Banking Consumer Desires in the Next 20 Years - Essay Example

? Understanding what consumers want from high street banks in the in the next 20 years. Client: Consortium of banks – Group 4 (HSBC, Lloyds, NatWest and Barclays) Table of Contents Table of Contents 2 Background 3 Objectives 4 Research Design 5 Data Collection 6 Sampling Plan 8 Data Analysis 9 Reference 11 APPENDIX 13 I Questionnaire for Street interview 13 II Questions for the focus group interview 14 Background The financial crisis, bailing out of banks, the mis-selling of Payment Protection Insurance (PPI), increase in the lending rates, poor quality of service, lack of transparent fees and interest, poor handling of complaints and the list goes on. In the recent times the banks have displayed a wide variety of problem regarding service to the customers due to which the customer has lost confidence over the banks. The general public are now seen to have low level of trust and reputation on the banks. A survey by Ernst and Young conducted amongst 23 matured and emerging market that were negatively affected by the credit crunch suggested that the customers of UK are seen to have low level of confidence on the banking system. About 63% has reported that their trust on the UK banks has completely fallen, whereas about 36% were completely dissatisfied (Flower, 2012). As all the banks generally deal with similar, undifferentiated category of products, so quality of the service becomes a primary weapon for winning the competition. The banks that display an excellent service quality are supposed to have a distinct marketing edge in terms of improved cross-selling rates, elevated revenues, better customer retention capabilities (Bennett and Higgins, 1988) and prolonged market share (Brown and Hedges, 1993). As defined by Ghobadian, Speller and Jones (1994) quality signifies how well the organizations cater to the requirement of the customers. The definition given by Deming (1986), Ishikawa (1985), Feigenbaum (1986), and Juran et al. (1974) also fall under the same category. This approach suggests that the organization should first understand and determine the requirements of the customers and then meet unto them. The service quality can only be judged either during or after the consumption is made (Audhesh et al., 2005). The performance of the service provider is the primary source of value creation for the service that is signified as the service quality. It may be very trivial service performance by the service provider but is likely to create a huge impact on the perception of the customers about the service quality of the provider. Barclays Plc, one of the major banks of United Kingdom (UK) has been involved in the scandal of mis-selling of PPI due to which they had to pay huge compensation to the customers (PPI Claim Company, n.d.; BBC News, 2011). Lloyds Banking Group has also suffered problems with the Faster Payments System that is responsible for transferring of funds in and out of the accounts of the customers. This problem has given rise to a knock-on effect on the customers of the bank (BBC News, 2013a; Winch, 2013). Earlier in the year 2012 due to system failure the customer of Lloyds using TSB debit cards, online banking and ATM have also faced problem (BBC news, 2012b; Salmon, 2012). Same is the case with NatWest whose customers have also faced problems with online banking, cash withdrawal etc (BBC News, 2013b; Bachelor, 2013; Farrow, 2012). HSBC of UK has also reported the same problems in the year 2011 and 2012 (BBC News, 2012a; Rojas, 2012; Osborne and Bachelor, 2011). This situation has given rise to a growing concern for all these four banks that are eager to know what the expectations of their customers are. Thus the current study tries to find an answer to this question. Objectives The main objective of the research is to understand the perception of the customers towards banks as well as gaining knowledge about the wants of the customers. In this context the closely done study on the current status of the banking organizations suggests that the financial crisis as well as the recent system failures had an adverse effect on the customers trust on the banking institutions. Today the environment in which the banking industry is operating has become more competitive and dynamic. In order to attain competitive advantage the banks are now focusing more on the quality of service they are providing. Thus in order to achieve the objective of the study the following questions are framed What is the perception of the customers of UK towards the banking institutions? What are the reasons for such a perception? Are they satisfied with the service quality, personalized service and multi channel experience provided by the banks? What changes do they want in their banks? The study will focus on the customers of UK specifically London since most of the banks participating in the research are based in UK. Research Design Proper research design is important for successful completion of the research and to achieve the objective of the research taken up. Research is intended to find the answer of the questions that are left unanswered rather than focusing on only collection of data. The research starts with definition of the problem and