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Searching for new saving behavior theories: How relationships between banks' customers and advisors affect household saving
KTH, School of Architecture and the Built Environment (ABE), Centres, Centre for Banking and Finance, Cefin. Global Projects Center, School of Engineering, Stanford University, United States .
KTH, School of Architecture and the Built Environment (ABE), Centres, Centre for Banking and Finance, Cefin. Swedbank, Stockholm, Sweden .ORCID iD: 0000-0001-7106-4827
2014 (English)In: International Journal of Bank Marketing, ISSN 0265-2323, Vol. 32, no 4, 279-299 p.Article in journal (Refereed) Published
Abstract [en]

Purpose: The purpose of this paper is to develop a model of bank advisor/customer relationships and customer saving behavior. Design/methodology/approach: The research is a theoretical review and model development of savings behavior and bank advisor/customer relationships. The review is used for the development of a model of bank advisor/customer relationships, and their effect on savings behavior. Findings: Findings are a model that distinguishes three kinds of exchange (relational, interimistic, and transaction) in between bank advisor and customer. The three kinds of exchange then influence customer savings behavior. Research limitations/implications: The implications of this research is that it points to that relationship marketing theory can be used in the analysis of how bank advisors influence customer savings behavior. Practical implications: For regulators and financial services firms, these findings point to how the role of bank advisors for consumer savings behavior can be analyzed. This is important, as much policy work presumes that advisors influence customer savings behavior, but the knowledge base for that presumption needs to be better understood. Social implications: The paper contributes toward a better understanding of the social exchange between bank employees and customers as regards savings products. Originality/value: This paper is original because it includes many theoretical research fields, and because it connects the bank advisor and customer relationship with the customer's savings behavior.

Place, publisher, year, edition, pages
2014. Vol. 32, no 4, 279-299 p.
Keyword [en]
Banking industry, marketing theory
National Category
Economics and Business
URN: urn:nbn:se:kth:diva-149255DOI: 10.1108/IJBM-03-2014-0040ScopusID: 2-s2.0-84902491775OAI: diva2:738583

QC 20140922

Available from: 2014-08-18 Created: 2014-08-18 Last updated: 2015-03-27Bibliographically approved
In thesis
1. Understanding the relationships between bank-customer relations, financial advisory services and saving behavior
Open this publication in new window or tab >>Understanding the relationships between bank-customer relations, financial advisory services and saving behavior
2015 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

While the saving environment has become more complex in recent years, so has the demand for individual activity. Important impetuses include financial deregulation, globalization, technological change, and reformed pension systems. Financial institutions can provide financial advisory services to help their customers to obtain positive net benefits by avoiding mistakes and using economies of scale, and they can also attract and maintain their customers by creating strong relationships. Earlier studies show that the incentive structure often leads to advice that is not to the benefit of the customers. In addition, not all customers seek and receive advisory services. The objective of this study is to increase our understanding of the relationship between the bank advisor – customer relation and the bank customer’s saving behavior.

The scope of the study is to analyze relevant theories and develop a model that includes financial advisors as a mediator of saving behavior, and to understand the relational attributes that can affect saving behavior. Also, the characteristics of customers with a relational versus a transactional exchange form with the bank are explored. Given the problems of establishing causality, the scope is also to understand the impact of the relationship and, in particular, face-to-face advisory meetings on saving behavior. The analysis is mainly carried out with the help of customer data – both objective bank register data and subjective survey data – while the advisor characteristics are to a lesser extent part of the data material.

Five studies are carried out using various methodologies, i.e., theoretical review and model development, probit and multinomial logistic regressions, difference-in-difference regression, and structural equation modelling. In addition, a case study is made analyzing dyads of customers and advisors in order to explore theoretical assumptions. Economics and relationship marketing are used to explain saving behavior with transactional, interimistic relational, and enduring relational exchange forms (Paper 1). Several major findings emerge in the quantitative analysis: First, the attributes are longer and stronger, the more relational the exchange form is (Paper 2). A second finding is that relational attributes also surface in transactional exchange, a finding that requires further research to be understood in more detail (Paper 2). Third, among relational attributes, duration and context have the largest total effects on saving behavior, while trust is a mediating variable (Paper 5). Fourth, not only demographic and socioeconomic factors can predict whether customers use the relational exchange form; psychological factors, such as saving motives and risk attitudes, are also predictors. Results are clearly different for women and men (Paper 3). Finally, financial advisory meetings are found to increase saving volumes and saving products held in stock. The largest effects are found for young customers with low wealth and low profitability to the bank, i.e., customers who initially have low activity levels and thus create a large potential (Paper 4).

Limitations include endogeneity problems in general, and selection bias in particular, making it difficult to establish causality, and internal and external validity. Future research should focus on data management, especially building time series with enhanced methods to adjust for selection bias. In addition, studies to better understand the transactional exchange form are needed, as well as studies that deepen the definition of relational exchange, not least when alternative channels to face-to-face meetings include mobile banking and internet banking, and the digitalization of  the social know-how of financial advisors.

Managerial implications include understanding the relational attributes that affect saving behavior, such as context, duration, and trust. Also useful to know are the factors that can help to predict the probability of a customer’s having a transactional or relational exchange form, i.e., including demographics, socioeconomics, psychology, and gender, to see how channels and customers can be better matched. Policy implications include using the model in this study to match relational attributes to the degree of financial literacy, since the risk of misselling is particularly large for relational-oriented customers with low financial literacy.

