In the UK, the re-design of bank and building society branches is currently in vogue. Many financial institutions are re-evaluating the role of their branches as a distribution channel and beginning to consider themselves as financial retailers with outlets akin to shops that are open and welcoming. Similar changes can also be seen across Europe as many banks remove the heavy glass barriers between customers and staff and place greater emphasis on targeting customer segments. This paper examines the factors propelling these changes. It points out that the analogy between retail outlets and bank branches has limitations. There are fundamental differences between the two types of outlet which make the task of re-designing bank branches more challenging. The paper also describes attempts by various banks and building societies to incorporate new corporate values and banking concepts into the changes in design. The role of market research in evaluating these changes is the focus of the paper; examples from research conducted on behalf of the National Westminster Bank and the National & Provincial Building Society are discussed in terms of the merits and pitfalls associated with their different approaches - testing prototype branches versus live branches. The authors conclude with statements about the relative importance of design in the mix of factors that makes a branch successful and highlight the role of staff in translating elements of this mix (being more welcoming, friendly, sale orientated) into practice.
Credit Communal de Belgique, like most of the Belgian banks has decided to rise the pricing of its transfering products through an appropriate pricing of its services to its retail customers. Before introducing this pricing, it was important to consider the perception of the cost and of the consequences of this new pricing on the behaviour of the consumer of transferring products. The study measured the choice between the different means of payment used by the customers (retail banking) in each situation. The data were gathered with 750 customers of Credit Communal de Belgique through the classic interviews technique. The data were processed by computer according to the "trade-off method". For each of the above mentioned situations, the future behaviour of the customers was observed on the basis of the proposed price levels with the help of simulations. These simulations also gave an answer to the question: At what level must the price of a service be fixed in order to increase or reduce the use of this service? The results allowed to set up a pricing system taking into account the expectations of the customers and the demands of the banks.
The paper argues that the small business market is a key sector for banks, providing the future base for the important corporate middle market and that there are opportunities for hunks to increase their business profitability in this sector while at the same time improving customer satisfaction. It shows how research can play an important role in the improvement of bank performance and profitability in the sector, at points ranging from service development and enhancement through relationship management to monitoring of performance. It provides evidence of a number of interesting trends and issues to be tackled including: -ways of increasing market share of new business customers -the impact of marketing action aimed at small businesses on a bank's reputation in other business sectors -identification of key market segments more likely to grow fast, and their special needs and priorities -the need to communicate the value of banking services to justify their cost -lack of small business understanding of service pricing. Conclusions include the need for better implementation of marketing and relationship management policies at the branch and local office level, opportunities to use new technology t0 add value and improve quality of service, the importance of monitoring all aspects of service quality and ways to strengthen relationships between banks and their small business customers.
In this paper, I shall examine the full spectrum of distribution channels for financial services. These changed comparatively little for at least 150 years, being based around branch banking and insurance brokers. Technology, combined with pressure on overhead costs, have conspired to make financial institutions re-examine their distribution philosophies and practices, helped in no small way by changes in legislation and regulation. Some of these changes have been more successful than others; automated telling machines are now an accepted feature of High Street retail banking, but âone-stopâ shopping for financial services has failed to take off, and the move of institutions into estate agency, at least in Britain, has been a disaster. I shall draw on several pieces of research undertaken in the past 12 to 18 months to demonstrate the need for better targeting of distribution channels in terms of market segments. Recent research among European financial institutions shows that the trend towards fewer branches and greater automation will continue, but large segments of the market, notably women, the older age groups and less well-off or educated people have deep reservations about these changes. The institutions themselves admit that it is becoming more difficult to discriminate among financial products, and point to corporate identity as a major instrument in creating product differentiation. The world of insurance, too, is seeing considerable changes in its distribution network, with the traditional broker hard pushed to survive. Legislators make great play of the importance of independent advice, and laws forcing intermediaries to polarise between tied agents, offering the products of a single supplier, and independent advisers, have existed in Britain for the past live years. Even if these laws have achieved their purpose, which is a moot point, do the British public want the results? Research evidence suggests that they do not: that independence is at best little understood, and probably plays little part in their decision of what to buy, and where to buy it.
