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Communal Financial Orientation as a Platform to Improve Financial Inclusion of Consumers in Banking Deserts
Authors: Martin Mende (Florida State University), Linda Salisbury (Boston College), Gergana Nenkov (Boston College), Maura Scott (Florida State University, United States of America)
Financial exclusion of vulnerable consumers from mainstream banking resources is a serious societal problem often linked to banking deserts (vulnerable communities lacking access to mainstream financial service providers [FSPs]). This research proposes a new approach to promote financial inclusion in banking deserts – via a consumer’s communal financial orientation, which emphasizes the interconnectedness between the consumer’s financial engagement and his/her community’s well-being.
In cooperation with an FSP in the United States, we conducted two field studies with their customers. In Study 1, we test the moderating effect of living in a banking desert on the relationship between individuals’ communal financial orientation and their perceptions and engagement with the FSP. In Study 2, we test whether emphasizing (i.e., manipulating) communal versus agentic financial orientation in FSP communication materials affects banking desert consumer perceptions and intentions differently than those of consumers in other communities. The two field studies show that communal financial orientation bolsters financial participation by consumers in banking deserts. Specifically, among consumers in banking deserts, it increases consumer-perceived benefits of the FSP and consumers’ financial engagement intentions (e.g., patronizing the FSP).
This research demonstrates that emphasizing communal benefits of an individual’s financial participation is a vital step toward consumer financial well-being and offers an incentive for mainstream FSPs to better serve consumers in banking deserts. Our findings illustrate the broader relevance of social class for transformative service research and for financial service companies. We posit that beyond individual social class differences, where consumers live is also an important factor in understanding social disparities that can be used to improve financial inclusion. Specifically, we demonstrate that the distinct psychological force of a communal financial orientation influences consumers living in banking deserts; thereby, our results illustrate the usefulness of banking desert residency as a segmentation criterion that scholars, marketers, and policy makers can use to design financial inclusion efforts.
For managers, our results demonstrate that a communal-oriented approach to serving consumers in banking deserts can benefit FSPs (e.g., favorable patronage intentions and positive WOM). This suggests a non-trivial incentive for FSP’s to serve vulnerable communities, as it is an opportunity to broaden their customer base. For policy makers, our research shows that communal financial orientation contributes to both consumer well-being on an individual level and on a community level (e.g., linking an individual’s financial participation to community well-being and incentivizing mainstream FSPs). Our results suggest that FSPs and policy makers would be well-advised to make the content of financial inclusion programs more communally-oriented (beyond just promoting them as such).