Factors Determining the Choice of Banks by Students - Research Paper Example

Heading: Student Banking Dissertation Your name: Course name: Professors’ name: Date Introduction Students often open accounts with various banks when during their time of study in school. Banks offer favorable student accounts’ services that facilitate students’ loans, overdrafts, savings, and deposits. Since every bank competes for wider customer base, they strive to provide competitive services in terms of prices, interest rates, convenience and speed of delivery among other factors. According to Haque, Osman & Ismai (2009), individual’s choice for a particular banks is determined by certain factors including demographics (age, gender, year of study); financial terms (interest rates, fees, and credit availability); rudimentary factors; location, recommendation, relationships, and convenience among others. Technical and functional quality also affects students’ choice of a retail bank. Based on the questionnaire results provided in this case, these factors will be grouped as per the students’ demographic factors; rudimentary factors, and financial terms. Demographic factors Many trials have been made to evaluate the link between socio-demographic features and bank choice. In these attempts, crucial differences in opinions and attitudes among gender, age, language, education level, and income were noted. Notably, clients with high income level opt for banks that provide a wide variety of services, as compared to low income level consumers. In this case, students’ choice of a bank is determined by year of study, gender, interest rates, publicity, bank benefits (free-interest overdraft), product’s quality, convenience, and satisfaction of their needs (Jantan, Kamaruddin & Hoe1998, pp. 20-31; Haque, Osman & Ismai, 2009). Age 40 years Students in this category responded that they had accounts with Barclays bank. Just like other students, they claimed that their choice for the bank was driven by its promotions and free gifts, which are free Kaspersky, free YHA membership, and Students Discount Card. They also indicated that their choice for the bank was influenced by financial terms like low interest charges, and interest-free overdrafts. It is also worth-noting that the students claimed that their continued stay with the bank was stimulated by the low interest rates offered by the bank. Besides, they admitted that they were very satisfied with Barclays bank’s services and products, and that they were interested in staying with bank in future, as well as opening graduate accounts. Year of study Year 1 Explicitly, the year of study among university students greatly affects their decision making regarding their choice of bank to use (Almossawi 2001, pp. 115-125). According to the questionnaire findings, first year students preferred Barclays and Santander banks. For those with accounts at Barclays, they responded that they had student’s accounts there, and that they were not driven by any promotional offers or free gifts into choosing the bank. With regard to benefits that accrue from the preferred bank, they indicated that they access interest-free overdrafts from Barclays bank. Furthermore, these students stated that their stay with the bank was influenced by its low interest charges. Consumers often choose financial institutions that offer its products and services with low interest rates (Mokhlis, Mat & Salleh 2008, pp. 258-270; Torres & Castells 2004, pp. 3-28). In addition, the students also admitted that they held Barclays bank’s credit, and that they are interested in future dealings with the bank. However, they confessed that they would not open graduate accounts with the bank. On the other hand, first year students holding accounts with Santander bank maintained that their choice was determined by the bank’s free gifts and promotions, which included free Kaspersky mobile and internet security, free membership for YHA, and Students Discount Cards. They also demonstrated that their loyalty to the bank was stimulated by its benefits that include interest-free overdrafts and low interest rates. Unlike those with Barclay’ accounts, Santander consumers responded that they had no credit cards. These clients also display a lot of satisfaction with the banks services and products, and show an interest in future transactions with the bank, for example, they stated that they would open graduate accounts, and stay with the bank in future. Year 2 In the case of second year students, the questionnaire indicates that they preferred HBSC, Natwest and Barclays, RBC, and Lloyds TSB banks. To start with, those with HBSC student’s accounts responded that their choice was influenced by promotions and free gifts like 25% off Lonely Planet travel guides. This group of students also attributed their bank preference to the bank’s benefits like low interest rates and interest-free overdrafts. In fact, they also added that these benefits were a driving force for the loyalty to the bank. Notably, the students stated that they had held credit cards, and that they were satisfied with the bank’s services and products (Sigala & Christou 2006, pp. 371-372). This group also admitted that they were interested in the future dealings with the bank like opening graduate