This paper examines the effect that the recession has had on the financial behaviour of small businesses and their optimism about the future. The main finding is that the age of the business and the change in its turnover over the preceding year are important determinants of behaviour and attitude. Hence, the conclusion is that these are essential components of any segmentation study, alongside the more commonly used size, sector and region variables. Furthermore, the author believes that the findings from the small business sector can be likened to the life stages used in consumer financial research, and draws a parallel between consumer disposable income and business turnover and profitability. There are similar parallels between new house-owners and new businesses.
The distribution is analysed traditionally by two types of modeIs. The first type is economic. The economists have tried to justify the agents ' presence in the distribution channels. Two functions are filled by the intermediaries for the exchange of the products between the producer and the consumer : cost minimisation, and utility maximization. The second type is behaviorist. The purpose is to explain the behavior of the firms 'channels. This perspective is complementary to the economic analysis, because it explains the mechanism of the distribution optimal configuration. The integration of these two approaches has been made by researchers. One of the most interesting models has been developed by E. Williamson. The strength of Williamson's work stems from recent developments in microeconomics which, through the transaction cost theory, has made a large part on. microeconomics directly applicable to the concerns of the main-line organisation theorist.
This paper deals with profitability enhancement in retail banking. More explicitly we will focus on how banks can gain understanding of customer bases in order to enhance profits. We will argue for proper segmentation approaches, where profitability of the customer relationship is a central ingredient of the analyses. Segmentation will be a central theme and we try to show what developments are needed in order to cope with the turbulence in the business environment. The paper will be of a theoretical nature. Empirical observations will be limited, and serve more as illustrations of our approach.
The number of M&A transactions involving German firms has risen sharply since the mid-1980s. An important influencing factor was the development of the internal market of the European Community. The demand for professional services in the area of M&A also grew in parallel. A professional M&A consulting market first developed in the United States. Through international deals, the professional consultants also found their way to Germany (and to other countries). The banks have various reasons for striving for commissions and intend, or are already doing so, to put together and/or beef up their own M&A teams, in order to fight their way to a market position in this field. in this situation, Infratest carried out an empirical basic study in the subject area of "Mergers and Acquisitions". This primarily involved determining the requirements and wishes of the customer and potential customers and investigating the banks' level of competence in problem-solving in comparison to their competitors. The following methodical aspects of the study will be addressed in this report. Training in and familiarization with the subject Decisions concerning the choice of the survey methods, universe, and the sample. The development of the questionnaire and Measures for the assurance of satisfactory response rate of the difficult target group (senior management). The results then showed that M&A consulting will continue to be an important topic in Germany and that the banks stand a relatively good chance of achieving success in this market. And the report closes with a few thoughts on modifications which could be made, should a new edition of the study appear.
Competitive pressures as well as the search for fee based incomes, mainly derived from cross-selling, have forced financial institutions to re-define their marketing strategies. Relationship banking has been perceived as a solution to these changes. The concept of relationship banking is based on the premise that "keeping a client is more desirable than attracting new business". This approach to bank-customer exchanges is particulary relevant to commercial (i.e.business sector) segments. Yet in reality the management of relationships is far from being a success, as stated by Day (1985)..."the business association with bankers euphemistically refer to relationship is prompted by financial lust not customer trust." On the basis of interactions with over 200 commercial bankers we trained through the Institute of Canadian Bankers, this paper identifies the major problems raised by the implementation of an effective relationship approach. From this critical analysis, the paper points out the need to view relationship banking as a major corporate issue, not as the sole responsibility of front line people (account managers). More precisely effective relationship banking entails: 1. A re-definition of profit centers 2. A new balance between responsibilities and authority, 3. Revised human resources policies as far as account managers are concerned, 4. Performance appraisal based on relational criteria as well as profit. The conclusion is that within the banking industry, as far as bank-customers relationships are concerned, marketing and strategic issues are merging.
