Trust in UK financial services: A longitudinal analysis

The role and importance of trust for the development and maintenance of relationships in the financial services sector cannot be disputed. In a business to consumer context, this article presents a model for measuring trust for financial services organisations and positions trustworthiness as its key antecedent. The work also presents five important determinants of trustworthiness and ultimately trust. Our work is based on 5 years’ data before and during the ‘credit crunch’, and across the seven main types of product provider in the United Kingdom. The findings show that the overall trust rating for financial services has remained remarkably stable throughout the period of the study. The research also reveals that trust ratings are highest in relation to consumers who are older and that consumers are typically more trusting of brokers than any other type of product provider.     

Trust in financial services: the influence of demographics and dispositional characteristics

So far, very little attention has been paid to examining consumer perceptions of trust from an interdisciplinary perspective. The purpose of this study is to examine how consumer trusting belief and disposition to trust within the financial services sector vary on the basis of individual demographic differences in trust. The research provides new insights into how consumers with higher dispositional trust have higher institutional trust and higher trusting belief and how consumers’ trusting belief significantly differs according to their demographic background in terms of age, marital status, ethnicity and gross annual income. The findings offer useful insights for the managers in financial institutions to carefully consider the impact of the influence of these individual differences on consumer behaviour in order to serve the needs of consumers in their target market and be able to design financial products and develop trust building strategies to attract and retain them. They also call for the action of the regulators and the financial institutions to play their part in building strong institutional systems that contribute to engendering higher levels of consumer trust.     

Trust in financial services: Impact of institutional trust and dispositional trust on trusting belief

Trust is important in strengthening the relationship bond between firms (trustees) and customers (trustors) generally and has been identified as having a particularly crucial role to play in the financial services sector given the damaging impact of recent turbulence and uncertainty on consumer confidence. This article reports on the findings of a study, which draws from the interdisciplinary convergent theories of trust to examine how two key constructs from this literature (that is, institutional trust and dispositional trust) influence consumers’ trusting belief about their main bank. Data was gathered through a survey distributed to a convenience sample of UK-based employees working for a large corporation. The findings highlight the importance of structural assurance and to a lesser extent situation normality on trust. Nevertheless consumers remain unconvinced that their main banks share the same values as their own and that their communications are absolutely transparent.     

WTO financial services commitments: Determinants and impact on financial stability

The paper investigates the factors that have influenced WTO members to take on their chosen level of liberalization commitments in the framework of liberalization of trade in financial services and the impact of such commitments on financial sector stability. The most important factors are economic growth, current account, trends in banking sector development, policy restrictiveness, and peer-group effects. The econometric evidence suggests that more liberal commitments may be associated with greater vulnerability to currency and banking crises—most likely a short-term effect, which should be mitigated with time through increased market efficiency and better resource allocation.     

International investment in financial services

This paper analyzes and models the significant components of international trade in financial services, namely, foreign direct investment in banking for the US, the UK and Germany. It distinguishes between banks' activities abroad and FDI in banking by banks and non-banks. A model for FDI in banking is proposed which contains certain explanatory variables peculiar to FDI in banking as compared to FDI in manufacturing. The components of the model of FDI in banking is different from those models designed to explain banks activities abroad. The empirical results of this study of FDI in banking indicate that bilateral trade, banks' foreign assets, the cost of capital, relative economic growth, exchange rates and FDI in non-finance industries are the major determinants of foreign investment in banking.     

Competition and innovation: Evidence from financial services

This paper presents new evidence on the relationship between competition and innovation by extending previous literature from manufacturing to financial services. We introduce a new measure of overall innovation by estimating and enveloping annual minimum cost frontiers to create a global frontier. The distance to the global frontier constitutes each bank’s technology gap, which decreases if the bank manages to innovate. Our innovation measure enables us to derive and estimate the model of Aghion et al. (2005b) at the firm level for the US banking industry. Based on individual bank Call Report data for the period 1984–2004, consistent with theoretical and empirical work by Aghion et al., we find evidence of an inverted-U relationship between competition and innovation that is robust over several different specifications. Further evidence on major structural changes in the US banking industry indicates that banks moved beyond their optimal innovation level and that interstate banking deregulation resulted in lower bank innovation. Policy implications to financial reform and prudential regulation are discussed also.     

