Share of wallet's role in customer profitability

Understanding the financial contribution customers make to their organisations is an initial step in customer relationship management. Set in the banking industry, this paper examines the strength of ‘share of wallet’ as a proxy variable for measuring customer profitability. Data from a study of 1,100 personal retail banking customers of a New Zealand regional bank were used in combination with the bank's own customer contribution data for each of those respondents. Results indicate that although share of wallet might be used as a proxy for customer contribution at a macro level of customer classification, details of specific financial relationships customers have with their main bank are still necessary. Nevertheless, share of wallet ought to become a standard entry in a bank's customer database.     

Customers’ dissatisfaction with banking channels and their intention to leave banks: The moderating effect of trust and trusting beliefs

Banks have the challenging task of managing customer experience across many traditional and technological channels in today’s financial services world. Recent studies and anecdotal evidence suggest that many customers are dissatisfied with their experiences across channels that are supposed to provide a seamless experience. This customer dissatisfaction potentially diminishes a financial service organization’s customer base, and requires the firm to rely on a more fickle customer mix and erodes its reputation. This paper investigates the relationship between individuals’ dissatisfaction with their primary bank channel and their intention to leave their bank in the future. The first study examines individuals’ overall trust in their bank as a potential moderator in the relationship that reduces customers’ likelihood to leave the bank even though they are dissatisfied with a particular banking channel. The second study goes one step further and examines the effect of three trusting beliefs about the bank potentially held by the customer: competence, integrity, and benevolence beliefs. Findings indicate that when customers have a high level of trust in their banks, they are less likely to leave their banks even though they are dissatisfied with their primary banking channel. Furthermore, while competence and benevolence beliefs about the bank have a similar moderating effect, integrity beliefs do not.     

Adoption of digital banking channels in an emerging economy: exploring the role of in-branch efforts

The aim of this qualitative study is to analyse the role of in-branch efforts of banks on migrating customers from branch banking to digital banking in India. In-depth semi-structured interviews were conducted with bank executives representing senior management from public and private sector banks in India. Qualitative content analysis technique was used to analyse the data. Varieties of responses received during interviews were clubbed into four main themes based on data reduction, display, and conclusion-drawing processes. In-branch communication with customers, digital transformation of the branch, customer-centric initiatives, and redefined role of branch staff hold the potential to bridge the customers’ migration to digital banking. The paper suggests that the key identified factor in improving digital banking acceptance in India is the requirement of integrated cultural and organisational changes at the bank’s level to gain the customers’ confidence and trust in digital banking.

     

On the potential for Twitter to add value in retail bank relationships

It is argued that research within financial services marketing has omitted to pay sufficient attention to social media in banking contexts generally and its potential impact on retail bank relationships in particular. At a general level, this research study explores the advent of social media and the manner of its deployment in financial services. Specifically, this article reports on the deployment of Twitter in bank–customer communications. Accordingly, a content analysis of 400 Tweets sent from a range of financial service providers to their customers was conducted. A literature-based model allowed for the classification of these Tweets as either customer acquisition, engagement or retention-oriented. Findings indicate that Twitter is mainly used for customer engagement, but scope is identified for their more meaningful deployment in relation to customer acquisition and retention.     

Customer account relationships and e-retail banking usage<Superscript>1</Superscript>

Financial institutions are actively developing new electronic banking products for their retail customers. To date, the market leaders have drawn a disproportionably higher share of e-retail banking customers. In response, smaller institutions have become quite active in exploring ways to participate profitably in online banking. A major influence is from a customer relationship management (CRM) perspective, where institutions try to limit the outflow of current customers and direct high-value customers to potential products from a multi-product service offering array. These efforts can succeed only if retail bank marketers focus the promotion of the new products and services that can utilise this channel toward those customers who are most likely to find them attractive. The first aim of this study was to examine the role that online and electronic banking play in defining the customer's primary financial relationship. The analysis of 701 retail customers of a financial institution presented in this study suggests that banks and other institutions are highly vulnerable to loss of customers to rivals with extensive online services. A second aim was to examine to what extent information on banking relationships is able to extend CRM analysis beyond that offered by typical demographic and income data. Current customer account relationships are found to be highly predictive of use of electronic services use in general. And, interest in the use of specific online services is related to differing customer relationships in addition to ordinary demographic and balance information. These findings can be useful for retail banking in identifying potential high-value users from a customer relationship management perspective.     

