Determinants of Consumer Choice Criteria in Retail Banking

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Determinants of customer

choice criteria in retail banking

Name: Julia Hazleen RostamID: 112007962Date: 9th December 2011

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Journal 1

Determinants of Choice Criteria in MalaysiasRetail Banking: An Analysis of Gender-Based

Choice Decisions

Safiek Mokhlis

Faculty of Management and EconomicsUniversiti Malaysia Terengganu

Keywords: Male and female customers, Retail Banking,Choice criteria, College students, Malaysia

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Abstract

This paper presents an analysis of gender differencesin the relative importance of choice criteria in respect ofselecting a retail bank. A quantitative methodology,using responses given by 368 Malaysiasundergraduates, is employed in the analysis. Findings

show that there are some differences in choice factorsemployed by both male and female customers inselecting a bank for patronage. Factors of which bothmale and female had variation are attractiveness,marketing promotion, ATM service, proximity, people

influences and financial benefits. Given this finding, it isrecommended that the bank marketers should treatmale and female consumers distinctive segments whendesigning their marketing strategies.

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introduction

Intense competition that exists in the market presents a bigchallenge to the profitability of retail banking institutions.

Peter and Olson (2005) argue that the application of more andbetter segmentation technique is the best strategy to meet thedemands of the competitive market environment.

The study chose to sample a narrower group of Generation Yindividuals in Malaysia, specifically college-age individuals.

This market attracts particular interest from financial institutionsbecause the market size is constantly expanding and has

become lucrative.In Malaysia, over 3.5 million Generation Y population in the age bracketof 17-23 year-old age bracket are currently attending college (source:Ministry of Higher Education Malaysia, 2009)

College student are likely to have a bank account to negotiate theireducational loans, study allowances.

Student market is the potential for above-average profitability in the

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method

Total of 400 sets of structured questionnaire weredistributed out

Sample for this study was selected from amongundergraduates students of Universiti Malaysia

Terengganu 390 sets were returned, however only 368 samples

were usable

Response rate 92%

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result

Respondents 39.1% males, 60.9% females

Median age of respondents 21.96 years

Ethnic group 73.1% malay, 12.5% chinese, 7.3%indian

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result

Ranking importance of bank selection factors by gender

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SelectionFactor

Male (n=144) Female(n=224)

Secure Feeling 1 2

ATM Service 2 1

Financial

Benefits

3 5

ServiceProvisioning

4 3

Branch

Location

5 6


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conclusion

This paper reports on a comparative analysis of therelative importance attached to retail banks choicecriteria by male and female college students inMalaysia.

Findings revealed that both male and female collegestudents place more emphasis on Secure Feeling andATM Service suggesting that such factors should beconsidered seriously by commercial banks in designingtheir marketing strategies.

Findings also indicate some differences in choice factorsemployed by male and female customers in selecting abank for patronage.

This should send a clear message to bank marketersthat they are dealing with two distinct market segments

which require different market strategies.

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Journal 2

Bank Selection Criteria in Iranian Retail BankingIndustry

Apena Hedayatnia

School of Management

University of Tehran

Keywords: Bank selection criteria, Retail Banking, Iran 99

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Abstract

Iranian retail banks need to identify criteria whichbank customers consider when they select a bank inorder to plan their marketing strategies and survive inan intense competition that exist in this industry. Thisstudy designed to examine the bank selection criteriabeing employed by bank customers in Iran. A total of798 customers (55.7% male and 44.3% female) servedas a sample for the study. 38 selection factors extractedfrom relevant literature and interviews with five bankofficials. Factors analysis is used to extract important

selection criteria and Friedman analysis ranks thefactors according to their importance. Findings show thatthe important factors determining customers selectionare: quality of services and new banking methods,innovation and responsiveness of bank, friendliness ofstaff and confidence in manager, price and cost, staffattitudes and convenience of bank location and services.

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introduction

Throughout the past decade structural, regulatory andtechnological factors have considerably changed thebanking environment in Iran and resulted in intensifiedcompetition in the market place.

The intense competition that exists in the bankingindustry services presents a big challenge to theprofitability of retail banking institutions.

Financial services marketing in Iran has become muchmore complex since privatization of public banks in the

2000s.

Consequently customer and their needs and theirselection criteria are becoming more important forbanks.