Abstract [sv]

Samtidigt som sparandet har blivit mer komplext under senare år, har behovet av individens egen aktivitet ökat. Viktiga drivkrafter för denna utveckling har varit finansiell avreglering, globalisering, teknisk utveckling och reformerade pensionssystem. Finansiella institutioner kan erbjuda finansiell rådgivning för att hjälpa kunderna erhålla positiv nettonytta genom att de då kan undvika att göra vanliga misstag och kan få skalfördelar med ökad tillgång till information. Genom att skapa starka kundrelationer kan dessa institutioner också använda rådgivningen för att attrahera och behålla kunder. Tidigare studier visar att incitamentsstrukturen ofta leder till att rådgivningen missgynnar kunderna. Det är heller inte alla kunder som söker och får tillgång till rådgivning. Syftet med denna avhandling är att öka förståelsen för sambanden mellan bankkundens sparbeteende, finansiell rådgivning och relationen mellan bankrådgivaren och kunden.

I avhandlingens omfång ingår att analysera teorier, utveckla en modell som inkluderar finansiella rådgivare som intermediärer till sparbeteende samt förstå de relationsattribut som kan påverka sparbeteendet. Dessutom görs jämförelser mellan kunders karaktäristika utifrån deras utbytesform. Med hänsyn tagen till svårigheterna att fastställa kausalitet ingår även att förstå hur relationen i allmänhet, och rådgivningsmöten i synnerhet, påverkar sparbeteendet. Analyser görs med hjälp av kunddata, både objektiva registerdata och subjektiva enkätdata, medan karaktäristiska för rådgivarna i mindre utsträckning finns med i datamaterialet.

Fem studier utförs som använder olika metoder, såsom teoretisk genomgång och modellutveckling, probit- och multinomiala logitregressioner, ”difference-in-difference” regressioner samt struktur-ekvationsmodellering. Inledningsvis gjordes också en fallstudie som analyserade dyader av bank-kunder och rådgivare för att undersöka teoretiska antaganden. Det framkommer att national-ekonomi och relationsmarknadsföring tillsammans kan användas för att förklara sparbeteende med hjälp av tre utbytesformer (transaktion, interimistisk relation, djupgående relation) (Art. 1). Ju mer relation utbytesformen innehåller, desto längre och större är relationsattributen (Art. 2). Relations-attribut finns också representerade i transaktionsutbytet, ett resultat som kräver ytterligare forskning (Art. 2). För det tredje framkommer att bland relationsattributen är duration och kontext viktigast för att förklara sparbeteendet, följt av förtroende som är en intermediär variabel (Art. 5). För det fjärde framkommer att förutom demografiska och socioekonomiska faktorer är psykologiska faktorer, såsom sparmotiv och riskpreferenser, prediktorer för utbytesform. Resultaten är markant olika för män och kvinnor (Art. 3). Slutligen, givet endogenitetsproblem, syntes finansiella rådgivningsmöten öka sparvolymer och antal produkter som bankkunder använder. De största effekterna observeras för unga, personer med låga förmögenheter samt personer med låg lönsamhet för banken, d v s kunder som initialt har en låg aktivitetsnivå men som utgör en potential (Art. 4).

Begränsningar i studierna handlar om endogenitetsproblemen i allmänhet, och selektions-svårigheter i synnerhet, vilka gör det svårt att fastställa kausalitet och vilka begränsar extern och intern validitet. Framtida forskning bör därför fokusera på datahanteringen genom att bygga upp tidsseriedata och utveckla metoder som justerar för selektionsproblem. Dessutom behöver transaktionsattributen studeras. Samtidigt är studier som fördjupar förståelsen kring relationen viktiga, inte minst som alternativa kanaler till mänskliga rådgivningsmöten – såsom mobilbank och internetbank – snabbt vinner gehör i bankerna och bland kunderna.    

Avhandlingens implikationer för bankledningar inkluderar ett ramverk som kan användas för hur relationen och dess attribut påverkar sparbeteendet, såsom duration, kontext och förtroende. Vidare är det användbart att förstå de faktorer som predicerar sannolikheten att kunden har en relations- eller transaktionsutbytesform, och de inkluderar demografi, socioekonomiska faktorer, psykologi och genus, inte minst som behovet att bättre matcha kanaler med kunder ökar. För politiska beslutsfattare kan avhandlingens modell användas för att matcha relationsattribut till graden av finansiell förmåga, inte minst som risken för ”misselling” är särskilt stor för relationsorienterade kunder med låg finansiell läsförmåga.

Place, publisher, year, edition, pages
Stockholm: KTH Royal Institute of Technology, 2015. 64 p.
TRITA/KTH/CEFIN-DT, ISSN 1654-9376 ; 11
Saving behavior, consumer finance, consumer financial decision making, financial services, relationship marketing, exchange forms, saving motives, risk attitudes, financial literacy
National Category
Social Sciences
Research subject
Business Studies
urn:nbn:se:kth:diva-162909 (URN)978-91-87111-02-0 (ISBN)
Public defence
2015-04-24, F3, Lindstedtsvägen 26, KTH, Stockholm, 13:00 (Swedish)

QC 20150327

Available from: 2015-03-27 Created: 2015-03-25 Last updated: 2015-03-27Bibliographically approved

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