Technology is a key resource of profound importance for corporate profitability and growth. One specific form of technology in retailing is self-service technology. The services industry, however, could be viewed as different from the product industry when it comes to the consideration of self-service technology. This is especially so when one considers that human staff plays a vital role in the delivery of services. This paper discusses the experts' opinions of the future of customer interface technologies in the New Zealand retail banking environment. In particular, it reports on brainstorming sessions, interviews, and a Delphi study held with leading executives from various sectors of the economy. The research indicated that in the future utilization of home banking by television will be limited to a specific and small market segment. Home banking by personal computer will be relatively more widespread, although it is unlikely to be used by more than 20 percent of the banking population. Home banking by automated telephone service will be more widespread still, yet acceptance is unlikely to be greater than 30 percent of the banking population. The use of human bank tellers will gradually fall over the next 20 years, as more and more transactions and functions are performed by electronic means. âStaff-less branches (which are staffed predominantly by self-service technology) will be available in all the main city centres before the turn of the century.
The significance of marketing and market research within financial institutions increased in the mid and late 1980s as a result of the increased competition brought about by de-regulation and growing financial sophistication on the part of the consumer. During that time marketing functions grew in terms of staffing and spend on all aspects of marketing, including research. This paper looks at the extent to which the role and influence of marketing and market research within financial services companies has been affected by the recession which followed the period of expansion of the late eighties and which has hit companies in the financial service sector particularly severely. The papers findings are based on twenty face-to-face interviews with research managers in financial institutions. The paper concludes that, whilst marketing functions within financial institutions have been affected by the cost control and cost-cutting programmes that companies have adopted as a means of off-setting a poor financial performance, market research functions within financial service companies are in reasonably good shape and that their longer term prospects are good. Market research has proved its value and, in many companies, market research is being used to look at personnel and organizational, as well as marketing, issues. That is not to say that research has not been affected; many researchers report budgets being maintained in absolute terms at last yearâs levels and a ban on recruitment. In order to offset the effects of less money being available for research, market research managers are prioritising research requirements and there has been a move away from research undertaken for tactical short term reasons to research of strategic and long term significance. In some respects this greater discipline is welcomed by researchers. Researchers, working within marketing functions where there is a ban on recruitment, feel their role is more compromised by reduced staffing levels than budget restrictions. Moreover, whilst many were coping well with budget restrictions, there was less evidence that strategies were being developed to cope with increased time pressures. This has potentially more critical and long term consequences because lack of time is preventing senior researchers from developing the role of research within business planning, where many believe that the long term future of research lies.
This paper describes, from the German viewpoint, the practical and legal problems of direct selling and the opportunities for its increased use in view of changes in consumer behaviour. The first chapter gives an overview of the current situation with regard to direct selling in Germany and certain other countries in the West and describes current trends. The second chapter considers the difficulties facing the selling of life assurance. Life assurance is an abstract product requiring explanation and over 80% of sales are via brokers. The provisions of the insurance board of control, the ban on granting the individual consumer special advantages and the ban on comparative advertising all considerably narrow the scope for direct selling. The third chapter looks at the consumer's views on direct selling. Considerable inhibition thresholds on the part of the consumer stand in the way of a high potential of customers interested in direct selling (20% of the population), me general disinterest in insurance matters - only 9% of the population takes any mterest - is negatively reinforced by the consumer's fears that direct selling is too complicated. Additionally, the consumer has a rather vague notion about the advantages of direct selling; basically, the majority of consumers does not believe mat those involved in direct selling offer better benefits. The fourth chapter examines the costs of direct selling and explains that direct filing is a more costly sales method if it only serves the acquisition of new customers. The fifth chapter prognosticates that the liberalisation in the European insurance market complicates rather than simplifies the situation for those involved in direct selling.