accounts. For those holding student’s accounts at Natwest bank, the stated that they were motivated to chose the bank by its free gifts and promotions like free Kaspersky and YHA membership. They also attributed their choice for the bank to its benefits like interest-free overdrafts and low interest charges. In terms of further dealings with bank in the future, the group responded that they would not get involved, since they were not fully satisfied with its products and services. Barclays bank clients reported that they motivated to open student’s accounts with the bank by free gifts and promotional offers like the 25% off AA membership fee. Additionally, low interest rates, convenience and interest-free overdrafts were some of the factors that attracted these students to the bank. These clients also demonstrated that they were satisfied with institution’s products and services; hence, they intended to open graduate accounts with the bank, and conduct other future dealings. In the case of the students with RBC bank student’s accounts, the questionnaire shows that they were motivated by attractive products and services, low interest rates, convenience and interest-free overdraft within the first year (Jagelavičienė , Stravinskienė & Rūtelionė, 2006, pp.87-92). With regard to the future plans with the bank, they responded that they would open graduate accounts and engage in other transactions, for they were satisfied then. Nevertheless, this group of clients was not driven by any promotions or free gifts. Lastly, students that second year students that opted for Lloyds TSB bank accounts were driven by the bank’s promotional campaigns, such as, free gifts and promotional offers. The study findings were also indicate that the students were attracted to the company by its advantages like interest-free overdrafts, as well as low interest charges (Frangos, Fragkos, Sotiropoulos, Manolopoulos & Valvi 2012, pp. 6-66; Rashid, M 2012, pp. 58-69). They also responded that their loyalty to the institution was stimulated by good products. As a result, the clients maintained that they were satisfied with the bank’s services, and that they planned to stay and open graduate accounts with bank in future. Unlike other students, these second year students stated that they held credit cards with Lloyds TSB bank. Year 3 In this category of students, those who opted for Halifax bank were driven by interest-free overdrafts and low interest rates. Explicitly, the bank did not offer them free gifts or offers. In terms of the bank’s services, the clients reported that they were satisfied, but did not wish to have further transactions with the bank in future. In relation to those that chose Barclays bank, they were attracted by promotions and free gifts, for example, free YHA membership and free Kaspersky mobile and internet protection. Similarly, interest-free overdrafts motivated their dealings with the bank. They also reported that their stay in the bank was due to the fact that it cars for them, and that its services are very satisfactory. Therefore, the third year clients displayed their future intentions to open graduate accounts with the bank. However, they stated that they had no credit cards for the institution. In terms of those holding student’s accounts with Lloyds TSB, their preference for the bank was stimulated by promotions and free gifts like free YHA membership and the difficulty in changing banks. It is also clear that they were dissatisfied, and thus, they will not have future dealings with the bank. On the contrary, HSBC account holders displayed that their choice for the bank was not influenced by any promotions and free gifts, but by convenience, somewhat satisfactory services, low interest rates, and interest-free overdraft (Vinten 2005, pp. 83-88). Though they did not hold credit cards with the bank, they would open graduate accounts with the bank. Nevertheless, others in this category claimed to have been influenced by 25% off Lonely Planet promotion, convenience, and satisfactory services. They also showed their interests to open graduate accounts with the bank in future. For Natwest student account holders, their preference was not determined by promotions, but by interest-free overdrafts, low interest charges, and somewhat satisfactory services. Besides, these students reported that they had no plans to stay with the bank in future. For the third year students with Santander accounts, their preference was not determined by promotions, but by low interest rates and interest-free overdrafts. In response to bank’s services, the students said that they were somewhat satisfied. Consequently, they had no intentions of future associations with the bank. Gender Clearly, choice of bank by individuals is usually affected by gender factors (Akin & Kaya 2011, pp. 101-107; Mustafa 2010, pp. 6-40). According to the questionnaire, females and males had different factors affecting their choice of bank. Females To begin with, female students across all years of study chose various banks like Barclays, HBSC, Santander, Lloyds TSB and RBC. To start with, those who chose Barclays were moved by promotions and free gifts like 25% off AA membership fee; low interest charges, interest-free overdrafts; and satisfactory services. They also reported