Websites informative function and its impact on banking services consumer 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 informat

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

1 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

2 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)

General factors - High perceived costs

- Low perceived benefits

- High perceived benefits

- Low perceived costs

Psychological factors - Low engagement

- Large experience

- Satisfied with current situation

- Loyalty for a given brand

- High engagement

- Small experience

- Curiousity

- Supportive attitude for a given brand

Situational factors - Time pressure

- Physical constraint

- High price/high risk

- Social pressure for a right choice

- Many source of information

- Low price/low risk

Information processing

factors

- Incapable to understand information

- Lack of trust

- Willingness to acquire information and capable to make use of it

Table 1 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

3 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

4 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 2

1 Price and value (total utility) 8 Packaging

3 Product utilization 10 Safety

4 Component and content 11 Ingredients

5 Product availability 12 Research results of independent institutions

6 Special offer 13 Results of research sponsored

7 Taste 14 New ideas, solutions

Table 2 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 3 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

(information

content)

Impact of factor

behavior

Detailed explanations of criteria

Example of information located on website

Group 1 – Information concerning bank’s offer

Price Product assessment

and selection criterion

Information about price of service, or cost of its purchase or use

Interest rate, commission (for getting credit loans), Charge for banking activity

Quality Product assessment

and selection criterion

Impact on fulfilment

Opinion about financial service expressed by bank or independent

Ranking assessing bank and its services carried out by State Bank, independent institutions or media

and satisfaction resulting from using financial services

institution or media

Awards,

distinction,

product

reference

Forming trust to banking institution

Positive opinion in 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

Service

components

Product assessment and selection criterion

Information about product components

Components are: interest rate, terms of pay back, rules and regulations of credit loans, discounts, profitable installments, processing time, etc

Application Building and

development customer awareness

in area of financial services

Instruction how to use a given service

Descriptions, instructions, suggestions, simulations, etc

Service

assortment

Product assessment and selection criterion

Information about products groups of different types, packages, diverse forms of deposits, investment and saving, diverse forms

of credits and deposits

ATM card, consumption and home credit loans, deposits, their forms and types

Distinctive

feature of

service or

bank

Forming perceived image of bank

Information that distinguish product

on the background of competitive services expressed by assessment, external ranking or data prepared by bank

External and internal ranking: product of the year, product benchmarking, product logo and slogan

Availability Product assessment

and selection criterion

Information concerning place, time and how to purchase or use the service

The number of ATM, services points bank’s branches and their contact & address, location maps with arriving instructions

Product

research

results

Forming trust to banking institution

Information presenting financial service market research results serving as a bank’s

Comments, press notes, Central Office of Statistics and State Bank’s reports, financial portals influencing customer product quality

offers recommendation

assessment and choice

Promotion Stimulating purchase

power and renewing the use of financial services

Information about current promotion actions

Vouchers, competitions, discounts, leaflets, public events sponsoring, gifts, etc Table 3a Criteria for measuring the Websites’ informative function – about bank’s offer

Criteria

(information

content)

Impact of factor

behavior

Detailed explanations of criteria

Example of information located on website

Group 2 – General information concerning bank

History and

foundation

Building bank’s image

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

Contact data Enhance knowledge

about financial institution

Authority and

organizational

structure

Enhance knowledge about financial institution

Employment Building bank’s

image Enhance knowledge about financial institution

Financial

reports

Building bank’s image

Press notes Building bank’s

image Table 3b Criteria for measuring the Websites’ informative function – about bank itself

Criteria

(information

content)

Impact of factor

behavior

Detailed explanations of criteria

information located on website

Group 3 – The rest of information

Guaranty Forming trust to

banking institution

Information about banking guaranties and warranties

Purchase on credit giving suppliers banking guaranties

Safety assurance Forming trust to

banking institution

All the mentions about how to secure customers’ transaction

Security system: PIN, token, SWIFT, ELIXIR, etc

Innovation Building bank’s

image

Information about innovative products and services or improvement

customer demand processing

Ideas, products innovation such as credit loan by SMS, e-mail, new customer service center, financial aggregators

Links to other

source of

information

Increasing customer awareness in area of financial services and the market

Redirecting customers

to other information sources about bank and its services

Links, phone, e-mail,

interviews, brochures, catalogues, leaflets

Advisory Supporting decision

making process in the market of financial services

Information supporting customers

in purchase decision making

How to set up banking accounts, contact services advisors

Table 3c Criteria for measuring the of Websites’ informative function – other information

5 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

7 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

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