Asian banking research – a guest editorial

Citation

Baumann, C. and Hamin, H. (2013), "Asian banking research – a guest editorial", International Journal of Bank Marketing, Vol. 31 No. 6. https://doi.org/10.1108/ijbm.2013.03231faa.001

Asian banking research – a guest editorial

Asian banking research – a guest editorial

Article Type: Guest Editorial From: International Journal of Bank Marketing, Volume 31, Issue 6.

Purpose – The purpose of this editorial is to provide an overview of emerging Asian banking. The growing importance of Asia in the financial services sector is outlined as a platform to showcase four papers that resulted from our call for papers on the direction that the Asian Tiger is moving. The purpose of our editorial is equally to offer a reflection on research on and in Asia, plus to offer future directions for Asian financial services research.Design/methodology/approach – Our editorial briefly outlines the topics of the four articles contained within this special issue. It also puts the special issue in context of recent changes in global banking.Findings – Following the shift of economic power to Asia, a new and better understanding of Asian banking is necessary. The four papers of this special issue contribute – in their own ways – to the literature on Asian banking. Key banking areas such as credit cards, internet banking, but also corporate social responsibility as well as satisfaction and customer loyalty have been explored with a focus on Asia.Originality/value – The four papers of this special issue build a fine platform to explore the issues investigated as exploratory research in more depth in the future. This special issue provides research on East Asia (China, Hong Kong, Japan, South Korea and Taiwan), India, Malaysia and Vietnam. Triangulation could be a next step to validate the key findings in a global context.

Keywords: Asian bankingAsian research, Competitiveness, Future research, Financier of the World, Banking, Competitive strategy

Paper type Guest Editorial

Emerging Asian banking

For this special issue for the International Journal of Bank Marketing (IJBM), we asked: “Far Eastern Banking: in what direction is the Tiger moving?” Given the growing importance of Asian banking, characterised by emerging Asian banks entering the world centre stage, the increasing income and wealth of Asian customers and intense competition with a striving for global competitiveness, the timing for this special issue was just right.

Asia’s growing importance in banking is underscored by the fact that Asia hosts four of the top ten global financial centres: Hong Kong (3rd), Singapore (4th), Tokyo (6th) and Seoul (9th) (Yeandle and Gunten, 2013). Shanghai is ranked 24th, but China has now replaced the USA, the UK and Japan as the host of the world's largest financial institutions. Five of the ten largest banks by market capitalisation are Chinese: The Industrial and Commercial Bank of China, HSBC Holdings (British based, but with strong Chinese ties), China Construction Bank, Agricultural Bank of China, Bank of China (Relbanks, 2013). In terms of brand value, the Chinese banks have become “increasingly dominant” (Brandfinance, 2013, p. 5). The Agricultural Bank of China, for example, has experienced the highest increase in brand value of any bank in the world to $6 billion And the four largest Chinese banks are now among the 20 most valuable bank brands in the world.

China is no longer just the “manufacturer of the world” (Meckstroth, 2012): with the world's largest banks, a growing middle class with increasing income and high saving rates (Tung and Baumann, 2009), China is emerging as the new “financier of the world”, a term we herewith coin in the context of China. China contributes substantially to the global financial market (Obe and Narioka, 2013), essentially funding debt-ridden western economies. As a result of Asia’s undeniable key role in so many aspects of contemporary global society, the Australian Government has declared the current century to be the “Asian Century” (Glover et al., 2013).

Asian markets are changing economic forces, and the financial services sector is no exception. Besides the emergence of China as a new key player in the finance sector, through the Association of Southeast Asian Nations, countries such as Indonesia, Malaysia, the Philippines, Singapore and Thailand are working to liberalise, integrate and push their financial markets to gain momentum in the global financial markets through process efficiencies for their individual markets and stronger positioning to compete for international capital (Simmons et al., 2011). Such developments challenge the established financial centres in New York, London, Zurich, Frankfurt and Tokyo, but equally, they challenge the newly emerging centres in China and the Middle East (Dubai). There is, thus, increased competitiveness for investment capital, which has implications for companies wanting to list in traditional, emerging or newly emerging financial hubs. While there is thus strong evidence on the supply side for Asia’s raise to power in the financial services sector, similar developments are observed on the demand, or consumer, side.

