Coming Out of the Niche? Social Banking in Germany: An Empirical Analysis of Consumer Characteristics and Market Size

• Published in: Journal of business ethics 2019-03, Vol.155 (3), p.889-911
• Main Authors: Krause, Kathleen, Battenfeld, Dirk
• Format: Article
• Language: English
• Subjects: Banking; Banking industry; Banks; Business and Management; Business Ethics; Conjoint analysis; Consumer behavior; Consumers; Consumption; Criteria; Customers; Demography; Economic performance; Education; Ethics; Finance; Financial institutions; Financial services; Internet; Investors; Literature reviews; Management; Marketing; Original Paper; Philosophy; Population; Purchase intention; Quality of Life Research; Residence; Respondents; Social responsibility; Sociodemographics; Sustainability; Sustainable consumption
• ISSN: 0167-4544; 1573-0697
• DOI: 10.1007/s10551-017-3491-9

The social banking market constitutes a small but rapidly growing submarket of the global banking sector. Due to an explicit commitment to sustainability, social banking is a segment of banking services which is not exclusively focused on economic performance criteria, but pursues ecological and social goal dimensions on an equal footing. Information on the number and reachability of potential social banking customers is essential for social banks to further promote sustainable consumption in finance. In scientific research, social banking is considered a relatively new field, still lacking empirical analyses regarding the market size and specific consumer behaviour. This study addresses the research gap by generating first insights into the German social banking market. Based on an online survey using an adaptive conjoint analysis, a large data set covering 3537 respondents was compiled. Sample 1 comprises 2896 respondents who are customers of three major social banks in Germany. Sample 2 covers the remaining 641 respondents who represent the German adult population and exclusively buy from conventional banks. Logistic regression modelling reveals that social banking customers differ significantly from their conventional counterparts regarding several socio-demographic, behavioural and psychographic factors. In comparison with conventional banking customers, social banking customers tend to be younger, higher educated and located in larger places of residence. Contrary to existing research on socially responsible investors, they are male to a higher proportion than female. Moreover, social banking customers demonstrate stronger sustainable buying patterns and weaker preferences for financial, but stronger preferences for social return than conventional banking customers. The results further indicate a considerable untapped growth potential for social banks by uncovering a market size ranging between 10 and 26% of the German adult population. Finally, suggestions for marketing strategies and future research are given.