CRM influence on investors buying behavior in Banking

CRM influence on investors buying behavior in Banking

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Introduction

This section determines the effect caused by various other factors to CRM (Customer relationship management (Alsmadi & Alnawas, 2011). CRM is noted to be one of the most used management concepts. It has been in existence for more than two decades since its inception in the world of business as well as other organizations. Therefore, this section will evaluate the influence of several factors to CRM in the banking industry especially towards investment.

Psychological Influence

In the business industry, especially in the banking industry. One of the key models that explains the impact of psychological influence on investor’s behavior in banking is the Johari window (Bloemer, De Ruyter & Peeters, 1998). The model was developed to explain how interpersonal communications play part in development or creation of unique psychological influence to an individual towards investment. Most financial theories are based on the idea that clients or investors must take control of all available information that their disposal before making investment decisions (Bloemer, De Ruyter & Peeters, 1998). However, there is much evidence in favor of the above as this is not the case in the banking industry. Investors fall prey to psychological failings hence end up taking the wrong decision towards investment at later end up in losses rather than profits. There are various type of psychological pressure that impacts investor’s decisions especially under conditions of uncertainty. This does not happen in a predictable manner. It not only does it happen the workplaces but also in other financial situation such as in the banking sector amid other sectors (Demetriou, Papasolomou & Vrontis, 2010).

The bottom line of the factors is that psychological forces lead most investors to make an investment mistake most of the time. Investor’s psychological behavior affects their interest to take part in banking market. This, in the long run, affects their ability to invest. According to Bloemer, De Ruyter & Peeters (1998) it is high time that the banking industry gets in line with measures on how to influence the customer’s psychological concerns. Hence the call for better and well-focused CRM in the banking industry (Bloemer, De Ruyter & Peeters, 1998). On the other hand, the study of human psychology denotes that psychological factors highly affects investment decisions and strategies. However, the psychological influence is highly compounded by other various variables. For example, it is clear from research that banking institutions that engage in proper CRM have more customer base as compared to those that do not have it. Such organizations have better strategies for managing their clients’ psychological influence on investment hence able to make the right decisions when investing and in such cases their client end up victories. In addition, it is evident that psychological process also affects the type of investment that people make or would engage in (Bloemer, De Ruyter & Peeters, 1998).

Cultural Influence

Investor’s behavior constantly differs around the globe. This affects investment decisions, strategies and financial returns on the financial market (Alsmadi & Alnawas, 2011). For example, when taking side with organizations such as Anglo-Saxon investors, they are considered as ones that can tolerate greatest losses, on the other hand, German investors are considered as the most patient. Based on the traditional understanding of investment, this has to do with money on the return the investor expects profits, but this time he/she has to be patient and have a positive attitude towards risks. However, the ability of a risk attitude depends on the investor’s economic environment (Bloemer, De Ruyter & Peeters, 1998).

In a given situation, that an American investor has a similar patience and risk abhorrence as a Japanese or a German investor (Alsmadi & Alnawas, 2011). This is only possible if all the investors have the equal economic background such as same rates of inflation and job security. Studies show that culture drives people’s investment behavior, even if other variables such as wealth and inflation are in control. In addition other studies have also indicated that how the effects of cultural differences have on investment in the banking industry (Jamal & Naser, 2002). Likewise, it has been noted that an individual’s cultural background can influence the returns of the economic and financial markets.

For example, European investors are ready to pay less for the value of stocks than those from Nordic nations; they always have a lower risk aversion and are considered to me more patient. Therefore, it can be concluded that cultural background of an individual affects the overall willingness to invest various banking platforms (Bloemer, De Ruyter & Peeters, 1998). The ideas that support proper CRM is the real solution to cultural influences on investment. Therefore, for a positive influence to be established, banking institution as well as investors should ensures they research and determine a cultural alternative that will assist investors with negative cultures to investment. This will help them to be more vigilant to investment concerns especially in the banking industry (Demetriou, Papasolomou & Vrontis, 2010).

Brand Influence

The selection or the choice of a certain brand is connected to the level of consumer behavior especially in the banking industry (Jamal & Naser, 2002). Members of the banking industry perceive brand image from the perspective of their needs as well as it value to the public or society. These members combine the two outlooks and perceive all the information needed in order to ascertain the right framework or market to the investor the stock to invest with. It can be determined that consumers of banking service are not only customers they are also investor or environmental advocates (Demetriou, Papasolomou & Vrontis, 2010). They become they greatest shareholders of the banks by the investment funds and portfolios. This develops an interaction among the facets of corporate brand image thus, influencing the behavior of clients, as well as their perceptions in the banking market (Fan & Ku, 2010).

