Behavioural economics and financial services marketing: a review

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Chuah, S. and Devlin, J. ORCID: 0000-0002-1526-8793, 2011. Behavioural economics and financial services marketing: a review. International Journal of Bank Marketing, 29 (6), pp. 456-469. ISSN 0265-2323

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Official URL: https://doi.org/10.1108/02652321111165257

Abstract

Purpose: It has been argued that the insights provided by behavioural economics have profound implications for the study and practice of marketing. The purpose of this paper is to provide a detailed analysis such insights help enhance understanding of aspects of marketing and consumer behaviour in financial services markets.

Approach: In this paper, we look at various facets of behavioural economics which we feel provide particularly important and salient insights in the context of financial services. In particular, we study loss aversion and prospect theory, status quo bias and defaults, framing and anchoring effects, hyperbolic discounting, availability effect and salience and over-confidence. In doing so, we provide a number of examples from the financial services context which provide insightful and informative insights for both commercial practitioners and policymakers. In each case, we introduce and explain the relevant phenomenon, before providing a number of applications and examples from the financial services domain.

Findings: We find that the insights afforded by behavioural economics are useful in helping to explain various aspects of consumer behaviour in financial services markets. We show that an understanding of the implications of behavioural economics may help in fashioning a choice architecture that is more likely to bring the desired consumer response, from either a commercial or policymaking perspective.

Practical Implications: Our analysis provides important insights for those responsible for the marketing of financial services, policymakers in the financial services domain, third sector agencies seeking to foster greater engagement with financial services and other interested parties.

Originality and Value: Our paper adds value by drawing together various aspects of behavioural economics, providing an analysis of their relevance to financial services marketing and offering numerous examples and applications.

Item Type:

Journal article

Publication Title:

International Journal of Bank Marketing

Creators:

Chuah, S. and Devlin, J.

Publisher:

Emerald

Date:

2011

Volume:

Number: