The perceptions of Bankers and Corporate Customers when Considering Loan Selection Factors between Banks in Thailand.

The perceptions of Bankers and Corporate Customers when Considering Loan Selection Factors between Banks

in Thailand

Scope of the Presentation

Introduction

Need for this paper

Objectives

Research question

Research methodology

Data analysis

Finding results

Implications

Conclusion

Limitation

Further research

IntroductionThe bank selection become important issue:-High competition in banking industry

-Few survival of good customers

-Multiple banking behavior

“Bankers should understand clearly the behavior of corporate customers for selecting bank borrowing (loan) in case of receiving similar offers from many banks”

Need for this research

-Mainly conduct in USA ,Europe( few in Asia)

-Inconsistency result

-Few research on banker’s perspective

-No research to do across two industries

-No research to compare perspective of

bankers and corporate customers in Thailand

-Fill the gap: research corporate customers and

bankers’ perspective across two industries

ObjectiveTo find out what factors are important for corporate customers from both manufacturing and service industries on bank selection decision for loan.

To design an appropriate marketing strategy to attract target customers

To develop bank selection model

Main Research Question

“Are customers’ perspectives the same as bankers’ perspectives in terms of bank selection in Thailand?”

Research Methodology

Method In- depth interview (Personal)

Sample

Fifteen bankers

Minimum 5 yrs direct contact to customers

(Private bank 5,Stated bank 5,Hybrid bank 5)

Sixteen corporate customers

Minimum 5 yrs direct contact to bankers

(Manufacturing 8, Service 8)

Research MethodologyInterview process

Pilot interview Prefer individual interview

First interview Identify factors / sub factors

Second interview

-Develop sheet listing all factors /sub-factors

-To make priority ranking all 14 factors

From rank 1 most important to

14 least important

-Choose top three sub-factors, make priority ranking

From rank 1 most important to

rank 3 least important

Finding Results First interview (14 factors)

1 Attractive offering 9 Personal relationship*

2 Good relationship 10 Bank’s ownership*

3 Service quality 11 High Technology*

4 Speed of approval 12 Package*

5 Lending policy 13 Recommendations*

6 Quality of RM 14 Bank merger*

7 Branch facilities

8 Bank image

* New factors received from the interview

Finding Results First interview (Sub- factors)

Attractive offering Service quality-Interest rate/fee -Efficient and accurate

-Amount of facility -Personalized & flexible services

-Payment peroid -Find new way to solve problems

-Un-complex covenants -Value added services

-Collateral -Full banking services

Good relationship Quality of RM -Easy access/close contact -Know customers’ business

-Help in emergency -Professional advice

-Relationship to management -Confidentiality

-Contact frequency -Effective communication

Data Analysis

Each factors receive different ranking by the frequency of the number of respondents selected

Each rank is given a weighted score by the first rank is given the highest score at fourteen as the most important an continuously decreases one score as the least important.

The weighted score for each factor is derived by multiplying the frequency of respondents and weighted score of each rank.

Each score will be summed resulting in total weighted score represent for each factors

Data AnalysisRank 1 2 3 5 6 7 8 9 10 11 12 13 14

Attractive offering

Weighted score 14 13 12 11 10 9 8 7 6 5 4 3 2 1

Frequency 11 3 2 - - - - - - - - - - -

154 39 24

Total weighted score 217

Good relationship

Weighted score 14 13 12 11 10 9 8 7 6 5 4 3 2 1

Frequency 3 3 - 5 1 1 - 2 1 - - - - -

42 39 - 55 10 9 - 14 6

Total weighted score 175

Remark: Represent two important factors as example

Findings ResultsImportant Factors (IF)

Rank Bankers Corporate Customers

1 Attractive offering Attractive offering

2 Speed of approval Good relationship

3 Service quality Speed of approval

4 Branch facilities Service quality

5 Quality of RM Lending policy

6 Bank image Quality of RM

7 Good relationship Branch facilities

Finding Results Less Important Factors (LIF)

Rank Bankers Corporate Customers

8 Lending policy Bank Image

9 Personal relationship Personal relationship

10 High technology Bank’s ownership*

11 Recommendations High technology*

12 Bank’s ownership Package*

13 Package Recommendations*

14 Bank merger Bank merger*

ImplicationsGroup1: Immediately to develop

Speed - Shorten credit process-Set standard timeframe to measure performance

-Decrease levels of authorization

-Revise credit proposal form

Service quality -Continuous training

-Efficient bank process - update technology

-Flexibility

ImplicationsGroup1: Immediately to develope

Quality of RM- Continuous training to impress customers

- Understand necessities of business

- Promptly response / quick decision

- Good judgement to solve problem

ImplicationsGroup 2: Need time to developAttractive offering: profit from whole package

Lending policy: increase credit facilities

before requesting

Branch facilities: increase outlet

Good relationship: growth by contact /advice/

help

Bank image: differentiate by building

brand awareness

ConclusionThere are differences when compare between bankers and corporate customers’ perspective.

- Although there are the same six out seven factors from IF

and LTF group, the ranking is difference.

- Attractive offering is considered the most important factor

for both side.- Good relationship is considered important by corporate

customers(rank 2) while perceived less important by

bankers’ perspective (rank 7).- Other important factors for both side are speed,service

quality and quality of RM.

Conclusion- Two most important factors are attractive offering

and good relationship

- Bank can set appropriate marketing strategy

New customers

Transaction-oriented strategy (pricing)

Existing customers

Mixed strategy (transaction+relationship)

-Better respond to customers’ needs

-Increase satisfaction and loyalty

-Become main bank

Limitation

Limit sample size – the result not generalized

Exclude other influential factors:

-economic situation,

-legal enforcement,

-political risk,

-organization culture etc

Further ResearchInfluence of emotional factors (cultural,

social etc.)on bank selection in Thailand

The effect of other influential factors (economic situation, legal enforcement etc) on bank selection

The degree how corporate customers satisfy with the important factors