Editorial

Citation

Estelami, K.E.a.H. (2013), "Editorial", International Journal of Bank Marketing, Vol. 31 No. 4. https://doi.org/10.1108/IJBM-03-2013-0027

Editorial

Article Type: Editorial From: International Journal of Bank Marketing, Volume 31, Issue 4.

It is a well-known fact that financial services organizations rely heavily on the establishment of long-term relationships with their customers in order to achieve profitability. Repeated transactions with customers are believed to generate profitable exchanges and help create contexts for satisfactory service encounters. The generation of satisfying customer interactions is therefore one of the primary pursuits of many financial services organizations. This pursuit is partially motivated by research studies and industry practices that assume a direct relationship between financial performance and customer satisfaction. In addition it is motivated by the belief that loyal customers are generally more satisfied with the services provided by a financial institution. The first two papers in this issue of the International Journal of Bank Marketing challenge these assumptions. While the first paper focusses on the impact of sociodemographic's and customer satisfaction and loyalty in the unique market of private banking, the second paper extends the scope of inquiry into the unique market of banking services in Greece, and examines the dynamics by which customer satisfaction may affect profitability. The remaining two papers in this issue focus on cross-country variations of consumer perceptions of fairness in various financial services categories and on how front-line employees can be enabled to better serve bank customers. The research findings presented in the papers featured in this issue provide converging evidence on the unique dynamics by which customer satisfaction is driven in financial services markets and question some of the conventional assumptions made in services marketing literature.

In the first paper in this issue, Seiler, Rudolf and, Krume examine the market for private banking services. They specifically focus on the dynamics by which customer satisfaction is formed in this unique market. Given that the majority of private banking customers are high net worth individuals, it is essential to understand the mechanisms by which their impressions of the service provider is formed. The authors address this by examining the role that sociodemographic variables can have on customer satisfaction and loyalty. Their research highlights the unique predictive power that sociodemographics can have in segmentation and behavioral analysis of private banking clients. They find that measures such as the size of liquid assets and employment status can significantly predict private banking customers’ satisfaction and loyalty. For example, self-employed clients are found to behave differently from those that are on salaries. The empirical findings also highlight that the length of the relationship with the bank does not necessarily translate into customer satisfaction – a finding that contrasts with traditional views on customer satisfaction effects. In addition, the finds suggest that segmentation is critical to reaching profitability in this particular market as the ultrahigh net worth clients demonstrate higher levels of customer satisfaction and may prove to be more a profitable segment to effectively serve. The results of this study also demonstrate the importance of the use of sociodemographic measures in conducting empirical research on high net worth markets.

In the second paper in this issue, Keisidou, Sarigiannidis, Maditinos, and Thalassinos further examine the role of loyalty and customer satisfaction in the unique context of the Greek banking system. The banking system in Greece has been under considerable pressure and scrutiny and has been largely associated with economic challenges faced at the national level. As a result, understanding the dynamics by which financial performance of Greek banks is formed is critical from both practical and academic perspectives. The authors question traditional beliefs which suggests that customer satisfaction and loyalty generate profitability for banks. To do so, measures of financial performance such as return on assets, return on investment, and return on equity are correlated with customer-centric measures such as customer satisfaction, loyalty, and customer perceptions of tangibles, convenience, image, and economic factors. Using a structural equations modeling approach on data collected from 12 Greek banks, the authors find that in contrary to assumptions made by most marketers, in the unique context of Greek banking, customer loyalty and satisfaction do not generate profitability. However economic factors – which reflect measures such as operating costs and prices – as well as tangibles – reflecting measures such as the physical facilities and equipment– have a greater predictive power in relating to financial performance of banks. This study highlights how under difficult economic conditions, banks’ financial performance may no longer be related to conventional measures of customer evaluations and validates that inertia – the propensity to continue business relationships despite dissatisfaction – can influence banking relationships in distressed economic times.

Worthington and Devlin extend the scope of inquiry on customer treatment to the specific topics of fairness and equity in financial transactions. The authors examine how these two constructs are perceived in the UK and Australia, specifically in the context of the services offered by banks, credit card companies, and financial advisors. Utilizing a widely established index for the measurement of fairness, large numbers of customers in these financial services categories were surveyed. The results of their findings indicate that the dynamics by which perceptions of fairness are formed vary across financial services categories. For example, in Australia financial advisors are perceived to be more fair than credit card companies and banks. The authors also provide a cross-country comparison and find that in general Australian financial services providers are perceived as more fair than those in the UK. Interestingly, the authors find no sign of a positive relationship between perceptions of fairness and loyalty as measured by the length of stay with a given financial services provider. This finding concurs with the findings in the first two articles in this issue of the journal, which also indicated that the length of the relationship between a financial services provider and the customer may not necessarily correlate positively with measures of customer perceptions.

In the last paper in this issue, Gibbs and Ashill take a proactive approach to examining how customer satisfaction can be generated through improving the job performance of front-line employees in banks. They specifically examine how job outcomes such as job satisfaction, organizational commitment, and job performance are affected by high-performance work practices (HPWP). These are organizational practices which for example include systematic training of front-line employees, providing them with empowerment and rewards for job performance. Using data from a bank in Russia, the authors apply structural equations modeling to determine the drivers of job outcomes as they relate to HPWP. Their results indicate that HPWP has a strong effect on both job satisfaction and organizational commitment as well as job performance. The effects are found to be stronger for the former and indicate that HPWP can help improve the experiences of front-line employees. Interestingly, in contrast to several earlier studies HPWP were found not to have a significant effect on organizational commitment – a result which may be attributed to cross-country and organizational characteristic differences with earlier research. The work of Ashill and Gibbs highlights how HPWP can be used effectively to enhance service providers’ job performance, and may therefore significantly contribute to our understanding of how to improve customer satisfaction in retail bank settings.

The papers featured in this issue of IJBM highlight specific commonalities in customer interactions in financial services organizations across the world. The studies presented cover a range of countries – Australia, Germany, Greece, Russia, and the UK – and provide convergent findings which question traditionally held views on customer satisfaction formation and loyalty effects. For example, three of the studies in this issue found that customer loyalty as measured by the length of relationship with a financial services provider can have a weak or nonexistent relationship with measures of customer satisfaction and fairness. This finding reinforces views in the financial services industry that customer retention may not always be correlated with customer satisfaction. The lack of such a correlation can be an early warning to an industry grappling with regulatory changes, as the emergence of new competitors, and the relaxation of regulations which will eventually make customer switching behavior more likely in the future. The research presented in this issue also focussed on how financial performance of banks can be influenced by measures other than those reflecting customer satisfaction, and be influenced by economics, sociodemographic characteristics of customers, as well as cross national differences. The common theme among the four articles featured is the pursuit of means to improve customer experiences with a range of financial services providers. It is this pursuit that is at the heart of the mission of IJBM, and the authors who contributed to this issue have been instrumental in serving this important mission.

Kent Eriksson and Hooman Estelami