Introduction
The modern banking system presents a set of difficulties for an average consumer that can harm their best interests and lead to a loss of finances or inadequate handling. For various reasons, financial operations require a certain level of cognitive and psychological abilities that many potential bank clients lack. The abilities required to recognize and efficiently analyze all possibilities and specifics of banking operations include mental resolve, attention to detail, focus, specific education factors such as numeracy and literacy, and impulsivity (Cuesta-González et al., 2021a). According to Roa et al., levels of income and education are particularly relevant in forming the consumers’ attitudes toward financial operations, their trust, and confidence (as cited in Cuesta-González et al., 2021a). Despite the lack of practical research, some theoretical evidence confirms that cognitive and psychological factors significantly influence consumers’ experience with banks and the banking system in general (Cuesta-González et al., 2021a). The acuteness of this issue presents possibilities for further research on the matter.
Despite the seriousness and relevance of this issue, the information on the topic is scarce and requires more profound research. The article by Cuesta-González et al. (2021a) explores the factors that influence customers’, particularly from vulnerable social groups, relations with the banking system, and what difficulties and barriers exist in such relations. Potential solutions that can be incorporated by the banks and directions for further scholarly and experimental research are also proposed. The authors conclude that customers’ distrust and shame lead to financial difficulties while dealing with banks. Barriers and difficulties in terms of access and ease of use arise as a result of affective and cognitive factors. These factors revolve primarily around poor financial education, low levels of literacy and numeracy, impulsiveness, fear of the system’s complexity, and the resulting irrationality of choices.
Discussion
Identification
Theoretical Background
Scholars working in the area describe different factors influencing consumers’ banking experience and the importance of these factors in comparison to one another. An article by Cuesta-González et al. (2021a) presents an analysis of these psychological and cognitive aspects of consumer experience with financial systems and their impact on consumers’ financial stability. Gathergood argues that financial knowledge and general education are decisive in customers’ attitudes toward banking, playing the primary role in influencing their decisions (as cited in Cuesta-González et al., 2021a). However, according to De Meza et al., for many regular consumers, financial knowledge can be less important and impactful in making financial decisions than the psychological and cognitive factors mentioned above (as cited in Cuesta-González et al., 2021a). Particularly, customers’ emotional condition during dealing with their finances, banking system, and personnel can often lead to certain impulsive decisions or, to the contrary, to hesitation.
Since financial decisions are usually not entirely rational and the economic system, in general, is becoming increasingly complex and confusing for an unprepared consumer, some ethical questions arise. Emotional and cognitive factors can form biases which, when combined with the increasing digitalization, scaling, and constant transformation of the banking system, often lead to unknowledgeable and incompetent decisions (Cuesta-González et al., 2021a). The perceived instability of global and national financial systems, especially in the wake of the 2008-2009 financial crisis and the current rising inflation, puts additional stress on customers and introduces a degree of economic uncertainty. The rising degree of complexity and competitiveness in the banking system puts consumers who lack financial stability, general education, economic knowledge, and psychological resolve into an economically vulnerable position (Cuesta-González et al., 2021a). This situation leads to an increased risk of financial exclusion of certain social groups, particularly minorities and those who lack access to quality education and financial counselling.
Study’s Purpose and Methodology
The issue of cognitive and psychological factors in financial decisions has not been extensively covered due to its inherent unquantifiable nature, while qualitative research remains scarce. The purpose of the article by Cuesta-González et al. (2021a), therefore, lies in identifying the affective and cognitive factors in customers’ financial behaviour, establishing relations between them and the degree of influence they have. Specifically, the article focuses on the access and use difficulties that arise under the influence of these factors (Cuesta-González et al., 2021a). The article includes the empirical qualitative study of vulnerable consumers’ perception of the digitalization of the banking system, the accessibility issues associated with it, and the role of competitiveness in customers’ banking experience and financial decisions. The study also analyzes how human-machine interactions in the context of ATM banking influence the rationality of financial decisions consumers tend to make in contrast to personal interactions with bank employees. The authors employ a qualitative empirical approach in their study that includes interviewees from vulnerable groups with low income to determine the role and influence of cognitive and psychological factors in their financial decision-making.
The results of the study show a significant influence of shame and distrust in consumers’ decision-making process while interacting with human employees in banks. Earlier bad experiences and the resulting biases were shown to affect the consumers’ perception of banking operations and interactions (Cuesta-González et al., 2021a). In combination with their lack of financial prowess, these factors further increase consumers’ distrust of banks (Cuesta-González et al., 2021a). The shame factor was shown to appear primarily due to the customers’ lack of financial stability, low income, and insufficient financial education, causing significant use difficulties while interacting with the banking system, particularly its digital aspects (de la Cuesta-González et al., 2021a). The subjective and objective psychological factors were shown to have a significant difference in influencing the consumers’ experience and attitude, with the latter playing a more distinct role than the former.
Evaluation of the Study’s Relevance
The study employs an empirical qualitative approach to determine the degree of effect different cognitive and psychological factors affect customers’ interactions with banks and bank personnel. This approach is best suitable for this kind of research due to the difficulties of quantifiably measuring the effects of psychological and cognitive factors in often inherently irrational financial decisions. The choice of a qualitative research method allows for a more detailed and personalized analysis of the participants’ experience and impressions of interactions with banks. Additionally, the quantitative method was employed for statistical analysis of the qualitative data. The choice of a mixed-method methodology is relevant and beneficial to the study area due to a lack of quantitative research on the topic (de la Cuesta-González et al., 2021b). A middle-sized sample balanced by gender and age chosen for the experiment is consistent with the purpose of the study in terms of the participants’ social grouping, age, and financial background.
The article relies on previous research on the topic to establish the issue’s nature, roots, and relevance. Including. The article by Ottaviani & Vandone (2017) explains the impact of psychological factors, primarily impulsivity, in modern financial customers’ decision-making, hindering the positive effects of financial education. The authors’ arguments and evidence backed up by previous research on the matter give weight to the relevance of the work by de la Cuesta-González et al. (2021a). A study by Kusev et al. (2017) on the influence of cognitive and emotional factors in particular, on financial decision-making, provides similar conclusions as those presented by the authors. Bustamante and Amaya (2020) emphasize the importance of customers’ emotional well-being in their interactions with banks and their engagement in financial operations. This study provides additional ground for the claims of de la Cuesta-González et al. (2021a) regarding the influence of emotional and psychological factors on customers’ interactions with the banking system, particularly in terms of distrust and shame.
The article is also consistent and relevant in terms of the studied population. A study by de la Cuesta et al. (2021) puts emphasis on the particular vulnerability of low-income and poorly educated social groups in the context of a highly digitalized and complex modern banking system. This study is consistent with the claims of de la Cuesta-González et al. (2021a) regarding the relevance of the issue for these social groups specifically. With only a small number of studies focusing on low-income social groups and analyzing the effect of economic background on the psychological aspects of financial interactions, more research is needed. Therefore, the current study is crucial for a deeper understanding of the matter and for developing alternative approaches and tools for this kind of research.
Furthermore, the current study presents an alternative perspective on the factors that influence people’s attitudes toward financial institutions and interpersonal interactions with bank employees. So far, most studies have focused primarily on cultural background as a driver for economic exclusion (Thrassou et al., 2020). The role of geographical factors in the process was also studied in some recent articles, including a article by Mende et al. (2020). In it, the authors argue for the negative impact of territorial division on people’s attitudes toward engaging in banking operations. While those influences are equally relevant to the discussed issue, other factors studied by de la Cuesta-González et al. (2021a) must be addressed and taken into account. The works by Dandapani et al. (2018) and Filotto et al. (2021) analyze how financial institutions, including banks, tend to move away from interpersonal contact between workers and customers toward technological solutions. Those solutions include ATM and online banking, and while aiming to mitigate the psychological discomfort of live interactions for the customers, these options create additional problems in other aspects.
The negative repercussions of these solutions are presented in the current study, connecting it to the conclusions of other scholars in the field. Particularly, the growing digitalization and automation of financial operations put the responsibility for the acquisition of financial literacy and necessary skills on the customers (Filotto et al., 2021). This process is prevalent mainly in high-income, developed regions, as discussed in the article by Menrad and Varga (2020). However, the population of countries and communities with less advanced economies suffer the most from the complications associated with the increasing complexity of financial operations. This situation further deepens the psychological stress of unprepared customers while engaging in economic activities, relaying the issue back to the focus of the current study.
The article pays specific attention to the irrational nature of financial decisions. The study relies on the currently prevalent prospect theory of Daniel Kahneman and its reinterpretation by Richard Thaler. The theory postulates that the decision-making process in the context of financial operations is closely related to the specific context of the situation (de la Cuesta-González et al., 2021a). In this regard, personal financial background, emotional condition, cognitive biases, and education play a significant role in the theory’s framework. In this context, the current article is consistent with the established scholarly views on the issue, bringing additional insights into the research topic.
