A transformative perspective of financial services for the unbanked

Abstract

Purpose This paper aims to examine the factors that affect financial services design of and their effect on the improvement of the unbanked customer well-being. Design/methodology/approach The authors use a path analysis to examine customer well-being integration in the activities of service organizations. The theoretical estimation model was conducted using a structural equation model with maximum likelihood estimation. To build a more robust model that explains customer well-being, direct and indirect effects are used in the estimation of the research model. Findings Perceived customer support and interaction with the storekeeper are two major factors that, positively, influence trust and customer participation (CP). In addition, CP plays a key role in enhancing financial empowerment and thereby in the production of greater customer well-being. Originality/value This study sheds light on the positive effects that the design of services has on customer well-being and exposes the underlying mechanisms that contribute to customer well-being through CP. It also provides a unique financial service format and specific strategies for managing trust and CP to enhance individual well-being in the unbanked population in a developing country.

Exploring the antecedents of retail banks’ reputation in low-bankarization markets: brand equity, value co-creation and brand experience

“…The final sample was representative of the current retail banking sector in Ecuador, both in terms of (1) the relative percentages of market share by bank brand, according to the Association of Ecuadorian Banks (Asobanca, 2019), and (2) the geographical distribution of the country's retail banking customers, according to Ecuador's official register of banks (Superintendencia de Bancos, 2019). Regarding the sociodemographic characteristics of the participants in the sample, in terms of gender (51% female), age (70% between 18 and 35 years old) and educational level (55% university-educated), these were consistent with the profile achieved in other studies conducted in this sector, such as that of Bustamante and Amaya (2019) and that of Loureiro and Sarmento (2018). Regarding monthly income, the sample profile was in line with that of the general economy of the country, with a large lowermiddle class population earning the minimum wage (INEC, 2019b).…”

“…Discussion, conclusions, and implications Discussion and conclusions Countries with a low-bankarization rate present significant adverse differences with respect to the socioeconomic wellbeing of the population compared to countries with a high bankarization rate (Bustamante and Amaya, 2019). In the former context, the mere existence of a financial system is insufficient because it offers no guarantee that the population will want to access its services.…”

“…Thus, a low-bankarization rate is typically associated with low income and various degrees of poverty (Fisk et al, 2018), and the unbanked commonly find themselves having to turn to informal financial providers (commonly known as loan sharks) to access financial services (Koku, 2015). This inevitably forces users to pay higher costs, which directly reduces their income and perpetuates a detrimental cycle of debt (Bustamante and Amaya, 2019).…”

“…The bankarization rate of a population is taken as an indicator of its socioeconomic wellbeing (Bustamante and Amaya, 2019). Consequently, increasing the level of bankarization is an important factor in improving the wellbeing of a country, as it contributes to achieving 7 of the 17 Sustainable Development Goals (World Bank, 2018).…”

“…In this research context, merely having a financial system in the country is not enough because this does not guarantee that the population will choose to use it. Rather, it necessary to identify valid strategies that contribute to improving the banking rate of the population (Mogaji et al, 2021), taking into account its particular characteristics (Bustamante and Amaya, 2019).…”