Summary: It is only the later part of the 20th century financial services institutions (FSIs) started morphing into a different shape altogether. Previously, a bank provided only banking services (i.e. mostly a place where you can deposit and withdraw money or similar assets). However, banks changed their role in a short span of time from consumer banking to multiple financial service providers (i.e. banking, mortgages, insurance, credit cards, capital and bond market services, internet banking, phone banking, investment finance, etc.). This new management of consumer credit and consumer debt had interesting implications for their marketing financial services. Image via Wikipedia First, in trying to cover every corner of the envisaged legal problems, banks already had lengthy contract papers. However, with multiple services consumers were now subjected to a combination of plentiful and conflicting information, an excessive number of brands, and product replications. Second, this one-stop service philosophy was brought about to create ease in transactions. However, as the number of services increased, the complexity did too. However, on the other hand, it created false confidence within the consumers regarding their financial judgment. Each of the above mentioned financial services require different set of skills to manage them however, a single provide and one-stop-shopping made consumers think that capital and bond markets investments were as easy as banking. Researchers suggest that product variety can have a significantly positive effect on consumer decision making however, results from empirical studies found that over-choice and overload of information deters customers from engaging with a service provider due to confusion over a product’s value. The multiplicity of financial services, which created the false confidence, may have similar results relating to consumer confusion and service value judgments as observed in other industries where product proliferations occurred. However, prior studies have not looked at consumer confusion in financial service industries. In a recent paper, published in the association for consumer research conference, my co-authors and I, attempted to conceptualize and empirically test a model of consumer confusion in financial services industry. I am going to address the first research question in this post focusing on ‘what are the causes of consumer confusion in financial services industry?’ Looking at prior studies we believe that confusion is fuelled by consumers’ general expectations, attribute similarity between products or services (i.e. attribute confusion), and overload, conflict or ambiguity of information (i.e. information confusion). Expectations Most researchers share a similar opinion that consumer expectations, prior to a service encounter, impact on customers’ evaluation of service performance. In the service literature the expectations construct has been divided into two parts namely, predictive expectations and evaluative expectations. The predictive expectations construct is associated with the level of performance and evaluative expectations construct is associated with an estimation of performance. For example, a consumer holding all his financial transactions including banking, mortgage, credit cards, and personal loans among others with a single FSI (approximately 40.5% of all FSI customers in the UK belong to this category) calls the customer services department for an emergency situation such as stolen cards or identity fraud. At this juncture, the consumer expects the call to be answered in reasonable time (predictive expectations) and also expects that whoever answers the call is in the right frame of mind and possesses knowledge related to the problem (evaluative expectations). In most of the FSIs, all the service departments operate separately and therefore the consumers will be asked to call each of them separately leaving the consumer angry, [...]