Application of the Results
Due to the established theoretical relevance and importance of the study, it serves as a potentially helpful tool for application in the practical aspects of financial institutions’ public relations policies. The results of the study align with some of the previously prevalent scholarly views about the positive implications of introducing technological solutions into banking operations. The results of the study confirm that, despite psychological discomfort caused by distrust and the feeling of injustice, digital solutions lead to a higher degree of rationality in economic decision-making by financially vulnerable customers. The articles’ conclusions and the valuable personal experiences acquired through the interviews can be used by financial institutions to optimize their approach to utilizing modern technologies. As increased digitalization and the shift toward online banking services gains pace, the psychological aspects of different financial interactions must be considered for ethical purposes. The unique perspective of the study’s participants can help theorists and practitioners in this area to improve their strategies.
In light of the present lack of scholarly studies backed by empirical evidence on the issue of cognitive and emotional aspects of financial decision-making, this article presents a valuable perspective on the matter. The findings of this study can potentially provide a framework for further theoretical and practical research on the topic. The article also raises a question of responsibility for improving the customers’ experience with banks and financial operations in the situation of unequal distribution of educational and economic possibilities. The results of the study suggest that customers should not be granted full responsibility for their perception and involvement in financial operations. The reason for that lies in their inability to influence the technological processes that take place in modern banking. Therefore, it is recommended that banks and other financial institutions take responsibility for how their services and operation strategies influence the consumer experience with regard to inherent cognitive and psychological biases.
Additionally, this perspective provides implications for the legal sphere of financial operations and banking. Several steps can be proposed based on the results of this study for governments and international organizations to take to ensure that the customers’ rights are protected. Obliging financial institutions to give clear information on the financial services they provide can prevent misunderstandings from customers regarding their actions and associated economic consequences. Furthermore, ensuring that all parties involved in the financial transactions and procedures are equally knowledgeable in the specifics of these interactions can prevent fraud and other unlawful operations with customers’ funds. Providing the necessary financial counseling, especially for vulnerable groups with an unstable financial background and a lack of required knowledge and skills, would ultimately serve the best interests of the customers. Establishing clear procedures in personal and impersonal interactions with the use of online technologies and automation can further optimize the operations of banks and other financial institutions. As a result of these measures, a more stable socioeconomic climate can be facilitated in local communities, additionally reducing the number of potential court cases involving financial operations.
The authors also point out practical implications for financial regulators and legal practitioners. As De la Cuesta-González et al. (2021a) point out, the existing risk or convenience surveys adapted by the Market in Financial Instruments Directive are incomplete in terms of the information they collect and analyze for customer profiling. The current regulations are primarily directed toward benefiting financial institutions, excluding cognitive and psychological dimensions of user experience (de la Cuesta-González et al., 2021a). The authors suggest that addressing these aspects can be productive for improving and optimizing the operational procedures of banks while simultaneously ensuring the protection of customers’ best interests and legal rights. Incorporating psychological training for bank employees to handle work interactions with customers from vulnerable groups properly is a potential step in this direction. Addressing this issue, as de la Cuesta-González et al. (2021a) argue, can lead to a reduction in the number of customer complaints and improve the banking institutions’ public image and reputation. Ultimately, the potential results of incorporating the study findings can benefit all parties involved.
Assessment and Remarks
The authors’ choice of a mixed research methodology allows to establish a quantitative relationship between cognitive and psychological factors and financial operations through detailed and extensive interviewing. Additionally, a qualitative approach helps achieve the statistical data that can potentially be applied to other geographical and cultural contexts and serve as a basis for future research. However, a small number of participants, though balanced by age and gender, hinders the variety and amount of experimental evidence in the research. This fact arises from the nature and format of a quantitative approach to data collection and the team’s limited resources. Therefore, it is recommended for future research on the topic to include larger sample groups to ensure that the qualitative part of the research is representative of the actual situation. Including interviewees from different geographical and cultural backgrounds is another relevant issue that other scholars should address.
Combining interviewees from different financial backgrounds also presents possibilities for more extensive research on the topic. Analyzing the influence of economic systems and different cultural aspects of financing can provide helpful insights for theoretical works and practical applications. Comparing different socioeconomic contexts through the subject matter can also help test some alternative views on the topic of cognitive and psychological factors in banking mentioned in previous sections.
Conclusion
The article presents a comprehensive view and discussion of the influence of cognitive and psychological factors on financial decision-making. The authors rely on an extensive list of relevant literature that includes the latest research and earlier sources. The choice of literature represents different contexts and gives supporting evidence and alternative views of the discussed problem. The sources comprise similar practical research articles, theoretical scholarly works, and reviews, presenting an all-encompassing list of references. Nevertheless, most of the reference sources relate to the local geographical and cultural context, presenting data based on evidence from a single country, primarily Spain, or other European states. Additional research in other contexts must be carried out to determine whether the authors’ conclusions are applicable in other settings. It can help establish whether the underlying psychological and cognitive factors associated with banking operations are relevant in different societies or are a product of a specific cultural or geographical context.
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