An investigation of interest rate communication strategies on customer decision-making in banking: a case study of Fortis Microfinance Bank
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Background of the Study
Interest rate communication is a critical component in influencing customer decision-making in banking. Fortis Microfinance Bank has recently overhauled its communication strategies to present interest rate information in a clear, transparent, and customer-friendly manner. In today’s competitive financial environment, customers rely on accurate and timely interest rate data to make informed decisions regarding savings, loans, and investment products (Ibrahim, 2023). Fortis Microfinance Bank’s approach integrates digital platforms, mobile notifications, and in-branch information sessions to ensure that rate changes and policy adjustments are communicated effectively. This multi-channel strategy is designed to reduce uncertainty and build customer confidence, thereby positively impacting deposit growth and loan uptake (Adeyemi, 2024). Research indicates that when customers understand interest rate dynamics, they are more likely to adjust their financial behavior in ways that benefit both the bank and themselves (Chinwe, 2023). However, challenges remain in ensuring consistency of message delivery and tailoring information to diverse customer segments. With an increasing shift toward digital banking, the role of clear interest rate communication becomes even more significant, as customers expect real-time updates and interactive tools that facilitate easy comprehension. Fortis Microfinance Bank’s initiatives also include the use of data analytics to monitor customer responses and refine communication tactics continually. Despite these innovations, there is limited empirical evidence on how these strategies translate into actual customer behavior changes. This study aims to bridge that gap by evaluating the effectiveness of current interest rate communication strategies on customer decision-making, drawing on customer surveys, digital engagement metrics, and comparative analysis with industry benchmarks (Ibrahim, 2023; Adeyemi, 2024).
Statement of the Problem
Although Fortis Microfinance Bank has implemented advanced interest rate communication strategies, customers still exhibit varying degrees of understanding and responsiveness to interest rate changes. Some customers remain confused by technical terminology and infrequent updates, leading to suboptimal financial decisions and reduced engagement with the bank’s products (Chinwe, 2023). Additionally, discrepancies in message delivery across digital channels and branches have resulted in inconsistent customer experiences. These issues may undermine the bank’s ability to build trust and influence customer decision-making effectively. Moreover, without a standardized framework to evaluate the impact of these communication efforts, it is challenging for management to quantify their effectiveness and identify specific areas needing improvement. Consequently, this gap in effective communication may negatively affect deposit mobilization and loan uptake, ultimately impacting the bank’s overall performance. This study will investigate the extent to which interest rate communication influences customer decision-making and identify operational challenges that limit its effectiveness.
Objectives of the Study:
1. To evaluate the impact of interest rate communication strategies on customer decision-making at Fortis Microfinance Bank.
2. To identify key challenges in delivering consistent and clear interest rate information.
3. To recommend strategies for enhancing communication effectiveness and customer responsiveness.
Research Questions:
1. How do current interest rate communication strategies influence customer decision-making?
2. What challenges hinder the effective dissemination of interest rate information?
3. What improvements can enhance customer understanding and engagement?
Research Hypotheses:
1. Clear and consistent interest rate communication significantly improves customer decision-making.
2. Inconsistent messaging negatively affects customer financial behavior.
3. Tailored communication strategies lead to increased customer engagement.
Scope and Limitations of the Study:
This study focuses on Fortis Microfinance Bank’s interest rate communication strategies, using customer surveys, digital engagement data, and branch interviews. Limitations include potential biases in self-reported data and external economic influences affecting customer behavior.
Definitions of Terms:
• Interest Rate Communication: The methods used by banks to convey changes in interest rates.
• Customer Decision-Making: The process by which customers choose financial products.
• Digital Engagement: Interaction between customers and digital communication channels.
• Message Consistency: Uniformity in the information delivered across channels.
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