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Who uses bank debit cards?
W H O USES B A N K D E B I T CARDS? Plastic bank cards are increasing, but their users aren't. Banks must overcome consumer resistance to electronic funds transfer systems by more effectively marketing their product.
THOMAS C. PORTER, ROBERT A. SWERDLOW, AND WILLIAM A. STAPLES
The number of plastic bank cards now prevalent in our society has increased rapidly. In 1975 there were approximately ten million bank cards in circulation. By 1977 the number had doubled to t w e n t y million. ~ A recent study projects that by 1986 as many as 70 percent of all personal deposit accounts will have plastic card access. ~ Although the longterm effects of this p h e n o m e n o n are not known, the system will probably m o d i f y social relationships and banking interests in America. a The possibility of a checkless society in the next few years appears unlikely, but a move toward that goal is being made. In 1977 approximately twenty-seven billion checks were processed through financial institutions.
1. J . M . Grant, "Bank Credit Cards," in Marketing EFT for Profitability (Chicago: Bank Marketing Association, 1977): 67. 2. Grant: 67. 3. Grant: 63.
T H O M A S C. P O R T E R is d i r e c t o r of m a r k e t i n g for B r e n t o n Banks, Inc., in Des Moines. R O B E R T A. S W E R D L O W is in t h e m a r k e t i n g d e p a r t m e n t at L a m a r University. W I L L I A M A. S T A P L E S is a m e m b e r o f t h e m a r k e t i n g f a c u l t y at Drake University.
This figure has been rising at a steady rate of approximately seven percent annually.4 The costs associated with check processing and the losses from bad debts are causing a greater interest in debit card use. With literally thousands of banks and savings and loan institutions issuing these cards, one major problem is emerging: customer reluctance and refusal to use the card. What accounts for this consumer reluctance to use electronic funds transfer (EFT) equipment? Who are the user and nonuser cardholders? What are the particular characteristics of the nonuser?
HISTORICAL DEVELOPMENTS Electronic funds transfer refers to a technological and organizational network that allows transactions to be initiated and executed with electronic impulses and machinecomprehensible data. s An EFT system must have three basic components. First, its c o m 4. "Electronic Banking: A Retreat from the Cashless Society," Business Week, April 18, 1977: 80-90. 5. James T. Powers, "Retailers and EFT: Both Chicken and Egg Have to Come First," Management Controls (Peat, Marwick, Mitchell and Co.), January-February 1977: 10-13.
FEBRUARY 1979
7.~
THOMAS C. PORTER, ROBERT A. SWERDLOW, AND WILLIAM A. STAPLES
76
ponents should be electronic. Second, there must be funds, or economic value, exchanged; if no value exchange takes place, the transaction will be rejected b y the system. Third, the funds must actually be transferred from one party to another b y electronic means. In all states, each bank has its own hardware and software for the processing of EFT transactions with its own card. However, the state of Iowa, a leader in the EFT movement, has instituted a new system. The Iowa Transfer System (ITS) was created b y the state legislature in J u l y 1976. This statewide electronic banking system is currently utilizing a computerized system that maintains two primary functions: ( 1 ) T h e system offers interchange among all financial institutions in Iowa, and (2) the system guarantees low-cost access to the " E F T m a r k e t " for small- to medium-sized financial institutions that would normally be precluded from an EFT system because of the extremely high capital investment necessary. The ITS is presently comprised of 550 Iowa banks out of a total of 658. The total deposits of the 550 member banks represent 99.1 percent of the total deposits in the state. Access terminals are located on bank premises and in retail outlets throughout the srate. As an example, a cardholder from a bank in Des Moines can activate his account in a grocery store in Cedar Rapids. The problem that confronts the ITS and its member banks is consumer acceptance. When the ITS was formed, two basic problems were thought to be satisfied. First, bankers needed a m e t h o d t o reduce the growing volume of paper that was threatening to cripple check-clearing systems. Second, a system was needed which would reduce cost by automating labor-intensive banking functions. Both of these needs, if satisfied b y the ITS, would lower cost and improve bank earnings. However, one basic c o m p o n e n t of success was omitted. The "marketing concept," the notion of consumer orientation and satisfaction, was conspicuously absent. Because of
BUSINESS HORIZONS
the lack of consumer orientation, education, and satisfaction, the system has not been widely accepted b y consumers-cardholders as well as noncardholders.
