“One size doesn't fit all”. Bank switching decisions and customer vulnerability in Europe
International Journal of Bank Marketing
ISSN: 0265-2323
Article publication date: 10 November 2023
Issue publication date: 5 August 2024
Abstract
Purpose
This paper examines the relationships between bank switching and both customer vulnerability and consumer-oriented policies (financial education and disclosure practices).
Design/methodology/approach
The analysis employs microdata from the Special Eurobarometer on Financial Products and Services, for 24 European nations. It carries out a probit estimation on the factors explaining propensity of bank switching, focusing on three characteristics associated with customer vulnerability: an advanced age, low educational attainment and residence in a rural or a relatively poor region.
Findings
The authors report that the probability of bank switching is significantly lower for three groups of vulnerable customers: the elderly, the less educated and those living in deprived regions. Further the authors identify that national financial education policies and disclosure practices have no significant effects on bank switching.
Research limitations/implications
Based on these results, the authors propose more targeted policies recognising customers' heterogeneity are required to increase bank switching behaviour.
Originality/value
This paper exploits a unique source of information on bank switching behaviour and customer characteristics across European nations. These data are complemented with information about consumer financial education policies and disclosure practices from the World Bank and geographical, market and regulatory factors at the regional and national levels. The paper contributes to two academic areas. First, it presents further evidence on heterogeneity of bank customer switching behaviour, addressed at improving the understanding of customer vulnerability in banking services. Second, it examines the efficacy of consumer-oriented policies (financial literacy and disclosure practices) in encouraging bank switching.
Keywords
Acknowledgements
This research has been carried out with the support of the Erasmus+ Programme of the European Union (Jean Monnet Action 620296-EPP-1-2020-1-ES-EPPJMO-MODULE). Authors acknowledge the valuable comments provided by Prof. Philip Molyneux.
Citation
Fernández-Gutiérrez, M. and Ashton, J. (2024), "“One size doesn't fit all”. Bank switching decisions and customer vulnerability in Europe", International Journal of Bank Marketing, Vol. 42 No. 6, pp. 1264-1281. https://doi.org/10.1108/IJBM-03-2023-0141
Publisher
:Emerald Publishing Limited
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