Chapter II: The Banks Client Behavior

Dr. Karim Kobeissi

Structure of the Banking

Market

In the banking market, we can distinguish two types of

customers:

lenders

(depositors

of

money)

and

borrowers (customers of products that are made-up by

the banking transformation process).
Although,

these

two

types

of

customer

consume

apparently distinct products; however, they inscribe

their

behaviour

in

the

same

customer

purchase

process.
The customer purchase process represents a road map of
customers minds that bankers and marketers use to
help guide their marketing and sales strategies.

Section 1: Client Behavior in Services

1.1 The Purchase Process for Services
The purchase process is the stages a buyer
passes through in making choices about which
services

to

buy.

In

the

purchase

decision

process for services we can distinguish five

stages:
Stage 1: Need Recognition.
Stage 2: Information Search.
Stage 3: Evaluation of Alternatives.
Stage 4: Purchase.
Stage 5: Postpurchase evaluation of decision.

Five Stages Model of the Customer Purchase Process

Stage 1: Need Recognition

It is linked to the perception of a gap between

a desired state and the current state.

It is not an absolute and objective standard

but a perceived gap where subjectivity plays
an important role.

If the perceived gap is low, below a certain

threshold, the need will be inactive 1.

Stage 2: Information Search

The Internal Search
It is activated just after the recognition of the need. This research
is performed in the client own memory where he tends to identify
all relevant information to the subject. For a first purchase, the
lack of experience limits the possession of specific knowledge.

The External Search

It's called prior research to purchasing. The first motivation is the
desire to make the best choices of consumption. Usually, this
research is very limited. However, for complex purchases, this
research is important: It involves a large number of product
attributes (e.g., price, quality), uses many external sources of
information (e.g., friends and company websites) and involves a
lot of time.

Stage 3: Evaluation of Alternatives

In this stage, four problems can occur:
1)

Defining Selection Criteria

Among the many possible criteria (e.g. price, room
service, internet connection, valet parking, SPA), the
client retains only a few.

2)

Selection of Possible Solutions

Screening offers led to the definition of a set of
offerings that the client choice operate (Hilton, 4
Seasons, Regency).

Stage 3: Evaluation of Alternatives (con)

3)

Estimation of Alternatives
It is to evaluate the performance (based on gathered
information) of each of the offerings in the range
mentioned against each criterion.

4)

The Choice of a Decision Rule

Performed in a compensatory logic or not, and only
according to the expectations and priorities of the
client.

Evaluation Model
Compensatory Model of
Fishbein

Interpretation
A consumer's overall attitude toward
supplier (or offer) is a function of:

1)The evaluation of the goodness of

particular attribute a supplier may have.

2)The strength of belief that a particular

supplier has that attribute.
Compensatory Model of
In this model the suppliers (or offers) are
Additive Difference
compared by attribute, two suppliers at a time.
The offer having the highest note will be chosen.
Conjonctive Model (non
The chosen supplier (or offer) is the one for
compensatory) .
which the evaluation of every attribute exceeds
a minimum threshold fixed by the consumer.
Disconjonctif Model (non
The chosen offer is the one for which the
compensatory)
evaluation of certain attributes exceed some
minimum thresholds fixed by the consumer.
Lexicographique Model
The consumer classifies the attributes in
(non compensatory)
ascending
order. The
most
performing
supplier (or offer) is chosen. In case of
equality, the alternatives are compared on
the second attribute and so on.
In a compensatory model a poor evaluation of one attribute can be offset by a
strong evaluation on another. In a non compensatory model suppliers (or offers)
are evaluated one attribute at a time, until one is superior.

Stage 4: Purchase
After evaluating the solutions, the consumer is in a buying situation;
however, his purchasing intention is still uncertain. In fact, the
customer has to consider different types of perceived risks that
are associated with the purchase of the service before making up
his mind:
a)

Financial risk

Monetary loss or unexpected costs:

- will I loose money if I make the investment recommended by my
stockbroker ?
b)

Functional risk

Unsatisfactory performance outcomes :

- will this training course give me the skill i need to get a better job ?
- will the dry cleaner be able to remove the stains from this jacket ?

