Banking Consumers and the Smaller Banking Enterprises Today - Essay Example

The Qualitative Research Phase BANKING CONSUMERS: HOW THEIR PERCEPTIONS AFFECT THE SMALLER BANKING ENTERPRISES TODAY of Instructor Name of Institution Executive Summary Banks have been recognized through many generations of economist as the backbone of the world's progress towards financial stability. Establishing the said type of financial institution has caused many economists to believe that this is the practical source of their strength and their status in the society as primary establishers of economic advancement within the human society. The status of banks had been faring well during the past decade. Likely, people were less cautious as to where they ought to keep their money as long as they know that their extra money goes somewhere safe and secure, and then, these secured places were the banks. However, situations changed and matters about financial growth caused a lot of individuals lose sight of the possibility of losing track of the development and falling off the trail towards freedom and financial progress. This is what has happened among bank industries as they face the world's most devastating situation of global financial crisis. The imbalance of monetary distribution has now caused many ordinary people who were basically the main clients of local bank branches are now opting to spend their money than save it since what they are earning now is just enough for their daily needs. Meanwhile, those who have better options of saving some of their earnings are becoming cautious about picking the right bank to which they are to invest their money in. In this regard, the banking industry has become a much sceptical commercial branch that needs to be supported through advancement and systemic progress at present so as to allow the smaller financial institutions such as local and rural banks to have at least a "say" in the current competition that they are involved in which practically includes the bigger names of larger banking organizations. In the study that follows, a proposal of a proper research on how bank consumers view their bank hosts and how they are able to choose over a lot of financial organizations offering them different options of service and saving shall be presented and discussed. This discussion is expected to have a great impact in the process by which smaller banking entities are able to operate successfully in the industry that they have chosen to join. TABLE OF CONTENTS 1. Formulation of Research Propositions 5 2. The Focus Group 6 3. Observations and Analysis 7 4. Interview Probe 8 4.1 Sample Population 13 4.2 Control of Variables Involved 13 4.3 Handling Ethical Issues 14 5. Case Study Presentation 14 6. Expectations 15 7. References 16 1. Formulation of Research Propositions Banks are of course are among the most important institutions in the human society today. Being the bonds that hold the finances of the people, they also stand as the epitome of the society's development when it comes to economic advancement. However, with the peak of the global financial crisis happening at present, it could not be denied that banks too have quite lost the attracting factor that they have on target clients years before the crisis began. With all these issues impending to affect the decisions of bank consumers, it could seen how the level of interest that the people have towards the intensity of their investments and how they are to manage their earnings that involves bank based investments have already decreased. Saving up money may be only a second priority to many as not so many have any spare budget to save in the bank anymore (WSB, 2009 , Internet) . Apparently, average families earn only as much as they could use for the day and have at least only 20% of their annual income actually dedicated to savings. (Rothbard, 1983, 45) Yes, although banks had been the worldwide economic backbone on the past, it could still not be denied that the entire procedure of taking into consideration the fact that this industry is already at its dying end as the finances of the people goes done could never be neglected (GNBS, PDF, Internet) . Hence, an immediate action towards this specific issue should really be pursued. In this study, it is then proposed by the researcher that a literary based research be undertaken as well as an experimental procedure that would involve actual connection with the focus group in attention within this study. It is expected by the researchers that certain limitations might hinder the process of getting ample knowledge about the issue being considered. No matter, it is still believed by the researchers that through an effective use of whatever particular information is collected through the research and experimentation procedures taken into consideration, the process of getting ample understanding as to how small and middle end banking enterprises could still gain an edge over those that already have reputable stance in the industry even in the middle of this crisis ( Piercy, 2006, 253). Through the adaptation of this procedure, it is expected by the researchers that this study would have huge and knowledgeable implication among those who are involved in the industry of banking especially among those who are still at the beginning stage of budding out towards further success in the industry of finance and banking. 2. The Focus Group As mentioned earlier, the focus group of this research is that of the smaller entities that are trying to make it in the finance and banking industries. Through identifying the different factors that contribute to client perspective and preference when it comes to bank consumption, it is expected that the SMBE's or Small and Medium Banking Entities would get a fine and applicable source of information which they could personally use on their growth goals (Goebert, 2002, 45). Through observation and interview, the consumers of the banking industries shall be analyzed based on their perception on service and savings options and how they are able to decide on which particular financing institution they should trust (Schmidt, 2006, 43) . With the results garnered from these procedures, taking a considerable identification of the elemental factors that drive the banking clients' decisions could help the SMBEs to find their stand in the competition that they need to face in the banking industry. 