Behavioural Economic Tools as a Way to Increase Customers’ Response in the Banking Sector

Abstract

The proper functioning of the banking sector is of great importance to the national and world economy. Ever since the crisis of 2008 banks have experienced a decrease in revenue for various reasons. This decline is worrying and while external factors cannot be altered by financial institutions, their effect can be reduced with the formulation and application of a focused marketing strategy. The purpose of this article is to determine whether implementation of behavioural finance can attract customers and improve sales in a sector with seemingly decreasing potential and growing competition. The research topic is the change in customer behaviour as a result of implementing behavioural techniques (nudges). The object of analysis is a leading bank in Bulgaria and its interaction with the customers. There are three main tasks in this article: – to show how the economic crisis as an external factor has contributed to changes in regulation and consolidation on the Bulgarian banking market; – to conduct a literature overview of some of the behavioural economics aspects, which can be incorporated in banking practices; – to present the results of a Bulgarian bank, which manages to improve the outcome of its campaigns and to apply the idea behind the customer decisionmaking matrix in its marketing mix by employing the tools defined in the literature overview. There is an abundance of theoretical research on behavioural economics, far less evidence from empirical studies in various sectors and none from the banking sector. The aim of this article is to shed some light on the topic. The major assumption held in this study is that the use of behavioural finance tools in banks’ marketing policies can increase customer response rate and help increase sales.