EFT CONSUMERS A large bank holding company agreed to participate in our study of EFT systems b y providing basic secondary data and a sample of its customers. The bank holding company originally issued approximately 40,000 EFT debit cards to its account holders. However, through previous analysis, it was determined that only 14 percent of the cards issued had been used even once. Our research does not try to differentiate between heavy and light EFT users, b u t to compare the characteristics of users and nonusers to determine if there are any significant differences. A total of ninety telephone interviews were completed, it must be noted at this point that all of the potential respondents called were known to have had debit cards issued to them eight months prior to the study. An interesting point appeared immediately. Of the ninety respondents, only fiftythree (59 percent) answered " y e s " to the question, "Do y o u have one of the plastic cards which can be put in a machine either to obtain cash or transfer funds from your a c c o u n t ? " Of the fifty-three, twenty-one possessed multiple debit cards. Thirty-seven respondents (47 percent) said that they did not have a card, and only two planned on getting a card. The following comparisons are based on the two groups studied. The customers who are aware they have a card are called the AC group. The group of nonaware consumers, although a card was issued to them, are classified as the NAC group. Figure 1 denotes the differences between the two groups in terms of their feelings about losing control over their banking. It can be seen that the NAC group more strongly agreed that it would lose control b y
Who Uses Bank Debit Cards?
FIGURE 1 "Most people feel that they lose control over their banking if they use the plastic card."
59% :::::::::::::::::::::: iii[ii!Tiliiiiii~!i{!iiiiiiiiiiiiiii!!ii!!{t
iii{iiiii(iiii~:iiiii!i~i~!i!
49%
::::::::::::::::::::::::::::::::::::::: !ij!iiiiiii!ii!iiiiiiiiiii!i!il ::::::::::::::::::::::::::::
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37%
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32%
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iiiii iiill 1 i{iiii{i{ii;i{ Disagree
Agree
D
4%
AC group
49 percent compared to 37 percent for the AC group. The disparity is even greater in responses to the statement on disagreement. Fifty-nine percent of the AC group disagreed that they would lose control while only 19 percent of the NAC group disagreed. When confronted with the statement, "Most people don't trust the plastic card machines," 24 percent of both groups agreed. However, as shown in Figure 2, twice as many AC consumers disagreed with this statement as did NAC members (65 percent versus 32 percent').
No opinion
[~
NAC group
Similar opinion patterns appeared when respondents were asked to respond to the statement, "The ability to use the plastic cards to obtain cash from machines during nonbanking hours is important." Figure 3 depicts the responses from both groups. Seventy-six percent of the AC group agreed with this statement, while 49 percent of the NAC group agreed. Obviously, after-hours convenience is very important to the users and at least somewhat important even to the nonusers.
FEBRUARY
1979
THOMAS C. PORTER, ROBERT A. SWERDLOW, A N D WILLIAM A. STAPLES
FIGURE 2 "Most people don't trust the plastic card machines."
65% ilili~i~i~iziiiiiiiiiiiii!iii!ili~:i:iii:i :::::::::::::::::::::::::::::::
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::::::::::::::::::::::::::::::
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24%
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i::il;i;i;i{iiiililililililili;~:i:ililiiii iiiiiiiii!iiiiii~iii!ii-~ii!iiiJ Agree
Disagree
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To test the hypothesis of the Iowa Transfer System for the location of automatic teller machines (ATMs) at convenient shopping locations, the statement, "The ability to combine banking and shopping is important," was asked. The majority in both groups agreed with this statement, 70 percent in the AC group and 51 percent in the NAC group. Figure 4 shows the comparison of responses to this statement.
BUSINESS HORIZONS
No opinion
N A C group
Because ATMs can be used at nonbank locations, the statement, "Most people want a demonstration on h o w to use the plastic card," was presented to both groups. As Figure 5 shows, 70 percent of the AC group agreed and 50 percent of the NAC group agreed. Therefore, it would seem that consumer education is basic to acceptance and usage. Demographically, the two groups appear
Who Uses Bank Debit Cards?
FIGURE 3 "The ability to use the plastic card to obtain cash from machines during nonbanking hours is important."
76%
43%
7oc
20%
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i i i i !i i i i i i i i i i !i i i i ~
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Disagree
Agree
AC group
No opinion
NAC group
FEBRUARY !979
THOMAS C. PORTER, ROBERT A. SWERDLOW, A N D WILLIAM A. STAPLES
FIGURE 4 "The ability to combine banking and shopping is important."
