Articles on Consumer Behaviour in Banking

What is Consumer Behaviour?

Consumer behaviour is the study of when, why, how, and where people do or do not buy a product. It attempts to understand the buyer decision making process, both individually and in groups.

Consumer Behavior in Internet Banking

Internet banking brings a number of benefits for both the provider and the customer. Bank customers identified by different characteristics to the adoption of internet banking.

Survey
Based on a survey of 400 banks customers, we note that relative advantage and complexity have the strongest influence in the adoption of internet banking in a small island done by VERENA and ANISHA.

DATA ANALYSIS AND FINDINGS

Data Analysis From our survey of 400 respondents, we note that 56 percent are female and the rest 44 percent are male. In addition, 57 percent of the respondents live in rural region while 43percent reside in cities.

Age Group of Surveyed Individuals

%
45 40 35 Bank 30 Customers 25 20 15 10 5 0

41.85 34.59

13.78

9.77

18-25

26-35

36-45

above 45

Age distribution

Further, we examine the income levels of the respondents

%
0.3 0.25 0.2 0.15 0.1 0.05 0

24.82 20.89

19.02

21.98 13.28
%

Income Brackets

Profile of Internet Banking Users vs. Non Internet Banking Users

Internet banking users (mean)

Age 18 to 25 years Age 26 to 35 years Age 36 and above Internet access at home 0.51 0.32 0.10 0.82

Non-internet banking users (mean)

0.37 0.36 0.15 0.67

Internet access at work

Education Income level Number of Observations

0.69
0.68 0.05 117

0.57
0.51 0.08 279

From table above, we note that on average the profile of the internet banking user is one is more likely to be single, educated, aged between 18 to 25, and live in the cities. The internet banking user is also one who has internet access at home and at work. In addition, to change is one element which causes people not to move towards the use of this banking facility as the mean is larger in the cause of noninternet banking users.

Results from a Customer Perspective

We observe that customers having internet access at home are more likely to use internet. Our findings also reveal that education plays a major role in influencing the adoption of internet banking. our results also show that those people with an income level exceeding Rs 30,000 are not interested in using internet banking. We note in the survey that those in this income bracket are mainly people in the age group, exceeding 46 years and are not eager to adopt a new technology. Managers and IT professionals are more likely to use internet banking because of their acquaintance to the new system and most probably their higher educational background.

Results from a Banking Perspective

The results from our bank survey reveal that internet banking is part of the banks business strategy to attract more customers. It benefits the banks in a number of ways, namely time saving, lower costs, provision of better services to customers and also they have more time to develop new services.

CREDIT CARD

A credit card is part of a system of payments after the small plastic card issued to users of the system. It is a card entitling its holder to buy goods and services based on the holder's promise to pay for these goods and services. The issuer of the card grants a line of credit to the consumer (or the user) from which the user can borrow money for payment to a merchant or as a cash advance to the user.

Types of cards in INDIA :

Premium Credit Cards Cash Back Credit Cards Gold Credit Cards Airline Credit Cards Silver Credit Cards Business Credit Cards Balance Transfer Credit Cards Co-branded Credit Cards Low Interest Credit Cards Lifetime Free Credit Cards

Consumer behavior in the credit card market: a banking case study

Author: Manuela Pulina Article first published online: 6 OCT 2010

ANALYSIS
This paper analyzed the demographic, socio-economic and banking-specific determinants that influence the choice of credit cards. A multinomial logit model was run on a recent portfolio of banking customers based in Italy. In this study, sole credit cards are used and are divided into classic, gold and revolving card

Graph of Credit Line

Graph of ATM

RESULTS
The results from analysis revealed , Women were found to have a higher probability to choose a classic card than men. Whereas, men are 1.62 times more likely to hold gold credit cards. Younger customers were found to be more likely to use revolving credit cards and this probability tends to decrease with age. On the other hand older customers are more likely to acquire a gold credit card. This finding is highlighting that younger customers may be less risk adverse, are in need of credit and likely to use more complex products.

