Retail Banking Research Articles

Determinants of bank deposit in a small economy’s banking sector: a study of Fiji

Purpose Deposits, a liability component of banks’ balance sheet, are an important source of funding for commercial and retail banks. In this study, the authors consider deposits as dependent variable and examine factors (bank-specific, macrofinance and structural) that could plausibly explain deposits. Subsequently, the findings are expected to support analysts, bank managers and regulators, especially in small economies such as Fiji, for asset–liability management. Design/methodology/approach This study uses a balanced panel of six commercial banks and two credit institutions over the period 2000–2022. To control for bank heterogeneity, a fixed-effect regression method is used. Findings Bank-specific variables such as bank size, profitability, loan-to-deposit ratio and bank stability are positively associated with bank deposits, whereas the capital adequacy ratio is negatively associated with bank deposits. Macroeconomic variables such as remittances and gross domestic product per capita are positively associated with bank deposits. Moreover, institutional variables such as control of corruption, political stability and regulatory quality are positively associated with bank deposits. However, tail events such as the global financial crisis of 2007–09 and the COVID-19 pandemic negatively influence bank deposits. Structural breaks for 2007 and 2011 of two banks (Bank of the Baroda and Bank of the South Pacific, respectively) are positively associated with bank deposits. Originality/value Previous studies have considered profitability, competition, nonperforming loans and stability of banks in Fiji. To the best of the authors’ knowledge, this study is the first to consider the determinants of bank deposits, an important source of funds for banks in many small countries including Fiji. In addition, this study examines the impact of structural breaks, tail events such as the recent pandemic (COVID-19) and institutional variables.

A Study on Significance of Security Management in Retail Banking

Security management is a critical aspect of retail banking, ensuring the protection of customer data, financial transactions, and physical assets. This study aims to investigate the significance of security management in retail banking, examining its impact on customer trust, operational efficiency, and overall business success. By analyzing existing literature and conducting empirical research, this study seeks to identify the key security challenges faced by retail banks and explore effective strategies for mitigating risks and ensuring a secure banking environment. Keywords— Security management, Retail banking, secure banking

A Comparative Study of Machine Learning Models for Predicting Customer Churn in Retail Banking: Insights from Logistic Regression, Random Forest, GBM, and SVM

Customer churn poses a significant challenge in the retail banking sector, leading to substantial financial losses and undermining long-term growth. This study explores the effectiveness of various machine learning models, including Logistic Regression, Random Forest, Gradient Boosting Machine (GBM), and Support Vector Machine (SVM), in predicting customer churn. Utilizing a comprehensive dataset derived from a leading bank, we conducted extensive data preprocessing and feature engineering before evaluating model performance through metrics such as accuracy, precision, recall, F1-score, and AUC-ROC. Our findings reveal that the Gradient Boosting Machine outperforms its counterparts, achieving an accuracy of 87.2%, with an AUC-ROC score of 0.91, indicating its exceptional ability to distinguish between churned and non-churned customers. Random Forest follows closely, exhibiting robust performance, while SVM and Logistic Regression demonstrate moderate accuracy levels. This research underscores the transformative potential of machine learning in enhancing customer retention strategies within the banking industry. By identifying at-risk customers and understanding the underlying factors contributing to churn, banks can implement targeted interventions to improve customer satisfaction and loyalty. The study further suggests avenues for future research, including the exploration of real-time data analysis and the integration of qualitative customer insights, to refine predictive models and retention strategies.

Integration level within the European Union banking sector

Purpose What is the current level of integration of the retail and wholesale banking sectors in the European Union (EU) countries, and what are the main factors and challenges affecting it? What are the solutions to promote the integration and convergence of the retail banking sector in the European countries?. Design/methodology/approach Evaluated the level of integration of the banking sector, focusing on the EU banking context, retail banking especially. The paper will adopt a comprehensive and multidimensional approach, considering different criteria and indicators of integration, such as price, quantity and information, as well as different segments and dimensions of the EU banking sector, such as wholesale and retail, assets and liabilities, products, services, price indicators and institutions and markets. Findings It reveals that while significant integration has been realized in domains like the money market and wholesale banking, it is less pronounced in the retail banking and capital markets. Originality/value This paper is an original research. The entire study belongs to me.

