Competition Between Banks and Building Societies in the Retailing of Financial Services

Published date01 September 1992
Date01 September 1992
DOIhttp://doi.org/10.1111/j.1467-8551.1992.tb00043.x
British
Journal
ojManagement,
Vol.
3,
169-1 79 (1992)
Competition Between Banks and Building Societies
in
the Retailing
of
Financial Services
Peter
J.
McGoldrick and Steven
J.
Greenland
Financial Services Research Centre, Manchester School
of
Management, University
of
Manchester, Institute
of
Science and Technology,
P.O.
Box
88, Manchester M60
IQD,
UK
SUMMARY
Within the financial services sector there has been diversification on
a
vast scale, with
varying degrees of success. Financial services are increasingly viewed as products, the
various branch networks
as
channels of distribution. The competition between banks
and building societies has become
a
major battleground in the war for consumers’
financial services expenditure. Both types of organization have a strong presence in
the high street and have become major users of media advertising and other marketing
weaponry. Historically, they have both enjoyed strong but different forms of relationship
with their customers; these differences are rapidly diminishing
as
each invades the other’s
trading territory. This paper presents results from
a
study of bank-building society
competition, illustrating the attributes and dimensions upon which consumers tend to
base their choices. Financial services retailers are urged to base their marketing strate-
gies upon a clear understanding
of
consumer needs and motives, not upon ‘me-too’
responses to competitors’ moves.
As
many product retailers have discovered to their
cost, heavy marketing expenditure cannot be
a
substitute
for
a
well founded retail
marketing strategy.
Introduction
The 1980s were a time of unprecedented change
within the personal financial services sector, with
the removal of many barriers to competition.
As
financial and other institutions seek opportunities
to diversify their activities, the traditional boundar-
ies have been rapidly eroded. It is increasingly rele-
vant to regard financial services outlets as a form
of retailing, and the services themselves as their
product ranges. While accepting the important dif-
ferences between the retailing of goods and ser-
vices, it is clear that many similar problems are
faced in the formulation of retailing strategy, the
utilization of the marketing mix and in the evalu-
ation of marketing performance.
Financial institutions are keen to embrace retail
marketing concepts yet generally have only devel-
oping experience of strategic and marketing plan-
ning. Many valuable lessons can be learnt from
their counterparts in the consumer goods sector.
For example, some of the less successful diversifi-
cations by some food stores in the later
1970s,
sell-
ing high-risk, ego-intensive merchandise alongside
basic groceries, bear a certain resemblance to plans
for ‘financial supermarkets’. Parallels can also be
drawn with the positioning problems encountered
by many product retailers.
As
banks and building
societies become less differentiated in terms of their
product offerings, branch environments, advertis-
ing messages and customer service levels, increas-
ingly blurred images may be the result.
This paper first discusses the adoption of retail-
ing concepts and techniques by banks, building
societies and other financial services providers. The
competitive context is then considered through a
brief overview of channels
of
distribution for finan-
cial services. The focus then narrows to consider
the especially important area of competition
between banks and building societies. Empirical
data are drawn from a study sponsored by
TSB
and conducted with the collaboration and support
1045-3 172/92/030169-1 1$10.50
0
1992
by
John Wiley
&
Sons, Ltd.
Received
15
April
I991
Revised
I5
January

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT