Academic journal article UTMS Journal of Economics

A Study on Customer's Perception of Croatia's Banking Industry

Academic journal article UTMS Journal of Economics

A Study on Customer's Perception of Croatia's Banking Industry

Article excerpt

INTRODUCTION

Already Daniel and Harrington (2007) concluded that the service sector makes significant contributions to economics and social development of countries around the world. The same is valid for Croatia. In the last couple of years, Croatia has developed a highly competitive banking market. As the global financial industry is changing rapidly and constantly, Singh (2014) is pointing out that financial firms especially banks need to keep up and update themselves with the growing customer needs. The Croatian banking market environment is especially strong in pricing forcing the banks to re-focus their core assets to the customers, trying to avoid to be only price competitive, as this has a negative impact on the overall financial result of the banks. Additionally, intensified market competition forced many banks to focus much more on their own perception in the eyes of the customers, as a potential source of market competitiveness. Before the time of economic crises, the Croatian banking sector operated in a relatively stable environment. Under these circumstances, banks may presume that their operations are customer focused, simply because they have customers (Saxena and Khandelwal 2011). Recently, many market crises in the Croatian banking sector, such as the Swiss Franc (CHF) issue, have caused a significant loss of trust in the banking sector in Croatian the eyes of the customers and the banks have gained negative perception, reputation, as well as negative public image. This was additionally empowered by the activities conducted by non-profit organizations such as „Udruga Franak" (Swiss Franc Association), by political parties in the country or by a number of negative articles published in the media against the Croatian banking sector. High tax policy, high interest rates, exchange rate issues (the CHF case), high unemployment rate, low GDP rate in Croatia, inflation, economic stagnation, as well as numerous legal proceedings - all of this influenced the reputation, image and perception of the banking industry in Croatia, mowing it toward a negative direction. In order to survive in a highly competitive market environment, this has to be changed. This research and study attempts to understand the problems connected with customer's perception of the banking industry in Croatia, recognizing good perception as a potential tool of market competitiveness for the banks. It tries to discover an importance of perception in the consumer's eyes and offers some interesting and useful insights for the banking industry in planning their future activities towards improving their perception and exceeding consumer's expectations.

1.LITERATURE REVIEW ON PERCEPTION IN THE BANKING INDUSTRY

Perception is of particular importance in the banking industry as well, which is recently undergoing many changes under market competition, innovative use of technology and changed set of values and lifestyles among customers. The ultimate goal of any organization is generation of profits and that can be achieved with attaining customer perception. Today, in addition to image, identity and reputation, aspects connected with customer's perception are a matter of interest among many marketing scientists and practitioners. There is an issue in regards with how the customer would select the bank (Kennington et al. 1996; Almossawi 2001; Bick et al. 2004, Hinson et al. 2013, and Tavishi and Kumar 2013). In connection with this, customer's perception is becoming a more and more important issue for the banking industry in general.

Schiffman et al. (2008) have defined perception as the process by which an individual selects, organises and interprets stimuli into a meaningful and coherent picture of the world. This particular issue has been a matter of interest among a number of marketing scientists and practitioners (Statt 1997; Schiffman et al. 2008 or Solomon et al. 2010). Statt (1997) is pointing out that the way a product and/or service are perceived by customers is a much more important influence on their behaviour than any objective characteristic it may have. …

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