A comparison of conventional versus Islamic banking customers attitudes and judgment

This investigates the impact of customer attitude and judgment regarding conventional and Islamic banking system in Pakistan. This study attempts to find out, how the customers of Islamic banks perceive about Islamic banking practices in terms of Shariah compliance and conventional banking system regarding earning more profits. This study consists on primary data through a well design questionnaire. Four hundred and thirty (430) questionnaires were distributed among different customers of all three types of banking, such as Islamic, conventional and stand-alone branches in order to investigate customer’s attitude and judgment toward banking system. The findings indicate that overall 28% of Islamic banking customers don’t know the essential concept of Islamic financial institution’s in Pakistan. Furthermore, 54% customers of conventional banking show their interest to convert their accounts toward Islamic banks.

     

Switching customers from branches to internet: A credit union's journey

This research paper reports how a credit union applied knowledge from the literature to solve a marketing problem. A credit union serves a unique group of customers who may be in the same profession, have the same employer, or simply in the same regional location. The marketing problem is how to switch bank customers from branches to internet for the main reason of reducing transaction costs. The research model comprises the independent factors of customer, transaction, application, and bank; and the dependent variables the number of internet banking transaction, perceived usefulness of internet banking, and willingness to use internet banking measuring different aspects of internet banking. We carried out an on-site survey in different branches of our subject credit union to capture the opinion of customers who rely solely on branches for banking transactions. To our knowledge, this study provides a pioneer internet banking survey in the context of credit unions. The survey results reveal different internet banking facilitators for customers with and without internet bank accounts. For customers with internet bank accounts, application security is the most important facilitator variable for them to continue its use in the future; while promises for continuous improvement can be a prohibitive variable. In order to encourage customers without internet bank accounts to adopt internet banking, the management should focus on strengthening the variables of bank diversified service, bank responsiveness, bank image, and extra online instruction and feedback for complicate internet transactions; and reducing the negative effect of web fun/entertainment. We also found that the variables of proficiency in using computers, application security, and bank image have opposite effects on customers with and without internet bank accounts.     

Do customers patronize Islamic banks for Shari’a compliance?

The purpose of this article is to investigate whether Islamic bank customers view Shari’a compliance and conventional banking services as two distinct and different sets of bank patronage factors and, if so, to find the relative importance of each. The article is based on the primary data collected from 357 Islamic bank customers in Pakistan. The analytical tools used in this piece of research are factor analysis and mean ranking. A total of six variables were fed into the factor analysis, which resulted in the identification of two factors accounting for about 76 per cent of the total variance in the variables. The resulting factors were then analysed through mean ranking to investigate them for the relative importance of each factor. The findings reveal that customers consider Shari’a compliance and conventional banking services as two distinct and different packages of bank patronization factors. It is further revealed that conventional banking services are rather more important than Shari’a compliance. The article has important implications for Islamic financial institutions (IFIs) in Pakistan. On the one hand, it signifies the importance of Shari’a compliance as an additional discrete factor for customers’ bank-selection decision, and on the other, it highlights the importance of customers’ traditional banking needs. In order to be sustainable, IFIs must be competitive with the conventional banking industry in the first place and stay Shari’a compliant in the second place for obtaining marginal competitive edge.     

Determinants of customer loyalty and share of wallet in retail banking

Previous research has investigated the determinants and consequences of customer loyalty, but, in banking, a critical measure largely neglected in previous studies is the customer's ‘share of wallet’. This study, based on a survey of 1,924 retail banking customers, suggests that a large proportion of the variance in stated behavioural intentions can be predicted, in particular, by customers' attitude measures. More importantly, the study shows that a substantial amount of the variance in share of wallet can be predicted, allowing banks to identify and focus on customer segments where there is most potential for growth. In recognition of the fact that dissatisfied customers are a distinct segment, the study models actual behaviour in terms of share of wallet for dissatisfied customers. Implications for research and for business are discussed.     

