Exploring the application of IVR: lessons from retail banking

In today's increasingly competitive retail banking environment, banks are faced with the challenge of building and maintaining relationships with profitable customers while at the same time embracing technological change. So, while on the one hand increasing the role of technology in a services organisation can serve to reduce costs and often improve service reliability; on the other hand, organisations are acutely aware of the important role for personalised relationships in the delivery of their service proposition. This article reports on a qualitative research study into the perceptions of customers and staff of a large retail bank regarding the piloting of an interactive voice recognition (IVR) system. This system is regarded as a way for the case bank to benefit from technological advances, while still retaining its relationships with more profitable customers. To this end, the system was hoped to encourage lower net worth customers to increase their use of the bank's telephone banking facility, and allow branch staff, who would be freed from dealing with routine telephone enquiries, to deliver a better personalised service to high net worth customers. However, despite this rationale, the article reports the paradoxical situation that the system has been effectively rejected by customers and staff alike. The key objection is that relating to the perceived service discrimination between high and low net worth customers, the very rationale for which the IVR was introduced.     

Consumers’ Behavioral Intentions Toward Self-Service Technology in the Emerging Markets

ABSTRACT

Self-service technologies (SSTs) allow customers to offer their own service encounters via the interaction of electronic service interfaces or machines rather than by interacting with a firm's service personnel. This lack of personal interaction generates doubts and queries in the minds of the people, especially those unaware or less aware of these technology-based services. Such a situation is quite prevalent in the developing nations (like India), where still a large number of people are apprehensive about using the latest technologies. In this regard, the present study aims to develop an integrated model designed to predict and explain the various factors that influence customers’ behavioral intentions to use or not to use one particular SST (i.e., ATM services). The study finds that bank customers are less innovative and less optimistic to try out new technologies. Usefulness of the technology helps in developing positive attitude toward the technology, which in turn affects customers' intentions to use that technology.     

“Switching is easy”—Service firm communications to encourage customer switching

For several service industries, customer acquisition is challenged because of matured markets. Winning new customers typically means encouraging the competitors׳ customers to switch. This article analyzes “Switching is easy”-messages of retail banks. In their marketing communication, UK banks focus on several aspects to decrease perceived switching costs of their competitor customers. However, many facets stay unmentioned such as stress-related dimensions of switching a relationship. The study therefore contributes to service research by outlining how service firms focus on to decrease perceived switching costs of bank customers to acquire them from competitors.     

Zone of tolerance for banks: a diagnostic model of service quality

Service quality has become an increasingly important factor for success and survival in the banking sector. Provision of high-quality service aids in meeting several requirements such as customer satisfaction and its consequent loyalty and market share, soliciting new customers, financial performance, and profitability (Cui, C.C., Lewis, B.R., & Park, W. (2003). Service quality measurement in the banking sector in South Korea. International Journal of Bank Marketing, 21(4), 191–201.). This paper presents the bank service quality measurement in its extended form. It deals with the concept of ‘zone of tolerance’ in judgments of service quality proposed by Zeithaml, Berry, and Parasuraman (1993, The nature and determinants of customer expectations of service. Journal of the Academy of Marketing Science, 21(1), 1–12.). The ‘zone of tolerance’ is recognized in the service quality literature as representing a range of expectations and an area of acceptable outcomes in service interactions. The present study describes the zone of tolerance for young customers’ service expectations and determines the customer satisfaction level for banks. The study focusses only on the youth market to formulate long-term strategies because young customers tend to keep themselves up to date with latest technological developments. A conceptual model BANKZOT is presented in this study, and the results demonstrate that evaluation of services can be scaled according to different types of expectations – ‘desired' and ‘adequate’ – and that customers use these two types of expectations as a comparison standard in evaluating bank services. The findings reveal that young customers have a narrow zone of tolerance with regard to the services provided by the banks. The results with respect to gap analysis reveal that there was a shortfall in the service quality provided by the banks in the sample, with the largest gap being found in tangibles and empathy of service quality dimensions. The results of exploratory factor analysis reveal that the SERVQUAL model is found to be uni-dimensional in this study. The results, managerial implications, and future research implications are discussed in detail.     

