Websites informative function and its impact on banking services consumer behavior

Website’s Informative Function and Its Impact on Banking Services Consumer Behavior NGUYEN HOANG TIEN, PhD, the Warsaw School of Economics Abstract: Customers behavior and their decision making process are determined by having information and possibility of its access Internet and new information technologies are the richest source of information and the cheapest means of communication Internet as the main way of communication influences on relations with customers The website serves as a tool to build and sustain these relations The aim of the article is to identify measuring criteria for the informative function of banks’ websites and present how they impact on customer behavior Paper describes the role of information in consumers’ decision making process, characterises website as a source of information, and attempts to identify main factors to measure informative function of banks’ websites with pointing out how informative content impacts customers behavior Keywords: consumer behavior, financial services marketing, website’s informative function Posing a problem Internet and other information technologies so-called the “information superhighway” are the richest source of information and the cheapest communication means These tools decrease the cost of acquiring data about the products and significantly improve consumers’ decision making process As a consequence, consumers are able to purchase products competitive in terms of price that best fulfill their needs One rising question is that how informative content on the website should be and which criteria should be used to assess its informative function to be accepted by potential consumers and incline them to purchase products and services The subject of interest here are banks’ websites and their informative function We choose banking services market due to its decisive share (participation) in all electronic business The Internet usage and exploration in financial and insurance services sector are tremendous In Great Britain more than 70% financial institutions have their own website and, what is more important, they use it commercially instead of traditional distribution and communication channels [13] Moreover, because of specific character of financial services information have decisive and significant impact on consumers behavior The main problem of this article is to identify measuring criteria of banks’ websites informative function, the further step is to show how it impacts on consumer behavior The first part of the article presents the importance of information for consumer decision making process The second part introduces the features of websites which are considered the main source of information for consumers The last and most important part is an attempt to identify criteria for banks’ websites informative function together with highlighting the impact of informative content on consumer behavior Moreover, this paper is a part of a theoretical-conceptional project carried out in the Marketing Strategy Department of the Business Administration Faculty at the Jagiellonian University in Cracow, Republic of Poland This project concerns the functionality of banks’ website which will be verified in the framework of primary research Information and research theory on decision making Information is considered as an important element enabling products and services selection, and the search for information is a very important stage in decision making process [6] The search for information may have systemic or casual character It concerns diverse alternative solutions for a given problem in terms of selection of means and methods to fulfill the needs The search for alternative solutions depends on necessary amount of time and financial means to acquire information, the amount of information possessed and the degree of perceived risk in case of wrong selective decision Perceived risk contains two important dimensions: - Uncertainty during purchasing process - The consequence of making wrong decision Therefore information will reduce both perceived dimensions of risk Moreover, the higher level of risk perceived the larger amount of information is necessary to make decision and purchase a product This is quite a significant condition in selection of financial service which due to high level of complexity and increased purchasing risk (in case of financial investment) compels consumers to acquire information in a complex and intense way The next important factor in the process of information gathering is the cost of acquiring them It embraces financial and psychological cost (stress, frustration, nervousness, tiredness) This cost may also be related directly to the process of achieving information itself (necessary amount of time, phone calls, purchasing and reading magazines, newspapers) as well as the process of information processing (which largely depends on the complexity of product and service) [2] Moreover, the scope of information searching may be conditioned by many factors such as the environment, the meaning of product for consumers, consumer’ experience and individual traits Furthermore, the scope of information searching, to a great extent, depends on the type of product and service In case of service, including financial service, the intangible factors may cause enhanced perceived risk in the decision making process which further will impact on increased level of information searching related to the service Searching for information about products offer also occurs in two ways: internal and external searching (Table 1) The process of internal searching (in a durable memory) and its scope are disproportionally correlated with the length and profoundness of purchaser’s experience Sometimes, as a result of internal searching, customers may decide to use previous solution to the same current problem (buy the same product/service in a previously purchasing place) Customers on one hand get more experienced and begin to analyze problem more precisely, on the other hand make purchasing decision more quickly We should remember that searching for internal information must be supported by external information searching (Table 1) Low activity General factors Psychological factors Situational factors Information processing factors High activity - High perceived costs - Low perceived benefits - Low engagement - Large experience - Satisfied with current situation - Loyalty for a given brand - Time pressure - Physical constraint - High price/high risk - High perceived benefits - Low perceived costs - High engagement - Small experience - Curiousity - Supportive attitude for a given brand - Social pressure for a right choice - Many source of information - Low price/low risk - Incapable to understand - Willingness to acquire information information and capable