Trusting Employees to Deliver Results in Times of Change

Trusting Employees to Deliver Results in Times of Change explores the research foundation showing that building trust is key to empowering high performance, especially during periods of organizational change and uncertainty. Drawing from literature in psychology, management, and organizational behavior, the article discusses factors that contribute to developing organizational trust, with a focus on the pivotal role of managers as "trust anchors." Practical strategies are provided for fostering trust through transparent communication, participative decision-making, skill development support, and empowering teams with autonomy. The article also shares examples from the retail banking and technology industries to illustrate how trust-based approaches aided successful navigations of major transformations. The conclusion reinforces that trusting employees to problem-solve enables engagement and results, even amid disruption.

The Impact of Sustainability Considerations on Investment Intentions—The Case of Generation Y

When investing, the investment motives of return, liquidity, and risk play a role in decision-making. However, due to the increasing relevance of environmental and social issues and the higher availability of sustainable investments, sustainability is an additional investment motive. The attitude of an individual toward sustainability has implications for other investment motives. This paper examines the interplay between the established financial investment motives of return, liquidity, and risk on the one hand and sustainability considerations on the other hand, with a view to the Generation Y cohort. A questionnaire approach was used to collect data from randomly selected Generation Y retail banking customers from Germany. The data were analyzed using correlation and regression methods. The findings of the paper confirm that there is a negatively directed relationship between the profit maximization motive and the green tradeoff intention. Furthermore, education moderates the relationship between the risk minimization motive and the green tradeoff intention. The paper contributes to different stakeholders. Practical implications result for retail banks and investment firms, which could continue to motivate Generation Y customers for sustainable investments and generate stronger financial education through targeted marketing and information campaigns.

Antecedents for Consumer’s Switching Behavioural Intention Retail Banks in Zimbabwe: Integrating the Theory of Planned Behaviour

The purpose of this research is to examine the antecedents of the behavioural intention of consumers to switch a retail bank for another in Zimbabwe. The study used positivism research philosophy where quantitative data was collected from a purposively chosen sample of 150 participants. Data was analyzed using logistic regression equation with two dependent variables. Our study confirms the probability of switching retail banks in Zimbabwe was driven by factors such as; brand image, changing demographics, brand loyalty, brand image, ease of use, and the perceived usefulness. The recommends that retail banks should invest more in building brand image to retain loyal customers. A combination of technological innovations and transaction cost reductions could help to increase brand loyalty, brand image, and the attraction of new customers while retaining the old ones. The study contributes to the literature on bank switching behaviour by pioneering the use of binary choice models.

The Impact of United Nations Sustainable Development Goals on Customers’ Perceptions and Loyalty in the Banking Sector: A Multi-Mediation Approach

The pursuit of sustainable development has become a global priority, with the United Nations Sustainable Development Goals (UN SDGs) serving as a comprehensive framework for addressing various social, economic, and environmental challenges. Employing the stimulus–organization–response (SOR) model, this study examines the impact of customer’s perceptions of the firm’s compliance with the SDGs on customers’ perceptions and loyalty through the mediation roles of image, trust, and reputation in the customer’s evaluation of the firm in the banking sector in Turkey. To achieve these objectives, a quantitative research approach was used, and 455 valid responses were collected from retail banking customers through an online survey. Data from the study were statistically analyzed using partial least-squares–structural equation modeling (PLS-SEM). The findings reveal significant positive relationships between SDG implementation and customers’ perceptions of banking institutions’ image, trust, and reputation. Furthermore, favorable image, trust, and favorable reputation are found to positively influence customer loyalty in the banking sector. The mediation analyses confirm that each of the mediating variables partially mediates the relationships between SDG implementation and customer loyalty, underscoring the significance of these intermediate variables in shaping customers’ loyalty behaviors. This research contributes to both theoretical and practical domains by providing insights into the role of SDG implementation in enhancing customer perceptions and loyalty in the banking sector. Managerial implications are discussed, and recommendations are provided for banking institutions seeking to leverage the SDGs to strengthen customer relationships and achieve sustainable growth.