70%
I
ji;i;ii;ii;Jiiii!iil :::::::::::::::::::::::::::::::::::::::::::
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ii!iiiiii!iiiiiiii i!!it i:!:i:!:!:i:!:i;!:i:!:i:i:i!;:i:i:;:i:?:i:l !~!i!~!iiii!i:i!i!i:i;i~!;i~?;~!!;!!!!!?!!! ...,........... ..............
ii!i;i!ii!iiii!!iii!i!i!ili!iiiiiiiii! :::::::::::::::::::::::::::::::::::::::::::
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80
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!i!iiiii!iiiiiiii!iiiiiiiiiii! .......................=
iiii!i!!!i!i!!i!!iiiii! !i!i~i!i!i!iil!iiiiiii~i~i!iiii!ii~i~t :::::::::::::::::::::::::::::::::::::::::: ::::::::::::::::::::::::::::::::::::::::::
!iiiiii~!~iiiiiii~i~ili!!i!i!!iii! ::::::::::::::::::::::::::::::::::::::::::
8%
1%
AC group
to be somewhat similar. Occupationally, both groups are composed of a high percentage of professional and managerial people, as shown in Figure 6. Both groups had a high percentage of married respondents (70 percent) and a relatively high educational level. One area of major difference between AC and NAC was age. The NAC group was skewed high (51
BUSINESS HORIZONS
No opinion
Disagree
Agree
El
NAC group
percent over 40), while only 36 percent of the AC group was over 40. Additionally, larger percentages of the AC group than the NAC group were in the younger classification levels, as shown in Figure 7. In summary, the user group had more confidence and trust in both electronic funds transfer equipment and bank debit cards.
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!!!!i!i~i~i~ii!i!i!!~!i!iTii!i!iiii!i!#l
ii{i{ii{i{i{i{i{{iii{i{i{{iii}{iil ~iiiiSiiii;iiiili;iii!i!i;iiiiiiili;iil;ii] :::::::::::::::::::::::::::::::: ::::::::::::::::::::::::::::::::::: :i!ii!~2~iiii?!i!i!ii!i~ I
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THOMAS C. PORTER, ROBERT A. SWERDLOW, AND WILLIAM A. STAPLES
FIGURE 6 Demographics: Occupation
34%
35%
::::::::::::::::::::::::::::::::::::::::::::
..............
::::-:::::::
..:...........
....
19%
13%
13%
11%
10% 'i;i;i'i!ii!ii!i!iiiii~!ii~!i!iU:!:::!~! ........ ............. .....
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6%
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Professional
Sales
Management
Clerical
Operative
82
13% 7% 4%
,,0%
0% Craft
N
Housewife
Student
AC group
D
MARKETING EFT SYSTEMS The new challenge for the banking community is to market the bank debit card systems effectively. The introduction of EFT banking presents a radical departure from past consumer banking methods. An initial step in a bank's marketing effort should be the develop-
BUSINESS HORIZONS
Retired
2%
0% None
NAC group
ment of consumer profiles through market segmentation studies. More specifically, financial institutions must depart from the use of demographic data alone. It is no longer enough to know only the age, sex, occupation, education, and income of bank customers. Further research must uncover what benefits people expect from using EFT systems.
Who Uses Bank Debit Cards?
FIGURE 7 Demographics: Age
51%
36%
36%
: : : . : : : . . : . : . . :.:: ...
23%
:+:.
ii!:ii!i:ii!iiiiiii;iiiii:i! !i!i ili;ii;iiiii! =====================================
22%
jj{~{: :!i:iii{ {ii{:{:!:!:!!{~ii{i{:!
23%
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i i i!i i i i i i i i i i !i!i i i i i i!i i !iiiiiii!iiiiiiiiiiiiiiiiiiiiiiiiii i[{!ijj!!J}!i!~ili!ilji~!i!i!iii~iJ~il
ili}?il)i!})ii?!ii!iii?ii?iii!iii ii~ii!i!;)ili!(i~ii!(!(~iiiii~(!iiiii!iii~! !:!:i:)i:~:i:!:!:~:i:;i:!~:i:)i:~!:!:1
!~!i~5i![i!i!i!~!Ji~ii!/!![5Ji£i;iiS~!i :::::::::::::::::::::::::::::::::::::::::
i~iii:i~!~!!! .....................~......... ){:!'i:!:!:i:i:~:i:i:~:i:i:i%ii~ili~ili:
4%
3%
1 Under 21
!i!iiiii?i?iil)] iiiiiiiiiiii!iiiiiiiiil
Ui121211
:iCi:i:ilili;5:il
Some market segments may desire safety and security while others may be more interested in the convenience of different options for conducting their banking activities, Many customer segments would probably desire dependable and reliable EFT systems that are easy to use. Along with the desired customer benefits, additional geographic segmentation is necessary. In order to locate EFT equipment, a bank will need to know not only where the customer lives, but those locations where an individual goes for employment, shopping, or recreation. Another form of segmentation, volume or use, should enable a bank to
J
iiiiiiiiii{ii{gli{iii{i!i 30-39
[~
83
i!i~!ji{ji!j~iji~ii!)i!i!{!il!i!ii?iii!
