Consumer Choice in Retail Banking: Are Prices Really Relevant?

Abstract

This paper presents an analysis of the role of pricing conditions with respect to other consumer choice criteria in retail banking. Our sample includes 7,146 respondents to the 2010 Bank of Italy Survey on Household Income and Wealth. Using both a univariate analysis and a logit model, results show that interest rates and services charges have increased in importance, especially in the last years. However, they are still not taken into account as a unique driver of choice, but are generally considered together with other extrinsic attributes of the offering. Finally, customers with a higher level of financial literacy are more likely to rely on technical features such as pricing conditions.