Asian consumers have become the benchmark for product design, e.g. research and development in the car industry focuses increasingly on the tastes of the emerging Asian middle and upper classes. With increasing demand for banking services, a strong focus on Asian consumers is likely also occurring in the services sector such as in banking. Asian income levels (after PPP adjustment) put Macau, Singapore, Brunei and Hong Kong in the top ten World Bank statistics; Japan (24th) and South Korea (30th) are more or less on par with the European Union (24th) (World Bank, 2013). China ranks 94th, but with strong growth rates and some super wealthy individuals. China now has the world's second largest number of billionaires (including those from Hong Kong and Taiwan), the USA having the most. The Asia Pacific region hosts 386 billionaires with a combined net worth of 1.16 trillion US dollars, with a notable increase from 2012 with 961 billion (Fang, 2013). Altogether, such wealth, combined with a fast growing middle class and a growing upper lower class (i.e. blue collar workers), has ensured that more Asians are opening bank accounts than ever before (Demirguc-Kunt and Klapper, 2012).

There is an existing body of literature which suggests that generally, Asian consumer behaviour differs quite substantially from western consumer behaviour (e.g. (De Mooij and Hofstede, 2011; Samli, 2013). Such differences in behaviour can also be observed in the area of financial services (Jp, 2012). To continue this exploration of the phenomenon of Asian banking, this special issue contributes four papers.

The research papers of this special issue on Asian banking

Four papers were eventually chosen as a result of a successful blind review process. They cover a wide range of topics and geographic areas within Asia.

Bouvain, Baumann and Lundmark investigated corporate social responsibility (CSR) in financial services, comparing Chinese and East Asian banks vis-à-vis American banks. Essentially, their study investigates the link between CSR and brand value and establishes that different CSR aspects are linked to brand value for banks in East Asia and the USA. Marakarkandy and Yajnik re-examined and empirically validated end user computing satisfaction models for satisfaction measurement in an internet banking context. Their study looks at such issues in an India banking context. Phan and Ghantous contributed a paper on managing brand associations to drive customers’ trust and loyalty in Vietnamese banking. Their study highlights the potential of branding in the Vietnamese banking industry as a strategy to build strong customer relationships. Teoh, Yong and Chong explored the factors influencing credit card spending behaviour among Malaysians. Their study sheds new light on credit card spending behaviour, particularly in a fast developing country.

Reflection on research on and in Asia

Acting as guest editors for this special issue has triggered a more broad reflection on research on Asia, but equally on research conducted in Asia. While the four papers chosen for this special issue passed the review and selection process, a number of paper submissions had to be desk rejected. Surprisingly, however, our experience has been markedly different from that of Denman, the editor-in-chief of the International Education Journal: Comparative Perspectives (IEJ) in 2011. Denman notes the “sheer volume of articles coming from the developing world where English is the second or third language”. He goes on to write “This circumstance suggests that a high proportion of authors have sought recognition in English-oriented journals for their scholarly writings and may be using the IEJ as a springboard for achievement. I cannot tell you how many times I received a friendly email with the plea that publication is critical for either promotion or employment. This added a greater sense of responsibility and burden” (Denman, 2011, p. 1).

Unlike Denman, we were not flooded with papers for our special issue. In fact, our call for the special issue did not attract the expected volume of high quality research initially, and the call subsequently had to be extended. Potential contributors in emerging Asian markets were also contacted, but for one reason or another, perhaps in order to “save face”, they declined the offer to submit a paper that possibly would be rejected.