3. Observations and Analysis The observation and analysis phase of this research shall be based on the evaluation of the different results garnered from the literary sources and tying them altogether with the results garnered from that of the interview procedures to be pursued by the researchers. In this case, a preview of the most important source of literary-based information and evidence for this study shall be presented in this section of the proposal. According to Reichheld (2001), there are necessary steps to follow with regards to the priority shifting process that has to be considered by small banking enterprise owners if they want loyalty form their people and their consumers as well. The following is the list of the principles included in the 'six bedrock' strategies that Reichheld refers to his book as an effective way of being able to shift one's point of view on profit: Preach what you practice This refers to the ability of the administrators to educate their employees well. This education does not only include the necessary matters of concern in business industry they are joined with but this is also designed to teach everyone in the company with regards to what is really happening in and out of the organization (Reichheld, 2001, 43). This process builds up trust as the company unfolds the supposed 'company secrets' to their valuable force, the employees. By doing so, they are able to satisfy the need of their employees to have the feeling of self-worth, meaning they are able to understand that they play a big part in the company and that they are well appreciated by the organization they chose to work for. As trust between the employees and the administrators are established, the more loyalty comes into the picture and succeeds the quest for being established. Play to win-win Consumers play the greatest part in reaching the goal of gaining profit for the company. The 'win-win' principle refers to the fact that even though companies see the consumers as 'money providers', they should also see the worth of their consumers when it comes to receiving fine service and products from them (Reichheld, 2001, 43). This means that both party wins in each transaction that the company and their consumers get into. The consumers should realize the fact that what they have paid for have been worthy enough because of what they received from the company. Hence, knowing this, they are able to establish fine relationship with the company and loyalty is established as well. Be Picky In business, one of the most important activities being done is decision making. Being picky simply refers to the ability of the management of a business organization in 'choosing' which services or features of products specifically meet the needs of their core stakeholders. This part of decision making though must be viewed as an equalizer between the employees and the consumers of the company (Reichheld, 2001 43). Being picky involves the ability of the management or the administration to choose what is best for both their employees and their consumers. This would inspire the employees serve even better and the consumers appreciate the products and services more frequent. Keep It Simple Everything must be clear, appealing yet understandable. Whatever the company considers with regards to the changes that they ought to take, everything must be attractive or appealing enough for both the employees and the consumers to accept (Reichheld, 2001, 33). Being simple and clear though is the main reason why certain processes could be called 'appealing' to others. It must cater to the general public which means it should be able to give both the needs of the employees of the company as well as the consumers' expectations in an equal manner. Reward Right Results Once the aim or the purpose of the strategies is met, it helps a lot if the management would be able to come up with reward policies especially for the employees who are working hard for them (Reichheld, 2001,32). This could be in a form of an award, recognition or monetary rewards. However, it would be, it is designed to help the employees realize their worth or their importance to the company. Listen Hard-Talk Straight Although there is a sense of authority, it should always be remembered by administrators that there is a need to listen. There is a need to remain open minded for other people's suggestions (Reichheld, 2001 42). This goes back to the first principle of letting others feel that they are of worth to the company. Applying these six principles mainly helps the business owners to identify their needed adjustment with regards to their shifting of priorities. It is indeed important that the business administrators are able to distinguish the exact aspect in which they should improve themselves to be able to receive fine results. According to Reichheld (2001), "Companies with faithful employees, customers and investors share one key attribute. That is the application of the 'six bedrock principles' listed above. Yes, these principles have been proven effective by the people who opted to apply it in their own business activities. These suggested procedures of establishing loyalty inside and outside the system of the banking enterprises had been evidently used by many banking organizations already and have given particular effective results in the end, thus proving their practical application at present. Considering this material for this phase of the research would help much in assisting the researchers find the linking factor that aims to create a great connection between the consumers and their loyalty towards the banking systems that are presented to them. From these particular suggestions, the researchers would be able to find better ways to link the literary based operations to that of the evidence based actual results of the principle applications considered (Gordon, 1999, 43). 