-):: ?!)57!::::::1!)!1!)!:~:!:2::?!i!i:~ ~ ;.:.:2:2":2;:.;:.: <<:;2:
21-29
AC group
?i!i i i i i i i i i i i i i i i i i i i!i i
Over 40
NAC group
identify which customers are heavy, medium, or light users of existing EFT services. This method of segmentation will also help to pinpoint which bank customers are nonusers of the services. The construction of consumer profiles through demographic, benefit, geographic, and volume segmentation should aid a bank in identifying its target markets. With an indepth knowledge of the consumer market, a bank can more effectively plan, price, promote, and distribute its EFT services. An effective marketing program should provide a bank with additional customers and a competitive advantage. EE]
FEBRUARY
1979
THOMAS C. PORTER, ROBERT A. SWERDLOW, AND WILLIAM A. STAPLES
The number of plastic bank cards now prevalent in our society has increased rapidly. In 1975 there were approximately ten million bank cards in circulation. By 1977 the number had doubled to t w e n t y million. ~ A recent study projects that by 1986 as many as 70 percent of all personal deposit accounts will have plastic card access. ~ Although the longterm effects of this p h e n o m e n o n are not known, the system will probably m o d i f y social relationships and banking interests in America. a The possibility of a checkless society in the next few years appears unlikely, but a move toward that goal is being made. In 1977 approximately twenty-seven billion checks were processed through financial institutions.
1. J . M . Grant, "Bank Credit Cards," in Marketing EFT for Profitability (Chicago: Bank Marketing Association, 1977): 67. 2. Grant: 67. 3. Grant: 63.
T H O M A S C. P O R T E R is d i r e c t o r of m a r k e t i n g for B r e n t o n Banks, Inc., in Des Moines. R O B E R T A. S W E R D L O W is in t h e m a r k e t i n g d e p a r t m e n t at L a m a r University. W I L L I A M A. S T A P L E S is a m e m b e r o f t h e m a r k e t i n g f a c u l t y at Drake University.
This figure has been rising at a steady rate of approximately seven percent annually.4 The costs associated with check processing and the losses from bad debts are causing a greater interest in debit card use. With literally thousands of banks and savings and loan institutions issuing these cards, one major problem is emerging: customer reluctance and refusal to use the card. What accounts for this consumer reluctance to use electronic funds transfer (EFT) equipment? Who are the user and nonuser cardholders? What are the particular characteristics of the nonuser?
HISTORICAL DEVELOPMENTS Electronic funds transfer refers to a technological and organizational network that allows transactions to be initiated and executed with electronic impulses and machinecomprehensible data. s An EFT system must have three basic components. First, its c o m 4. "Electronic Banking: A Retreat from the Cashless Society," Business Week, April 18, 1977: 80-90. 5. James T. Powers, "Retailers and EFT: Both Chicken and Egg Have to Come First," Management Controls (Peat, Marwick, Mitchell and Co.), January-February 1977: 10-13.
FEBRUARY 1979
7.~
THOMAS C. PORTER, ROBERT A. SWERDLOW, AND WILLIAM A. STAPLES
76
ponents should be electronic. Second, there must be funds, or economic value, exchanged; if no value exchange takes place, the transaction will be rejected b y the system. Third, the funds must actually be transferred from one party to another b y electronic means. In all states, each bank has its own hardware and software for the processing of EFT transactions with its own card. However, the state of Iowa, a leader in the EFT movement, has instituted a new system. The Iowa Transfer System (ITS) was created b y the state legislature in J u l y 1976. This statewide electronic banking system is currently utilizing a computerized system that maintains two primary functions: ( 1 ) T h e system offers interchange among all financial institutions in Iowa, and (2) the system guarantees low-cost access to the " E F T m a r k e t " for small- to medium-sized financial institutions that would normally be precluded from an EFT system because of the extremely high capital investment necessary. The ITS is presently comprised of 550 Iowa banks out of a total of 658. The total deposits of the 550 member banks represent 99.1 percent of the total deposits in the state. Access terminals are located on bank premises and in retail outlets throughout the srate. As an example, a cardholder from a bank in Des Moines can activate his account in a grocery store in Cedar Rapids. The problem that confronts the ITS and its member banks is consumer acceptance. When the ITS was formed, two basic problems were thought to be satisfied. First, bankers needed a m e t h o d t o reduce the growing volume of paper that was threatening to cripple check-clearing systems. Second, a system was needed which would reduce cost by automating labor-intensive banking functions. Both of these needs, if satisfied b y the ITS, would lower cost and improve bank earnings. However, one basic c o m p o n e n t of success was omitted. The "marketing concept," the notion of consumer orientation and satisfaction, was conspicuously absent. Because of
BUSINESS HORIZONS
the lack of consumer orientation, education, and satisfaction, the system has not been widely accepted b y consumers-cardholders as well as noncardholders.