On the issue of digitalization of banking services

In this article, we will identify and analyze banking services provided during the use of modern information technologies in remote customer service of the bank. The author highlights the features, issues, and prospects of the digitalization process in Ukraine. Today, dozens of banks offer their clients, both legal entities and individuals, as well as individual entrepreneurs, remote servicing systems and Internet banking, providing full banking services through the «Internet» from anywhere on the globe. Internet banking is a service that allows managing one’s bank account over the internet, offering great convenience and speed, the ability to carry out operations with one’s account, opened in one’s bank, without visiting the bank’s office and forgetting about queues at the cash desks and settlement departments of other organizations. On the other hand, internet banking is a general term for remote servicing technologies, as well as access to accounts and operations (on them), provided at any time from any computer with internet access. The article notes the lack of a unified approach to defining retail banking services, as well as a universally accepted interpretation of the concept of a «banking service.» A definition of a banking service is proposed, namely, a banking service is the result of a set of banking operations aimed at satisfying the client’s needs, bringing certain benefits to the consumer, related to the movement of financial assets or providing financial information. Accordingly, the provision of banking services is the main activity of any bank. In order to make a profit, a banking institution must create a service necessary for the client, determine its price, enter the market with it, implement it, and also ensure proper legal regulation. As a result of the study, conclusions were made that the range of banking services provided to individuals is constantly expanding. This will allow banks in the future to create various types of service packages.

Measuring Effects of Interest Rate Fluctuations on Retail Loan Holder in Metropolitan City: Evidence from Nepal

Background: Interest rate fluctuations have long been a critical research topic, particularly in relation to retail loan holders. In Nepal, the status of retail loans has been progressively improving, making it essential to understand how interest rate changes affect retail loan borrowers in Kathmandu Valley. Objective: This study aims to investigate the impact of interest rate fluctuations on retail loan holders in Kathmandu Valley. It seeks to determine how these fluctuations influence banking performance and retail loan products in the context of Nepalese financial institutions. Method: A descriptive research design was employed, focusing on retail loan holders from Nepalese financial institutions in Kathmandu Valley. A sample of 383 retail loan borrowers was selected using simple random sampling. Data were collected via a structured questionnaire. The analysis involved descriptive statistics, correlation, regression, as well as pre-estimation and post-estimation techniques. Result: The findings indicate that interest rate fluctuations have a positive and significant impact on retail loan products offered by Nepalese banking institutions. Higher interest rates tend to enhance retail loan offerings, contributing to improved banking performance and increased creativity in loan practices. Conclusion: The study underscores the positive role of interest rate fluctuations in shaping retail loan products and banking performance in Nepal. It suggests that financial institutions could benefit from adjusting their interest rates to foster better loan practices and improve overall performance. For economic benefit, banks should consider lowering interest rates and providing attractive returns to depositors to balance their profitability and enhance financial stability. This research provides a foundation for further academic exploration into the effects of interest rates on retail loan behavior. Paper Types: Research Paper Keywords: Interest rate, Retail banking products, Ordered logistic model, Kathmandu valley. JEL Classification: G1, E43, G21 and G41

Development of optimised causal AI and its application in retail banking

Causal artificial intelligence (AI) has emerged as a promising approach in machine learning (ML), as it considers not only correlations but also cause-and-effect relationships in data, resulting in more human-like decision making. The pivotal stages within causal AI involve causal discovery and inferencing, each playing a crucial role in extracting meaningful insights from the data. In the realm of causal discovery, various algorithms have been developed to uncover the underlying cause-and-effect structures within data sets. A notable limitation, however, surfaces when attempting to apply these algorithms to data sets characterised by binary variables. This constraint prompts a crucial examination of the current methodologies and calls for innovative solutions that can seamlessly navigate the complexities of binary variable data sets. This paper proposes an optimised causal discovery algorithm that is integrated with the causal inference method based on the estimation of conditional average treatment effects (CATE) scores. The results present the potential of causal AI in terms of incremental impact on the predictive capability of AI/ML models. And the incremental impact is elucidated by comparing conventional propensity-based modelling and causal AI-based modelling by means of a use case in the field of retail banking.

