Retaining students in retail banking through price bundling: Evidence from the Swedish market

Abstract This article investigates the issue of the customer retention of students in retail banking through a price bundling approach. Students’ preferences concerning some basic retail banking services, type of price reduction, and choice of bank are examined by using conjoint and cluster analysis. The empirical evidence comes from the Swedish student market. Three customer segments were found based on the students’ ‘price sensitiveness’ and ‘loyalty’. Price bundling offers many opportunities to improve customer retention in retail banking through a demand based choice of services (international debit card and Internet bank) and a price discount model that creates incentives to stay through time (individual price discount based on relationship size and length).

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