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International Research Journal of Finance and Economics ISSN 1450-2887 Issue 75 (2011) EuroJournals Publishing, Inc. 2011 http://www.eurojournals.com/finance.

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Factors Affecting Individuals Bank Choice


Faruk Akin Asst. Prof. Bilecik University, Pazaryeri Vocational School Pazaryeri-Bilecik, Turkey E-mail: faruk.akin@bilecik.edu.tr Tel: +90-228-3812777; Fax: +90-228-3813084 Ferudun Kaya Asst. Prof. Abant zzet Baysal University,Mudurnu Sreyya Astarc Vocational School Mudurnu-Bolu, Turkey E-mail: ferudunk@ibu.edu.tr Tel: +90-374-4216233; Fax: +90-374-4216232 Abstract In this paper, it is aimed to identify the factors affecting individuals bank choices when they buy bank services. In the study, a survey form containing the close-ended question as a data collecting means has been used. The used data have been obtained by talking face to face to the individuals utilizing banking services. The obtained data have been explained by using statistical packaged software and evaluating at the significance level of 95 %. When analyzing data, the frequency distribution has been overviewed to summarize the sample characteristics with numerical presentation and to arrange data, and the average and standard deviation of the scale has been overviewed to identify attitudes of the individuals utilizing bank services for the level of significance placed on the opinions of the customers choices. In consequence of statistical evaluation of data; it has been found out that the factors such as making customized applications in the bank services and providing installment by the customer have high level of impact amongst the factors having impact on preference of the customer. A hypothesis has been established to determine whether such factors having impact on customers bank choice differ according to the demographical characteristics of them. The hypothesis has been tested by applying MannWhitney U ve Kruskal-Wallis H statistical tests. As a result, the statistically significant differences have been identified between the demographical characteristics of the individuals attending this study and the factors having impact on individuals bank choices. Keywords: Banking, Banking Products, Consumer Choice JEL Classification Codes: G21, D10

1. Introduction
Recently, diversity and alternatives in services offered by the bankers to their clients have increased in line with the increasing technology in the financial services sector. The fact of that the bank preferences of the individuals can not be identified will lead to that banks will faces with significant and serious problems such as missing opportunity to increase profitability, decrease of profitability or losing clients. Thus, the competition increasing day by day in the banking sector made it inevitable to determine the viewpoint of the individuals of the banking sector. The banks started to attach more

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importance to the concept of client preference in order to be able to survive in the existing intense competitive environment. The banks must know of target audience very well and identify requirements and develop strategies to meet such requirements. In the current study aiming at filling the gap in this part of the banking sector, a field research has been made to identify reasons of bank preferences of the individuals.

2. Literature Search
In the literature, some of the studies dealing with factors which have impact on the bank preferences of the individuals are following; In the study carried out by Khazeh and Decker (1992) in Maryland, USA to find out bank selection criteria of the clients, they identified that factors such as service charge policy, trade reputation of the bank, credit interest rates, time needed for credit approval, advices from friends are the first five determinants in making decision on bank selection. In the study carried out by Ta ve Har (2000) in Singapore to examine preferences of students for bank selection, they identified that pricing of bank services and product sizes are very important for university students. Almossawi (2001) conducted a study in Bahrain to identify the basic factors having impact on bank selection of the university students. Findings from this study revealed that the basic factors determining bank selection of university students are reputation of bank, availability of parking lot near the bank, good humour of bank personnel, availability of ATMs and location of ATMs. Gerrard and Cunningham (2001) made a case study including university students from Singapore to determine factors having impact on their decisions of bank selection. In this study, it was found out that there are seven reasons; for the banks to be preferred. These are; appearance, service supply, human effects, nonhuman factors, ease, electronic services and feeling safe. A study carried out by Karamustafa and Yldrm (2007), they suggested that reliability of the bank, immediate service provided by the bank without long queues and widespread ATMs with multiple services are high effecting factors amongst factors which have impacts on preferences of the consumers for banks. Mokhlis (2009) revealed his selection criteria as regards personal banking by using answers of 368 university students from Malaysia. Findings indicate that there are some differences between male and female clients as to the bank selection. Factors differing in males and females are attractiveness, marketing promotion, ATM service, proximity, human effects and financial gains. Takn et al. (2010) suggested that factors having impact on preferences for bank are confidence on bank personnel, knowledge of bank employees, wishing to reach bank services through different channels and physical appearance of the personnel.

