Investigating the transformative impact of bank transparency on consumers’ financial well-being

Abstract

Purpose

Grounded in Transformative Service Research, the purpose of this paper is to explore the mechanisms by which bank information transparency influences consumer’s financial well-being (FWB). The authors propose that customer attitudes toward the brand and the subjectively perceived ability of individuals to deal with the financial challenges explain the enhancement of FWB driven by bank information transparency.

Design/methodology/approach

A survey was conducted to test the proposed hypotheses. In total, 400 bank customers of five commercial banks in Colombia were approached and asked to fill out a pen and paper questionnaire. Serial mediation analysis was applied to test the hypotheses.

Findings

This research shows that bank information transparency can uplift the FWB of customers. Furthermore, the positive effect of bank information transparency on the FWB occurs because the shared information improves the positive attitudes toward banks and the perceived financial self-efficacy of customers.

Research limitations/implications

This paper heeds the call of current literature for improved explanations of the relationship between attempts to inform consumers about financial services and their FWB.

Practical implications

This research shows that managers who embrace the challenging task of improving the FWB of their customers should design strategies for more transparent information sharing with their customers. However, these strategies should be designed not only to deliver information to customers but also to increase the perceived disclosure, accuracy and clarity of shared information.

Originality/value

This pioneering study aims to explain the effects of bank information transparency on the FWB of consumers by drawing on interdisciplinary literature. This research is important as many banks aim to increase their information transparency without a clear understanding of the effects of these actions on consumers and therefore in many instances their efforts fail. A key contribution of this study is identifying concrete mechanisms (i.e. brand attitudes and self-efficacy) that help managers to improve customers’ FWB via information transparency. Accordingly, the authors offer suggestions for better information transparency strategy implementation.

Citation

Losada-Otálora, M. and Alkire (née Nasr), L. (2019), "Investigating the transformative impact of bank transparency on consumers’ financial well-being", International Journal of Bank Marketing, Vol. 37 No. 4, pp. 1062-1079. https://doi.org/10.1108/IJBM-03-2018-0079