EFT CONSUMERS A large bank holding company agreed to participate in our study of EFT systems b y providing basic secondary data and a sample of its customers. The bank holding company originally issued approximately 40,000 EFT debit cards to its account holders. However, through previous analysis, it was determined that only 14 percent of the cards issued had been used even once. Our research does not try to differentiate between heavy and light EFT users, b u t to compare the characteristics of users and nonusers to determine if there are any significant differences. A total of ninety telephone interviews were completed, it must be noted at this point that all of the potential respondents called were known to have had debit cards issued to them eight months prior to the study. An interesting point appeared immediately. Of the ninety respondents, only fiftythree (59 percent) answered " y e s " to the question, "Do y o u have one of the plastic cards which can be put in a machine either to obtain cash or transfer funds from your a c c o u n t ? " Of the fifty-three, twenty-one possessed multiple debit cards. Thirty-seven respondents (47 percent) said that they did not have a card, and only two planned on getting a card. The following comparisons are based on the two groups studied. The customers who are aware they have a card are called the AC group. The group of nonaware consumers, although a card was issued to them, are classified as the NAC group. Figure 1 denotes the differences between the two groups in terms of their feelings about losing control over their banking. It can be seen that the NAC group more strongly agreed that it would lose control b y
Who Uses Bank Debit Cards?
FIGURE 1 "Most people feel that they lose control over their banking if they use the plastic card."
59% :::::::::::::::::::::: iii[ii!Tiliiiiii~!i{!iiiiiiiiiiiiiii!!ii!!{t
iii{iiiii(iiii~:iiiii!i~i~!i!
49%
::::::::::::::::::::::::::::::::::::::: !ij!iiiiiii!ii!iiiiiiiiiii!i!il ::::::::::::::::::::::::::::
I!iii!ili!iiiii?iii!i!i!iiiii!iii!i!i!i!iiiiil i:!:!:~:ii:!:i:{:~:i:!:i:i:i:{i:{:i:{:~:l
I
iiiiiiiiiiiiiiiiiiiiiiiii!iiiiiiiiiiii!iiiiij iiii!iiii!i;ii!!ii!!iiiiiiiiiiiiiiii;ii!
37%
!9!:!:i:;:!:!:i:i:!:!:i:i:i:i:i:i:!:i:)i4 :!:i)ii~:~iiiiiZii):iii:ii~iiii!i;i~iii:iil :::::::::::::::::::::::::::::
~!i;ii~!iiiiiii!ilililil;il ::::::::::::::::::::::::::::::::::::::::::
32%
i[i!+J!iiilf!ili222iilZiiiiJ2iiiSiffiiiff[~]jrl] )i???)i?i?ii}i?i!ii)i?)ii?iii!i?}??l !!iiiiiiii?iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiill ~ilfSi?ili221iiii!iiSiSi!!Jiiii!iiii!!ii!ifill ;:}~?????:?:)::!?}?;?!?i?:)???#i?~?;?:l
~iiii!21iilfli![!iJ!;j/!ii~ili{iliJiii!iil/[~l
15!;s2555111~iisiisrrs!~iiS!i?2!i;!i;5151
!i)?i?i?i!??!?}i)iiii?i}!)i)iiiiil ii!i!!{!i!!ilfi~!iiii!!!21S;!i}!iii!ij?i!i!il
i))}i)?}));)i))?}i)!));}))i~i~i))i))))})))))i!-i}i}iiiii2iiiiiiiiiii!!iiiiiiiiiiii!i}iiiiiii]
iiiiiiiiiiiii!iiii!il iii21:;ii2iii2i!ilil{ii2;iii2it ??i?i)i??ii}i?[i??iil !?i}i i?i}i i?i ?i?l i!~ii}~i?:)i!i~il}ii~?i!??i~):i!}!i!il}t
iiiii iiill 1 i{iiii{i{ii;i{ Disagree
Agree
D
4%
AC group
49 percent compared to 37 percent for the AC group. The disparity is even greater in responses to the statement on disagreement. Fifty-nine percent of the AC group disagreed that they would lose control while only 19 percent of the NAC group disagreed. When confronted with the statement, "Most people don't trust the plastic card machines," 24 percent of both groups agreed. However, as shown in Figure 2, twice as many AC consumers disagreed with this statement as did NAC members (65 percent versus 32 percent').
No opinion
[~
NAC group
Similar opinion patterns appeared when respondents were asked to respond to the statement, "The ability to use the plastic cards to obtain cash from machines during nonbanking hours is important." Figure 3 depicts the responses from both groups. Seventy-six percent of the AC group agreed with this statement, while 49 percent of the NAC group agreed. Obviously, after-hours convenience is very important to the users and at least somewhat important even to the nonusers.
FEBRUARY
1979
THOMAS C. PORTER, ROBERT A. SWERDLOW, A N D WILLIAM A. STAPLES
FIGURE 2 "Most people don't trust the plastic card machines."
65% ilili~i~i~iziiiiiiiiiiiii!iii!ili~:i:iii:i :::::::::::::::::::::::::::::::
;ii;i;i:;i;iiiiiiiii;i:;:i:;:i: -'..7.'::.':':':':':':'. ..... ............... ":'::7:':".':':'::':':"'' ................
iiiii,:iiii!i:iliiiiiiji!ililiiii:i iii :;ii;:;;i;ili;ili;i;iil;jili21;ii~iiii
44%
........................
i i i:;::ii i i i i i i i i i!i!i!i i : . . . . . . . . . . . . . . .
::::::::::::::::::::::::::::::
32% ::::::::::::::::::::::::::::::::::::
24%
iiiiiiiiiiiiiiiiiiiiii
24%
iiiil;iil;iiii!il)iiiii;iiiiiiiiiil;ii!;il
i!i!i!iiiili!iliiiiii~iiii!iiiiii!iiiiiii ;ilililiiii:i:;::i;ili;;ii;;:::::;:i:i ii{iiii{!~!!iiiiiiiilililili!~!i!iliiiill iiiiiii!iiiiiiiiiiiiiiiiiiiiii!iiiiiiiiiii
::2::::::: :,.:.:.:.:, .:-:::::::::
78
~:'::::::::: ,.::....
.....,,
. ........ .....
:2:2:722:;2:2:2:2:2:72:'2.2.
: !!!~!ii~i!............................. ' :+:.:.:-:.:
::.:--:.
•.
:
........... ................ :::::::::::::::::::::::::::::::::::::::::
ii~i:!~ii~il~ii~ii:~:i:i:i:i i:i:iii:iii|
iiiiiii~iiiiii~iiiiii:i!iiiiiiii~i~
11%
ili i i i l)i i i i i}i i i ?i}i i i i
iiiiiiiiiiiii!i!iiiii!il
".'.'.'..7.'.'.'.'.'.'.'.77.'.'.': ".'.7.7.'.'.'.'.'.'.'.'.'.'..'.'.': ":'.'7:':':':":':'."':':':':" I
i::il;i;i;i{iiiililililililili;~:i:ililiiii iiiiiiiii!iiiiii~iii!ii-~ii!iiiJ Agree
Disagree
AC group
To test the hypothesis of the Iowa Transfer System for the location of automatic teller machines (ATMs) at convenient shopping locations, the statement, "The ability to combine banking and shopping is important," was asked. The majority in both groups agreed with this statement, 70 percent in the AC group and 51 percent in the NAC group. Figure 4 shows the comparison of responses to this statement.
BUSINESS HORIZONS
No opinion
N A C group
Because ATMs can be used at nonbank locations, the statement, "Most people want a demonstration on h o w to use the plastic card," was presented to both groups. As Figure 5 shows, 70 percent of the AC group agreed and 50 percent of the NAC group agreed. Therefore, it would seem that consumer education is basic to acceptance and usage. Demographically, the two groups appear
Who Uses Bank Debit Cards?
FIGURE 3 "The ability to use the plastic card to obtain cash from machines during nonbanking hours is important."
76%
43%
7oc
20%
'i)iiii!iiiil)iii!iiii!!i!iiii~il;iill
i i i i !i i i i i i i i i i !i i i i ~
================================= i ii!i}~!iii~iiiiii!i!i!i!i!i!!@!iii!i!~il
iiiiii~iiiiiiiiiiiiiiiii~iiiiiiii iiiii}i}iiiiiiiii}iiii!i ii!i!i!iiii ;i!ii!i iii iiii!!!!!!iiiiiii iiiiiii!i!i!i;iiiii!il
8%
:~:!iiii:i21!i2~!i!i!i!i!i!!!!;!;!:!£i)i
iii~ii!i!i!iiiiiiiiiijiiii!iiiiiiiig!ii
Disagree
Agree
AC group
No opinion
NAC group
FEBRUARY !979
THOMAS C. PORTER, ROBERT A. SWERDLOW, A N D WILLIAM A. STAPLES
FIGURE 4 "The ability to combine banking and shopping is important."
