inspection of the tables reveals that the scale items appearing at or near the top of the lists are common for both main and secondary banks. Choosing a bank near home, on the basis of family relationship, taking note of the recommendation of others and choosing a bank near a place of work dominate the rankings for both main and secondary banks. Such findings are

Implications

Prior to discussing the implications of differences in importance of choice criteria for main and secondary banks, it is worthwhile to comment briefly on the managerial consequences of the importance rankings generally. Rankings for both the main and secondary banks were dominated by locational and relationship factors, as well as recommendations. With those choice criteria having the greatest influence on consumers, it is apparent that consumers are making relatively simplistic and uninvolved

Limitations and conclusions

Prior to conclusions being drawn, limitations and recommendations for future research are presented. A potential limitation was that the data collection method did not allow for aggregation of data using factor analysis or related techniques. However, it should be noted that the use of data reduction techniques has very rarely been employed in bank choice criteria studies and the present analysis, in common with the vast majority of prior studies, relies on a comparison of individual choice

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  • Cited by (38)

    • Perceptions on the accessibility of Islamic banking in the UK—Challenges, opportunities and divergence in opinion

      2017, Accounting Forum

      This study examines the views of UK-based Muslims, Islamic Scholars and Islamic banking employees on the current state of the latter industry, both in practical terms and as regards engagement with the nation’s large, but often marginalised Islamic community. The British Government has recently championed the Islamic banking sector and committed to supporting it as a means of addressing financial services needs and consolidating London’s position as the global centre for Islamic investment. The analysis adds to the substantive literature in two principal ways: (i) by contextualising the evidence via the notions of empowerment, engagement and social justice that underpin both the state’s attempts to foster growth and the central tenets of Islam; and (ii) by placing comparison of the opinions of key groups at the heart of the investigation. The findings reveal that while progress has been made, UK-based Muslims see several substantive impediments to access, including the complex terminology of Islamic banking products, the lack of internet banking facilities and branch networks as well as a generalised lack of interest in marketing on the part of the institutions. Whilst some coincidence of perception is evident, the views of bankers are shown to be out of line with those of the other parties in a number of key areas. For example, bankers appear to see less potential in the role of the internet as a medium for spreading awareness than do either potential customers or religious scholars. The paper therefore concludes with a call for multi-party Ijtihad and Qiyas (deductive analogy) that will encourage industrial outreach and, in so doing, support long-term growth.

    • The region-of-origin effect on the preferences of financial institution's customers: Analysis of the influence of ethnocentrism

      2016, BRQ Business Research Quarterly

      Citation Excerpt :

      They found that lower service charges on checking accounts, lower interest charges on loans, promptness in correcting errors, accurate billing, courtesy of personnel and higher interest payments on saving accounts were more important for national bank customers, whereas fast and efficient service, available parking space nearby, the bank's external appearance, mass media advertising, and interior comfort were mentioned as the most salient factors for local bank customers. Devlin and Gerrard (2005), in a study throughout Britain, found that closeness to home, a family relationship, the recommendation of others, closeness to the workplace dominated the bank selection criteria. Blankson et al. (2009) carried out exploratory research on students’ selection of retail banks in the United States and Ghana.

      The financial crisis that started in the USA in 2007 has obliged many small financial entities in southern Europe to undertake mergers in order to comply with the stability and solvency policies established by the European Central Bank. In Spain, this situation has led to a profound restructuring of the financial system, obliging many of these institutions to decide whether or not to maintain their regional brand identity after such a merger. The purpose of this study was twofold: on the one hand, to analyze the importance customers attach to the origin of their usual financial institution and the relative utility they give to the three levels of brand origin presented: regional, national and foreign, and, on the other, to assess whether consumers’ level of ethnocentrism modifies their preference structure and, if so, to identify the profile of the individuals composing each segment. The technique of Conjoint Analysis was applied to a survey of 427 customers. The results showed the bank's to be the attribute with the greater importance in forming customers’ preferences than other characteristics of the institution such as the treatment by employees, the location of offices, the electronic banking services, and the number of social activities the entity carries out in the region. In addition, the respondents prefer regional brand origin over national and foreign. Both the importance and the utility attached to the regional brand origin increase with higher levels of consumer ethnocentrism. The findings of this study will serve to these entities as a guide for their decision-making regarding brand management.

    • Calibrated fuzzy AHP for current bank account selection

      2013, Expert Systems with Applications

      (Video) Marketing: Segmentation - Targeting - Positioning

      Citation Excerpt :

      This explorative study will give an insight into the most important criteria in selecting a student bank account using calibrated fuzzy AHP, described in Section 3. In the literature there are several studies for bank selection in different countries: Romania (Katircioglu, Tumer, & Kılınç, 2011a); Ghana (Hinson, Owusu-Frimpong, & Dasah, 2011; Mahmoud, Tweneboah-Koduah, & Danku, 2011); USA (Lee & Marlowe, 2003), Northern Cyprus (Katircioglu, Unlucan, & Dalci, 2011b; Safakli, 2007); Malaysia (Ahmad, Rustam, & Dent, 2011; Amin, 2008; Mokhlis, Salleh, & Mat, 2011); Greece (Lymperopoulos, Chaniotakis, & Soureli, 2006); Bahrain (Al-Ajmi, Abo Hussain, & Al-Saleh, 2009; Almossawi, 2001); United Kingdom (Devlin & Gerrard, 2005; Farquhar & Panther, 2008; Thwaitesa & Verea, 1995); Singapore (Ta & Har, 2000), Poland (Kennington, Hill, & Rakowska, 1996); Hong Kong (Denton & Chan, 1991); India (Gupta & Dev, 2012). Each study has its own list of criteria.