setting of specific objective that would find an answer to the research question. Based on this proper data are collected, analysed and then a final conclusion is derived on the basis of the genuine evidences. This section throws light on the type of research that will be conducted in order to reach the conclusion. In this case descriptive research will be done. Descriptive research tries to find the answer of the ‘what’ question whereas exploratory research tries to find the answer of the ‘why’ question (Vaus, 2002). In this case the reasons for the change in the satisfaction level of the customers are known to the banks. Through this study the researcher is interested to know what the customers expect from the high street banks and not why they expect so. Descriptive research mostly includes a wide variety of areas like media research, public opinion polling, market research etc. It also tends to find the answer of ‘who, when, where and how’. Descriptive research may be both qualitative and quantitative in nature. In quantitative descriptive research the main aim is to provide description of the data and characteristics of the phenomenon that is being studied. On the other hand qualitative descriptive research provides the answers to the reason of the situation. The descriptive research may include methods like statistical survey, sampling and interviews. Some of the descriptive research is also exploratory in nature since it aims towards deriving a general information on the research topic though exploratory means. Descriptive research is all about describing and discussing the opinions with the parties involved in the study (Offredy and Vickers, 2010). In this case also the parties involved in the study are the customer whose wants are to be understood by the banks in order to cater to them. Semi structured interviews are preferably the best method to derive information from the participant of the study. Data Collection The study requires an exhaustive research on the perception of the customers towards the banks and their expectations from them. In this context the study requires collection of data that will focus both on wants and need of the customers. The study demands conducting of focus group interview and street interview. But before starting with the focus group interview and street interview, a basic knowledge of the present scenario is required that helps not only in answering the research question but also preparing the questionnaire. This can be achieved by collecting secondary data that is relevant to the topic of research. These data will be collected from different journals, newspapers, magazines, books, government websites and some other authentic sources. The focus group interview (See Appendix II) will involve people who possess certain specific characteristics and are able to provide good qualitative data that can be gathered through the focussed group discussion. The discussion provides a clear insight about the topic. The focus group interviews are mainly restricted within group strength of maximum ten to twelve people. The size of the group is intentionally kept small so that everyone gets a fair chance to share their opinion and to avoid diversity in the perception. If the group is big then the participants who want to share their views do not get a chance since there is no pause in between the conversation and they tend to whisper it with the person sitting next to them. This makes the size of the group a critical factor. If the size is from four to five people then the participants gets an equal opportunity to share their ideas but it also offers a disadvantage of limited idea owing to the smaller group. Thus the size of the group for this focus group interview has been fixed from eight to nine people (Krueger and Casey, 2000). Since the study requires customers of bank as participant so the focus group interview includes high net worth clients of the bank who are regularly using a variety of services. These customers are also valuable for the banks and catering to the needs of these customers may result in huge benefits for the banks. In case of street interview the general public are approached with questionnaire, to know their views and thoughts. The questionnaire will include open ended questions only (See Appendix I). The open ended questions are used so that the participants may provide their views without any restrictions. The study demands a very clear and open view from the participants that can be used by the banks in improving their future business. Sampling Plan Sampling technique becomes an important factor when the research involves participants from the general public. In this case the study requires the participants both from the general public in the streets and also customers of the specific banks. In case of the street interview, which involves common people, non probability convenience sampling is used. Non probability convenience sampling selects the participants who are in close proximity to the researcher and are easily accessible. Since the street interview involves huge population so this type of sampling is used in order to make the work of the researcher much easier. This type of sampling is inexpensive, fast, and can be done easily. The sample