70%
I
ji;i;ii;ii;Jiiii!iil :::::::::::::::::::::::::::::::::::::::::::
i!iii!iii!iii!iiiiiii!t
:iiiiii!!iiiiiiiiii!iii!i!i!iiil
:ii!iiiiiii!!i!iii!!!i!ii!ii!!i!!
i!~i~i~!~i~!~!i!iiiiiiiilliiiiiiil 51%
ii!iiiiii!iiiiiiii i!!it i:!:i:!:!:i:!:i;!:i:!:i:i:i!;:i:i:;:i:?:i:l !~!i!~!iiii!i:i!i!i:i;i~!;i~?;~!!;!!!!!?!!! ...,........... ..............
ii!i;i!ii!iiii!!iii!i!i!ili!iiiiiiiii! :::::::::::::::::::::::::::::::::::::::::::
41%
iiiiiiiil
iiii?iiiiilEiiiii?iiiii:i ......:..............::
i!i!!!!!!i:~ii~!!!!!i!iiii!i!!i!i!!!! ........................:
:.;:.:.:.:.,._..,..........,...=
80
!2!2f2!2{if??~' iJi'f2~2f2!2{2f2!2f2!27, :::::::::::::::::::::::::::::::::::::::::: ::::::::::::::::::::::::::::::::::::::::::
!i!iiiii!iiiiiiii!iiiiiiiiiii! .......................=
iiii!i!!!i!i!!i!!iiiii! !i!i~i!i!i!iil!iiiiiii~i~i!iiii!ii~i~t :::::::::::::::::::::::::::::::::::::::::: ::::::::::::::::::::::::::::::::::::::::::
!iiiiii~!~iiiiiii~i~ili!!i!i!!iii! ::::::::::::::::::::::::::::::::::::::::::
8%
1%
AC group
to be somewhat similar. Occupationally, both groups are composed of a high percentage of professional and managerial people, as shown in Figure 6. Both groups had a high percentage of married respondents (70 percent) and a relatively high educational level. One area of major difference between AC and NAC was age. The NAC group was skewed high (51
BUSINESS HORIZONS
No opinion
Disagree
Agree
El
NAC group
percent over 40), while only 36 percent of the AC group was over 40. Additionally, larger percentages of the AC group than the NAC group were in the younger classification levels, as shown in Figure 7. In summary, the user group had more confidence and trust in both electronic funds transfer equipment and bank debit cards.
656I X'kIVfl~I R a g
"LL6I 'au.WoVl~ gauo ~ aq7 ql.~m aavf,~aguI s, u v W 'uo.neDoss V ~u!la:,iJeiAi :,iuefl "9
9"sa~.pnls qaJeas -aJ aamnsuoa gugs.~xa ~II.~a sappu!oa Xlaso P aIIJoad aasn aqj~ "luamaaa.~tp~e ieuo.~l~anpa jo Iaaa I .~aq~.q e pu-e suo~.l~dnaao i e ! a a ~ u e t u .m
dnoJ6
3VN D
uo!u!do oN
IeUO.~SSajo~d q:l.~ slenpD.~pu.~ pa.m~m '.~agunoX XlVem~.ad p a p n p u ! dnox~ ~asn aq~ l~t[1 paleaA -a..i uo~lElj.tlojut" a . ~ q d ~ o t u a p aria ,Aii~uId •sa~.l.~A~.~tas gu!ddoqs pug gUplU~ q am.qmoa ol OSl~ l n q sanoq aa:tje gUplU~ q m a~egua oa 31[uo :mu maria alqeua p i n o ~ stua~tsXs Kd~t jo ash aqa aeqa paaa.qaq d n o ~ s.~qa 'os W
dnoJ6 ~
aaa6es!o
o0,~6V
!ii!.!.!i!.i .i %~
%OZ
%6 L
......... i!i!iiiiii:ii i:!i iiiililiiiiii:i .................
~8
iiiiiiiiiiii!iiiiiiiii!
%Og
~[i!!~!i~Jiii!ii~2i!ii!i!ilili~?i!i!i!!i~l ji!iiii2i2i21111i2iiii;iilflil ~iigii]!iiii)iiiiiiiiii!igliiiiiiiiiiilg}ill
ii!i!~iii~iiiii!iiiiiiiiiiiiiiiiiiiiiiiii:!
i !i!i!i!i!i!i!ij!i!;!i i i li i i i i i ! !iiiii:2:ili!jigiizgiiilg:g:iiiii!iisi:ii i!~il!):i:iii!iiiiiiiiii~iiiilli!iiii-lii :::::::::::::::::::::::::::::::::::::::::: :::::::::::::::::::::::::::::::::::::::::::
jii!ii!iiiiiili!iiiii::iiiiiiiiiiiiiii!ii!]