Service Quality Model for Modern Retail Banks in India – A Questionnaire Development and Validation

With significant changes in the Indian banking sector, private sector and foreign banks greatly emphasise the standardisation of 'high-tech' services and their application in retail banking. The shift in how modern banks are perceived for the quality of their services in recent years has made it more important for scholars and professionals to comprehend its facets. Prior research on this concept has mainly focused on the SERVQUAL model (developed by Parasuraman et. al, 1988). The theoretical contribution of the present study lies in extending the SERVQUAL model to modern retail banks in India. The study starts with identifying and testing dimensions of service quality. Based on the analysis of data collected from 173 customers of different banks, the questionnaire has been found to be reliable and valid for measuring various dimensions of service quality in modern banks in India.

Service failure and negative Word-of-Mouth in Chinese retail banking: a moderated-mediation approach

Service failure and negative Word-of-Mouth in Chinese retail banking: a moderated-mediation approach

Examining the Nexus Between Customer Engagement and Satisfaction: Evidence from A Selected Retail Bank in South Africa

In the current retail banking environment, effective customer engagement is crucial for the success of organizations, impacting customer satisfaction, loyalty, and overall business performance. Given the competitive landscape and evolving customer expectations, it is essential for banks, especially Absa bank in South Africa, to understand the dynamics of customer engagement. This study aims to investigate how customer engagement initiatives influence customer satisfaction at Absa bank in the Durban area to provide strategic insights for enhancing competitiveness. Using theoretical frameworks such as Sashi's customer engagement cycle and Gronroos' model of service quality, this research explores the relationship between communication strategies related to organizational change and customer satisfaction levels at Absa bank in Durban. A quantitative research approach was employed, utilizing a structured questionnaire survey and convenience sampling to gather data from walk-in clients at various Absa bank branches. Statistical analyses, including descriptive and inferential methods, were used to analyze the data and test hypotheses. The results of the study offer valuable insights into customer preferences and expectations in the retail banking sector. Customers appreciate consistent messaging across different engagement channels and value personalized communication from the bank. Personalized calls, follow-up phone calls, and nonverbal cues such as a firm handshake were found to significantly impact customer perceptions and satisfaction with Absa bank's services. Customers display a high level of trust, satisfaction, and engagement with Absa bank, indicating the success of its customer engagement initiatives. The study also emphasizes the importance of social media in enhancing positive word-of-mouth and shaping consumer perceptions. Based on these findings, it is recommended that Absa bank implements a proactive customer engagement strategy focused on providing positive and personalized experiences to its existing customers. Key strategies include tailoring customer interactions, soliciting feedback, introducing loyalty programs, and utilizing various engagement platforms.

The influence of organisational change communication on customer satisfaction at retail bank in the greater Durban area

The influence of organisational change communication on customer satisfaction at retail bank in the greater Durban area

Friends or Foes: Incumbents’ Parallel Claims and Category Creation in Retail Banking

Friends or Foes: Incumbents’ Parallel Claims and Category Creation in Retail Banking

Pengaruh E-Banking Service Quality dan Brand Image untuk Membangun E-Wom dan Niat Pelanggan Menggunakan E-Banking

The COVID-19 pandemic has disrupted banking operations that are carried out directly to customers and increased the threat of physical contact for retail bankers and customers, as a result, the world is turning to Internet banking to continue routine transactions for bill payments, grocery purchases, and brand shopping. This study aims to determine the effect of e-banking service quality and brand image on Ewom and the effect of e-banking service quality, brand image, and EWOM on customer intentions to use e-banking at Bank BRI in Denpasar City. The variables studied in this study are e-banking service quality, brand image, E-wom, and customer intentions in using e-banking. The data used is primary data, namely the results or answers of respondents through questionnaires. The study employed a purposive sampling technique to gather data from BRI Bank customers in Denpasar City, with a total of 235 respondents participating. Path analysis was utilized as the analytical method. The findings indicated a favorable impact of E-banking service quality on electronic word-of-mouth (e-wom) at BRI Bank in Denpasar City. Additionally, E-banking service quality demonstrated a positive influence on customers' intentions to utilize BRI Bank E-Banking services in the same city. Likewise, the brand image variable exhibited a constructive effect on e-wom for BRI Bank in Denpasar City and also positively influenced customers' intentions to use BRI Bank E-Banking services. Ultimately, the e-wom variable was found to have a positive impact on customer intentions to engage with BRI Bank E-Banking services in Denpasar City.