Operations in banking: the service quality and effects on satisfaction and loyalty

This paper studies the service quality provided by the banks. The objectives are (i) to identify which aspects of the transactions carried out by the banks are important for the service quality perceived by the customers, taking into account some aspects that are sometimes ignored (online channels) and (ii) to observe how service quality influences customer satisfaction and how customer satisfaction affects the loyalty towards the bank. Using a factor analysis, the research identifies the operative, physical, new technologies and human factors. Next, using structural equations models with AMOS, the results show an influence of the operative aspects and the new technologies on service quality, as well as the confirmation of quality as a precedent to customer satisfaction, and how such satisfaction influences on customer's loyalty towards the bank.     

Credibility and Staff Conduct Make or Break Bank Customer Service Quality

ABSTRACT

Service quality is assessed by customers along the dimensions of staff conduct, credibility, communication, and access to teller services. Credibility and staff conduct emerge as the highest loading first-order factors. This highlights the significance of rectifying mistakes while keeping customers informed, and employing branch staff that are responsive and civilized in their conduct. Discovery of a valid second-order factor, namely, overall customer service quality, underscores the importance of providing quality service across all its dimensions. For example, if the bank fails to rectify mistakes and keep customers informed but excels in all other dimensions, its overall customer service quality can still be rated poorly.     

Managing Customer Switching Behavior in the Banking Industry

This study aimed to explore the factors that lead to the intention to stay and the intention to switch in the banking industry. The research adopted a qualitative, inductive approach to data collection using a sample of 19 Australians customers who use banking services, and two Australian bank managers. The factors that are important to the customers' decision to change banks or to diversify their accounts include: (a) customer service and customer intimacy; (b) response to service failure; (c) effect of advertising; (d) reputation; (e) ease of banking; and (f) customer value.     

Determinants of retail bank choice in Nigeria: a focus on gender-based choice decisions

As the Nigerian retail banks customers become more sophisticated, it is now very important that retail banks determine the factors that are important and relevant to the customers’ retail bank choice decisions. By using a survey of retail bank customers, this study evaluates the relative importance attached to retail banks’ choice criteria used by male and female customers in Nigeria. The results show that there are some differences in choice factors used by male and female customers in selecting a retail bank for patronage. The recommendation is that bank managers should take both female and male market segments into consideration when making retail bank strategic planning in order to become competitive. The findings can assist retail bank managers in refining their marketing strategies as a means of overcoming the intense competition that exists in the Nigerian banking system.     

A multi-country study of bank reputation among customers in Africa: Key antecedents and consequences

This paper studies the antecedents related to service quality and the consequences of bank reputation among bank customers in three prominent markets in Africa, the continent on which one of the banking industries with the highest potential in the world is located. The research hypotheses were tested through the use of partial least squares modelling and by employing data collected from almost 1000 retail-banking customers from Ghana (n = 349), Kenya (n = 337), and South Africa (n = 300). An analysis of these data indicates that service quality dimensions, namely service offering appeal and customer care, meaningfully contribute to the strong perceptions customers have of their banks as regards reputation. The positive role of bank reputation in the development of trust and customer loyalty is also validated in this study. Furthermore, the multi-group analysis shows differences among countries in the case of all the relationships analysed, with the exception of the weight of customer care on bank reputation. Finally, the conclusion is reached that bank managers should focus their reputational strategies on improving the competitiveness of their bank products and should consider subtle institutional differences outside the bank's home-country in order to succeed in their internationalization strategies on the continent.     

Understanding registration influences for electronic banking

Abstract

The growth in online or e-banking has resulted in customers interacting with their banks through remote technological channels to a greater extent. That said, there is much variation in online banking registration and adoption levels and little is understood about actual customer motivators and perceived barriers to registration for online banking services. As part of a larger study exploring the impact of the Internet on bank – customer relationships, this paper reports on key findings which shed light on such motivators and inhibitors for online banking registration. The results show that convenience (through 24-hour banking access) and reassurance about security are the most important considerations for customers in registering for e-banking within the case bank. Marketing implications for the case bank, as well as the broader industry, are discussed.     