3. Methodology
Objective of the study: The banks must configure their own products and services so as to create positive perceptions for the clients. Simultaneously, they have to monitor frequently how their products have been perceived by the clients. It is compulsory to understand positive and negative attitudes of the clients against banking services and to identify how such attitudes can be turned to use of banking services. These findings will be effective on perceiving the client needs and requirements correctly. In this study, it is aimed to identify factors having impact on bank preferences when the individuals buy services from banks. It is expected that this study makes a major contribution to the institutions which intend to pave the way for meeting needs of the individuals related to make use of banking services. Method of Study: In the current study carried out based on opinions of the individuals, a survey form containing the closed ended questions has been used as data collection tool. The utilized data have been obtained with face to face talks having with the individuals who make use of banking services. The first section of the survey comprising two parts comprises 6 questions relevant to the demographical features of the service users and the second section comprises 46 judgements intended to determine the preferences of the individuals for bank. In the second section, judgements related to

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the features of the preferred banks and to marketing decisions adopted have been prepared according to quinary Likert scale. Population and Sample of the Study: The population of this study comprises bank clients residing in stanbul. In selecting stanbul there are factors such us immigrants are allowed to come intensively due to job opportunities and forming a mosaic of people coming from various cities of Turkey. This status allows that the sample contained in the study is resulted from a heterogeneous population. According to the results of census that took place in 2009, 17,8 % (12.915.158 residents) of the total population (T K, 2010) is living in stanbul and they are over 18 age which constitutes the population of this study. For a main mass composed of 12.9 million people, at 95 % significance level, the minimum level of sample volume has been determined as to be 385 people with a sampling fault of 0,05 (p=0,5; q=0,5). For determining sampling volume, the simple random sampling method has been used (Yazcolu and Erdoan, 2004: 48; Ba, 2001:45). Data Collection Process and Data Analysis: The survey was applied to 440 individuals, over age 18, who have been using banking services and have been selected with random sampling method in districts such as Kadky, Eminn, skdar, Beyolu, Saryer, Pendik, mraniye, Zeytinburnu and Bakrky of Province stanbul, included in the study carried out in October and November 2010. In the process of the study, 29 data out of those obtained from sample population were not included in the scope of study in the preliminary evaluation phase since we had a suspicion on correctness of the answers, and 411 surveys out of remaining ones have been deemed suitable for analysis. Data obtained at the end of survey have been evaluated at significance level of 95 % with the statistical packaged software and statistical methods. The general reliability of scale of Study intended to identify factors having impact on preferences of the individuals for bank has been calculated as to be = 0,887. During data analysis; a frequency distribution test has been conducted to summarize sample features numerically and to arrange data, and a t-test has been conducted to identify whether the average values of each judgement intending to determine bank preferences of the individuals differ from the median statistically. Some reliability tests have been conducted in the reliability range of 95 %, and the mean and standard deviations of the scale have been taken into consideration in order to identify attitudes of the individuals concerning significance level for judgements having impact on preference of the individuals for banks. A hypothesis has been established to identify if the factors having impact on bank preferences differ according to the demographical features of the individuals. This hypothesis has been tested by applying statistical tests of Mann-Whitney U and Kruskal-Wallis H.

4. Findings
4.1. Descriptive Analysis The frequencies and the percentage distributions of findings related to demographical features of the individuals to whom a survey is conducted are given in Table 3.
Table 3:
Gender Male Female Frequency Married Single Frequency 1825 2635 3645 4655 56 and more

Demographic features of individuals (n:411)


Frequency 228 183 % 181 230 % 75 154 103 38 41 % 55,5 44,5 44,0 56,0 18,2 37,5 25,1 9,2 10,0

Marital Status

Age

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Table 3: Demographic features of individuals (n:411) - continued
Primary School Secondary School High School College Bachelors Masters Monthly Income Level (TL) 0500 5011000 10011500 15012500 25015000 Profession Public Sector Private Sector Artisan / Self-employed Student / Unemployed Retired /Housewives Total Frequency 27 27 98 140 87 32 Frequency 77 87 112 109 26 Frequency 131 81 82 72 45 411 % 6,6 6,6 23,8 34,1 21,2 7,8 % 18,7 21,2 27,3 26,5 6,3 % 31,9 19,7 20,0 17,5 10,9 100,0