Stage 4: Purchase (con)

c) Physical risk
Personal injury or damage to possessions:
- will I get hurt if I go skiing at this resort ?
- will the contents of this package get damaged in the mail ?
d) Social risk
The possibility of loss of social status due to the purchase of the
service:
- what will my friends think of me if they learn I stayed at this cheap
hotel ?
e) Temporal risk
wasting time, consequence of delays:

- will I have to wait in line before entering the exhibition ?

Stage 4: Purchase (con)

f) Psychological Risk
Personal fears and emotions:
- will the doctors diagnosis upset me ?
When customers feel uncomfortable with risks, they can use a
variety of methods to reduce them, for example:

Seeking

information

from

respected

personal

sources

(family, friends...).

Examining tangible cues or other physical evidence.

Trying aspects of the service before purchasing.

Looking for guarantees and warranties.

After the risks evaluation , the consumer decides or not to buy.

Stage 5: Postpurchase Evaluation of Decision

During

the

process

postpurchase
they

began

in

stage,
the

customers

service

continue

encounter

stage:

evaluating service quality (comparing what they expected

with

what

satisfaction

they
or

perceive

they

dissatisfaction

received)
with

the

and

their

service

experience. The outcome of this process will affect their :

Futur intentions (remain loyal to the provider or not).
Futur communications (whether to pass on positive or
negative recommendations to others).

Consumers may skip or minimize one or more stages in the

purchase decision process depending on:
1)Their level of involvement (e.g., having a hair cut Vs
having a medical operation).
2)The personal, social, and economic significance of the
purchase (e.g., one day Vs twenty days residence at a
hotel).

Applied Exemple on the Compensatory Model of Fishbein

bi =The strength of belief that the bank

Attribute (i)

ei = Evaluation of the
goodness of the attribute
(i) that the supplier (or
service) has.

Bank A

Bank B

Bank C

Proximity

+4

+3

+1

-1

Working hours

+1

+1

+3

+3

Network

+2

+2

+1

-1

Credits

+3

+2

+3

+1

Interest rate
on savings

+2

+3

+1

-2

Services
invoicing

-1

-3

-1

+3

+32

+21

-1

Overall attitude scores Ao = eibi

has the attribute (i)

According to this model, bank A will be chosen by the client.

Applied Exemple on the Compensatory Model of Additive Difference

Attribute (i)

Evaluation of the
attribute (i) by the
client
Bank A

Bank B

Bank C

Comparison done by the client

Comparaison
between

Comparaison between
bank A & C

Comparaison between
bank B & C

bank A & B

Proximity

+3

+1

-1

(+3) (+1) = +2

(+3) (-1) = +4

(+1) (-1) = +2

Working
hours

+1

+3

+3

(+1) (+3) = -2

(+1) (+3) = -2

(+3) (+3) = 0

Network

+2

+1

-1

(+2) (+1) = +1

(+2) (-1) = +3

(+1) (-1) = +2

Credits

+2

+3

+1

(+2) (+3) = -1

(+2) (+1) = +1

(+3) (+1) = +2

Interest rate
on savings

+3

+1

-2

(+3) (+1) = +2

(+3) (-2) = +5

(+1) (-2) = +3

Services
invoicing

-3

-1

+3

(- 3) ( -1) = -2

(-3) (+3) = - 6

(-1) (+3) = - 4

Total of additive difference

+5

+5

According to this model, bank C is rejected and the client hesitate between A & B.

Applied Exemple on the Conjonctif Model

Attribute (i)

Minimal Accepted
Level

bi =The strength of belief that the bank

has the attribute (i)
Bank A

Bank B

Bank C

Proximity

+1

+3

+1

-1

Working hours

+1

+3

+3

Network

-1

+2

+1

-1

Credits

+1

+2

+3

+1

Interest rate
on savings

+1

+3

+1

-2

Services
invoicing

-1

-3

-1

+3

According to this model, bank C is rejected due to its poor performance in term of
proximity and interest rate. Bank A is also rejected due to its poor performance in term of
service invoicing . Bank B will be chosen.

Applied Exemple on the Disconjonctif Model

ei = Evaluation of
the goodness of the
attribute (i) that the
supplier (or service)
has.