IJBM’s special issue on Asian banking would have been a golden opportunity for emerging scholars in Asia. Many would have some expertise on the topic, and likely easy access to data and background information. The journal itself was founded in 1983 and combined with a respectable 30-year track record and publication through Emerald, the journal reaches a large global audience with attractive citation impact potential. Perhaps it really is a matter of “saving face” for emerging Asian scholars to be hesitant to submit papers to international journals as previously alluded to. In addition, many have yet to come to realise that they need to focus on publications in international journals for academic employment and promotion. Top universities in China, Hong Kong, Japan, Singapore, South Korea and Taiwan have academic career criteria aligned with elite universities in Europe and Australia, Canada, UK and USA. Particularly noteworthy instances of the hesitation to tackle global academic platforms such as IJBM occurred when some authors chose not to revise and resubmit their work even after having been invited to do so, having passed the first review stage. We also experienced issues with plagiarism.

Formerly, academics in Asia could build their academic careers with research agendas focusing exclusively on Asia with publications in local journals in the local language. Replication studies, or studies using convenient samples such as students, were sufficient for such output. However, such an approach gave them little chance of making a global citation impact which typically required writing in English and having a more ambitious approach to research. Our special issue, and of course the countless other calls for papers in international journals, may well serve as a wakeup call for many Asian academics to reshape research agendas from local to global issues where local replication studies are no longer sufficient. For publications in international journals such as the IJBM, international quality standards are required, i.e. papers need to have a solid theoretical foundation, sampling needs to be representative of the targeted population, and statistical analysis needs to match the research objectives and reach some level of sophistication (e.g. multivariate analysis or conjoint analysis). Importantly, implications need to be of relevance for a global audience.

A rethinking is necessary for emerging researchers in Asia – and indeed elsewhere. For such researchers, an open mind is the quintessential basis from which to embark on careers as international scholars with a potential to act as future key players. No doubt this constitutes a challenge when it comes to pursuing adequate research topics beyond simply studying one's country of origin due to personal interest and convenience. A second challenge is having research capability itself. Ultimately, however, key appears to be a realisation of the importance of international journal publications in academic portfolios to build international careers through global citations. This appears to be the only way to make respectable impacts in the field and “build a name” for oneself. The academic field is changing. Although most editors of international journals have western backgrounds, increasingly, change in editorships is resulting in editorial boards with more diverse ethnic backgrounds. Such developments may attract and advance research from emerging Asian scholars once the importance of international publications has become widely recognised.

In sum, while there is little doubt that Asia warrants more emphasis as a research topic and as such as a unit of analysis, we also found that research conducted in Asia in some cases may need more development to reach international standards. We could not help to conclude that a golden opportunity to showcase one's emerging research on and in Asia for this special issue was underestimated and therefore missed by many.

Future directions of Asian financial services research

A research narrative of local replication studies of existing western research, as previously indicated, is no longer well suited for publication in international journals. The necessary rethinking could follow current developments in East Asia. In China, Fudan University in Shanghai is establishing a new centre aiming at retesting and redeveloping western theory and models to adapt them to Chinese market conditions. The new Research Institute for Oriental Management at Fudan will develop theories on – and for – Chinese management, including marketing, hospitality and even hospital management. In South Korea, Seoul National University’s (SNU) Institute of Economic Research exchanges research with 60 research institutes globally, and the Seoul National University Asia Center is one of the university’s core research projects[1]. The Centre’s concentration is on East Asian economic cooperation and integration where relationships between East Asia and Korea’s economic partners are investigated. Such institutes and centres base their research and teaching on the application of western theories to Asia, as much of globally recognised theories originate from the west. But Asian universities are no longer satisfied in simply taking over such knowledge untested in their own home turf. Consequently, new Asian theories on management and marketing are emerging, and it is not unlikely that at one stage in the future, western researchers back-verify Asian theory in western markets.

Taking customer loyalty as an example, there is an extensive body of literature with a focus on western markets, and only recently have Asian consumers been included. For example, recent work has investigated the loyalty behaviour of Chinese and overseas Chinese (Baumann et al., 2012). Notwithstanding such developments, there is a lack of a unanimous definition, understanding, conceptualisation and measurement of customer loyalty. The American Marketing Association's definition of customer loyalty as:

[…] the new imperative of marketing. As the marketplace approaches a super-saturation of products–as the power in the marketing equation shifts from product to consumer–brand loyalty disappears. To survive, companies will have to create loyalty relationships with their customers, one customer at a time[2].