It is worth to note that investors strategize their familiarity with a certain brand. This is a brand that is strongly influenced by its reliability and presence in the market. When selecting a certain brand, potential investors are influenced by the attractiveness and saliency of a brand and its financial performance in the banking industry. According to Howcroft, Hamilton & Hewer (2002) he concludes that a study conducted in Saudi Arabia indicated that banking industry is paying attention towards strengthening their brand image in order to increase their customer base as well as retain the current ones. Individuals are more aware that the brand image has a higher influence on stock market value. The value for brands account for up to 80% of the stock market value for banking firms in UAE (Jamal & Naser, 2002).

Therefore, it is worth to consider that with a proper CRM, a bank can analyze the best branding strategies that can steer its brands in the financial market for clients to invest or trade in.

Advertisement Influence

Whether the advertisement is via TV, Radio, Newspapers and other new forms of media such social media and the internet, earning the trust of a consumer is the objective of a successful campaign. The banking industry is also not left behind trying to ensure that it meets this threshold (Jamal & Naser, 2002). The good news for advertiser is that the clients are more trusting that they used to be a decade ago. It is evident that advertising influence consumers or the clients at a great extent. It is through advertising that organizations can share the cake of success to their clients. As for the banking industry, it can reach more and more clients via advertising hence able to grow geographically and economically (Kheng, Mahamad, Ramayah & Mosahab, 2010).

It is worth to consider that it is from the adverts that we share that the banks can get more and more clients. The type of advertisements greatly influence the behavior of most investors (Jamal & Naser, 2002). It is from an advertisement that banks in the UAE, as well as others, around the world can share their service with clients. The more the advertisement and the richer the adverts, the more the clients get envisioned or persuaded to the services rendered to them. It is from an advertisement that clients can refine the breath of information that they need to garner from the banks. For example, clients can know of a bank’s share value from an advertisement hence able to make the right decision to invest (Kheng, Mahamad, Ramayah & Mosahab, 2010). For better depiction of information, it is worth to evaluate the reliability of CRM towards value of the advertisement towards banking investments. Via CRM the banks can determine the best advertising platform to use in order to persuade more customers to invest.

Influence of Product/Service Quality

The quality of a products or service greatly affects the consumer behavior towards the service of product. As of the banking industry, it is worth to denote that they offer service, as well as products to its clients (Krasnikov, Jayachandran & Kumar, 2009). The quality of service and product rendered by banks have proved to be an asset in the past and also currently. Banks that offer quality service and products have increased their customer potentials as well as develop a better customer satisfaction level as compared to those that offer considerably poor services. Clients are noted to have a higher preference to the banks that offer higher quality products and service hence develop trust to such institutions (Kheng, Mahamad, Ramayah & Mosahab, 2010). Therefore, it can be noted that the consumer behavior is greatly influenced by the quality of service and products.

References

Alsmadi, S., & Alnawas, I. (2011). Empirical investigation of the CRM concept in the Jordanian context: The case of banks and financial institutions.International Journal of Business and Management, 6(2), p182.

Bloemer, J., De Ruyter, K., & Peeters, P. (1998). Investigating drivers of bank loyalty: the complex relationship between image, service quality and satisfaction. International Journal of Bank Marketing, 16(7), 276-286.

Demetriou, M., Papasolomou, I., & Vrontis, D. (2010). Cause-related marketing: Building the corporate image while supporting worthwhile causes. Journal of Brand Management, 17(4), 266-278.

Fan, Y. W., & Ku, E. (2010). Customer focus, service process fit and customer relationship management profitability: the effect of knowledge sharing. The Service Industries Journal, 30(2), 203-223.

Howcroft, B., Hamilton, R., & Hewer, P. (2002). Consumer attitude and the usage and adoption of home-based banking in the United Kingdom.International journal of bank marketing, 20(3), 111-121.

Jamal, A., & Naser, K. (2002). Customer satisfaction and retail banking: an assessment of some of the key antecedents of customer satisfaction in retail banking. International Journal of bank marketing, 20(4), 146-160.

Kheng, L. L., Mahamad, O., Ramayah, T., & Mosahab, R. (2010). The impact of service quality on customer loyalty: A study of banks in Penang, Malaysia.International Journal of Marketing Studies, 2(2), p57.

Krasnikov, A., Jayachandran, S., & Kumar, V. (2009). The impact of customer relationship management implementation on cost and profit efficiencies: evidence from the US commercial banking industry. Journal of Marketing,73(6), 61-76.