Minimal
Accepted
Level

bi =The strength of belief that the

Bank A

Bank B

Bank C

Proximity

+5

+4

+4

+4

+3

Credits

+4

+3

+3

+3

+1

Interest
rate on
savings
Network

+3

+2

+3

+1

-2

+2

+1

+2

+1

-1

Working
hours

+1

+0

+1

+3

+3

Services
invoicing

-1

-1

-3

-1

+3

Attribute
(i)

bank has the attribute (i)

According to this model, only bank A meet all the requirements of the client. Consequently,
bank A will be chosen.

Applied Exemple on the Lexicographique Model

Attribute (i)

ei = Evaluation of
the goodness of the
attribute (i) that the
supplier (or service)
has.

bi =The strength of belief that the bank

Bank A

Bank B

Bank C

Working hours

+1

+3

+3

Services
invoicing

-3

-1

+3

Proximity

+3

+1

-1

Network

+2

+1

-1

Credits

+2

+3

+1

Interest rate
on savings

+3

+1

-2

has the attribute (i)

According to this model, banks B & C have equal score on the most
important attribute (working hours). The choice is settled by way of
the second most important attribute (Services invoicing) bank C will

Section 2: Factors Influencing The Banking Client

The analysis of clients behaviors in banking allows to
differentiate many types of behaviors which will
guide the definition of the offers' characteristics
that best match each client.
Before introducing the different factors that affect
the banking client, it is necessary to present the
various dimensions of the banking client behavior.

1. Dimensions of the Banking Client Behavior

The analysis of the banking client behavior leads to
consider his numerous facets that are focused
around three dimensions:
a) The prospecting dimension.
b) The purchasing dimension.
c) The consuming dimension.

The Dimensions of the Banking Client Behavior

Analyzed Content
Prospective

Purchasing

Consuming

Part of the client

that decides
where to buy and
perform
arbitration
between multiple
points of sale.

Part of the client

that purchase and
which we must
know the
purchasing
processes and
comportements in
relation to the
various products.
Part of the client
that consumes
and develops
treasury, saving
and retirement
needs.

The behavior of the client is analyzed

according to his process of choice
between different points of sale.
Apparently, there is two types of
prospective clients:

Consequences for
Banks Marketing
Develop the loyalty of both
types of prospective
clients.

- A "flux client chooses the bank branch

due to its closeness.
- A "traffic client " chooses the agency
for other reasons (word of mouth, image,
habits) and he frequent it more rarely but
The behavior of the client is analyzed to
for longer durations of visit.
detect the perception of the products
and offers at the different points of sale.
In particular, it is a question of detecting
among the various types of products
those that are the object of spontaneous
purchases or in contrast scripted
purchases.
The behavior of the client is analyzed
according to his needs.

Organization of premises.
Identifying staff tasks and
response times.

Structure the banks offers

in distinguished product
lines that meet the needs
of consumers' segments.
The offer is a
comprehensive and
materialized answer to the

2. The Different Factors That Influence The Banking Client

2.1 Social Influences
Social Classes
Different studies have showed that modest social classes tend to borrow to fulfill
their personal needs while wealthier classes borrow mainly for the purposes of
their professional activities.
These results demonstrate the importance of social class in explaining financial
behavior and its possible use as a criterion for segmentation and thus designing
differentiated offers.
Social Groups
Social groups apply their influence on the individual through interpersonal
relationships. Two mechanisms have been identified:
a) Normative Influence: the group puts pressure on the individual to adopt its
standards of consumption.

b) Informative Influence : The group is a source of information, especially for

complex purchases, and, more generally, when the individual perceives a lack of
competence to collect and process information from other sources.

The Different Factors That Influence The Banking Client (con)

Family
In a restricted environment, the family has the most decisive
and direct influence on the individual. The family must be
taken into account to capture young clients1 by acting on the
influence of their parents.
2.2 Socio-demographic Influences
Age, gender, race, ethnicity, income level, marital status,
number of children, occupation, and education level.. Are the
socio-demographic features that are frequently used by
marketers to define the demographic profile of a client.

The Different Factors That Influence The Banking Client (con)

2.3 Psychological Influences

Individuals attitudes towards money are different.

We can distinguish two major dimensions that
can be used to develop a simplified diagram that
represents individuals perceptions of money:
a) The Psychological Dimension
Two extremes: Money fusion, carnal corresponds
to an absence of
distance, and money
instrumental reflecting a maximum difference
between being and having.
b) The Moral Dimension
Distinguished by having money, money earned
(work), and fun money.