MUTUAL FUNDS

INTRODUCTION
The story of mutual fund industry in India started in 1963 with the formation of Unit Trust of India. Risk adverse investors are interested in scheme with tolerable capital risk and return over bank deposit. But objective of the MF industry has changed over the decades.

What is a Mutual Fund?

A mutual fund is just a financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective. When you invest in a mutual fund, you are buying units or portions of the mutual fund and thus on investing becomes a shareholder or unit holder of the fund.

Working of Mutual Fund

Registrar

SEBI

Trust Custodian AMC

Consumer Behavior towards Inherent Risk and Potential Returns in Financial Products

RESEARCH HYPOTHESES

H1: More experienced investors have a higher propensity to risk; less experienced investors have a relatively lower to propensity risk. H2: Investor perception to risk and investor propensity to risky investment are in negative correlation. H3: Investors informed by optimistic market reports have a lower perception of risk; investors informed by pessimistic reports perceive a higher degree of risk to be present

H4: Investors informed by optimistic market reports have higher returns expectations. H5: Risk perception and returns expectations are in positive correlation. H6: Investment experience and returns expectations are in positive correlation.

The results of factor analysis showed that all loading factor for questions are exceed 0.5, the 4 components of the questionnaire reached a total variance of 63.60%. Of this value, past experience accounted for 16.56%, risk propensity accounted for 13.56% and 14.69% was attributed to returns expectations.

The overall coefficient was found to be 0.843 which exceeds the minimal recommendations of 0.7. Results by item for the internal consistency of components were as follows: investment experience had a coefficient of 0.879, propensity for risk factor had a coefficient of 0.602, risk perception for a variety of financial products had a coefficient of 0.8 and the coefficient for returns expectations was 0.865. These figures support the internal consistency and therefore the results of this study.

RISK PROPENSITY ITEM NO OF SAMPL ES MALE FEMALE INVESTMEN LESS T EXPERIENC E MORE MARITAL STATS MARRIED UNMARRIE 173 154 175 MEA N SD

RISK PERCEPTION SD

TMEA STA N TIST ICS 1.46 0.14 2.00 23.87 23.26 22.66

T STATISTIC

GENDER

23.87 23.26 23.09

3.28 4,18 4.15

3.2 8 4.1 8 2.6 3

1.104 .271 -3.03

152 149 178

23.93 23.28 23.76

3.40 4.13 3.46

0.04 1.16 0.25

21.70 22.10 22.31

3.1 3 2.9 1 2.9

.003 .66 .51

INVESTMEN EXPERIENCE T

ITEMS
TIME DEPOSITS STOCKS MUTUAL FUNDS LINKED BONDS INVESTME NT Unmarried Married Unmarried Married Unmarried Married Unmarried Married Unmarried

MEAN
2.57 3.10 2.20 2.81 2.34 2.96 1.87 2.08 2.34

SD
1.06 1.03 1.03 1.08 1.07 1.14 0.93 0.97 1.05

T-STATISTICS
-4.53 0.000 -5.20 0.000 -5.048 0.000 -1.996 0,047 -1.074

PRODUCTS ITEMS ALL PRODUCTS More

RISK MEAN 21.70

PERCEPTIO N SD 3.13 TSTATISTICS -3.029

Less TIME DEPOSITS

STOCKS MUTUAL FUNDS

22.66 3.10
3.14 3.89 4.08 3.81 3.92

2.63 0.75
0.76 0.60 0.55 0.62 0.62

0.003 -0.577
0.564 -3.058 0.002 -1.474 0.141

More
Less More Less More Less

ANALYSIS AND CONCLUSION

There is no significant difference in the gender towards risk propensity and risk perception but according to the investment experience there exist difference the experienced investors usualy have higher risk propensity and less perception but coservative investor change the their investment to avoid reducing losses. The married investors have amore experinced than their unmarried counterpart.