E-business opportunities in financial services

Over many years, technological developments have enabled financial services products to be sold and administered via remote distribution channels. E-business is the latest channel whose potential is being explored by both traditional financial services players and new entrants alike. But, in their haste to ‘go online’, are organisations, new and old, falling into the ‘technology trap’ and ignoring the fundamentals underpinning financial services retailing and, perhaps, undermining some of their ‘segment-of-one’ strategies? This paper concludes that the key to successful e-financial services retailing is to take the nuances, attributes, techniques and skills that have accompanied financial services products in the physical world and reinvent them in an e-environment. Only by following this approach will e-business avoid being labelled as a solution looking for a problem. UK high street banks are continuing to extend the choice of channel through which customers can manage their money, eg e-banking. But it is suggested that channels such as e-banking potentially reduce the level of personal contact between bank and customer to the extent that a ‘virtual’ relationship develops. This paper concludes that, given the tendency towards ‘virtualisation’, it is inconceivable that bank–customer relationships will become any more intimate in the future. Indeed, a greater degree of personalisation in customer communication may be the very best that banks are able to offer.     

Employer branding: Attracting and retaining talent in financial services

This study develops and investigates a framework for better understanding employer branding. More specifically, the overall purpose is to provide a deeper understanding on how employer branding is used to attract and retain talent. An extensive literature review leads to a proposed conceptual framework focusing on two key research questions: How can the relationship between corporate branding, internal branding and employer branding in service industries be described? And, How can the role of corporate values in delivering the brand promise be described? A qualitative, case study approach is used to collect data from a financial services company in Sweden. The data collected and analyzed reveals that the areas of employer, internal and corporate branding are not mutually exclusive, but instead an intertwined collection of branding issues that together form the corporation’s core values. All of this together is what allows the corporation to in turn deliver its brand(s) promise to several stakeholder groups.     

Managing customer expectations in financial services: Opportunities and challenges

Although studies have been conducted to advance our understanding of the concept of expectations, a number of challenges have been created in relation to the nature, types and dynamics of these expectations, and the effects of expectations on subsequent evaluations, both of which need closer attention. The objectives of this paper are to examine these challenges in the context of financial services, and discuss how financial service providers can manage customer expectations to their advantage. A set of propositions is developed, and suggestions for future research are also discussed.     

Technology and financial services: Marketing in times of U-commerce

This article revisits and uses the so-called U-Commerce framework to challenge financial services marketing decision makers to consider reformulating marketing objectives in an age of ubiquitous technological networks. It outlines the 4 U’s of U-Commerce – ubiquity, universality, unison and uniqueness, and revisits the original framework used to conceptualize U-Commerce. Then it identifies and describes four broad marketing objectives that financial services marketers can strive for, including amplification, attenuation, contextualization and transcension. Four broad marketing strategies can be used to achieve these objectives, namely nexus marketing, sync marketing, immersion marketing and transcension marketing. Examples specific to financial services marketing are used to illustrate and discuss these strategies.     