Customer Satisfaction with Consumption Systems

ABSTRACT

Purpose: This research examines how satisfaction toward a product and its associated services offered together by a single provider jointly affects behavioral intentions toward the provider.

Design/methodology/approach: In this study, empirical tests were conducted using longitudinal data spanning 5 years from a multinational company that offers both products and associated services as part of a consumption system to their customers.

Findings: Results show a joint congruent effect of product and services satisfaction on behavioral intentions is linear and positive. It appears that offering great service cannot compensate for less-than-adequate satisfaction toward the product. The results further highlight decreasing customer sensitivity to improvements in both sources of satisfaction and imply that focusing on too high levels of one type of satisfaction for their customers can actually be counterproductive for firms.

Research Limitations: Our model was tested using the data obtained from a single firm. Future research could test this model with data from multiple firms in various different industries and establish broader generalizability to the findings.

Practical Implications: Findings provide managers with insights on how to allocate resources across product and service spaces and to manage product and services revenues over time. Results also indicate that customer behavioral intention ratings are more weighted on product quality over the service received by them. However, mere improvements in the product cannot provide the highest desired results and therefore quality improvements in the product need to be complemented by improvements in service quality.

Originality/Value: There is a rapid emergence of the phenomenon of manufacturers providing both products and services as an integrated consumption system to their customers. While the provision of both product and service subsystems by the same firm leads to certain synergies, there are obvious costs to the development of new service capabilities and coordination with existing product capabilities. Our research intends to address this issue.     

Customer Satisfaction with Retail Banking Services in Ghana

Recent studies indicate high competitiveness of the Ghanaian banking industry, making it difficult for banks to satisfy and retain customers. However, little empirical knowledge exists on the determinants of customer satisfaction toward the services delivered by the banks. This article reports a study of the determinants of customer satisfaction of retail bank services in Ghana. An extensive review of the extant literature was used to identify the theoretical determinants of customer satisfaction in retail banking and their measurement scales. These were adapted to build a conceptual framework for the empirical investigation conducted. Data were collected using a questionnaire administered through personal interviews to 650 customers of retail banks, and the results were factor analyzed and regressed. The empirical results indicated that relational, core, and tangible dimensions of service were positively associated with customer satisfaction in retail banks in Ghana. The study discusses the strategic implications of the findings for the management of customer satisfaction for retail banks operating in Ghana. © 2014 Wiley Periodicals, Inc.     

Customer Channel Preferences in the Finnish Banking Sector

Abstract

This research examined a survey of 3,000 and indepth interviews of 30 financial customers who provided information regarding their usage of, and attitudes towards, financial distribution channels. Improvements in technology are facilitating the development of alternative delivery methods and channels, and this paper examines the implications both for customers and for banks. This study looks at customers' behavior and links it with their usage of financial distribution channels to determine if there are particular behavioral segments of customers who exhibit similar patterns of access to financial services. This should enable financial institutions to more efficiently market their delivery of financial services.     

Consumer Perception of Commercial Banks in a Newly Industrialized Country

In recent years, there has been an increased competi- tion and introduction of advanced technology into the banking sector all around the world. This situation has forced banks of all sizes to apply marketing concepts and techniques. In particular, assessment and understanding of bank customers' needs and wants have become very important marketing strategy tools. With this in mind, the ur pose of Ulis empirical study is to determine the importance o f se- - lected patronage factors used by Hong Kong commercial bank cus- tomers in choosing domestic versus foreign banks. Although Hong Kong bank customers use domestic banks more often, they perceive the usefulness of a select number of services in a similar manner for both domestic and foreign-banks available in Hong Kong.     

A field study of customers’ switching behavior for bank services

This research paper makes three important contributions with managerial implications concerning the issue of bank service switching behavior. First, it identifies four overall dimensions of customer satisfaction with bank services. These are personnel related considerations, financial considerations (interest earnings and interest payments), environment related considerations (atmospherics), and convenience related considerations (ATM and hours). Next, we develop and test some hypotheses pertaining to the relationship between customer satisfaction and bank service switching behavior as it is mediated by the importance of a particular bank service to a particular customer and by the nature of competitive offerings for different types of banking services available from other banks. Based on the empirical results of a large scale field study, we provide several theoretical and managerial implications.     