The effectiveness of personalized marketing in online banking: A comparison between search and experience offerings

This study reports the results of personalized online promotions in a context where personalization has not been researched before – in online banking. Genuine online bank customers were shown personalized banner advertisements when they logged in to their online bank account. Three financial offerings consisting of different search and experience attributes were promoted to three groups of customers. We examined the attention, elaboration and choice measures, and compared the effectiveness of personalized banners to default banners, and the online promotions to direct-mail promotions. Despite the goal-directed routines that reflect the dominant customer behaviour in online banking, personalized banners attracted more attention than default banners. Furthermore, messages that promote fairly simple search-type offerings that are easy to apply and are linked to the context in which the promotion occurs are more effective than messages that do not fulfil these criteria. The results offer implications both for research and practice.     

Understanding the intention to use mobile banking by existing online banking customers: an empirical study

The Indian banking sector can take advantage of the proliferation of smartphones as well as the government’s encouragement of cashless transactions to accelerate the use of mobile and online banking. The purpose of this study is to understand the initial acceptance of mobile banking by existing online banking users. Few studies have focused on online banking users’ behavioural intention to use similar services (such as mobile banking) in India. To this end, a theoretical model was developed using the technology acceptance model, which was extended to cover the adoption factors that influence users of online banking to use mobile banking. These adoption factors comprise perceived ease of use, perceived security, mobile self-efficacy, social influence and customer support. The dependent variable is customers’ behavioural intention to use mobile banking. A partial least squares structural equation modelling analysis was used to test the theoretical model with sample data from 420 online banking customers of various public, private, foreign and co-operative banks in India. The study found that the adoption factors had a significant impact on customers’ behavioural intention to use mobile banking. The findings of this study provide insight into digital banking channels, contribute to existing research on digital banking adoption and will educate banks and financial institutions on the adoption of mobile banking in India.

     

Effects of demographic factors on bank customers’ attitudes and intention toward Internet banking adoption in a major developing African country

This study provides an African perspective to the global research and literature on retail customer adoption of Internet banking (IB). It empirically examines the influence of seven demographic variables – age, gender, level of education, marital status, employment status, income level and area of residence – on retail banking customers’ behaviours toward IB adoption in a major developing African country – Nigeria. A sample of 500 customers was surveyed, and ANOVA and multiple regression analyses were used in testing the association of the variables with customer attitude and intention toward IB adoption. Although all seven variables were correlated with attitude and intention, only gender, level of education, and employment status showed significant ability to influence Nigerian customers’ attitude and intention toward IB adoption. The study therefore concludes that gender, level of education, and employment status are the major demographic affecters of Nigerian banking customers’ attitudes to IB adoption.     

Antecedents of brand loyalty in South African retail banking

With new banks entering the South African market and consumers generally not satisfied with their current bank, brand loyalty in the banking sector is receiving greater attention. A gap in the literature exists regarding the issues of bank loyalty and their antecedents in South African retail banking because of the few studies available in the South African context, the new competitive environment in the banking sector, the multi-cultural nature of the market, and the likely switching behaviour by customers. The South African context is a multi-cultural environment and therefore offers a unique background as most previous brand loyalty studies have been in mono-cultural contexts. The purpose of this study was to investigate the antecedents of brand loyalty, including satisfaction, brand relationship quality, customer advocacy, and brand trust in retail banking. We report on a survey of 351 banking customers through SEM using AMOS. While the findings are generally supportive of previous studies, some surprising results are discussed and implications for both theory and practice are highlighted.

     

The effectiveness of personalized marketing in online banking: A comparison between search and experience offerings

This study reports the results of personalized online promotions in a context where personalization has not been researched before – in online banking. Genuine online bank customers were shown personalized banner advertisements when they logged in to their online bank account. Three financial offerings consisting of different search and experience attributes were promoted to three groups of customers. We examined the attention, elaboration and choice measures, and compared the effectiveness of personalized banners to default banners, and the online promotions to direct-mail promotions. Despite the goal-directed routines that reflect the dominant customer behaviour in online banking, personalized banners attracted more attention than default banners. Furthermore, messages that promote fairly simple search-type offerings that are easy to apply and are linked to the context in which the promotion occurs are more effective than messages that do not fulfil these criteria. The results offer implications both for research and practice.     