%0S
i~i~i!;i!iiiii~i~i~iiiiii~i~i;i! .......................................... ii{i!!!:!i!i~i~!i!i!!!!~!{ii~il!i!i!i!!:1
i!i~:!i!iiii~i~i~i~3ilijiji~i~!~J :i:i~::!:!:~:~:~:i:~:!:!:~:~:i:i:i:~!:!:!| iiiiiiiiiiiiiii?iiiii#iiljilj}!ii}iiiiill !:i:i:!:~:i:~:i:!:i:!:~:i:i:i:i:i:!:i:i:f:l
!!!!i!i~i~i~ii!i!i!!~!i!iTii!i!iiii!i!#l
ii{i{ii{i{i{i{i{{iii{i{i{{iii}{iil ~iiiiSiiii;iiiili;iii!i!i;iiiiiiili;iil;ii] :::::::::::::::::::::::::::::::: ::::::::::::::::::::::::::::::::::: :i!ii!~2~iiii?!i!i!ii!i~ I
%OL
,,'Wea a.nseld art1 ash oa ~ o q jo u o r . l ~ l s u o m a p e :~ule~ aldoad lSOlN,, g H~I~Old
gsp,tv o l.~qatl ~/uvff sasfl oy/H
THOMAS C. PORTER, ROBERT A. SWERDLOW, AND WILLIAM A. STAPLES
FIGURE 6 Demographics: Occupation
34%
35%
::::::::::::::::::::::::::::::::::::::::::::
..............
::::-:::::::
..:...........
....
19%
13%
13%
11%
10% 'i;i;i'i!ii!ii!i!iiiii~!ii~!i!iU:!:::!~! ........ ............. .....
10%
6%
i;i(iii~i:f:i:i:f:!:i:i:i:!:i:f:J:!:~:~r~:~n
~;:iiii i'ii.li.i!iliS.:# = I .:.:.:.x.:.:.:x.:+:+:.:.:.:.:.,.,.,
:':':'!i!~!;!*i:::i!!i![!!i!i!!i!?::::::!:i
Professional
Sales
Management
Clerical
Operative
82
13% 7% 4%
,,0%
0% Craft
N
Housewife
Student
AC group
D
MARKETING EFT SYSTEMS The new challenge for the banking community is to market the bank debit card systems effectively. The introduction of EFT banking presents a radical departure from past consumer banking methods. An initial step in a bank's marketing effort should be the develop-
BUSINESS HORIZONS
Retired
2%
0% None
NAC group
ment of consumer profiles through market segmentation studies. More specifically, financial institutions must depart from the use of demographic data alone. It is no longer enough to know only the age, sex, occupation, education, and income of bank customers. Further research must uncover what benefits people expect from using EFT systems.
Who Uses Bank Debit Cards?
FIGURE 7 Demographics: Age
51%
36%
36%
: : : . : : : . . : . : . . :.:: ...
23%
:+:.
ii!:ii!i:ii!iiiiiii;iiiii:i! !i!i ili;ii;iiiii! =====================================
22%
jj{~{: :!i:iii{ {ii{:{:!:!:!!{~ii{i{:!
23%
:??i?!x+i?i?!??:
i i i!i i i i i i i i i i !i!i i i i i i!i i !iiiiiii!iiiiiiiiiiiiiiiiiiiiiiiiii i[{!ijj!!J}!i!~ili!ilji~!i!i!iii~iJ~il
ili}?il)i!})ii?!ii!iii?ii?iii!iii ii~ii!i!;)ili!(i~ii!(!(~iiiii~(!iiiii!iii~! !:!:i:)i:~:i:!:!:~:i:;i:!~:i:)i:~!:!:1
!~!i~5i![i!i!i!~!Ji~ii!/!![5Ji£i;iiS~!i :::::::::::::::::::::::::::::::::::::::::
i~iii:i~!~!!! .....................~......... ){:!'i:!:!:i:i:~:i:i:~:i:i:i%ii~ili~ili:
4%
3%
1 Under 21
!i!iiiii?i?iil)] iiiiiiiiiiii!iiiiiiiiil
Ui121211
:iCi:i:ilili;5:il
Some market segments may desire safety and security while others may be more interested in the convenience of different options for conducting their banking activities, Many customer segments would probably desire dependable and reliable EFT systems that are easy to use. Along with the desired customer benefits, additional geographic segmentation is necessary. In order to locate EFT equipment, a bank will need to know not only where the customer lives, but those locations where an individual goes for employment, shopping, or recreation. Another form of segmentation, volume or use, should enable a bank to
J
iiiiiiiiii{ii{gli{iii{i!i 30-39
[~
83
i!i~!ji{ji!j~iji~ii!)i!i!{!il!i!ii?iii!
-):: ?!)57!::::::1!)!1!)!:~:!:2::?!i!i:~ ~ ;.:.:2:2":2;:.;:.: <<:;2:
21-29
AC group
?i!i i i i i i i i i i i i i i i i i i i!i i
Over 40
NAC group
identify which customers are heavy, medium, or light users of existing EFT services. This method of segmentation will also help to pinpoint which bank customers are nonusers of the services. The construction of consumer profiles through demographic, benefit, geographic, and volume segmentation should aid a bank in identifying its target markets. With an indepth knowledge of the consumer market, a bank can more effectively plan, price, promote, and distribute its EFT services. An effective marketing program should provide a bank with additional customers and a competitive advantage. EE]
FEBRUARY
1979