McKechnie, S. (2011), "Consumer confidence in financial services after the crunch: new theories and insights", International Journal of Bank Marketing, Vol. 29 No. 2. https://doi.org/10.1108/ijbm.2011.03229baa.001Download as .RIS
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Consumer confidence in financial services after the crunch: new theories and insights
Article Type: Guest editorial From: International Journal of Bank Marketing, Volume 29, Issue 2
The unprecedented turbulence and uncertainty experienced in global economic and financial markets because of the “credit crunch” has had a damaging impact on consumer confidence. For the financial services industry in particular the impact of the current crisis on consumer saving and spending activities is confusing. The goal of this special issue is to bring together research that is theoretically innovative and well grounded to enrich our understanding of the consequences of the financial crisis for the consumption of retail financial services. There are four research papers and two viewpoint papers, which individually and collectively provide timely insights into this area.
The opening paper “New insights into consumer confidence in financial services” by Adèle Gritten examines the extent to which consumer behaviour for financial services has changed in the UK since the credit crunch. Drawing from proprietary consumer tracking research undertaken by YouGov plc, a leading professional research and consulting organisation, this viewpoint paper provides strong empirical evidence on how exactly consumer attitudes and spending behaviours have altered. She explores hopes and fears with regard to financial decision making in households, and raises a number of interesting questions about whether we can expect to see further changes in consumer behaviour in a post-recessionary climate.
Ever since the publication of the OECD’s (2005) international study of financial education and the need to improve consumer financial literacy, there has been a drive by many governments and organisations to improve levels of financial literacy and capability so that consumers are confident and capable of managing their finances well. The second paper, “Measuring the financial capability of investors – a case of the customers of mutual funds in Finland” by Outi Uusitalo, Antti Pellinen, Karl Törmäkangas and Anu Raijas, focuses on the financial capability of private investors with regard to their choice of mutual funds. Mutual funds have increasingly been seen as an attractive investment alternative to traditional savings accounts. This paper examines Finnish investors’ financial knowledge and understanding in order to establish how this particular aspect of financial capability is manifested in their investment decisions. The authors find differences in types of investors according to level of financial knowledge and distribution channel used.
Notwithstanding attempts to improve financial capability, financial services consumers need to be protected especially in these challenging times. The third paper, “Financial services and consumer protection after the crisis” by Folarin Akinbami reviews the literature on behavioural economics and psychology and uses it as a basis to critique the approaches to consumer protection regulation in the UK financial services industry before the global financial crisis. Given ongoing moves to reform UK financial regulation, this paper considers some substantial changes that could have potentially significant consequences for consumers.
There has been a long tradition of “multi channelling” in the financial services retail sector, which has allowed customers to choose from a range of distribution channels. The next two research papers provide insights into how technological developments in the delivery of financial services is changing the consumption process for retail customers. The fourth paper, “Understanding the consumption process through in-branch and e-mortgage service channels: a first-time buyer perspective” by Jane Coughlan, Robert Macredie and Nayna Patel, specifically investigates the consumption process for mortgages amongst first time buyers in the UK. It sets out to establish whether this process differs between traditional in-branch and web-based service channels, and how any differences may relate to problems encountered in the electronic service environment with regard to the information search and evaluation stages of the consumer decision making process. Their exploratory study reveals that the design of electronic service environments to support these complex products is product – rather than consumer-orientated, and consequently does not help to create confidence in the online information and advice provided. The fifth paper, “Generic technology-based service quality dimensions in banking: impact on customer satisfaction and loyalty” by Shirshendu Ganguli and Sanjit Kumar Roy, makes a different contribution to extant work on technology-based service channels. Rather than examine customer perceptions of service quality in relation to specific technology-based service channels, the authors consider how these perceptions relate to technology-based banking channels generally. Through an online survey of US consumers they identify four generic service quality dimensions and establish their relative influence on customer satisfaction and loyalty. As with the previous paper, these findings highlight the need for service providers such as banks to design these distribution channels more from a customer perspective as this should help them to instil consumer confidence in accepting them.
The sixth paper, “Banking without the banks” by Steve Worthington and Peter Welch, assesses the prospects for “non-banks” to enter and expand into the UK financial services retail sector in the aftermath of the financial crisis when the reputation of “traditional” banks has been considerably damaged. This viewpoint paper is based on a cutting edge report by the authors that concentrates on challenges that these new entrants pose for banks today. They critically evaluate the cases of Virgin Money and Tesco Bank, both of which operated as niche players in the UK marketplace for more than a decade before the crisis, yet have recently announced plans to become full-service retail banks.
Finally, I would like to thank several people who have helped to bring this special issue to fruition. First of all, I would like to thank the editor of the International Journal of Bank Marketing, Professor Jillian Farquhar, and the publishing team at Emerald for their support throughout this project. Secondly, special thanks to all of the authors who submitted papers to the special issue, as well as to the expert reviewers for their rigorous and prompt feedback. I hope that the insights into the contemporary consumption of retail financial services provided by this collection of papers will inspire academics and practitioners to undertake further research in this area.
Sally McKechnie Associate Professor in Marketing at Nottingham University Business School, Nottingham, UK.
OECD (2005), Improving Financial Literacy: Analysis of Issues and Policies, OECD Publishing, Paris