安永：欧元区金融服务业发展预测

安永预测：欧元区整体经济今年仍然面临着非常严峻的各种挑战,财政紧缩、信贷紧缩以及失业率上升等等,这些导致增长缓慢的因素只不过是欧元区的成员国和其金融机构面临问题的一部分而已,因此,     

Excessive financial services CEO pay and financial crisis: Evidence from calibration estimation

The questions of whether there ever existed excessive risk-taking incentives from executive compensation in the financial industry, and whether top executives of financial services firms actually responded to such excessive incentives that eventually led to the crisis remain unanswered. The prior research has attempted to answer the second question, however, with conflicting evidence and without a clear definition of excessive. To answer the first question, this paper uses a numerical calibration approach to estimate the optimal level of CEO pay and derive the excessive compensation which provides excessive risk-taking incentives. We then examine the extent of excessive compensation in the financial industry relative to the non-financial industries during the 2000s and whether there were changes in compensation practices between the post Sarbanes–Oxley period and the pre-crisis period. We find mixed evidence in favor of the presence of higher excessive pay in the financial industry, and the CEO compensation practices remained largely unchanged over time. In addition, the relation between excessive pay and excessive risk-taking in the financial industry is somewhat weak, suggesting that CEO compensation might not be a major cause for the crisis in 2008.     

Pricing financial services innovations

The number of innovative financial solutions introduced to markets has grown considerably in the past decade owing to emerging digital technologies, deregulation and market fragmentation. Examples are abundant in the worldwide markets for insurance, credit products and transaction processing services. A question of growing interest is how firms should price these innovations. The optimal introductory pricing of financial innovations may vary as a function of factors such as price sensitivity of the market and competitors’ ability to introduce competing financial solutions. In this article, we examine the role of these factors in the optimal pricing of a financial innovation. Using an agent-based simulation framework, introductory pricing strategies that maximize profitability under various market conditions are identified. Results indicate that lower levels of market price sensitivity and longer time horizons for competitive entry create pricing opportunities for financial innovators. However, the relationship becomes more complex as market price sensitivity increases or competitive market entry becomes more immediate. Detailed recommendations for optimal pricing of financial innovations under various market conditions are provided, and the article concludes with strategic recommendations for pricing innovative financial services.     

Multiple channel structures in financial services: A framework

The use of multiple channels is probably the most common distribution strategy nowadays. Surprisingly, the determinants of this strategy remain largely unexplored. This paper aims to address the problem by elaborating on the configuration of a multiple channel strategy. A framework is proposed that attempts to elaborate on the entire channel mix decision starting with the factors that influence and constrain the choice of channels, and finishing with key outcomes of a channel mix. It is proposed that a multiple channel structure should be thought of along three dimensions or properties: number of channels; channel integration; and extent of customer contact afforded by the channel mix. The relationships between these properties of a mix of channels and the performance of the channel, measured by sales and costs, control and flexibility is discussed. It is hoped the framework will be useful to channel managers and researchers alike. Directions for future research are developed.     

Customer value analysis in financial services

This study investigates what creates value for customers and how providers can improve value for their customers. A comprehensive analytical model with a four-step approach is presented and applied in the field of financial services. In a first step, the main customer value drivers are identified and five value dimensions are derived, based on qualitative interviews with customers. These results are then compared to value assumptions made by customer-contact employees, and gaps between customer and employee perceptions are analysed. Based on these identified gaps, a multitude of implications for managing company customer value at the normative, strategic, and operational level of management are derived, and finally implications of findings for service marketing practice and research are discussed.     

Information technology and financial services consolidation

This paper examines the interaction of information technology and the current consolidation in the financial services industry. It suggests that an important reason for financial service firms to consolidate and not outsource their information technology may be to retain the strategic option to be more diversified firms that offer both financial and information services in the future.     

CRM in intermediated financial services markets

A division of a major UK insurance company manufactures insurance products for wholesale clients to retail into their banking and building society customer bases. This paper discusses the CRM challenges of leveraging insurance business from existing partnership relationships, including issues of confidentiality between client portfolios, the strategic use of data marts rather than data warehouses and the sharing of information. It describes the issues involved in implementing CRM, such as rolling out customer contact management and call centre systems. The study concludes with an appraisal of lessons learned, which include a better understanding of who the customers are and which of them are profitable, together with the characteristics that contribute to them becoming profitable or unprofitable.