This reflects a western market setting with saturated markets, but large emerging markets such as China, India and Indonesia have different circumstances with not yet saturated markets, calling for a new understanding of customer loyalty and other key marketing – and indeed management – concepts.

Switching service providers such as banks has become easier than ever (Gerrard and Cunningham, 2004), and with the convergence of products and services, consumers may perceive there to be decreasing differences between brands (Bansal et al., 2005; Strandvik and Liljander, 1994). Latecomer brands (Hamin et al., 2013) emerging from the Asian markets were previously limited, for the most part, to durables such as cars and electronics, but they are now becoming prominent in the services sector. For premium banking, for example, the established Swiss private banks are facing stiff competition from Asian banks such as HSBC, while new Chinese and Korean banks[3] have discovered that high income expatriates are a lucrative target market. Given such new market forces, will consumers remain loyal to their service providers in the future out of habit as in the past (spurious loyalty)? Will emotional attachments to banks remain or decrease? And will these factors, coupled with internet, phone and mobile banking, which is also strong in the new Asian markets, call for new understandings of customer loyalty?

Consumers interested in fast moving consumer goods largely focus on functionality (Mcdonald et al., 2001) coupled with brand attachment (Stilling Blichfeldt, 2005), whereas for luxury products, the focus has been on the emotional attachment to the brand (Scholz, 2012). But what if latecomer (Asian and other) brands offer superior functionality to traditional western brands at lower prices? In banking, for example, HSBC Premier services and Chinese banks have recently gained substantial market share, competing against established western financial service providers.

Conclusion

This special issue’s objective is to shed light on the changing face and as such growing importance of Asian banking. All of the papers included point, in one way or another, to a shift towards Asia of the entire momentum in financial services, from consumer banking to investment capital. Following this shift of power to Asia is a stronger focus on research on and in Asia. It is increasingly clear that Asia's new power in the area of financial services will be permanent, and as such, will be a key component of the so called “Asian Century”. The shift of the “world currency” away from US$ (and possibly the Euro) to the Chinese Yuen (Amadeo, 2013; Zhang, 2013) provides symbolic evidence of the power shift to Asia.

Asia is a diverse region. While no special issue can capture the entire nature of such diversity with respect to cultural and market dynamics, we are confident that IJBM No. 6 at least contributes to the body of knowledge on Asia in terms of banking and also research directions. For example, large emerging markets like Indonesia hold enormous potential for domestic banking, but what are their chances of overcoming negative country of origin effects (Hamin and Elliott, 2006) in offering banking services to the world?

In the final analysis, we view our special issue only as a first stepping stone to embarking on future research on the topic, and we hope to attract more followers on our journey. With an established link between culture, competitiveness and performance (Baumann and Hamin, 2011), catalysed by East Asia’s Confucian Dynamism, we are left to wonder to what extent the findings of our special issue will hold true beyond financial services. If culture “drives” competitiveness and ultimately performance, then perhaps the points made above will be equally true for other services such as education, tourism, hospitality and air travel, where East Asia has also become fiercely competitive and successful at the global level. These developments warrant further investigation, taking the findings from this special issue on the far east as a starting point.

Note

For more information, visit: http://en.snu.ac.kr/research/instituteswww.marketingpower.com/_layouts/dictionary.aspx?dLetter=C; source: IEGSee e.g. www.koreatimes.co.kr/www/news/biz/2012/08/123_117245.html

Acknowledgements

The editors of this special issue wish to thank the editors of IJBM, Professors Hooman Estelami and Kent Eriksson, as well as Emerald Publishing Limited for the opportunity to contribute this special issue on Asian banking. We also want to thank the authors for contributing their work, and thank the reviewers for adding value. We also thank the Master of Research students at Macquarie University (FOBE710 first semester 2013 cohort) for their input where this editorial was used as a learning piece. Equally, Dr Stephanie Huang of Macquarie University and Jihyun Lee of Seoul National University (SNU) are thanked for their contribution to the editorial.

Chris BaumannMacquarie University, North Ryde, NSW, Australia and Seoul National University, Seoul, South Korea, andHamin HaminMacquarie University, North Ryde, NSW, Australia