103

Educational Level

4.2. Attitudes of the Individuals as to the Preference of Bank A t-test has been conducted to identify if the factors having impact on bank preferences of the individuals when they buy banking services differ statistically from 3,708 which is the group average out of averages. According to this test, total 46 judgements have been found significant based on = 0,05. According to the average and standard deviations of the attitudes of the individuals for bank preference when they buy banking services, the 24 percent of these factors has been above the general average and the 22 percent has remained lower than the general average. The factors that the banks find highly effective on bank preferences of the individuals are listed in Table 4.
Table 4:
Factors Reliability of the bank has effect on my preference for bank. The knowledgeable and the good humored bank personnel has effect on my preference for bank. The approach of bank personnel to the clients has effect on my preference for bank. Solution finding in the bank for my problems has effect on my preference for bank. Keeping words given by the bank has effect on my preference for bank. The kind and sincere approach and giving exact information by the bank personnel have effect on my preference for bank. Completion of my transaction in a short time has effect on my preference for bank. High safety of the internet site of the bank has effect on my preference for bank. The widespread ATM network of the bank has effect on my preference for bank. High technological safety of the bank has effect on my preference for bank. Immediate conclusion of my application to the bank has effect on my preference for bank. Easily understanding the data on web site of the bank has effect on my preference for bank.

The Factors Considered To Have Significant Effect On Bank Preference


Average 4,4939 4,487 4,4526 4,4307 4,3942 4,3090 4,2482 4,2457 4,2409 4,2165 4,2141 4,1776 StandartSap ma ,88170 1,0153 ,89963 ,95096 1,05709 1,04503 1,01535 1,06631 1,04666 1,16841 1,08780 1,02176 t Sig. (2tailed) (103,329)** (89,583)** (100,339)** (94,455)** (84,273)** (83,593)** (84,822)** (80,722)** (82,143)** (73,161)** (78,538)** (82,890)**

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Table 4:

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The Factors Considered To Have Significant Effect On Bank Preference - continued
4,1533 4,0827 4,0535 4,0292 3,9562 3,9416 3,9392 3,9197 3,7689 3,7372 3,7299 3,7105 1,10138 1,09677 1,12491 1,20936 1,17204 1,21434 1,00180 1,01254 1,36242 1,11489 1,11204 1,32568 (76,450)** (75,467)** (73,053)** (67,543)** (68,431)** (65,804)** (79,716)** (78,480)** (56,081)** (67,958)** (67,999)** (56,743)**

The commission and interest rates imposed by the banks have effect on my preference for bank. The developed technological substructure of the bank has effect on my preference for bank. The credit interest rate imposed by the banks has effect on my preference for bank. Charging membership fee for credit cards has effect on my preference for bank. Providing a unit to which complaints can be submitted has effect on my preference for bank. Waiting in the queue in the bank has effect on my preference for bank. Participation of the bank in social responsibility projects has effect on my preference for bank. Rapid Access to customer services of the bank has effect on my preference for bank. The availability of widespread branch offices of the bank has effect on my preference for bank. Granting high interest rate of deposit has effect on my preference for bank. Easily understanding web site of the bank has effect on my preference for bank. Providing consultancy services by the bank through various means (internet, phone call) has effect on my preference for bank.

**,* indicates significance at 1 % and 5 % level respectively. (n:411)

4.3. Impact of Demographical Features of the Individuals on Bank Preference To compare the factors having impact on bank preference with the genders, the following study hypothesis (H) has been tested by conducting Mann-Whitney U test (Bykztrk, 2004:139; Ural and Kl, 2006:259). Ho: The factors having impact on bank preferences of the individuals do not differ according to the genders. H: The factors having impact on bank preferences of the individuals differ according to the genders. Findings obtained in consequence of Mann-Whitney U test are listed in Table 6.
Table 6:
No 3 4 7 13 14 16 26 28 38

Comparison of Factors Having Impact On Bank Preferences according To Genders


Gender Male Female Male Female Male Female Male Female Male Female Male Female Male Female Male Female Male Female Average of Sequence Values 216,99 192,30 216,82 192,52 223,81 183,81 227,91 178,70 217,97 191,08 217,41 191,78 223,68 183,97 221,20 187,07 191,61 223,93 MannWhitney U 18355,5 18396 16801 15866 18132,5 18260,5 16830,5 17397 17581,5 Wilcoxon W 35191,5 35232 33637 32702 34968,5 35096,5 33666,5 34233 43687,5 Z 2,765 2,531 3,663 4,268 -2,45 2,392 3,463 3,515 2,821 p 0,006 0,011 0,00 0,00 0,014 0,017 0,001 0,00 0,005

