The Service Profit Chain of Retail Banking - How Regulation Might Promote Service Innovation

37 Pages Posted: 17 Mar 2008

See all articles by Rene Fischer

Rene Fischer

EBS Universität für Wirtschaft und Recht - EBS Business School - Department of Finance and Accounting

Andreas Hackethal

Goethe University Frankfurt - Faculty of Economics and Business Administration; Goethe University Frankfurt - Research Center SAFE

Christian Jansen

EBS Universität für Wirtschaft und Recht - EBS Business School - Department of Finance and Accounting

Date Written: January 2008

Abstract

Current regulatory changes in the financial services industry aim at ensuring customer protection in the context of investment advisory services. This study demonstrates that customer orientation as proposed by MiFID could improve the service profit chain of financial service providers. We draw on a unique dataset from a large German retail bank including the way customers and their advisors perceive the advisory process as well as internal records of customer transaction behavior and profitability. We find that using information about customers' financial sophistication and experience to make the advisory process more appropriate could significantly enhance customer satisfaction and retention. Moreover, we find a strong positive effect of customer satisfaction and retention on customer profitability.

Keywords: Service profit chain, MiFID, financial service providers, investment advisory

JEL Classification: G18, G21

Suggested Citation

Fischer, Rene and Hackethal, Andreas and Jansen, Christian, The Service Profit Chain of Retail Banking - How Regulation Might Promote Service Innovation (January 2008). Available at SSRN: https://ssrn.com/abstract=1102125 or http://dx.doi.org/10.2139/ssrn.1102125

Rene Fischer

EBS Universität für Wirtschaft und Recht - EBS Business School - Department of Finance and Accounting ( email )

Gustav-Stresemann-Ring 3
Wiesbaden, Hessen 65189
Germany

Andreas Hackethal

Goethe University Frankfurt - Faculty of Economics and Business Administration ( email )

Theodor-W.-Adorno Platz 3
Frankfurt am Main, 60323
Germany

Goethe University Frankfurt - Research Center SAFE ( email )

(http://www.safe-frankfurt.de)
Theodor-W.-Adorno-Platz 3
Frankfurt am Main, 60323
Germany

Christian Jansen (Contact Author)

EBS Universität für Wirtschaft und Recht - EBS Business School - Department of Finance and Accounting ( email )

Gustav-Stresemann-Ring 3
Wiesbaden, Hessen 65189
Germany

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