FINANCIAL DECISION-MAKING BY THE YOUNG PROFESSIONAL IN THE UNITED KINGDOM: A STUDY OF THE RELATIVE EFFECTS OF INSTITUTION AND PRODUCT ON CONSUMER CHOICE OF FINANCIAL SERVICES

This study addresses key questions about consumer decision making in today's financial services market. A review of the literature shows little insight into whether the product or the institution that markets it has the dominant role in choice. Moreover, little is known about how consumers' perception of an institution shapes preference and whether perception or such variables as demographics, parental behavior, or past usage drive futures choice. These are particularly relevant issues for the U.K. where institutions which formerly sought either the consumer's saving or transaction business now compete for both by marketing virtually indistinguishable product lines.;Results show that decisions vary dramatically by the need address; for transactions, institution is dominant; for savings, it is product. For both choices, there are significant main effects of the other factor and significant interaction effects. A test of alternative models of financial decision making revealed that perceptual variables were the strongest determinants of institution preference. Many attributes correlated to preference were common to both choices.;The conclusion is that the investigation of the simultaneous effects of institution and product on choice provides insights into an institution's ability to compete effectively in a new sector. Moreover, the multiattribute analysis of preference shows how institutions are positioned and distinguishes between dimensions which are true basis of differentiation versus mere passports to entry.;Twenty-two hypotheses were researched by a program which included qualitative field interviews, a pilot test, and a survey of 489 young professionals. The survey instrument contained a designed-in experiment which required the simulation of two choices (probability of opening an account) to solve a future transaction need and the saving of surplus funds. Data were analyzed by a repeated measures analysis of variance and other bivariate and multivariate techniques.