Factors * The knowledgeable and the good humored bank personnel has effect on my preference for bank. Keeping words given by the bank has effect on my preference for bank. Charging membership fee for credit cards has effect on my preference for bank. Opinions of the other clients for the bank has effect on my preference for bank. Easily understanding web site of the bank has effect on my preference for bank. Completion of my transaction in a short time has effect on my preference for bank. Granting promotions by the bank has effect on my preference for bank. Reliability of the bank has effect on my preference for bank. The informative and leading bank advertisements have effect on my preference for bank..

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Table 6:
40

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Comparison of Factors Having Impact on Bank Preferences according to Genders - continued


Male Female Male Female 223,95 183,64 217,47 191,71 16770,5 18247,5 33606,5 35083,5 3,603 2,247 0,00 0,025

45

Concluding an agreement between the bank and the seller of product or service I want to buy has effect on my preference for bank. Support given by the bank to cultural and social activities has effect on my preference for bank.

* In this table, results relevant to factors having significant impact only are included.

As a result of Mann-Whitney U test, the statistical significant differences have been found based on the genders of the participants in terms of factors mentioned in Table 6. Thus, the hypothesis H: The factors having impact on bank preferences of the individuals differ according to the genders has been accepted. It is observed that the male participants find the factors numbered 3, 4, 7, 13, 14, 16, 26, 28, 40 and 45 shown in Table 6 much more effective in compare to the female participants. The judgement no 38 has been found more effective by the female participants in compare to the male participants. This result can be explained with the fact of that men attach more importance to material factors and attitudes of the employees than women. In terms of bank preference, women are more affected by informative and leading advertisements in compare to men. The hypothesis developed to compare the factors having impact on bank preferences of the individuals with demographical features has been tested with Kruskal-Wallis H. Findings resulting from Kruskal-Wallis H test are listed in Table 7. Ho: The factors having impact on bank preferences of the individuals do not differ according to demographical differences (age groups, education, monthly income level and profession). H: The factors having impact on bank preferences of the individuals differ according to demographical differences (age groups, education, monthly income level and profession).
Table 7: Impact of the Demographical Features of Individuals On Bank Preference
Age X p 41,188 0,00 22,302 33,776 12,831 33,263 10,827 41,153 6,637 9,018 35,863 4,389 9,191 14,711 5,647 29,305 8,598 17,767 20,808 0,00 0,00 0,012 0,00 0,029 0,00 0,156 0,061 0,00 0,356 0,057 0,005 0,227 0,00 0,072 0,001 0,00 Education X p 42,365 0,00 43,356 35,53 28,277 36,472 29,766 27,875 33,232 26,272 39,083 28,629 9,381 27,479 78,914 48,083 20,726 33,183 19,768 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,095 0,00 0,00 0,00 0,001 0,00 0,001 Monthly Income X P 13,5 0,009 19,458 2,124 21,672 41,763 48,813 41,16 13,515 15,319 27,423 66,944 14,116 42,477 8,095 79,925 48,977 23,558 6,343 0,001 0,713 0,00 0,00 0,00 0,00 0,009 0,004 0,00 0,00 0,007 0,00 0,088 0,00 0,00 0,00 0,175 Profession X p 16,763 0,002 7,061 18,228 27,004 13,843 32,846 12,054 16,218 48,301 26,386 52,419 4,644 16,29 24,448 73,706 13,393 7,891 23,764 0,133 0,001 0,00 0,008 0,00 0,017 0,003 0,00 0,00 0,00 0,326 0,003 0,00 0,00 0,01 0,096 0,00