Determining Relationship Quality in the Development of Business-to-Business Financial Services

ABSTRACT

The quality of relationships built with customers during the New Service Development (NSD) process is a current concern of researchers in relationship marketing (and NSD) and is particularly important in a highly competitive environment characterised by rapidly changing customer needs like the one of financial services. The primary relationship analyzed in relationship marketing is the one between seller and buyer, but the focal type of relationship for new product and service development is the one termed “the knowledge relationship” (Gummesson 2002), a relationship used to create knowledge. This paper reports the results of in depth qualitative research on the factors that impact on the quality of such relationships developed between new service developers and their customers during the NSD process of business-to-business financial services. Results show that the most important factors that affect relationship quality are: communication quality of the relationship; the development of strong relationship bonds; the quality of relationship partners; a strong customer orientation in NSD based on a proactive approach of relationship partners during the NSD process, and proficiency in knowledge brokering.     

Ignoring Your Best Customer?

Abstract

Many organizations devote considerable amounts of money and human resources to develop systems aimed at improving customer retention and profitability. The conventional wisdom is that if retaining the most profitable customers is a good way to increase profitability, then allocating resources to increase the satisfaction of those customers has to be a great objective. However, managers do not observe clear link between satisfaction, retention and profitability. The reason is that different customers have different preferences for convenience as well as different costs associated with switching service providers. These preference and cost heterogeneities have important implications for how companies should target their customer service efforts.

In this paper, we adopt a latent class model to examine the interrelationship amongsatisfaction, retention and profitability. Applying the model to a data of customer satisfaction, self-reported switching propensity, and profitability provided to us by a large Midwestern bank, we make normative statements about which customers are the most criticalones for the company to satisfy and how to satisfy them. The results of this research help to explain why managers have been frustrated by the apparent lack of actionable information present in customer satisfaction data and points to more intelligent ways to use this data.     

Technology and intermediation: do banks pass the gains to their customers?

A key function of the banking system is to facilitate intermediation between borrowers and lenders. In this paper we single out for attention the money transmission function of banks to test whether intermediation costs have been reduced by technology and passed on to consumers. Using data for the commercial banking sector in Ireland over the period January 1986 to August 1996, we find that the gains from technology in the provision of banking services, provided they exist, have not been passed on to the bank customers in the form of a lower bank interest rate spread.     

Transaction services and SME internationalization: The effect of home and host country bank relationships on international investment and growth

Building on the argument put forward by North and Wallis (1994) that the transaction sector enables economic growth by lowering the costs of transacting, we investigate how internationalizing firms’ host and home country bank relationships affect their international specific investments and growth. Banks provide payment, liquidity, and risk management services, which are essential to international business relationships, yet little is known about how banks affect international business relationships. In a sample of 255 small and medium-sized enterprises (SMEs), we find that host and home country bank relationships affect the dependent variables differently. We contribute to the literature by explicating the role and effects of banks in international business relationships. Our findings have implications for understanding transaction services in international business as well as the choices made by their customers.     

Key influencers and inhibitors on adoption of the Internet for banking

The focus on new technologies in service situations is growing and is of particular importance in financial services contexts. It is argued that there is mutuality of benefit for both bank and customer through the adoption of self-service technologies (SSTs), of which e-banking is but one example. While the economic imperative for banks’ adoption of e-banking solutions is clear, the value proposition for the customer can be less evident. It is proposed that the value proposition on offer through e-banking could be better conveyed to customers were banks to have a greater understanding of the appropriateness of the on-line medium for products as they varied according to complexity level. This paper reports on a study which examined customer-stated propensity to purchase financial products on-line at varying levels of complexity. Findings underline the importance for banks to achieve a customer-oriented balance between face-to-face relationship-managed activity and online enablement and to understand now this balance varies according to customer and complexity of product. Strategic marketing implications for the case bank are discussed.