Establishing bank–corporate relationships and building competitive advantages

This article investigates how banks build competitive advantage through relationship banking. Using a grounded theory approach, 29 interviews were conducted with relationship managers and corporate banking directors in 21 case banks from 2004 to 2008. Grounded theory models were developed to illustrate the value creation process in relationship banking. It was found that long-term bank–corporate relationships were established through trust-based personal communications. In the case, banks customer information and knowledge advantages were created. Risk-adjusted returns on assets were used to measure customer relationship performance, and relationship managers were rewarded accordingly. The interviewees thought that bank performance could be improved by managing customer credit risk and identifying cross-selling opportunities. This study starts to open up the ‘black box’ of how banks create shareholder value through relationship banking, provides a picture of relationship banking as a social phenomenon, and supplies some theoretical and managerial implications. The article also links the literature relevant to relationship banking from different disciplines. This is a new way of looking at the relationship banking phenomenon and relevant literature in an integrated manner.     

Effects of demographic factors on bank customers’ attitudes and intention toward Internet banking adoption in a major developing African country

This study provides an African perspective to the global research and literature on retail customer adoption of Internet banking (IB). It empirically examines the influence of seven demographic variables – age, gender, level of education, marital status, employment status, income level and area of residence – on retail banking customers’ behaviours toward IB adoption in a major developing African country – Nigeria. A sample of 500 customers was surveyed, and ANOVA and multiple regression analyses were used in testing the association of the variables with customer attitude and intention toward IB adoption. Although all seven variables were correlated with attitude and intention, only gender, level of education, and employment status showed significant ability to influence Nigerian customers’ attitude and intention toward IB adoption. The study therefore concludes that gender, level of education, and employment status are the major demographic affecters of Nigerian banking customers’ attitudes to IB adoption.     

Electronic banking in Finland: Consumer beliefs and reactions to a new delivery channel

The increasing turbulence in the financial service industry sector since the mid-1990s has created a whole new delivery channel for banking: Internet banking. The purpose of this paper is to describe the current state of Internet banking in Finland and to study consumer perceptions, beliefs and reactions to electronic banking in general and Internet banking in particular. The results of this study indicate that bank managers can, by knowing the basic beliefs consumers hold about Internet banking, create more effective customer communication, improve software and target prospects better concerning Internet banking. There is wide agreement that Internet banking will on the one hand have a great impact on the whole bank market, and on the other hand will be considered the most important retail banking delivery channel in the near future. A total of 3,000 questionnaires was prepared and sent to MeritaNordbanken customers in Finland. Using a mailed questionnaire with a response rate of 38.9 per cent, it was found that 40 per cent of the Finnish consumers who responded to this survey were already using Internet banking services. The results of this study provide interesting additions to knowledge of electronic banking and consumer behaviour.     

Bank image in the UAE: Comparing Islamic and conventional banks

This study investigates how bank customers in the UAE view Islamic banks versus conventional banks and whether this image affects customer loyalties or selection of a bank. We distributed a questionnaire to a convenient sample of UAE bank customers that focused on five areas: bank image, bank products, service quality, cultural aspects and religious factors, in addition to demographic attributes of the sample. The main findings of this study are: first, most UAE bank customers prefer banking with Islamic banks, although they are not satisfied with the quality of products and services; second, customers generally have a positive image of whatever bank they dealt with; third, the regression analysis results indicate that the most important factor in choosing a bank was bank products followed by service quality and then religious factors; fourth, there is a significant difference between how customers perceive UAE Islamic banks versus conventional banks; fifth, there is a significant difference in how customers perceive UAE Islamic banks based on their gender, education and duration of the relationship; and finally, there is a significant difference in how customers perceive UAE conventional banks based on their gender.     

Electronic customer care: The innovative path to e-loyalty

In this paper, the authors argue that the use of an electronic customer relationship management system (eCRM system) enables traditional ‘physical’ customer proximity to be substituted by ‘digital’ proximity, within the scope of a multi-channel approach. This method of substitution presents enormous potential for cost reduction, profit maximisation and customer loyalty. The main intention of the paper is to illustrate how electronic customer care tools can be used to create customer e-loyalty in the field of private internet banking. The knowledge is supported by findings of a questionnaire survey based on a sample of 45 bank experts involved in eCRM and private internet banking in Germany, Austria, Switzerland and the USA. This empirical study of the capability of electronic customer care technologies to enable individual customer banking relationships in the private internet banking field demonstrates the potential for customer loyalty specifically for the internet channel of distribution.