size has been decided to be 100 people. While conducting the street interview the respondents will be first briefed about the research and then will be approached with questionnaire. The name of the banks will be kept confidential to avoid future consequences. The only disadvantage of this method is that the result of the interview does not provide a complete view of the whole population. Therefore the result of the study may be different from the result originating from the entire population. So there may be problem in generalization and conjecture making. To bridge this gap focus group interview is also conducted. In case of the focus group interview probabilistic simple random sampling is used. The participants of the focus group interview are extracted from the client database of the four participating banks. For the focus group interview only the high net worth customers are chosen. The participants are invited to participate in the survey through an invitation via mail that briefs a little on the topic of discussion. Among the interested one, the final eight participants will be chosen through lottery and the venue, time and date will be intimated to them. This type of sampling is this used to ensure that all the individual customers get a fair chance of participating in the study. The main advantage of this sampling technique is that it is easy to assemble the sample. Data Analysis Now a day’s banks are providing a combination of corporate, personal and commercial business, all in one branch, which has emphasized secluded qualities and thus resulted into creating emotional gulf between the banks and the customers. The study is meant to understand the needs of the customers so that the gulf between the banks and the customers is filled up. Keeping this in mind the study has planned to collect data through secondary sources, focus group interview and street interview. The collected data are analysed using qualitative methods. The qualitative research is conducted with the view to understand the real motive behind a particular process. The qualitative method encompasses the process of deriving inner meaning from the data rather than just quantifying them and reaching the conclusion. An in depth knowledge of the customers perception, needs and want is the main objective of the study, which can be effectively and efficiently done by using the qualitative analysis (Hammersley, 2012). In this research simply quantifying the data will not serve the purpose. Focus group interview and street interview are the most appropriate way to conduct the qualitative analysis. On the other hand quantitative method for analysis is not used because it involves computational, mathematical and statistical techniques. This type of analysis also requires numerical data but the present research will not serve the purpose if it is based only on the numerical data. The wants and needs that the customer requires cannot be quantified and has to be analysed qualitatively. Quantitative analysis is only done in case of the research where opinions or feedback of the respondents regarding the topic of study are required (Newman and Benz, 1998). Traditionally it is seen that the banks provide service to the upper end of the market. The style, substance and quality of service provided by the banks are presented in such a way that it reflects that the bank caters to the need of a particular segment rather than to the mass market. This research will provide the banks with an insight of what the customers actually wants so that this type of traditional beliefs may be eradicated. The banks will gain a clear insight on the expectation of the customers and plan their strategies accordingly. The banks will also come to know whether their services are meeting up to the level of the customers’ expectations. Unlike goods, the quality of the services cannot be judged easily, so this type of study will be really helpful. The banks will also get to understand where they lack in case of personalized services and what development the customers are expecting. The multi channel experience like mobile and telephone banking are also not performing up to the expectation so this type of study will be of great help in understanding them. Reference Audhesh, K.P., Spears, N., Hasty, R. and Gopala, G., 2005. Search quality in the financial services industry: a contingency perspective. Journal of Services Marketing, 18(5). Bachelor, L., 2013. Furious NatWest customers pledge to leave bank following latest IT crash [online] Available at < http://www.guardian.co.uk/money/2013/mar/07/furious-natwest-customers-leave-bank-it-crash> [Accessed on 10 Aril 2013]. BBC News, 2011. Barclays to settle payment protection insurance claims [online] Available at [Accessed on 10 April 2013]. BBC News, 2012a. HSBC cash machines hit by IT failure [online] Available at < http://www.bbc.co.uk/news/business-18140620> [Accessed on 10 April 2013]. BBC News, 2012b. Lloyds Banking Group and Co-op hit by system errors [online] Available at < http://www.bbc.co.uk/news/business-19846157> [Accessed on 10 April 2013]. BBC News, 2013a. Lloyds suffers Faster Payments System problems [online] Available at < http://www.bbc.co.uk/news/business-21123618> [Accessed on 10 March 2013]. BBC News, 