Search quality in the financial services industry: a contingency perspective

Abstract

Financial services are inherently intangible and high on experience and credence qualities. In order to promote them effectively, a service provider must first identify the dimensions used by consumers to evaluate the service quality of banks prior to becoming a customer. Based on responses from customers of a credit union, the current study identifies four dimensions – empathy/assurance, tangibility, routine transaction cost, and loan transaction cost – which form the domain of consumer's evaluation of search quality in the financial services industry. Further, the relationships between these search quality factors and overall assessment of respondents' current bank is also investigated. The results indicate that higher levels of importance accorded to search quality factors, especially loan transaction costs, were associated with extreme (good or bad) assessment of current bank. The importance accorded to these search quality factors was also tested against contingency variables such as gender, marital status, age, household income, employment status, education, and house ownership. Of these, gender and home ownership emerged as the strongest determinants. These findings suggest that bank managers should be cognizant of search quality factors and their relations with the appropriate contingency variables.