Improving Financial Inclusion through Communal Financial Orientation: How Financial Service Providers Can Better Engage Consumers in Banking Deserts

Abstract

Banking deserts, vulnerable communities that lack access to mainstream banks, represent a serious societal problem. Mainstream banks successfully entering banking deserts can help to assuage this problem. Drawing from research on the psychological consequences of poverty, we propose that mainstream banks can more successfully operate in banking deserts by increasing consumers' perception of communal financial orientation as a bank benefit (i.e., consumers' perception that engaging with the bank is beneficial for their community's well-being). Two field studies, comparing customers of a credit union who live in a banking desert and those who do not, show that the perception of communal financial orientation as a bank benefit increases bankingdesert consumers' beliefs that engaging with the credit union is beneficial and increases their likelihood of patronizing and recommending it; consumers living outside banking deserts do not display these effects. These findings provide novel insights into psychological mechanisms distinctly associated with banking-desert consumers and establish the importance of communal financial orientation. This is a win-win proposal for under-served communities and financial service providers because it helps both improve financial inclusion and increase the viability of serving banking deserts.

Is bank staff interaction associated with customer saving behavior in banks?

“…These findings add to the literature about known factors related to saving behavior related to saving behavior theory (Lewis et al ., 1995; Eriksson and Hermansson, 2014; Greenman, 2017; Asebedo et al ., 2019). Although this is the first study to explore the association of personal access method and self‐service technology and saving behavior, these findings are generally consistent with relevant research literature regarding the importance of relationships in financial behaviors for the general population (Goodstein and Rhine, 2017; Xu, 2018; Mende et al ., 2019; Shell and Buell, 2019) even when technological access methods are available (Aslanzadeh and Keating, 2014). However, findings differ about the importance of relationships for lower‐income households that have less access to bank branches and bank staff (Richardson et al ., 2019).…”

“…Face‐to‐face account access method fulfills two major functions for consumers of bank branches. First, customers can develop interpersonal relationships with bank staff, which allows for trust‐building and to receive advice on their finances and products/services (Goodstein and Rhine, 2017; Innovation for Poverty Action, 2018; Xu, 2018; Mende et al ., 2019). Through their interaction with customers, bank tellers can make customers feel noticed, appreciated, and valued, which can be an important consideration about the degree to which customers are open to saving suggestions from a bank staff member (Pew Charitable Trust, 2013; Martin, 2016; Servon, 2017).…”

Consumer-Level Perceived Access to Health Services and Its Effects on Vulnerability and Health Outcomes

“…Conversely, future research should also try to understand how a high level of PAHS increases consumers’ likelihood to overuse or misuse health services, as too much utilization can also have negative consequences. Moreover, investigating consumers’ perceived access to healthy food options (food deserts; Block et al 2011) and the availability of financing to pay for health services (banking deserts; Mende et al 2019) might provide a better understanding of both perceived service vulnerability and the relationships between health care, food, finance, and consumer well-being.…”

Consumer’s subjective financial well‐being: A systematic review and research agenda

“…Figure 1 shows all of the article counts over the years (longitudinal) from both marketing and non-marketing areas of consumer Wong and Lynn (2019), Limbu and Sato (2019), Mende et al (2020), Nicolini and Cude (2019), Cook and Sadeghein (2018), Netemeyer et al (2018), Pereira and Coelho (2019), Xiao and O'Neill (2018), Xiao and Porto (2017), Haws et al (2016), Santos et al (2016), Komarova Loureiro andGonzalez (2015), Mende and van Doorn (2015), Postmus et al (2015), Winterich and Nenkov (2015), Norvilitis (2014), Baker and Dumont (2014), Shim et al (2013), Collins et al (2013), Guo et al (2013), Schmeiser and Seligman (2013), Lyons et al (2007), Devaney and Kim (2003), Kinsey and Lane (1978), Bhutta et al (2015), Lim et al (2014), Xiao et al (2014), Tach and Greene (2014), Meier and Sprenger (2013), Donnelly et al (2012), Gutter and Copur (2011), Malone et al (2010), Shim et al (2009), Forry ( 2009), Bonke and Browning ( 2009), Norvilitis et al (2006), Prawitz et al (2006), O'Neill et al (2005, Baek and DeVaney (2004), …”

“…Consumer co‐production behavior can also be used to solve broader societal challenges such as financial inclusion (access to banking services and financial products) for vulnerable communities in developed economies and the large bottom‐of‐pyramid (BOP) consumers in developing nations. Mainstream banks can operate successfully in these communities if they demonstrate a community‐oriented financial orientation as a banking benefit–engaging with a bank can increase the well‐being of the whole community (Mende et al, 2020). As this section shows, consumer co‐production behavior can be investigated by future researchers ( Research Gap 3 ).…”