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The IUP Journal of Bank Management
Which Factors Determine Bank Selection? A Sample Study
of MBA Students in Kolkata
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This paper presents an empirical study of bank selection criteria used by MBA students of Kolkata and checks for group differences on factor scores on the basis of various demographic and related factors. The study also investigates whether certain personal characteristics can be used to differentiate these segments. A structured questionnaire was prepared for use in the survey and the questions were organized into three sections according to the following topics: bank selection criteria, banking behavior and personal background. The respondents were asked to rate the relative importance of 30 attributes while choosing which bank(s) to patronize. The responses were analyzed with the help of factor analysis. The study found that in their bank selection, the MBA students tend to put more emphasis on the factors which give them quick and convenient access to the bank’s services, cost-effective services and the quality of service, rather than factors related to the marketing promotions and advertisements and peer group and friend’s influence. The study also found significant differences in bank selection factors on the basis of single or multiple bank usage, type of bank, place of residence and gender of users.

 
 
 

The study of the key determinants and factors that influence customers’ selection of banks and banking services has received wide attention during the last three decades. Previous research has indicated that “location” is the most important criterion for selecting a bank (highlighted by Dupuy and Kehoe (1976) on the basis of compiled previous research) and that customers remain loyal to the banks they have chosen based on ‘Location’. Foster’s (1968) research found that “75% of the respondents had never changed banks for reasons other than changing residence.” Because the bank customer is so loyal, it is difficult for banks to attract new customers from existing residents, and thus, new residents are generally the major source of prospective bank customers.
But in today’s global environment, as the customers are highly mobile due to growth in business and employment opportunities, post-globalization and liberalization of the major economies of the world, especially in India where a large number of banks—nationalized, private and foreign banks—are in operation providing a basket of financial services apart from the traditional deposit portfolio, the customers have a wide range of products and services and banks to choose from. Furthermore, with the advent of e-banking portals, ATMs and Electronic Fund Transfer, the banks are no longer restricted by the geographical limits of the customers, so convenience of location may not be the most critical factor in the selection process of banking services.

 
 
 
Bank Management Journal, Empirical study of bank selection criteria , Various demographic and related factors, Banking behavior and Personal background,Marketing Promotions and Advertisements.