      Fuzzy AHP is a hybrid method that combines Fuzzy Set Theory and AHP. It has been developed to take into account uncertainty and imprecision in the evaluations. Fuzzy Set Theory requires the definition of a membership function. At present, there are no indications of how these membership functions can be constructed. In this paper, a way to calibrate the membership functions with comparisons given by the decision-maker on alternatives with known measures is proposed. This new technique is illustrated in a study measuring the most important factors in selecting a student current account.

    • Constructing a strategy map for banking institutions with key performance indicators of the balanced scorecard

      2012, Evaluation and Program Planning

      Citation Excerpt :

      In particular, they found that a bank's cost structure, size, and loan portfolio were the most critical determinants of a new bank's success. In the study by Devlin and Gerrard (2005), data were drawn from a questionnaire survey that collected the responses of 495 consumers regarding their financial service relationships. The authors performed a statistical analysis of consumer choice criteria and presented an itemized comparison of the relative importance of the selection criteria for main and secondary banking institutions.

      This study presents a structural evaluation methodology to link key performance indicators (KPIs) into a strategy map of the balanced scorecard (BSC) for banking institutions. Corresponding with the four BSC perspectives (finance, customer, internal business process, and learning and growth), the most important evaluation indicators of banking performance are synthesized from the relevant literature and screened by a committee of experts. The Decision Making Trial and Evaluation Laboratory (DEMATEL) method, a multiple criteria analysis tool, is then employed to determine the causal relationships between the KPIs, to identify the critical central and influential factors, and to establish a visualized strategy map with logical links to improve banking performance. An empirical application is provided as an example. According to the expert evaluations, the three most essential KPIs for banking performance are customer satisfaction, sales performance, and customer retention rate. The DEMATEL results demonstrate a clear road map to assist management in prioritizing the performance indicators and in focusing attention on the strategy-related activities of the crucial indicators. According to the constructed strategy map, management could better invest limited resources in the areas that need improvement most. Although these strategy maps of the BSC are not universal, the research results show that the presented approach is an objective and feasible way to construct strategy maps more justifiably. The proposed framework can be applicable to institutions in other industries as well.

    • Customer experience in the banking industry

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    FAQs

    What determines customers choice of a bank? ›

    Important factors which affect the customer's choice are staff friendliness, speediness of the process, reputation of banks, services quality and cost of loan but the unimportant factors include financial advice availability, effective advertisement of the bank and availability of direct deposit (Khazeh & Decker, 1992) ...

    What are criteria used to select financial institution? ›

    reputation, competitiveness of loan rates, time required for loan approval and friendliness of tellers, are the most important factors in explaining how customers choose banks. A selection criterion is one of the factors that influence of selecting the financial institution among the customers.

    What is repayable demand Mcq? ›

    An overdraft is repayable on demand.

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    Financial Criteria means: (i) earnings or earnings per share; (ii) stockholder return; (iii) return on capital, investment, or stockholders' equity; (iv) cash flow or throughput; (v) EBIT or EBITDA; (vi) return on assets employed; (vii) gross margin; (viii) operating profit; (ix) working capital; (x) market share; (xi) ...

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    In general, there are four factors that influence consumer behaviour. These factors impact whether or not your target customer buys your product. They are cultural, social, personal and psychological.

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    Consumer behavior is influenced by many factors such as situation, psychological, environmental and marketing factors, personal factors, family, and culture. Businesses try to collect data so that they can make decisions on how they can reach their target audience in the most efficient way.

    When was minimum reserve system started in India Mcq? ›

    The Minimum Reserve System is the currency issue system followed by the RBI at present. It was adopted in 1956. The Minimum Reserve System which requires the RBI to keep a minimum reserve of Rs 200 crores comprising foreign currencies, gold coin and gold bullion (minimum of Rs 115 crore in the form of gold).

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    The Cash Reserve Ratio (CRR) refers to the share of Net Demand and Time Liabilities that banks have to hold as balances with the RBI. The objective of CRR is to keep inflation under control. During high inflation in the economy, the central bank raises the CRR to lower the bank's loanable funds.

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    What does Customer of a bank mean? A customer is a person who has an account with a bank or has a relationship with the banker even though he has no account with the bank.

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    High Yield Options

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    6. Focus More On Customer Satisfaction. ...
    7. Innovate With Products Customers Want And Need. ...
    8. Offer More Value-Added Services.
    11 Jul 2022

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    A customer is an individual or business that purchases another company's goods or services. Customers are important because they drive revenues; without them, businesses cannot continue to exist.

    What makes one bank better than another? ›

    So, in a business where products and services are easily replicatable, what differentiates one bank from the others is the quality of customer engagement, the employees who handle the client interface part and how well they are able to offer great customer experiences consistently across all customer touch points.

    What bank is best? ›

    Our top picks for best national banks of 2021-2022
    • Capital One - Best Overall.
    • Bank of America - Best Customer Service.
    • Wells Fargo - Best Mobile App.
    • Charles Schwab - Best for Low Fees.
    • Citibank - Best for High Yield Savings Account.
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    4 Things to Look For When Choosing a Bank
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    Competitive interest rates are important to over 90% of consumers. Over half of consumers consider savings account interest rates the most important type of interest rate.

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    The 5 most important banking services are checking and savings accounts, loan and mortgage services, wealth management, providing Credit and Debit Cards, Overdraft services.

    What are the three main types of bank transactions? ›

    Banking account transaction types:

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    Providing quality customer service is important in the banking industry because it makes customers feel valued, helps you meet their needs more effectively and improves your overall customer retention.

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