that their loyalty to the bank was driven by the fact that their needs are met fully. They also stated that they intended to have further transactions with the institution in future. Nonetheless, not all the students in this category were attracted by promotions, and held credit cards with the bank. Secondly, those that held student’s accounts at HSBC bank reported that they were moved by promotions and free gifts, such as, 25% off Lonely Planet travel guides, to the bank. They also said that they were attracted by interest-free overdrafts, convenience, satisfactory services, as well as low interest rates. As a result, they stated that they would open graduate accounts in the bank in future. Below 20 years, Santander student’s account holders also identified low interest charges, interest-free overdrafts, good products, satisfactory services, and promotional activities as their driving factors to their bank choice. Additionally, the indicated that they would have future businesses with the bank in future, for instance, by opening graduate accounts. Nevertheless, those students between 30 and 40 years maintained that almost similar factors affected their choice of bank, except that were not fully satisfied, and thus, did not intend to have any links with the bank in future. In the case of those at Lloyds TSB bank, they attributed their choice of bank to interest-free overdrafts, convenience, low interest charges, and very satisfactory services. Consequently, they indicated their interests in future associations with the bank. For those with RBC bank student’s accounts, they held that their preference was affected by low interest rates, convenience, and interest-free overdrafts. Despite the satisfactory services, they had no plans of having accounts with the bank in future. Males For those that had student’s accounts at Halifax bank, they reported that it was hard to change banks, and that favorable financial terms attracted them to the bank. However, they had no plans of opening graduate accounts with the bank in future. In the case of Barclays’ student’s account holders, promotions, good services, low interest rates and interest-free overdrafts are among the factors that influenced their bank choices (Akin & Kaya 2011, pp. 101-107). They also displayed interest in further transactions with the bank in future due to very satisfactory services. Natwest clients also attributed their preference to low interest charges, interest-free overdrafts and efficient services. Nonetheless, they reported that they would not want any more dealings with the bank in future. For those with HSBC bank accounts, convenience, low interest rates, and interest-free overdrafts were their determining factors of their bank choice. Since they were not fully satisfied, they could not want any associations with the bank in future. What is more, those that had Santander bank accounts admitted that bank preference was influenced by interest-free overdraft, and low interest charges. They also maintained that they were somewhat satisfied; hence no future transactions with the bank. Lastly, male students with accounts at Lloyds TSB bank cited promotions, interest-free overdrafts, and good products as their bank’s choice determining factors. Since they were satisfied by the bank’s services, they stated that they had plans to associate with the bank in future. Conclusion Choice of bank by individuals were largely affected by various factors, such as, interest rates; overdrafts; brand; quality of services and products; year of study; age; and gender. Most of the young people or students are preferred banks that offered promotional offers or free gifts, while the older ones did not base their choices on the factor. Nevertheless, both the young and old had their choices affected by quality of the services and products, and favorable financial terms. In the case of year of study, first-year and second-year students’ bank preferences were influenced by promotional activities, while third year students were not influenced by promotions. However, they were all influenced by low interest rates, interest-free overdrafts, and satisfactory services. Lastly, gender factors also affected the students’ choices of banks. Both males and females bank preferences were determined by similar factors, such as, interest-free overdrafts, low interest charges, convenience, and quality services. 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Vinten, G 2005, ‘Product portfolio management and corporate performance in the banking sector’, International journal of bank marketing for the financial services sector, vol. 23, no. 1, pp. 83-88. Appendices Demographic factors affecting bank choice Factor Frequency % Age 40 200 100 50 30 20 50 25 12.5 7.5 5 400 100 Year of study 1 2 3 200 150 50 50 37.5 12.5 400 100 Gender Female 200 50 Male 200 50 Gender factors of bank preference Factors / Frequency Female (%) Male (%) Low interest rates 20 20 Interest-free overdraft 20 20 Promotion 25 15 Convenience 15 20 Quality Services 20 25 Total 100 100 Year of study as a factor of bank choice Factors / Frequency Year 1 (%) Year 2 (%) Year 3 (%) Low interest rates 20 20 20 Interest-free overdraft 20 20 20 Promotion 25 15 0 Convenience 15 20 35 Quality Services 20 25 25 Total 100 100 100 Read More