According to a study by the three experts published in the summer 1995 Journal of Retail Banking, consumers generally distrust big banks.
"The current era in banking is perceived by consumers as one where big banks take over friendly neighborhood banks, eliminating customer service," says Richard Widdows, professor of consumer sciences and retailing. "Consumers feel like they are nothing more than a part of an overall product-based management strategy -- a strategy where the customer is the product."
Widdows and his colleagues, Richard A. Feinberg and Sugato Chakravarty, created focus groups and consumer advisory panels from a representative sample of 45 consumers from four major cities in four different states: Indianapolis, Tampa, Fla., Kansas City, Mo., and Madison, Wis. The goal was to uncover consumer perceptions of large financial institutions and see just what customers want from banks.
Feinberg, head of the Department of Consumer Sciences and Retailing, says consumer perceptions of large institutions are mixed.
"Customers don't think banks are totally up front about their charges," Feinberg says. "Study participants reported that there are too many hidden charges, such as charges for paying off a loan early or using an ATM card, that become apparent only after it is too late or too costly for the customer to investigate or change."
On the other hand, individual bank employees often received high marks from study participants, Feinberg says.
"What we're really seeing is that customers have relatively positive feelings about their banks, but harbor suspicion about large corporate entities," he says. "A popular example of this type of thinking is 'we don't like Congress, but we love our Congressperson.'"
Banks can capitalize on this sentiment by focusing more on the "down-home" personal feeling, says Chakravarty, assistant professor of consumer economics.
"The way to reach your customer is through the people dealing with them on a daily basis," Chakravarty says. "You have to train your employees to be courteous, friendly and helpful almost to a fault. Your employees are actually building one-on-one relationships with customers -- not unlike those found in small communities.
"Participants unanimously expressed a desire to be greeted in a friendly manner and wanted prompt service. Communications is the key. Customers want to be able to make contact on a personal level with someone in the bank."
Customer suggestions on how banks could enhance communication included: establishing call centers to answer customer questions; distributing instructional videos detailing all of the bank's services; and sending monthly newsletters or leaflets including information on federal banking regulations and commonly encountered financial terms, such as APRs and balloon payments.
There also were services customers said they could do without, Chakravarty says.
"Less than a third of the participants was interested in banking from home via computer," he says. "However, most were in favor of banking by phone, because the resulting staff reductions would perceivably mean savings passed on to the customer."
Many participants thought that banks have a moral responsibility to educate consumers about elementary finance. Others, however, strongly disagreed.
"A significant number of individuals felt banks are profit-making ventures just like any corporation -- that it is the individual's responsibility to educate himself," Chakravarty says. "Banks weren't totally absolved of educating consumers, however. Most people said banks should put relevant information within easy reach of consumers and should work with high schools to change the attitudes of young people toward cash management."
What it all boils down to is that customers are going to bank wherever they find the best customer service, the friendliest atmosphere and the most cost-efficient programs for managing their money, Widdows says.
"Financial services providers are slowly starting to realize that the key to profitability -- indeed to survival -- is customer loyalty," he says. "That loyalty is difficult to achieve because as more and more services become available, yesterday's quality service becomes today's accepted norm. The bar is continually being raised one notch higher."
Sources: Richard A. Feinberg, (765) 494-8296; home, (765) 497-0332; Internet, email@example.com
Richard Widdows, (765) 494-8314; home, (765) 463-6331
Sugato Chakravarty, (765) 494-8292
Writer: Victor B. Herr, (765) 494-2077; Internet, firstname.lastname@example.org
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