engleski

Application of AHP Method in Selection of Bank Accounts by Croatian Students

In today's competitive environment, it is necessary that bank managers develop the ability to determine the critical bank selection factors of the market segment they plan to attract. An excellent business opportunity for banks could be undergraduate market. It might be in the interest of banks to attract these young people to open accounts, as there is a great probability that they would remain, after graduation, with the bank. Some recent surveys showed that about 80 percent of the first-year university students believed they would continue with the same bank after graduation. The development of financial products for individuals is relatively new in Croatia. Although great majority of Croatian banks have developed some kind of financial products for students, they haven't developed marketing strategy especially oriented to students. Existing financial products for students are mostly intended for those students that have a regularly salary. In order to gain competitive advantage and to be able to provide better and more adjusted financial products to the needs of the young people it is necessary to investigate students' needs and preferences. This paper presents the results of a survey conducted among Croatian undergraduates on bank selection preferences. In the study several criteria for bank selection decision are identified. In other words this study examines predominant factors that have a bearing on undergraduate bank selection decisions by employing Analytic Hierarchy Process (AHP). The AHP is a multi-objective and multi-criteria theory of measurement. It is a helpful tool for bank managers in obtaining a detailed understanding of the criteria that undergraduates find important in selection decisions and the strength of their preferences. The findings indicate dimensions on which undergraduates place high emphasis. The results provide information on the importance of the selection criteria as well as strong points and weaknesses of banks. The decision on relevant criteria of undergraduates was made on the basis of literature review and the results of conducted focus group. They were: recommendations by parents and family members (includes the fact that parents have opened an account for undergraduates in given bank or have influenced undergraduates' bank selection decision) ; bank’ s image ; competency and kindness of bank officials (quality of services) ; availability of undergraduate privileges ; convenient locations of the bank and its ATM’ s ; low interest rate on loans ; high interest rates on savings. The second part of the discussion was conducted in order to identify undergraduates’ familiarity with banks in Croatia. Discussion showed that students had more interactions with Zagrebačka banka (ZABA), Privredna banka, Zagreb (PBZ), Raiffeisenbank Austria (RBA) and Erste and Steiermärkische bank (ERSTE), as these were the banks at which they had accounts. These four banks were chosen for our further research. The content of the questionnaire was based on seven aforementioned criteria and four banks that were chosen for this research. The questionnaire was divided into two parts. The first part consisted of the list of seven criteria, and the respondents had to make pair-wise comparisons of the criteria. The aim of the second part of the questionnaire was to obtain the relative preference of one bank over another with respect to each criterion. The respondents were required to make pair-wise comparisons of the four banks with the respect to each of the seven criteria. The findings of this study indicate that undergraduates place high emphasis on recommendations by parents and family members (0.300), availability of privileges for undergraduates (0.273) and on convenient location (0.143). On the 4th place is ranked the criterion high interest rate on saving. The criterion bank’ s image is ranked on the fifth place. Criteria "Low interest rate on loans" and "Competency and kindness of bank officials" are both ranked low in importance. According to the results obtained for the second part of the questionnaire, PBZ is most preferred bank for five of seven criteria. These are: recommendations by parents and family members, high interest rates on saving, bank’ s image, low interest rate on loans, competency and kindness of bank officials. Despite the fact that PBZ is the most preferred bank, it is remarkably that ZABA has the first rank for the second and third most important criterion: availability of undergraduate privileges and convenient location of the bank and its ATM’ s. Overall preferences are as follows: the most preferred bank among undergraduates is PBZ. Although ZABA is the second preferred bank, the undergraduates favour this bank almost as much as PBZ. Both banks ZABA and PBZ are more than twice preferred to RBA and ERSTE. These results could be of great importance for bank management. Every segment of market has its own characteristics and needs. The segment of undergraduates is very interesting and it can be an excellent business opportunity for banks. It is necessary to identify selection criteria for the segment of market they want to attract. The results of this study provide information about the importance of several factors which influence the undergraduates’ bank selection decision and give information about specific attributes on which each bank is the most or the least preferred.

decision making; banks; Analytical Hierarchy Process

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