Customer’s attitude towards and expectations of the financial services
Nowadays, financial institutions are not any more the simple loan and saving institutions, they provide financial services to the customers and in nature, the financial institution belongs to the services industry. In the past, people may not have so much money just their income earning, and their attitude about the financial services are different from today, so the financial services were very simple. With the development of the world economy, people now have more disposable income, and want to invest their money to the financial products so as to earn more. Therefore, people as customers to the financial institution, their attitudes and expectations have experienced the dramatic change. Moreover, the financial services industry is under the pressure and facing the competitive forces. Schmidt et al (2007) point that many new competitors entering the market has changed the business model and the competitive drives that established financial services organization are facing today worldwide. Financial organization not only need to serve the domestic customer’s needs and requirements, but also requires them to create sales in foreign markets.
- Literature Review
KHAN (2010) definite financial services is concerned with the design and delivery of advice and financial products to individuals and business with the areas of banking and related institutions, personal financial planning, investment, real assets, insurance and so on. Moreover, Anderton (1995) suggests that financial services, as it applied in the UK, is broadly understood to include banking, insurance, building societies, stockbroking, and investment services.
Schiffman and Kanuk (2007) state that organization who wants to conduct business successfully in a multi-country environment must understand the nature and the difference between the consumers coming from different societies, and culture in order to create the effective target marketing strategies focus on the foreign market of interest. Customers’ attitude towards and expectations of the financial services has changed this year, this in turn urge the financial organizations also make the relative changes to keep pace with them and then they could achieve their business goals. In addition, accounting and operation management texts and monographs (Cooper 1999, Cooper and Kaplan 1999; Fitzsimmons and Fitzsimmons 2001) recognize the importance of customer interaction in the design of performance measurement system in services firms.
On the other hand, attitudes are important in the customer environment, attitude towards financial services could be a critical factor in achieving efficiency and effectiveness in the financial services industry. Klein and Kunda (1992) found that individuals are motivated to hold a belief about one topic and then search the information to support that belief they hold. This means customers who believe the financial organization are more likely to find the information to confirm their belief. This in turn leads to the financial organization viewing social relationships with their customers as important and information exchange for developing and maintaining customer relationships. (So and Speece, 2000).
The customer’s attitude and expectations are affected under the social environment. Research in social environment has pointed that impacts that social influence can have on people’s behavior. (Bailey, 2004) Normally, the culture, social and family groups, psychological factors, personal circumstances and the service encounter put a strong influence on the customer’s attitude. For example, regarding the personal circumstances, customer in the society with potential disposable income and good job often wants to search the source to invest their money. Different culture may drive people purchase different financial products, such as Western and US customer prefer to purchase the stock, but Chinese people prefer to purchase the state bond.
Therefore, the financial organization should provide the customers the accurate information, research the customer’s expectation towards the services and financial products and make up the gaps. Then they would achieve the business success in this industry.
- A discussion on the ways in which customers have changed in recent years and how this impact the financial sector
To the financial organization, customers not only buy the financial products, they are also looking for a bundle of benefits which will meet their needs. In recent years, according to Illuminas (2008) the customers’ attitude could be divided into 4 groups: the Happy-Go Luckies, the Uncertain & Anxious, the Cautious & Responsible, and the Financially Confident. For the Happy-Go Luckies customer, they are most young people and having not very much saving. They have no time to search the financial products, so they think financial organizations generally know the customers expects. Their requirements are simple and they trust the financial organization. The Uncertain & Anxious group is people have lower income so they struggle to make the financial portfolio. This group customer finds it is hard for them to understand the financial products, and they are uncertain about the financial products due to the least able to shop. Financial organizations are the same to them. The Cautious & Responsible group is customers who actively manage their financial position to make sure it is under their control. They would not like to have debt and ensure they income is sufficient. They feel it is important to have savings to protect them for their future life. Hence, their attitude towards financial organization is conservative, and their financial advisors come from the independent advisors. The last Financially confident group has the resource and assurance about their investment, and they actively manage their finance. This group customer tends to older and has high levels of the income. They like to involve the financial matters and have a good understanding about the world and domestic economy. They review the financial deals on regular basis. Therefore, they treat financial organization more actively and seek to maximize their financial portfolios. Financial organizations often maintain a good relationship with this group.