The main objectives in this research are:-

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method

Place of study City of Tehran

Total of 830 structured questionnaires weredistributed to bank customers and 802 sets

were returned.Only 798 sets were considered usable (valid

and complete), thereby yielding 96.1% ofresponse rate.

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result

Respondents 43.4% Female, 56.6% Male

Age group 43.4% are between 18-30 yearsold

> 50% of respondents have bachelor degree

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result

Ranking importance of bank selection factors

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Selection Factor Rank

Bank Appearance 1

Quality of services and availability ofnew banking methods

2

Easy banking processes and variety ofservices

3

Price and cost 4Convenience 5

Reputation and word of mouthadvertising

6

Additional services (i.e.: financial 7


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conclusion

To determine the important factors that bankscustomers perceive as useful to their selection of retailbanks in Iran.

Such information should help the management of

banks in devising suitable marketing strategies forreaching, attracting and retaining customers.

The results reveal that customers place moreemphasis on quality of services, innovation in bankingservices, ease of banking processes and price of

products.

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Abstract

This paper investigates the determinants of bankselection criteria by banking and business customers inNigeria. It is motivated by the need to address the severallimitations in a previous study by Omar (2007) byproviding recent and extensive evidence on the

determinants of bank selection choices in Nigeria, and tobetter inform bank executives and authorities with insightsinto the kinds of service customers find most appropriatefor their banking needs. A total of 1750 respondents fromsix metropolitan cities across the six geo-political zones

and FCT were sampled. Their responses on the importanceof 25 different factors while choosing a deposit bank weresought and analyzed. The findings of the study reveal thatthe safety of funds and the availability of technology basedservice(s) are the major reasons for customers choice ofbanks. While other factors received less rating, howeverthis does not in any way imply that they are not important.

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introduction

Understanding customers banking selection criteria ishelpful to banks in identifying the appropriatemarketing strategies needed to attract new customersand retain existing ones.

This paper investigates on the determinants of banksselection criteria by banking and business customersin Nigeria.

Competition in provisioning effective quality ofservices to customers is becoming a key determinant

of the growth and prosperity of banking sector inNigeria.

As a result, Nigerian banks are broadening their rangeof services to cater for the needs of sophisticated anddemanding customers.

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method

Study conducted across six geo-political zones ofNigeria and the Federal Capital Territory (FCT).

For each geo-political zones, the most metropolitancity is selected for this study.

North East Zone Maiduguri

North Central Zone Jos

North West Zone Kano

South East Zone Enugu

South West Zone Lagos

South South Zone Port Harcourt

250 sets of questionnaires distributed among 5 banksat each location.

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result

Respondents 62.2% Male and 37.8% Female

Response rate 100%

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Age Group Percentage

< 21 years old 4%

21 30 years old 22%

31 40 years old 41%

41 50 years old 18%> 50 years old 16%


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result

Ranking importance of bank selection factors

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Selection Factors Rank

Safety of funds 1

Quick / prompt service 2Minimum time waiting 3

Good complaint handling 4

Reputation/dependability 5

One stop banking 6

Any branch banking 7

Innovative products andservices

8

Low/reasonable service 9


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conclusion

Nigerian banks are now operating under a morecompetitive financial atmosphere and rendering awider variety of financial services.

The findings of the study reveal that safety of funds,

quick/prompt service and minimum waiting timeare the major factors in a bank selection by thesampled respondents.

It is recommended that banks should take propercognizance of these factors as a guide in designing

their future strategies for competitive advantage.

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similarities

All three studies focused on identifying the majorfactors considered by bank customers when selectinga bank.

The results obtained from these three studies can be

used by the banks as a guide on developing futuremarket strategies according to the customerpreferences at their location.

In summary, the respondents from all three countriesemphasize most on the security of the funds

deposited to the bank, quality of service offered andalso the convenience of being able to perform bankingtransaction through widely available ATM machines ore-banking.

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differences

Below is a summary of the differences between the 3journals:-

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Criteria Journal 1 Journal 2 Journal 3Location ofRespondents

Students of UMT(Malaysia)

Bank Customers inTehran (Iran)

Bank Customers inFCT & 6 geo-

political zones(Nigeria)

Age Group 17 23 years old Under 18 Above 55years old

Under 21 Above55 years old

Sample Size 400 830 1750

Documents

Determinants of Consumer Choice Criteria in Retail Banking