Modelling satisfaction with ATMs: THE UK AND HUNGARIAN BANKING SYSTEMS

The banking sectors of the UK and Hungary are in stark contrast. The UK has a highly developed financial system and a rapid pace of financial innovation, whereas Hungary has one of the least developed banking markets in the post-communist region, despite rapid banking reform. In both markets, however, competition between banks and other financial institutions and markets has intensified. Strong competition for corporate clients has forced banks to seek out and expand retail banking business and place greater emphasis on the quality of services that they provide to retail customers.

Within the UK retail banking market, payments mechanisms are in a period of structural change with cheque and cash usage declining and plastic cards and direct debits increasing in popularity. New technology in the form of telephone banking, Internet banking and electronic commerce has both increased the range of payments mechanisms available to the consumer and enabled new players, such as supermarkets and insurance companies, to enter traditional banking territory. It has been forecast that the level of non-cash payments will reach 16.5 billion by 2007.

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Modelling satisfaction with ATMs

Modelling satisfaction with ATMs

INTRODUCTION

Due to ever increasing competition within banking services, in terms of both prices and banking products, overall consumer satisfaction is playing a vital role in marketing management, since it is widely assumed and assessed to determine repeat sales, positive word of mouth recommendations and, most importantly, customer brand loyalty.

With the globalisation of companies now increasing, cross-cultural studies are becoming more important, particularly with new market places opening up in the old communist systems of Eastern Europe. For international marketers, consumer satisfaction is now one of the primary goals to strive for. Without satisfaction, brand loyalty — important for continuity reasons — is highly unlikely.

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How small business firms select a bank: SUMMARY AND CONCLUSION

This paper compares the factors which small business firms consider important in the bank selection process in order to shed light on whether banking deregulation in the USA will have an impact on small business. It is based on a mail survey of chief executives of 115 small business firms in the United States and 614 small business firms in Australia. Since restrictions no longer inhibit bank mergers in the USA, the industry structure is beginning to resemble the banking structure that has existed in Australia since the mid-1980s; an industry dominated by four major banks.

In the study, weighted average rank scores on each of 14 individual bank selection factors were calculated and examined to determine which factors were important and whether or not there were significant differences between countries. The results show that small firms in both countries ranked the bank’s willingness to accommodate their credit needs as being important. However, US firms considered the range of products and services, convenient location, financial health and personal relationships as being more important. Australian firms, on the other hand, placed greater emphasis on long- term relationships, day-to-day efficiency and competitive prices.

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How small business firms select a bank: DISCUSSION part 2

Another possible reason why small firms in Australia are concerned about long-term relationships relates to the frequency of staff turnover within most large banking organisations. This has been especially true in recent years in the four major national banks where it has not been uncommon to transfer successful branch employees after only a few years. Most small firms want to deal with someone they know; not a new branch manager or loan officer every few years. Anecdotal evidence is that many firms are happy with the manager who initially started the banking relationship. Once that manager is moved, however, the relationship sours. As a way to combat the problems associated with employee turnover and unhappy business customers, the major national banks have started to introduce business banking units to ensure continuity of service and that customers’ needs are met. On the other hand, business-banking units have been prevalent in the United States for many years.

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How small business firms select a bank: DISCUSSION

How small business firms select a bank: DISCUSSION

A possible reason for the difference in the rankings between the two countries may be due to the nature of the banking organisations that the small business firms deal with. As noted before, the structure of the US banking industry is somewhat different from the banking structure existing in Australia. Approximately one- third of the banks in the United States are community banks. While community banks may offer more personal banking service, their limited size and financial resources may also prevent them from offering a full range of products and services to their customers. To obtain specialised financial services, small business customers may be required to have relationships with more than one bank. This would be especially true, if a small business firm had operations outside its home state or had large borrowing requirements.

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How small business firms select a bank: Survey findings

Figure 1 reports the weighted average rank scores obtained in the two separate countries and Figure 2 shows the differences in weighted average rank score for each of the 14 bank selection criteria. The actual weighted average rank scores used to construct these figures are given in the Appendix at the end of the paper. In Figure 1, the Australian rankings are charted at the top (the dark shaded rectangle) and the US rankings are charted on the bottom (the lighter shaded rectangle). In Figure 2, if the US small business firms ranked an individual factor higher than the Australian small business firms, the shaded rectangle is to the right of centre, and if the Australian small business firms ranked it higher, the shaded rectangle is to the left of centre.

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How small business firms select a bank: RESULTS

Completed questionnaires were received from 384 firms in the United States and 1,249 firms in Australia. Of the 384 US firms, 115 or 30 per cent were small businesses. Of the 1,249 Australian firms, 614 or 49 per cent were small businesses.

The higher small business response rate in Australia was not surprising given the high level of debate on banking practices in the financial press in recent years. Using standard banking industry classifications based on sales levels, small business firms were identified as a firm with sales under US$5m or under A$10m. The difference in sales levels between the two countries is due primarily to the exchange rate at the time of the survey and overall industry size.

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