Consumer Behavior Analysis: Cashless Transactions and Digital Banking

This report delves into consumer behavior concerning cash and cashless transactions within the UK banking sector. It examines the shift towards digital banking, exploring consumer perceptions of both cash and electronic payment methods like e-wallets and credit/debit cards. The report analyzes the influence of Maslow's hierarchy of needs on ATM usage and provides recommendations for banks to invest in digital banking services. It highlights the advantages of digital banking, such as increased efficiency and wider service offerings, while also addressing consumer concerns regarding security and convenience. The study emphasizes the importance of understanding consumer preferences and adapting services to maintain customer loyalty in the evolving financial landscape. The report concludes with a comprehensive overview of the changing payment landscape and the need for banks to innovate and adapt to meet consumer needs.

CONSUMER BEHAVIOUR

TABLE OF CONTENTS
Introduction......................................................................................................................................1
Task..................................................................................................................................................2
1. Consumer behaviour towards cash versus cashless transaction..............................................2
2. Consumer perceptions towards digital banking.......................................................................3
3. Application of motivation theory for use of ATM in UK.......................................................4
4. Recommendation to banks for investing in digital banking....................................................5
Conclusion.......................................................................................................................................6
References........................................................................................................................................7

Introduction
Digital banking has changed the scenario of banking industry. The report will analyse
that cash transaction is convenience for consumer or cashless transactions are convenience. It
will explain what consumer feel about the digital banking. And also this project will analyse the
factors which should be improve by Banks
Task
Consumer behaviour towards cash versus cashless transaction
The payment evaluation is changing very rapidly in UK from cash to cheque, cheque to
smart cards and recently card-less and cashless environment is surrounding with the advance
technology. But still cash will remain as an important part of consumer's day-to-day life.
Behaviour of consumer is mostly depends on the need based theory of motivation, which is
concerned by the factors which motivate consumers to choose certain behaviour (Martins,
Oliveira and Popovič, 2014). Is there need of cash transactions or cashless transaction. From the
Maslow's need theory, the security and safety need decides the different behaviour of consumers.
Accordingly, transactions should be safe and secure, and free from fraud and theft.
Behaviour of consumers towards cash:
Most of the public in UK uses cash mode as payment and find it positive, whereas some
locality find the traditional payment mode negative. Cash generates security, as the public feel
comfortable and secure by paying in cash. The mode of payment reduce the risk of digital fraud
or any scams. As from the view point of local public this kind of frauds and scams affects the
behaviour of them to use digital banking or making any cashless transactions. Consumers find
the cash transaction simple than other mode of payments, as they are free from the complexity
that arises in cashless transactions. Old generation still believes in cash transactions whereas
young people like to use digital services.It is universally accepted that consumers don't need any
internet or any account to exchange cash and in day to day transactions consumer find cash
payment more convenient (Dinh, Nguyen and Nguyen, 2018).Cash payment takes less time than
other payment modes, as consumers can be in hurry. So the priority of consumer can be paying
by the cash.
However, there are some negative views of using cash as many people find carrying cash
inconvenient. It might be because of the volume of cash or for the safety reasons that when the
cash gets stolen it never gets traced.
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Behaviour of consumer towards cashless transactions:
Cashless transaction include- e-wallets or mobile wallets, smart cards such as credit or
debit cards, electronic payment system, etc. It is also mixed of both behaviour of consumer in
UK, positive and negative. By using e-payment, each and every transactions and expenses
recorded in the bank statement of consumer. It is costlier by paying from digital payment modes
for both consumers and merchants, which influence the consumer behaviour towards the cashless
mode.
Most of the people are still not aware of important guidelines to secure their e-payments
and cards from fraudsters. That is why consumer do not feel secure in using the cashless
transaction. Consumer finds cashless transactions or digital banking risky in compare to cash
transactions, they being hacked over network or there are chances to leak bank data through
internet
Consumer perceptions towards digital banking
Consumer perception is the impression of company in the consumers' minds and which is
affected by public relations, word of mouth, reviews and personal experience when interacting
with it directly.
Digitalisation of payment system, all banks across the globe has adopted this for the
easier banking operations and for providing customers easy access to all the financial services in
a fraction of seconds without any issue. However, many people even today prefer the cash
payment system due to security reasons, frauds while using e-banking. Also, people prefers cash
when it comes shopping for groceries or in their basic day to day life.
Consumer perception theory of psychology focuses on choice of the consumers regarding
a particular thing when the alternatives are made available them. In banking consumers are given
the choice of either using cash for the transactions or to go for cash less
transaction(ttps://www.jstor.org/stable/2488898?seq=1#page_scan_tab_contents).
Most people use cash because of the security as their choice is making full secured transactions.
Theory's other way is consumer's choice of using cards as they make the transactions processed
quickly thereby saving the time and eliminating the necessity of going to the vendors personally
for transacting when online purchasing is done or when the payment of bills has to be made.
Digital banking nowadays have become an integral part of the people as it provide them an easy