to - Lack of trust make use of it Table Factors impacting external information finding process Source: [14] Moreover, in case of financial services customers should have access to information in a systemic way and in a proper time The situation when consumers have no information or information comes not at the right time, put them in an unfavorable position to make a financial decision The earlier mentioned information asymmetry as well as the need to provide information in a complex way will surely cause that information transmission will transform into provision of complex advice and recommendation in the area of financial decision making [8] The research results show that the consumers on the financial service market will base all their making decision processes on the provided information [3] So the searching and gathering information phase as well as the stage of raising consumers’ awareness and experience in the area of financial services are to be prolonged Therefore it is also essential from the consumer point of view to provide them necessary information about products and services and support them in each stage of decision making Website as a source of information for consumers New technologies and especially Internet technology are the factor that implicates changes in financial services consumer behavior It is perceived as a channel that supports flow of information, transaction and goods, and operates without time and geographical barriers Enterprises may use Internet and tools related with it in order to present their offers, to manage customers’ feedback information, to provide information or to sell products and services [1] Internet is the main means of communication that impacts on the building and shaping of relationships between bank and customers By applying diverse functions Internet is capable to enhance the experiences of purchasers, influence their satisfaction and needs fulfillment [4] As a result of research carried out by Statistic Office in United Kingdom in 2001, around 73% Internet surfers declares to use Internet to find information about products and services Website as a source of information has a lot of advantages First of all, in a significant measure it reduces the cost of acquiring, gathering and processing information Moreover, due to its total availability, interactivity, and as a virtual medium it impacts positively on the quality of provided information (diverse types of presentations, quick and complex update, different forms of information – texts, animations, films) So the process of searching for information through the Internet gives customers a chance to effectively find necessary information, reduce searching cost and efficiently assess the existing alternatives However not always consumers’ expectation in relation to the websites’ informative content corresponds to the real situation So there is a rising question, to what extent the website fulfills the informative function for customers and what kind of measures to use to investigate this function that by the informative content it is possible to efficiently impact on them and their purchasing behavior in the network Method and model of research Speculation concerning the websites’ informative function and how to measure it should refer to the “Information Content Paradigm” model presented by Resnik and Stern in 1977 [12] Those people set up a list of 14 variables, factors defined as key information used by consumers in decision making process These variables are presented in the table Price and value (total utility) Quality Product utilization Component and content Product availability Special offer Taste Packaging Guaranties 10 Safety 11 Ingredients 12 Research results of independent institutions 13 Results of research sponsored 14 New ideas, solutions Table Measuring criteria for informative content according to Resnik and Stern Source: [12] In the admitted method the information (i.e advertisement) presented by the company fulfills the informative function if it communicates at least one of the above mentioned criterion This model was modified a little bit to be applied in the research of the advertisement clips and their informative functions It also found its application in the research of the informative content of the corporates’ websites One of its latest adaptations was used in researches carried out by Waite and Harrison in 2005, in which the authors presented a list of criteria of insurance broker websites’ informative contents [9] While constructing the instrument to measure the variables of banks’ websites informative function one should take into consideration the introduced above models as well as the specificity of financial services and the impact of those information on purchaser behavior The table below illustrates the list of variables of websites’ informative function We here make some modifications consisting in highlighting groups of information and assigning each of them criteria selected and adopted from above mentioned models In addition, we introduce the “advisory” criterion as a factor which in case of financial services assures a help desk in customers’ purchasing decision making Criteria Impact of factor Detailed (information on consumer explanations content) behavior criteria Group – Information concerning bank’s offer Price Quality Example of information of located on website Product assessment Information about and selection price of service, or criterion cost of its purchase or use Product assessment Opinion about and selection financial service criterion expressed by bank or Impact on fulfilment independent Interest rate, commission (for getting credit loans), Charge for banking activity Ranking assessing bank and its services carried out by State Bank, independent institutions or media and satisfaction institution or media resulting from using financial services Forming trust to Positive opinion in banking institution the website about bank and its services to show that this is a trustworthy institution Results of competitions “product of the year”, “employee of the year”, “bank of the year”, “branch of the year”, “the most beneficial product for customer”, positive press notes and customer direct opinions Product assessment Information about Components are: interest Service and selection product components rate, terms of pay back, rules components criterion and regulations of credit loans, discounts, profitable installments, processing time, etc Building and Instruction how to Descriptions, instructions, Application development use a given service suggestions, simulations, etc customer awareness in area of financial services Product assessment Information about ATM card, consumption and Service and selection products groups of home credit loans, deposits, assortment criterion different types, their forms and types packages, diverse forms of