Factors Affecting Bank Selection

Figure 1.1: Consumer behavior research model

Consumer behavior researchers show that consumer needs are expressed in both rational and emotional aspects. According to Tho and Trang (2009), this consumer behavior model is described in Figure 1.1. Thus, consumer behavior can be understood as the customer's purchasing decision reactions under the influence of external stimuli and internal psychological processes.

The consumer purchase decision process goes through the following stages:

Identify needs

The buying process begins when consumers become aware of their own needs. According to Philip Kotler (2001), needs arise due to internal and external stimuli.

- Internal stimuli are common human needs such as hunger, thirst, love, liking, being admired, etc. For example, a person feels hungry and wants to eat; feels different and wants to drink; feels hot and wants to go swimming.

- External stimuli such as time, changes due to circumstances, environment, social influences such as culture, reference groups, marketing stimuli from marketers, etc. For example, a person passing by a restaurant and smelling the aroma in the cold weather will have the desire to eat.

Search for information

According to Philip Kotler (2001), when the need is strong enough, it will create a motivation for consumers to seek information to understand the product. The process of searching for information can be "internal" or "external". However, if the internal information search is successful, then there may not be a search for information from external sources.

The information sources consumers use to research products vary depending on the product being purchased and the buyer's characteristics. Consumer information sources can be divided into four groups:

- Personal information sources : information from relatives, friends, colleagues;

- Commercial information sources : information received from advertisements, sellers, on packaging, at fairs and exhibitions;

- Public information sources : objective information on mass media, government agencies, organizations;

- Source of experience information : through direct learning such as contact and trial.

Each source of information plays a different role and has a different degree of influence on the consumer's purchase decision. For example, commercial sources play an informative role; personal sources play an affirmative or evaluative role. However, the number and degree of influence of information sources on the purchase decision vary depending on the type of product and the characteristics of the buyer.

Evaluate the options

Before making a purchase decision, consumers process the information they receive and then evaluate the value of competing brands. The evaluation process is typically carried out according to the following principles and sequence:

First , consumers view a product as a set of certain attributes. Each attribute is assigned a useful function that the product can bring satisfaction to consumers when owning it.

Second , consumers tend to classify attributes according to their level of importance.

importance to their needs being satisfied.

Third , consumers tend to build a set of beliefs about brands as a basis for evaluating product attributes.

Consumers will choose to buy the brand that best meets the attributes they are interested in. However, this evaluation depends on the psychology, economic conditions, and specific context in which the consumer's shopping behavior occurs.

Purchase decision

After evaluation, purchase intention will be formed. However, according to Philip Kotler, there are two factors that can intervene before consumers make a final purchase decision.

The first factor is the attitude of relatives, friends, and colleagues, whether they support or oppose it. Depending on the direction and intensity of the support or opposition of these people, consumers decide to buy or abandon the purchase intention.

The second factor is unexpected situational factors. Consumers form purchase intentions based on certain bases such as expected income, price, expected benefits, etc. Therefore, when situations occur that change the basis of purchase intentions such as the risk of job loss, rising prices, products not meeting expectations, etc., they can change or even abandon the purchase intention.

Post-purchase behavior

After purchasing a product, consumers will feel satisfied or dissatisfied to some extent and then have certain post-purchase actions and reactions towards the product.

If the features and functions of the product meet the expectations before purchase, consumers will be satisfied. As a result, the purchase behavior will be repeated when they have a need, or recommend it to others. In the opposite case, they will be upset and establish psychological balance by switching to another brand, or bad-mouthing that product to others.

In short, customers often do not have the conditions to accurately quantify the value for them, but often estimate it by balancing the benefits and costs based on intuition, or in other words, "feeling". Therefore, the value for customers is essentially perceived value, which is a comparison between the benefits that customers receive and what they have to pay.

1.2. Previous studies

This section will be divided into two parts. In the first part, we will summarize the studies related to bank selection factors in general, while in the second part, we will look at the differences in the importance of bank selection factors for different customer groups in terms of demographics such as age, income, and gender.

1.2.1. Factors affecting the choice of bank

Similar studies have been conducted in many parts of the world, mainly in the US and European countries, providing a lot of background knowledge for this study. In what is considered as in-depth studies, Anderson et al. (1976) found that while a group of customers saw significant differences between banks, a larger group of customers did not see such differences, they viewed financial services as similar between banks and the results found that the most important factor for customers was the convenience of the bank's location. Lee and Marlowe (2003) used both qualitative and quantitative methods to clarify how consumers choose a financial institution to open their accounts. They also found that most consumers rated convenience as one of the most important determinants. Many studies in other literatures also show that the convenience of bank location is of utmost importance to customers (Kaynak and Kucukemiroglu, 1992; Laroche et al., 1986; Martenson, 1985).

However, some other studies suggest that other criteria are most important. In a study conducted in Sweden, Zineldin (1996) discovered five main factors influencing customers' decision to choose a bank:

(1) service quality;

(2) competitive loan availability and rates;

(3) distribution system;

(4) advertising;

(5) reputation and word of mouth.

