Characteristics of consumers of financial services
Characteristics of consumersof financial servicesDrisya Saseendran
• Howcroft et al. (2003) identify five characteristics offinancial service consumers.• During information search consumers rely more onpersonal sources, such as recommendations offriends and family.• In service evaluations, consumers rely on a limitednumber of quality cues, of which the majority isrelated to the price and the physical aspects of theservice offering.• In a face of many alternatives, consumers mightjust pick out the first acceptable offering instead ofmaximizing satisfaction by evaluating all thedifferent options
• Due to the intangibility, consumers perceive greater risk whilepurchasing services and especially financial services.• Finally, because of the greater risks, consumers tend to rely more onbrand loyalty and achieve toward a relationship with the serviceorganization.
Other characteristics• Financial services consumers always prefer a personal, interactiverelationship with the service provider so that they know theconsumers very well.• Financial service consumers prefer service providers who ensurecustomer orientation ;those who consider their business needs andwhat products should be beneficial for them.• Financial services consumers prefer those service providers whosatisfy all their service needs and process their financing relatedquestions in a timely manner.• Consumers prefer service providers who provide required informationto them so that they are equipped for making right decisions.• Factors influencing choice of a bank by a customer are locationconvenience, speed of service, competence and friendliness of bankpersonnel.• Ethnicity of consumer has a strong impact on consumption.• Consumer satisfaction is influenced by service quality, servicefeatures,service problems etc.
Financial traits exhibited by consumers.• Consumers approach financial matters in avariety of waysFour dominant financial traits.• • Financial planning: the extent to which a persontakes a long or short-term perspective when• making financial decisions.• • Financial risk: the willingness of an individual totake on financial risk.• • Financial engagement: the level of interest infinancial matters.• • Financial decision making: whether a person basestheir financial decisions on intuitive factors such astrust, or by analysing data and options.
FINANCIAL PLANNING• Short term• Tend to make financial decisions quickly• with little thought for long-term• consequences. Want to know “What’s in it• for me now?” Point-of-sale information has• greatest impact.• Long term• Want to know longer-term benefits and risks.• Seek comprehensive information before• making decision. Appreciate financial• planning tools (e.g. online calculators).
FINANCIAL RISK• Risk averse• Will not knowingly expose themselves to the• chance or risk of financial loss (though may• not have sufficient knowledge to appreciate• the true risks of different financial products).• Risk tolerant• Are willing to take financial risks in the hope• of achieving favourable outcomes, and to• tolerate some losses.
FINANCIAL ENGAGEMENT• Engaged Are interested in and knowledgeableabout financial services.• Wish to manage their own finances, view as hobbynot chore.• Seek out relevant information. Enjoy using tools.• Disengaged• Are disinterested in and/or fearful of personalfinance.• Tend to lack understanding of financial offerings,and disinclined to learn more.• Prefer simple explanations without jargon orcomplex descriptions.
FINANCIAL DECISION MAKING• Intuitive• Tend to make financial decisions based onintuitive factors such as instinct, trust, brandor recommendation.• Seek reassurance, need to feel decision isright one for them• Data-driven• Tend to use logical, information-heavyapproach (e.g. weighing up pros and cons).• Focus on facts and figures so that they caneasily compare different offers. Need toknow they have considered all options.
Conclusion…• It is apparent that there is a noticeableabsence of any general conceptualframework that describes how consumersbuy services• There is a real need for marketing theoriesand concepts to be developed specifically forservices• The framework adopted by the interactionapproach already has potential for generalapplication in services as well as financialservices