Is Bank Staff Interaction Associated with Customer Saving Behavior in Banks?

Background: Major changes are underway in the U.S. retail banking sector toward heavy investments in technology and fewer resources in physical locations and direct-line personnel (FDIC 2015). Research has established that bank branch location is associated with overall consumer financial wellbeing (Célérier and Matray 2014, 2017; Friedline, Despard, and West 2017a, b, c; Goodstein, et al. 2018) and savings behavior is associated with financial wellbeing (Sun, et al. 2018). Simultaneously, consumer savings is being highlighted as key to consumer financial wellbeing because savings provide an ability to absorb unexpected expenses (CFPB, 2017; Sun et al. 2018).

Study Rationale: This study examines a possible relationship between bank staff interaction and consumer savings behavior with U.S. consumers with bank accounts.

Methods: The 2017 Survey of Household Economics and Decision-making (SHED) from the Board of Governors of the Federal Reserve System included 12,447 participants. After deletion of participants without a bank account and participants with missing values on any covariates, 11,359 participants were included in the final analysis. Three logistic regression models were used to estimate the odds of having any of three saving behaviors with the two banking access methods. Odds ratios and 95% confidence intervals were reported to quantify the associations.

Results: Findings of this study suggest that bank account access method is differentially associated with saving behavior related to different types of savings goals. Finding suggest that the use of the personal access method increases the likelihood of saving for periodic expenses, but is not associated with saving for emergencies. The personal access method also bordered on being significant to increase the likelihood of saving for long-term goals. Technological access is associated with lower likelihood of saving for emergencies, and higher likelihood of saving for long-term and periodic expenses. Results also suggest that the use of both personal and technological access methods decreases the likelihood of saving for periodic expenses, but is not associated with saving for emergencies or long-term saving goals.

Conclusions: As technology advances, banks will likely continue to decrease access to bank staff and rely more heavily on technological access alone or in combination with bank staff for customer transactions. These results suggest that technological access alone is positively associated with saving for long-term and periodic expenses, and thus benefits most customers. However, banks should be cognizant that the majority of the associated saving behavior benefits are currently realized by younger (re: saving for emergency) and college educated (re: saving for long-term and periodic expenses) consumers. While technology offers great promise, banks should be aware of the possibility that such benefits may not be realized by all populations of consumers. Future technology may be able to deliver similar consumer benefits of personal access method, which can lead to trust and connection to the bank and positively influence consumer saving behavior for emergency and long-term savings and savings for periodic expenses for all populations. These results suggest that technology has not yet completely delivered on that possibility.