Customer's choice criteria between competitors within the financial services industry

Abstract

Throughout the past fifteen years, we have seen how the Maltese financial service industry has been changing and evolving both in terms of upgrading and improving its selection of banking services as well as to conform to European standards and regulations. When Malta joined the European Union, it opened doors to other financial institutions to join the Maltese banking sector, and the current supply has since then grown from four retail banks to twenty-five foreign or privately owned credit institutions and fifteen financial institutions (MFSA, 2011). Therefore in light of this highly competitive market, it is important for banking management to be aware of the criteria customers, both depositors and borrowers, use when deciding which bank to trust with their financial activities. To our knowledge, no previous studies have been conducted in this particular field. Therefore this study attempts to identify the factors that determine the basis upon which customers base their decision in choosing between different financial services providers in Malta. This study also attempts to gauge customer loyalty and satisfaction in relation to their main financial services provider. The findings of the study reveal that bank reputation and recommendation from family members or friends are the major factors having an impact on customers' choice between banks in Malta. While other factors ranked lower in our analysis, it does not in any way mean that they are not important, therefore the difference between factors selection and preference between different demographic and social groups were observed. Study also reveals that different customer satisfaction levels exist among the different banks in Malta.