Banking products: You can take them with you, so why don't you?

Carin van der Cruijsen, Maaike Diepstraten

Research output: Contribution to journalArticleScientificpeer-review

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Abstract

Policymakers around the world call for more competition in the banking sector. One prerequisite to achieving this is customer mobility. Despite its policy relevance, surprisingly little is known about consumers’ bank switching behaviour. We show that the principal reasons to stay at one’s bank are a good bank-customer relationship, practical barriers, and the perception that there is not much benefit in switching. Moreover, we find that the reported propensity to switch varies across banking products. For the main current and savings accounts, this propensity is most strongly related to the bank-customer relationship, while for mortgage loans it is especially linked to switching experience. These findings have important implications for antitrust policy; they provide an argument against using a cluster-based legal standard for the analysis of competition and in favour of a disaggregated approach. Regarding the effectiveness of hypothetical policy initiatives to lower switching barriers, we find that the reported switching propensity with current accounts is higher in the case of account number portability, while more knowledge of the existing switching service has no significant effect. Lastly, scenario analysis shows that a policy of allowing new foreign banks to enter the savings market is less promising for enhancing mobility than a policy that increases the number of domestic players.
Original languageEnglish
Pages (from-to)123-154
JournalJournal of Financial Services Research
Volume52
Issue number1-2
Early online dateMay 2017
DOIs
Publication statusPublished - Oct 2017

Fingerprint

Banking
Propensity
Customer relationship
Savings
Politicians
Switching barriers
Current account
Mortgage loan
Scenario analysis
Foreign banks
Number portability
Switching behavior
Antitrust policy
Banking sector

Keywords

  • Banking products
  • Switching behaviour
  • Barriers
  • Household survey
  • Financial literacy
  • Psychological factors
  • Loyalty
  • Bank competition
  • Policy initiatives

Cite this

van der Cruijsen, Carin ; Diepstraten, Maaike. / Banking products : You can take them with you, so why don't you?. In: Journal of Financial Services Research. 2017 ; Vol. 52, No. 1-2. pp. 123-154.
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title = "Banking products: You can take them with you, so why don't you?",
abstract = "Policymakers around the world call for more competition in the banking sector. One prerequisite to achieving this is customer mobility. Despite its policy relevance, surprisingly little is known about consumers’ bank switching behaviour. We show that the principal reasons to stay at one’s bank are a good bank-customer relationship, practical barriers, and the perception that there is not much benefit in switching. Moreover, we find that the reported propensity to switch varies across banking products. For the main current and savings accounts, this propensity is most strongly related to the bank-customer relationship, while for mortgage loans it is especially linked to switching experience. These findings have important implications for antitrust policy; they provide an argument against using a cluster-based legal standard for the analysis of competition and in favour of a disaggregated approach. Regarding the effectiveness of hypothetical policy initiatives to lower switching barriers, we find that the reported switching propensity with current accounts is higher in the case of account number portability, while more knowledge of the existing switching service has no significant effect. Lastly, scenario analysis shows that a policy of allowing new foreign banks to enter the savings market is less promising for enhancing mobility than a policy that increases the number of domestic players.",
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Banking products : You can take them with you, so why don't you? / van der Cruijsen, Carin; Diepstraten, Maaike.

In: Journal of Financial Services Research, Vol. 52, No. 1-2, 10.2017, p. 123-154.

Research output: Contribution to journalArticleScientificpeer-review

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