4. Interview Probe The interviews would involve at least 15 bankers who are randomly picked from both online and the physical branches of the banks that were chosen by the researchers to evaluate. Of course, to avoid any particular ethical issues, permission from the management of the bank should first be obtained through letting them know about the process of the research and their important involvement in it. The banks chosen are likely those that are small and less influential compared to the big banks around the states. This shall saturate the focus group and give more practical suggestions to the target population being assisted in the study Goebert, 2002, 52). a. Sample Population: As mentioned earlier, this study shall be based upon the collaborative use of three particular resources. One, being the research based from literary sources [studies and textbooks that had been written in the past with regards the same topic involved], two, being the case-based analysis that are practical reports about small banking institutions that used different procedures of attraction to be able to keep up with the competition that they have with the bigger entities in the industry; and third, being the interview probe that is to be used as the actual based results that would support the theoretical background that the research (Dorofeev, 2006, 54). To complete the interview probe, the need for keeping track of 15 people from online interview, and at least 15 others from actual interview for those who are consumers of local rural banks. They are to be noted as the practical sources of actual information in this research that would mirror the preferences of the basic consumers of the local banking industries (Moisander, et al, 2006, 54). Having a two-fold interview is seen by the researchers as a fine source of balance for the study. b. Control of Variables Involved Mostly, the variables to be in considered in this study would involve the economic status of the consumers of those who are to be interviewed for the probe. It could be noticed how the entire process would undergo a quite different path because of this variable. Hence, to keep the balance regularly directed towards the expected proof that is aimed to be featured in the study, a control on the level of economic disparity that the interviewees have from each other shall be considered conscientiously to at least create a fine connection between those consumers who aim to choose to invest their money in local banks from those who choose to invest their money in a much bigger financial institutions around the state. c. Handling Ethical Issues Because of the important issues that are concerned in the situation, it could be noted that the private information of the interviewees ought to be kept perfectly safe for the sake of keeping the whole matter seriously dedicated to the study itself alone and not on the personal issues and personal identification of the people who have been interviewed for this research (Goebert, 2002, 54). 5. Case Study Presentation To make the research even more authenticated, a case-based presentation shall be used to give importance to the points presented through the research. Relating the literary evidences with the actual case results and the interview data collected could make this study more organized and well focused on the group that it ought to serve (Malhotra, 2006, 54). Practically, the attention is drawn to the most important issues of the matter thus creating a more workable edge of topic that could control the flow of information presented through the entire research about the consumer reaction on banks and the services that they offer to the public. 6. Expectations As for the expectations, it is highly hoped by the researchers that the practical mission of collecting the needed evidences to prove that there is still a huge chance for smaller organizations of the banking and finance industry to make it in the competition even if they are in the middle of a huge commercial group of "big banking daddies" and the global financial crisis issues. The data that would be garnered and presented through this research are expected to have a great impact on how small-end bankers would learn to play their card of "perfect service" to their clients against the already established names of their competitors in the industry. It is of course a great concern for the researchers of this study to have this research a practical application character that could be used not only by this generation's banking entrepreneurs but also that of the future (Kotler, et al, 2006, 43). Hence, through going through the different cases to be presented herein, it is rather expected by the researchers that this study would be able to give a new insight about the new sense of modern banking and how advancement could help in the business progress of the SMBEs today. References: Frederick F. Reichheld. (2001). The Loyalty Effect: The Hidden Force Behind Growth, Profits, and Lasting Value. Harvard Business School Press; New Ed edition. When Shopping for a Bank - Consumers Value Brand Image Highest. http://www.paymentsnews.com/2009/07/when-shopping-for-a-bank---consumers-value-brand-image-highest.html. (August 09, 2009). Epsten, Jonathan. Bank consumers choose brand over branches. http://www.buffalonews.com/409/story/737881.htmlimw=Y. (August 09, 2009) A Guide to the National Banking System (PDF). Office of the Comptroller of the Currency (OCC), Washington, D.C. Provides an overview of the national banking system of the USA, its regulation, and the OCC. Rothbard, Murray Newton (1983). The Mystery of Banking. Richardson & Snyder. Statistics Department (2001). "Source Data for Monetary and Financial Statistics". Monetary and Financial Statistics: Compilation Guide. Washington D.C.: International Monetary Fund. p. 24 Kotler, P & Keller, K 2006, Marketing management, Prentice Hall, Upper Saddle River, NJ. Malhotra, N, Hall, J, Shaw, M & Oppenheim, P 2006, Marketing research: an applied orientation, 3rd edn, Pearson Education Australia, New South Wales. Piercy, NF 2006, 'The trouble with marketing research is marketing researchers', International Journal of Market Research, vol. 48, p.253. Schmidt, M J & Hollensen, S 2006, Marketing research: an international approach, Pearson Education Limited, Harlow, Essex. Goebert, Bonnie & Rosenthal, Herma 2002, Beyond listening: learning the secret language of focus groups, John Wiley & Sons, New York Gordon, Wendy. 1999. Good thinking: a guide to qualitative research. Admap publications, Oxfordshire. Moisander, Johanna K, & Valtonen. Anu 2006 Qualitative marketing research: a cultural approach. Sage Publications, London. Dorofeev, Sergey & Grant, Peter. 2006. Statistics for real-life sample surveys, Cambridge University Press, Cambridge. Read More