Demographical Features Factors Having Impact On Bank Preference Reliability of the bank has effect on my preference for bank. The knowledgeable and the good humored bank personnel has effect on my preference for bank. The approach of bank personnel to the clients has effect on my preference for bank. Solution finding in the bank for my problems has effect on my preference for bank. Keeping words given by the bank has effect on my preference for bank. The kind and sincere approach and giving exact information by the bank personnel have effect on my preference for bank. Completion of my transaction in a short time has effect on my preference for bank. High safety of the internet site of the bank has effect on my preference for bank. The widespread ATM network of the bank has effect on my preference for bank. High technological safety of the bank has effect on my preference for bank. Immediate conclusion of my application to the bank has effect on my preference for bank. Easily understanding the data on web site of the bank has effect on my preference for bank. The commission and interest rates imposed by the banks have effect on my preference for bank. The developed technological substructure of the bank has effect on my preference for bank. The credit interest rate imposed by the banks has effect on my preference for bank. Charging membership fee for credit cards has effect on my preference for bank. Providing a unit to which complaints can be submitted has effect on my preference for bank. Waiting in the queue in the bank has effect on my preference for bank.

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Table 7:

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Impact of the Demographical Features of Individuals on Bank Preference - continued
44,916 2,939 16,527 22,019 28,809 44,149 0,00 0,568 0,002 0,00 0,00 0,00 38,543 37,304 19,378 49,096 7,241 63,165 0,00 0,00 0,002 0,00 0,203 0,00 16,362 19,654 2,776 35,104 15,835 39,329 0,003 0,001 0,596 0,00 0,003 0,00 32,131 11,389 5,772 39,495 20,803 7,895 0,00 0,023 0,217 0,00 0,00 0,095

Participation of the bank in social responsibility projects has effect on my preference for bank. Rapid Access to customer services of the bank has effect on my preference for bank. The availability of widespread branch offices of the bank has effect on my preference for bank. Granting high interest rate of deposit has effect on my preference for bank. Easily understanding web site of the bank has effect on my preference for bank. Providing consultancy services by the bank through various means (internet, phone call) has effect on my preference for bank.

It is understood from findings that the factors having impact on bank preferences indicate significant difference statistically according to demographical features of the individuals (age groups, education, monthly income level and profession) Thus, the hypothesis H: The factors having impact on bank preferences of the individuals differ according to the demographical features has been accepted.

5. Conclusion
Increase of competition in banking sector every passing day made it compulsory to identify the reasons of bank preferences of the individuals. In this study, The t-test has been conducted to identify if the factors having impact on bank preferences of the individuals when they buy banking services differ statistically from 3,708 which is the group average out of averages. According to this test, total 46 factors have been found significant based on = 0,05. According to findings, the factors to which the individuals attach importance for bank preference are following; (a) Reliability of the bank has effect on my preference for bank. (4,49), (b) The knowledgeable and the good humored bank personnel has effect on my preference for bank. (4,48), (c) The approach of bank personnel to the clients has effect on my preference for bank. (4,4526), (d) Solution finding in the bank for my problems has effect on my preference for bank. (4,4307), (e) Keeping words given by the bank has effect on my preference for bank. (4,3942), (f) The knowledgeable and the good humored bank personnel has effect on my preference for bank. (4,3090), (g) Completion of my transaction in a short time has effect on my preference for bank. (4,2482), (h) High safety of the internet site of the bank has effect on my preference for bank (4,2457), () The widespread ATM network of the bank has effect on my preference for bank. (4,2409). The probable causes of the fact of that above factors are classified by the responders in the highest effect on bank preference are a) willing of the individuals to have trust on banks and b) expectation of the individuals for close interest and information from bank personnel. In turn, it is seen that the factors such as gift draws organized by the banks have effect on my bank preference (2,3674), remembrance of the bank my special days such as birthday has effect on my bank preference (2,5061) and Execution of interest free (islamic) banking has effect on my bank preference (2,9830) have less effect level. In consideration of the above results, to attract potential clients, the banks must develop strategies with the purpose to protect and increase their market shares taking into consideration the factors identified in the end of study and having high impacts on bank preferences of the individuals. Mann-Whitney U and Kruskal-Wallis have conducted H statistical tests for the hypothesis to test if the factors having impact on the individuals when preferring banks differ according to their demographical features. Based on the findings, it is concluded that the demographical features of the individuals have impact on bank preferences. According to the evaluation of the obtained data, differences which are statistically significant have been identified amongst the variables such as gender, age, education level, income level, profession and other independent variables (factors having impact on bank preference). In the light of the study findings, the

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banks can create a rich data storage in the target market, by classifying the wishes and needs of the individuals according to their demographical features, in order to increase transaction number and volume. The banks can identify different client groups by means of data mining and can offer different product or services for each group.

References
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