way of paying bills, transferring funds, purchasing of financial instruments and many other
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services. Since almost all the people have access to internet, the Banks have opportunity to
widen its customer base by making aware of the online banking services it is providing to its
customers and explaining its benefits to them (Suneja, 2017).
The bank also have fully secured payment framework for its customers for their
protection from the hackers and fraudulent people. Although it is argued that whether this digital
banking is convenient for the banks or for the customers. The benefits of digital banking is
fruitful for the sides like it helps in enriching the bank's efficiency in its operations providing a
wider range of banking services to its customers and customers can make an international
transaction in a fraction of time that too without physically interacting with the bank (Storey,
2016).
Customers perceptions towards digital banking varies as customers are different in age
and level of education. Aged people who are mostly not aware of the technology and who are
more prone to the online frauds do not have positive attitude towards the e-banking and usually
avoids the internet banking transactions. Young and educated people are more comfortable with
online banking services as it saves their time and also many attractive offers they get which
induce them to use the e-banking services (Graja and et.al., 2018).
Customers generally face problems in digital banking like ATM most of the time does
not have enough cash in it or all the machines does not provide the transfer of funds directly, or
when you get credited but the amount does not actually receive in the account, many a time The
Bank’s website or mobile app does not work because of the low server and these problems
hampers the customers' loyalty base. Thus, in order to survive in the banking industry Banks
have opportunities as well as requirement to improve its services to retain the customers' loyalty
(Saccani, Visintin and Rapaccini, 2014).
Even after some issues in digital banking, it is increasingly becoming popular as it is
quick, easily accessible, safe and more economical. Customers perceptions are changing in a
positive direction because of improvement in the security system on the internet which in turn is
increasing the trust level in the minds of the customers.
Application of motivation theory for use of ATM in UK
Recently across UK there are 70,000 cash machines, with 176 million cards which were
used to withdraw 180 billion euro from UK cash machines last year. So many developments are
done to improve some mechanism issues, and for making ATM as advance as the technology.
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The latest development of ATM is by making it a “bank branch in a box”, this development
provide transactions through video teller at ATM. As per the survey 94% adults of UK use cash
machine once a week (Radu and Lindgren, 2017).
The process of motivation influences the behaviour of an individual and makes it
positive. For an organisation or establishment it is necessary for them to keep motivating their
employees, this is going to help in raising satisfaction level of consumers to a great extent.
Below stated is the Maslow's theory of motivation which explains its hierarchy of needs:
Maslow theory of motivation always focuses on needs of consumers. There are various
requirements of consumers such as self actualisation, love, safety, physiological etc. Banks have
to look upon the safety needs of its depositors and other consumers. Each customer has need that
their money gets secure, thus, by making them aware with benefits of using ATM banks can
motivate their consumers to use ATM. This is safe and secure way to minimise issues of frauds
etc. Ego needs is another expectation of customers. They always want credit cards etc. Banks
offers facilities of credit to such customers those who maintain good banking. ATM can help
them in managing their deposit accounts and managing cash in banks in safer way. This will
encourage them to use ATM facility.
Recommendation to banks for investing in digital banking
The rise of digital banking is enhancing the quality services, transparency to consumers.
According to the need of digitalisation of consumers, Banks are started investing billions in
offering online services, train their employees on digital technology. 76% of UK consumers use
mobile banking. Digital banking provide online banking services, by which consumers can pay
bills, check their bank balance without visiting to the bank. It makes the overall process hassle
free and easy.
Below points discusses in what ways banks manage and increase interactions between consumers
and financial services providers beyond the ATM.
 For banks, it is necessary to provide consumer satisfaction by providing them the services which
are different from their competitors and are useful for their consumers as well.
 Consumers are attracted towards the benefits, so it is important to ensure that any service
provided ensures their benefits and necessary requirement.
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 This is where banks can ensure how they can deal with situations in which their customers are
following up on other's provided ones. It is necessary that they make sure everything they do is
providing enough benefits to the customers and leaving them satisfying.
Conclusion
As per the above study the project report discussed about the consumer behaviour towards
the different mode of transaction and what consumers felt about cash transactions and
cashless transactions. Cash is not easy to carry and high risk involved in it, thus, most of the
people prefer to make transaction by using digital banking services. And most important if
the cash is stolen it cannot be traced or recover, which is a downside of using cash. The
benefits of digital banking is fruitful for the sides like it helps in enriching the bank's
efficiency in its operations providing a wider range of banking services to its customers and
consumers can make an international transaction in a fraction of time that too without
physically interacting with the bank. In order to survive in the banking industry banks have
opportunities as well as requirement to improve its services to retain the customers' loyalty.
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References
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Radu, I. C. and Lindgren, P., 2017, October. Fostering optimal business model innovation
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Psychological Theories of Consumer Choice,1976 [Online] Available through
<ttps://www.jstor.org/stable/2488898?seq=1#page_scan_tab_contents>
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