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Determinants of customer choice criteria in retail banking

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Click to edit Master subtitle style Name: Julia Hazleen Rostam

ID: 112007962 Date: 9th December 2011

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Journal 1

Determinants of Choice Criteria in Malaysias Retail Banking: An Analysis of Gender-Based Choice Decisions Safiek Mokhlis Faculty of Management and Economics Universiti Malaysia Terengganu

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

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Abstract
This paper presents an analysis of gender differences in the relative importance of choice criteria in respect of selecting a retail bank. A quantitative methodology, using responses given by 368 Malaysias undergraduates, is employed in the analysis. Findings show that there are some differences in choice factors employed by both male and female customers in selecting a bank for patronage. Factors of which both male and female had variation are attractiveness, marketing promotion, ATM service, proximity, people influences and financial benefits. Given this finding, it is recommended that the bank marketers should treat male and female consumers distinctive segments when designing their marketing strategies.

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introduction

Intense competition that exists in the market presents a big challenge to the profitability of retail banking institutions. Peter and Olson (2005) argue that the application of more and better segmentation technique is the best strategy to meet the demands of the competitive market environment. The study chose to sample a narrower group of Generation Y individuals in Malaysia, specifically college-age individuals. This market attracts particular interest from financial institutions because the market size is constantly expanding and has become lucrative.

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In Malaysia, over 3.5 million Generation Y population in the age bracket of 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 their educational 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 were distributed out

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Sample for this study was selected from among undergraduates 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

Selection Male (n=144) Factor Secure Feeling 1 ATM Service Financial Benefits Service Provisioning Branch Location 2 3 4 5

Female (n=224) 2 1 5 3 6

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conclusion

This paper reports on a comparative analysis of the relative importance attached to retail banks choice criteria by male and female college students in Malaysia. Findings revealed that both male and female college students place more emphasis on Secure Feeling and ATM Service suggesting that such factors should be considered seriously by commercial banks in designing their marketing strategies. Findings also indicate some differences in choice factors employed by male and female customers in selecting a bank for patronage.

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This should send a clear message to bank marketers 88 that 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 Banking Industry

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Apena Hedayatnia School of Management University of Tehran

Keywords: Bank selection criteria, Retail Banking, Iran

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Abstract
Iranian retail banks need to identify criteria which bank customers consider when they select a bank in order to plan their marketing strategies and survive in an intense competition that exist in this industry. This study designed to examine the bank selection criteria being employed by bank customers in Iran. A total of 798 customers (55.7% male and 44.3% female) served as a sample for the study. 38 selection factors extracted from relevant literature and interviews with five bank officials. Factors analysis is used to extract important selection criteria and Friedman analysis ranks the factors according to their importance. Findings show that the important factors determining customers selection are: quality of services and new banking methods, innovation and responsiveness of bank, friendliness of staff and confidence in manager, price and cost, staff attitudes and convenience of bank location and services.

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introduction

Throughout the past decade structural, regulatory and technological factors have considerably changed the banking environment in Iran and resulted in intensified competition in the market place. The intense competition that exists in the banking industry services presents a big challenge to the profitability of retail banking institutions. Financial services marketing in Iran has become much more complex since privatization of public banks in the 2000s.

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Consequently customer and their needs and their selection criteria are becoming more important for banks. 11 The main objectives in this research are:11

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method

Place of study City of Tehran of 830 structured questionnaires were distributed to bank customers and 802 sets were returned. 798 sets were considered usable (valid and complete), thereby yielding 96.1% of response rate.
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Total

Only

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result
Respondents Age

43.4% Female, 56.6% Male

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group 43.4% are between 18-30 years

>

50% of respondents have bachelor degree

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result
Ranking importance of bank selection factors Selection Factor Bank Appearance Quality of services and availability of new banking methods Easy banking processes and variety of services Price and cost Convenience Reputation and word of mouth advertising Additional services (i.e.: financial Rank 1 2 3 4 5 6 7

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conclusion

To determine the important factors that banks customers perceive as useful to their selection of retail banks in Iran. Such information should help the management of banks in devising suitable marketing strategies for reaching, attracting and retaining customers. The results reveal that customers place more emphasis on quality of services, innovation in banking services, ease of banking processes and price of products.

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Journal 3
The Determinants of Bank Selection Choice by Customers: Recent and Extensive Evidence from Nigeria Omo Aregbeyen, Ph.D Department of Economics University of Ibadan
Keywords: Banks, Selection Choices, Customers, Nigeria

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Abstract

This paper investigates the determinants of bank selection criteria by banking and business customers in Nigeria. It is motivated by the need to address the several limitations in a previous study by Omar (2007) by providing recent and extensive evidence on the determinants of bank selection choices in Nigeria, and to better inform bank executives and authorities with insights into the kinds of service customers find most appropriate for their banking needs. A total of 1750 respondents from six metropolitan cities across the six geo-political zones and FCT were sampled. Their responses on the importance of 25 different factors while choosing a deposit bank were sought and analyzed. The findings of the study reveal that the safety of funds and the availability of technology based service(s) are the major reasons for customers choice of 17 banks. While other factors received less rating, however 17 this does not in any way imply that they are not important.

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introduction

Understanding customers banking selection criteria is helpful to banks in identifying the appropriate marketing strategies needed to attract new customers and retain existing ones. This paper investigates on the determinants of banks selection criteria by banking and business customers in Nigeria. Competition in provisioning effective quality of services to customers is becoming a key determinant of the growth and prosperity of banking sector in Nigeria. As a result, Nigerian banks are broadening their range of services to cater for the needs of sophisticated and demanding customers.

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method

Study conducted across six geo-political zones of Nigeria and the Federal Capital Territory (FCT).
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For each geo-political zones, the most metropolitan city 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 banks at each location.

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result

Respondents 62.2% Male and 37.8% Female Response rate 100%

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Age Group < 21 years old 21 30 years old 31 40 years old 41 50 years old > 50 years old

Percentage 4% 22% 41% 18% 16%

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result
Ranking importance of bank selection factors

Selection Factors Safety of funds Quick / prompt service Minimum time waiting Good complaint handling Reputation/dependability One stop banking Any branch banking Innovative products and services Low/reasonable service

Rank 1 2 3 4 5 6 7 8 9

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conclusion

Nigerian banks are now operating under a more competitive financial atmosphere and rendering a wider variety of financial services. The findings of the study reveal that safety of funds, quick/prompt service and minimum waiting time are the major factors in a bank selection by the sampled respondents. It is recommended that banks should take proper cognizance 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 major factors considered by bank customers when selecting a bank. The results obtained from these three studies can be used by the banks as a guide on developing future market strategies according to the customer preferences at their location. In summary, the respondents from all three countries emphasize most on the security of the funds deposited to the bank, quality of service offered and also the convenience of being able to perform banking transaction through widely available ATM machines or e-banking.

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

Criteria

Journal 1

Journal 2

Journal 3
Bank Customers in FCT & 6 geopolitical zones (Nigeria) Under 21 Above 55 years old 1750

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Location of Respondents

Students of UMT Bank Customers in (Malaysia) Tehran (Iran)

Age Group

17 23 years old Under 18 Above 55 years old 400 830

Sample Size

24 24