The impact of AI marketing activities on consumer-based brand equity: The mediating role of brand experience

In today’s rapidly evolving world, the integration of artificial intelligence (AI) technologies has become paramount, offering unparalleled value propositions and unparalleled consumer experiences. This study delves into the transformative impact of five AI activities on brand experience and consumer-based brand equity within the retail banking landscape of Lebanon. Employing a quantitative deductive approach and a sample of 211 respondents, the research employs structural equation modeling to analyze the data. The findings underscore the significant influence of four AI marketing activities on brand experience, revealing that factors such as information, accessibility, and customization play pivotal roles, while interaction has a less pronounced effect. Importantly, the study unveils that brand experience acts as a partial mediator between AI marketing activities and consumer-based brand equity. These revelations not only illuminate pathways for retail banks in Lebanon to refine their AI strategies but also underscore the importance of leveraging AI-driven marketing initiatives to bolster customer equity, acquisition, and retention efforts in an increasingly competitive market age.

Brand innovativeness and brand equity: the mediating role of brand attitude and the moderating role of perceived brand ethicality

PurposeThis study aims to examine the relationship between brand innovativeness, brand attitude and brand equity within the service industry. Despite the prior literature’s acknowledgement of the importance of brand innovativeness, the previous studies on its impact on brand equity have yielded inconsistent results. This study also explores the moderating effect of perceived brand ethicality on the relationship between brand innovativeness, brand attitude and brand equity.Design/methodology/approachThis study collected the self-administered survey data of 402 respondents in the Chinese retail banking sector and employed a moderated mediation analysis to examine the research hypotheses.FindingsBrand innovativeness positively influences brand equity, and brand attitude mediates the effect. Perceived brand ethicality strengthens the positive association between brand innovativeness and brand equity.Originality/valueThis study contributes to the extant brand literature by demonstrating how the positive impact of brand innovativeness transcends brand evaluation to impact overall brand equity; it also reveals the mechanism through which brand innovativeness affects brand equity. The findings advance the under-researched issue of whether consumer perceptions of a brand’s ethical conduct affect the efficacy of brand innovativeness in brand equity.

Assessing The Effect of Digital Banking Services on Retail Banking Customers’ Satisfaction Levels in Lusaka’s Central Business District

Digital banking platforms have improved the way banks deliver their services to clients which has resulted in the gradual movement from brick and mortar to the use of digital applications such as mobile phones, iPads, laptops and ATM machines. The purpose of this study was to assess the effect of digital banking on retail banking customer service satisfaction levels in Lusaka Town. The study was guided by three objectives which were; to determine customers’ perception of the reliability of digital banking services in Lusaka Central Business District; to assess customers’ perception of the responsiveness of digital banking services in Lusaka Central Business District and, to examine customers’ perceptions of the security of digital banking services in Lusaka Central Business District. This study investigated customers' perceptions of digital banking services, focusing on reliability, responsiveness, and security, using a quantitative approach. Simple random sampling was used to collect data using a structured questionnaire with 5-point Likert scale. The researcher ensured that the respondents remained anonymous to avoid bias and that whatever information they provided would be treated with confidentiality. The researcher did not influence the responses provided by the respondents in anyway. The sample size was 150 and 140 respondents who are bank customers in Lusaka Central Business District responded. The response rate was 93.33%. The data was analysed using descriptive statistics, ANOVA, hierarchical regression, and correlation analysis. The findings reveal that customers generally perceive digital banking services positively in terms of reliability and responsiveness, with significant associations found between these factors and overall customer satisfaction. However, concerns remain regarding security, despite moderate confidence in digital banking security measures. The study underscores the importance of trust, transparency, and technological advancement in shaping customer perceptions. Recommendations for further research include exploring the impact of AI technologies, regulatory frameworks, and demographic differences on digital banking adoption and satisfaction. These findings contribute to understanding customer behaviour in digital banking and inform strategies for enhancing service delivery and customer experience in the financial sector.