deposits, investment and saving, diverse forms of credits and deposits Forming perceived Information that External and internal Distinctive image of bank distinguish product ranking: product of the year, feature of on the background of product benchmarking, service or competitive services product logo and slogan bank expressed by assessment, external ranking or data prepared by bank Product assessment Information The number of ATM, Availability and selection concerning place, services points bank’s criterion time and how to branches and their contact & purchase or use the address, location maps with service arriving instructions Forming trust to Information Comments, press notes, Product banking institution presenting financial Central Office of Statistics research service market and State Bank’s reports, results research results financial portals influencing serving as a bank’s customer product quality Awards, distinction, product reference Promotion offers recommendation Stimulating purchase Information about power and renewing current promotion the use of financial actions services assessment and choice Vouchers, competitions, discounts, leaflets, public events sponsoring, gifts, etc Table 3a Criteria for measuring the Websites’ informative function – about bank’s offer Criteria Impact of factor Detailed Example of information (information on consumer explanations of located on website content) behavior criteria Group – General information concerning bank History and Building image foundation bank’s Information concerning bank’s history, mission, goals, activities, management board, employees, archives of press news, financial reports, published information in different language version Open days, anniversary, annual activity reports, total number of specialists, employees, student internships, career opportunity, required qualification, bank’s logo, language version Enhance knowledge about financial institution Authority and Enhance knowledge financial organizational about institution structure Building bank’s Employment image Enhance knowledge about financial institution Building bank’s Financial image reports Building bank’s Press notes image Contact data Table 3b Criteria for measuring the Websites’ informative function – about bank itself Criteria Impact of factor Detailed (information on consumer explanations content) behavior criteria Group – The rest of information Example of of information located on website Forming trust to Information about banking institution banking guaranties and warranties Forming trust to All the mentions Safety assurance banking institution about how to secure customers’ transaction Building bank’s Information about Innovation image innovative products and services or improvement customer demand processing Links to other Increasing customer Redirecting customers source of awareness in area of to other information financial services and sources about bank information the market and its services Supporting decision Information Advisory making process in the supporting customers market of financial in purchase decision services making Guaranty Purchase on credit giving suppliers banking guaranties Security system: PIN, token, SWIFT, ELIXIR, etc Ideas, products innovation such as credit loan by SMS, email, new customer service center, financial aggregators Links, phone, e-mail, SMS, WAP, interviews, brochures, catalogues, leaflets How to set up banking accounts, contact services advisors Table 3c Criteria for measuring the of Websites’ informative function – other information Research results and proposal The presented variables in the measuring instrument of banks’ websites informative function will serve as key information used by bank’s customers in decision making concerning the choice of banking institutions, their offers and whether or not to renew purchases Moreover, they have significant meaning in construction and extension the customers’ awareness in the area of banks’ offered financial services Repeatedly, they are critical condition for selecting financial institutions, their products and services and also shaping bank’s positive image Internet and its abundance of information and applications will make consumers more independent and more self-relied in purchasing decision making Such situation will cause that modern customers become fastidious in terms of websites’ presented informative content Therefore it is important for banks to recognize that it is suitable to build their websites and locate there such data that have impact on functionality and support the process of consumers’ decision making and understanding their behavior Conclusion Analysis the bank’s websites informative content and determining the method to measure the informative function are fundamentals to analyse consumers behavior (elaboration of the bank’s consumer purchasing model) and their decision making process These variables may, in the next stage, be used to measure website functionality and answer the question, to what extent the bank’s policy in reference to the website building is effective, efficient and impacts on the retaining sustainable relationships with customers as well as inclines customers to the purchasing decision The received data might be a rich source of information for managers of financial institutions and a beginning to implement websites’ projects Reference: [1] Azzone G., Bianchi R., Noci G., The company’s website: different configurations, evolutionary path, “Management decision” 2000, Vol 38, Nr [2] Bakos J.Y., Reducing buyer search costs: implications for electronic marketplaces, “Management Science” 1997, Vol 43, Nr 12 [3] Banks E., E-finance: the electronic revolution in financial services, John Wiley and Sons, Chichester 2001 [4] Chauffey D., Edgar M., Measuring online service quality, “Journal of targeting, analysis and measurement for marketing” 2000, May 8(4) [5] Cuuninghan S M., the major dimensions of perceived risk, [in:] Cox D F., Risk taking and information handling in consumer behavior, Boston University Press, Boston 1967 [6] Evans M J., Moutinho L., Van Raaij W F., Applied consumer behavior, Addison Wesley, Harlow 2001 [7] 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brand Essence and Managing, PWE, Warsaw 2001, pp 75  ... websites and locate there such data that have impact on functionality and support the process of consumers’ decision making and understanding their behavior Conclusion Analysis the bank’s websites informative. .. (information on consumer explanations content) behavior criteria Group – The rest of information Example of of information located on website Forming trust to Information about banking institution banking. .. information (information on consumer explanations of located on website content) behavior criteria Group – General information concerning bank History and Building image foundation bank’s Information