In turn, the financial organization also make the related change to keep pace with the customers, otherwise, they may lose their business. The financial organization now develops the customer relationship management system to collect the information from their customers, integrate the customer profiles, analysis the loyalty and balance the relationship, make the marketing strategy, and use the information technology to exercise it. On the network considerations, financial organization could develop branches, ATM, internet services, telephone services, on-line banking, and customer services. For the high contribution customers, financial organization now sets the independent advisor to provide the personal financial advice. For the low contribution customer like the Uncertain & Anxious Group customer, the financial organization could introduce them to the ATM or self service sector so as to lower the operation cost. Lashmet (2000) found that financial organization need to related the customer transaction information with the credit check, risk management, and product purchase behavior. This in turn leads to the financial organization set up the mechanism to group their customers. In addition, it is costly to develop the new customers, hence the financial organization makes an effort to maintain the customer loyalty then they could make extra profit. Giving the customer confidence and provide good services could retain the customers. Moreover, the analysis of the customer’s contribution could bring the benefit to the financial organization as well. Since the cost of developing a new customer is bigger than maintain, so the financial organization know the contribution, they could avoid the wrong resource allocation. Furthermore, the financial organization now collecting the feedback from the customer about the services satisfaction is another change compare to the customer’s attitude change. Financial organization now analysis the difference between the customer’s expectation and the real return to trace their feedback, so they could make some plans to improve their financial services.
This sector is the detail examples show how the financial organization recognizes this changes from the customer’s attitude and ways in which these delivered in order to achieve the customer satisfaction and maintain the competitive position. In 2006, HSBC launch the HSBC Direct services. HSBC Direct is a telephone and internet banking which attracts customer through mortgage, accounts and savings. It is convenient for all the four customer groups above mentioned to use. It help the customer to set up the account and analyze the customer value, moreover it telephone and online banking give the customer a fast and easy way to access the bank account, they do not have to queue in the bank to make a money transfer or pay the bills. Moreover, the customer services staff from HSBC Direct often calls the customer to make sure their account going regular. What’s more, they offer the online financial planning for the household to plan their children’s education from now on. When the customer choose the saving schemes, HSBC Direct offer the different saving schemes such as regular saver, fixed rate saver and so on. Customer always easily to finds a way to access their account and make a consideration about their deposits, financial plans and other services.
Many households now hold credit card connected with big shopping malls or supermarkets. Customer would like to pay and collect points for the saving purpose. The financial organization like banks launches the credit card under some shopping malls like Debenhams and Tesco. This kind credit card not only could collect points in-store, but also collects credits in the banks. Customer does not have to register the shopping mall club cards and immediately enjoy the club members’ rights by using this credit card. On the one hand, financial organization could increase their client basis through the shopping mall promotion, through this corporation they could know better about the customer preference, which could also provide them potential new information so as they could analysis and better service or products to them. On the other hand, customer holding the credit card connected with shopping mall could enjoy VIP services in store and at banks. Moreover, customer can know the discount information in advance through the bank’s booklet and make a good arrangement about their income. Particularly, customer may attend the exclusively promotion in the shopping mall which could add their satisfaction, reinforce their loyalty to that bank financial services. Financial organization provides this kind of products as well as services could achieve the customer needs and maintain the relationship with the customer, finally they could get a competitive position in the financial markets.
However, the moving step never stops. Financial organization should never satisfy the current situation. Instead, they should know about the customers’ attitude all the time to make some improvements, such as launching the new financial products and enhancing the customer service quality due to the same customer basis. By doing so, they will gain more customers and not exit the financial markets.
This essay reviews the financial services, and discusses the changes in which customers’ attitude towards and expectation of the financial services. In particular, the study focus on the customer changed and how they influence the interaction with the financial services sector. As time goes by, the customer’s attitude and expectation towards the financial services has changed a lot. They are now divided into four groups regarding how they view the financial services. Similarly, financial organization react the changes of the customers so as to keep pace with them and try not to exit from the financial markets. They develop the customer relationship management system to analysis and develop their customer’s preference and expectations. Moreover, different countries and different financial organization also make the different changes. In UK, financial organization like bank launches the credit cards with shopping mall to promote the sales in store and in banks. This credit cards aim at the households and people with a good buying power. However, there is still a long way for financial organization to go if they want to keep their competitive market position. Not only they need to exist in the financial crisis, but also they are asked for creating new products or services to satisfying their customers. The customers’ attitude towards financial services is always changing, it is very import for the financial organization to give a quick feedback towards this changes.
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