Strategic and marketing implications of consumer behaviour in financial services

As competitive liberalisation and the application of technology in the creation and distribution of financial services have increased consumer choice in the UK personal financial services industry, so consumer behaviour has assumed a greater role in determining the strategic environment in which financial service providers operate. This paper explores the relationship between consumer behaviour and the strategic choices facing financial service firms by developing a framework of consumer behaviour and linking the forms of behaviour that flow from that framework with the distinctive characteristics of financial services. It is the interaction between form of consumer behaviour and type of financial service instrument that determines the strategic environment within which financial service providers operate. Based on that interaction the paper develops a contingency view of financial services strategy and argues that to be successful, financial service providers will need to move away from broad service provision and adopt more focused strategies that reflect far more closely the strategic environment in which they operate.