2013b. RBS to compensate customers after accounts disrupted [online] Available at < http://www.bbc.co.uk/news/business-21694704> [Accessed on 10 April 2013]. Bennett, D. and Higgins, M., 1988. Quality means more than smile. ABA Banking Journal, 80(6). Brown, J.W. and Hedges, R.B., 1993. Increasing service quality in retail banking. Journal of Retail Banking, 15. Deming, W.E., 1986. Out of Crisis, Massachusetts Institute of Technology, Cambridge, MA. Farrow, P., 2012. NatWest: technical problems continue to hamper millions of customers. The Telegraph [online] Available at < http://www.telegraph.co.uk/finance/personalfinance/consumertips/banking/9348598/NatWest-technical-problems-continue-to-hamper-millions-of-customers.html> [Accessed on 10 April 2013]. Feigenbaum, A.V., 1986. Total Quality Control. New York: McGraw-Hill. Flower, G., Fawcett, P. and Harle, S., 2012. Banking: in Search of Relevance: A New Model for a New Reality. Leicester: Troubador Publishing Ltd. Ghobadian, A., Speller, S. and Jones, M., 1994. Service quality: concepts and models. International Journal of Quality & Reliability Management, 11(9). Hammersley, M., 2012. What is Qualitative Research? New York: Bloomsbury Publishing Plc. Ishikawa, K., 1985. What Is Total Quality Control? The Japanese Way. New Jersey: Prentice-Hall. Juran, J.M., Gryna, F.M. and Bingham, R.S., 1974. Quality Control Handbook. New York: McGraw-Hill. Krueger, R.A. and Casey, M.A., 2000. Focus Groups: A Practical Guide for Applied Research. California: SAGE. Newman, I. And Benz, C.R. 1998. Qualitative-Quantitative Research Methodology: Exploring the Interactive Continuum. Illinois: SIU Press. Offredy, M. and Vickers, P., 2010. Developing a Healthcare Research Proposal: An Interactive Student Guide. New Jersey: John Wiley & Sons. Osborne, H. and Bachelor, L., 2011. HSBC investigates card and website problems [online] Available at < http://www.guardian.co.uk/money/2011/nov/04/hsbc-customers-card-website-problems> [Accessed on 10 April 2013]. PPI Claims, n.d. Barclays PPI Complaints [online] Available at [Accessed on 10 April 2013]. Rojas, J.P.F., 2012. HSBC customers hit by computer glitch. The Telegraph [online] Available at < http://www.telegraph.co.uk/finance/personalfinance/consumertips/banking/9278841/HSBC-customers-hit-by-computer-glitch.html> [Accessed on 10 April 2013]. Salmon, J., 2012. Disaster for Lloyds TSB customers on the New Year’s Eve as technical glitch renders cashpoints and debit cards out of action [online] Available at < http://www.dailymail.co.uk/news/article-2255434/Disaster-Lloyds-TSB-customers-New-Years-Eve-technical-glitch-renders-cashpoints-debit-cards-action.html> [Accessed on 10 April 2013]. Vaus, D.D., 2002. Surveys in Social Research. Oxen: Routledge. Winch, J., 2013. Lloyds apologises after Faster Payments System problems. The Telegraph [online] Available at < http://www.telegraph.co.uk/finance/personalfinance/consumertips/banking/9816544/Lloyds-apologises-after-Faster-Payments-System-problems.html> [Accessed on 10 March 2013]. APPENDIX I Questionnaire for Street interview Name: ______________________________________________________________________ Age: ______ Sex: _______ No. of different banks you are dealing with: ____ 1. Are you retail banking customer? a. Yes b. No 2. How often do you go for banking transaction in a month? a. 2 b. 8 c. 15 d. More than 15 3. What is most preferred mode of transacting with the bank? a. Through internet banking b. By visiting the branch 4. What do you feel about the ways the banking institutions are performing now a day’s? Why? ____________________________________________________________________________ _____________________________________________________________________________ 5. The services provided by the bank are satisfactory a. Strongly agree b. Agree c. Neutral d. Disagree e. Strongly Disagree 6. Please state the reasons why do you disagree? ______________________________________________________________________________ 7. Does your bank provide ample personalised service? a. Yes b. No 8. If no how often you expect them to contact? a. Once in a month b. Once in a week c. Twice in a week d. Once in every 15 days 9. Are you satisfied with the multi channel experiences like Internet banking, branch banking, mobile banking and telephone banking? a. Yes b. No 10. Which is the worst performing one? a. Internet banking b. branch banking c. mobile banking d. telephone banking 11. What changes would you like to see in your banks multi-channel experiences? ______________________________________________________________________________ 12. What changes would you like to see in the services provided by your bank? ____________________________________________________________________________________________________________________________________________________________ II Questions for the focus group interview Name: ______________________________________________________________________ Number of years in relation with the current bank: _________________________________ What do you feel regarding the performance of your bank during the crisis situation? Do you feel confident about your bank? If not why? What changes would you like to see in your bank so that it makes you fully satisfied? Read More