Zineldin (1996) found that the most important factors were service quality and distribution system factors, namely: friendliness and helpfulness of staff, accuracy in transaction management, availability of loans and services provided. Kennington et al. (1996) found that in Poland, as in other countries, the most important factors influencing customers’ choice were reputation, price and services provided by banks. Similar results were provided by Clemes et al. (2010). They found that price, service quality and reputation significantly influenced bank choices. Prices charged on loans, service fees and interest rates were the main reasons for switching banks. Customers compared the prices of different banks on savings, service fees and chose the banks that were most cost-effective for them. Therefore, it is important for banks to charge reasonable prices to retain old customers and attract new customers to their bank. Service quality and reputation are also other important reasons for switching banks. When customers perceive poor service quality, they switch to other banks. The reputation of banks matters a lot, any negative rumors about banks in the market can affect the image or financial stability, customers will switch banks. Boyd et al. (1994) conducted a survey and found that the five most important factors identified by respondents in the US were bank reputation, interest on savings accounts, interest rates charged on loans, prompt service and location in the city.

Ta and Har (2000) examined the major factors influencing the bank selection decision of college students using the Analytic Hierarchy Process. They showed that college students place emphasis on price and banking product factors. Ta and Har (2000) showed that the college student market is a profitable market segment for banks. Therefore, banks should understand their bank selection decision process. On the other hand, Lewis (1982) reported that college students have high loyalty to banks.

their. Safakli (2007) investigated the banking market in Northern Cyprus and found that there are six main factors that determine customers' choice of bank:

(1) service quality and efficiency;

(2) bank image;

(3) convenient location;

(4) parking lot;

(5) financial factors; and

(6) influenced by others.

Maiyaki (2011) investigated that there are various factors that greatly influence customers’ choice of bank in Nigerian banks such as the size of the bank’s assets, the availability of a large branch network across the country, and the bank’s reputation. In another study in Nigeria, Aregbeyen (2011) found that capital adequacy, prompt service, low waiting time, good complaint handling, and reputation were the key factors in customers’ choice of bank. Mokhlis (2009) conducted a survey on 368 students in Malaysia and discovered that there are nine factors that influence students’ choice of bank:

(1) the influence of others;

(2) attraction;

(3) supply services;

(4) ATM services;

(5) branch location;

(6) convenience;

(7) sense of security;

(8) promotional marketing;

(9) financial benefits;

Among them, ATM service and sense of security are the two most important factors.

Katircioglu et al. (2011) found that there were no significant differences in bank choice factors between Turkish and non-Turkish international university students at a public university in Northern Cyprus. Availability and convenience of ATM services and speed and quality of service were the most important factors for Turkish and non-Turkish university students. Katircioglu et al. (2011) study in Romania had similar results, the number of ATMs was the most important factor in bank choice.

1.2.2. Demographic differences in bank selection behavior

Researchers have considered demographic factors in their previous studies such as gender, age, income, etc. to determine the factors that influence customers’ choice of banks. In an in-depth study on this issue, Laroche et al. (1986) found that there were some significant differences in demographic factors in the choice of banks by Canadian customers. Among the interesting findings of this study were that men were more influenced by overdraft privileges, while women were more concerned about the friendliness of employees and safety of funds.

A study by Boyd et al. (1994) in the US found that the relative importance of selection factors varied across groups of respondents. However, the differences found were unclear because the authors did not test whether they were significant or not.

Almossawi (2001) conducted a survey in Bahrain and found that male and female university students showed significant differences in 22 of 33 factors influencing bank selection. In a study by Gerrard and Cunnigham (2001) in Singapore, it was found that males were more concerned about “appearance” than females.

Another study conducted by Aregbeyen (2011) in Nigeria found that there was hardly any significant difference between men and women in selecting and ranking factors including prompt service, reputation, number of branches, availability and security at ATMs at all times, appearance of staff, procedures, and quality of service.

size of the bank and age of the bank. However, there are factors that are ranked significantly higher by men than by women, namely one-stop banking, low/reasonable service fees, transaction alerts and regular communication with customers, connection to other banks' ATMs, security of online banking, easy contact with branch managers, telephone banking. In contrast, women are more concerned about capital safety, short waiting time, good complaint handling, innovative products and services, friendly/fun attitude of staff, proximity to home/workplace, etc. In addition, the author also shows that there are almost no significant differences between income groups in the selection of factors; but there are differences between age groups, younger people will rank factors higher.

Katircioglu et al. (2011) surveyed 248 bank customers in two major Romanian cities and found differences between different income groups in their assessment of influencing factors, but no significant differences between age groups and gender.

In general, studies related to bank choice provide valuable guidance, but the conclusions drawn are contradictory. Depending on the economic environment, the conclusions may be different, so we cannot mechanically apply the results of research in one country to another, we have to go through specific studies.

Table 1.1 below summarizes the key factors and factors influencing customers’ bank selection decisions from previous studies. This study will explore and analyze in detail the relative importance of these factors and other relevant factors for individual customers in Ho Chi Minh City.

Table 1.1: Key factors and “common” factors

Author

Factors

Almossawi

(2001)

(1) Name

language/technology

ATMs available at some locations; reputation of

bank; 24h ATM service available; service

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