Selection criteria in the South African retail banking sector

This study focused on the reasons retail clients select a bank for the first time in five geographical locations in central South Africa. The most important bank selection criteria were found to relate to the perceived image, reputation, and service quality of the bank. In particular, service quality was found to be important for all the market segments identified. Relatively speaking, pricing factors were deemed unimportant for the respondents, which are explained by the majority of respondents being elderly. The study is unique in that it is the first of its kind conducted in South Africa and paves the way for further studies focusing on why South African clients choose a bank, particularly from a demographic point of view.

criteria, initiate a relationship between a bank and client (Kugyte and Sliburyte, 2005).If a bank is better able to identify the criteria used by clients when they choose a bank, they are able to better adapt their marketing and advertising strategies to attract and acquire new clients.Therefore, the purpose of this paper is to identify the bank selection criteria used by South African retail banking clients to choose their main or lead bank.Blankson et al. (2009) acknowledge the lack of studies of this type in developing economies, especially in the African context.This paper therefore fills a gap in the literature by focusing on the selection criteria South African retail banking clients use when selecting a main bank.

A BRIEF OVERVIEW OF THE SOUTH AFRICAN RETAIL BANKING SECTOR
The South African retail banking sector is dominated by the so-called Big Four banks namely ABSA, FirstRand [functioning under the First National Bank (FNB) brand in the retail market].Standard Bank, and Nedbank.As of December 2010, the Big Four accounted for approximately 85 per cent of the domestic bank assets and with a Herfindahl-Hirschman index value of 0.188, the South African banking sector is extremely highly concentrated (SARB, 2010).The South African Reserve Bank (SARB) has adopted an explicit "four pillar" policy whereby the banking sector must have at least four dominant competitors.An attempt by Nedbank (then Nedcor) in 1999/2000 at a hostile takeover of Standard Bank was prevented by the then Minister of Finance in the interest of ensuring that the market has four large banks that promote competition.A notable repercussion of this was an amendment to the Competition Act (Standard Bank Group, 2009).Since then the South African banking landscape has changed dramatically, especially regarding the number of banks active in the retail market.In 2002 the then seventh largest bank Saambou was put under curatorship pending corporate governance issues and this sparked the demise of confidence in the so-called smaller A2 South African banks.Bank such as Imperial bank, Mercantile Lisbon, and McCarthy were purchased by larger banks and Brait Merchant Bank, Cadiz Investment Bank and CorpCapital did not apply to have their banking licences renewed (Falkena et al., 2004).Following this, the Board of Executors (BOE) Bank faced liquidity problems and was purchased by Nedbank.
Foreign bank ownership of South African banks also became prevalent given the potential of the market and also the highly developed nature of the financial sector.In 2005 the UK-based Barclays plc bought a majority shareholding of ABSA which resulted in one of the Big Four becoming foreign owned.ABSA has in turn capitalised on the operational synergies of Barclays and Coerzee et al. 10559 remained a dominant player in the retail segment.Speculation has been prolific since around 2006 that foreign banks such as the UK-based Standard Chartered were interested in Nedbank.From a competitive point of view, a takeover of this nature would be beneficial to Nedbank who has struggled to capture significant market share in the retail segment.The Standard Chartered talks were later dismissed.In late 2010 talk again surfaced that negotiations between HSBC and Nedbank were underway for a 70% ownership of Nedbank (Dolan and Soh, 2010).However, these negotiations were ended in October 2010.The value of the South African retail banking sector is nonetheless without question and foreign banks often cite in particular the regulatory soundness of the banking sector as a major attraction.
The South African retail banking sector is also faced with addressing to some extent socio-economic issues.For example, the unbanked form a large portion of the retail clientbase that has either been largely untapped or offer some sort of risk to banks due to the perceived risk attached to not servicing them in the past (Deloitte and Touche, 2010).An initiative to address this has been the introduction a cheap entry-level bank account called the 'Mzansi account' in 2004 by the large South African banks and PostBank to address the exclusion of the unbanked from the banking system.Poor financial literacy and a reliance on a cash-based modus operandi by the poor are commonly regarded as the major drivers explaining the lack of reliance on a bank account by the South African poor.South African retail banks have in turn made this an explicit focus area of their retail strategies to address the needs of this market [for example, the financial sector charter (2003)].
Nevertheless, Capitec bank in particular has become a strong competitor in the unbanked market with the PostBank also making strides to attract the lower-end of the retail market (www.postbank.co.za).Capitec in particular offers attractive product and pricing options such as free cash withdrawals and focuses specifically on the lower-end retail segment.The Big Four have accordingly taken notice of Capitec as a formidable competitor in this segment.

SELECTION CRITERIA IN FINANCIAL SERVICES
The literature on bank selection criteria ranges from the convenience associated with accessing brick-and-mortar facilities such as branches or automated teller machines (ATMs), to perceptions of service quality, image, and reputation of the bank, or indeed the brand of the bank.Several studies have been done in developing economies such as Bangladesh (Rashid, 2012), Cyprus (Senyucel, 2009), Malaysia (Mokhlis et al., 2010) Pakistan (Nayyab et al., 2011), Thailand (Lateh et al., 2009) and also African countries such as Ghana (Narteh and Owusu-Frimpong, 2011) and Nigeria (Aregbeyen, 2011).To the knowledge of the authors, no study has been conducted in the South African context and on any market segment of the South African banking population.This study therefore fills this gap.
Trust plays a very important reason in the selection of a bank, especially due to the complexities associated with banking products and services.Aregbeyen (2011: 280) finds that the safety of funds (that is, deposits) as well as the provision of e-banking facilities to be important bank selection criteria.
Moreover, the perceived riskiness of banking products was found by Babakus et al. (2004) to reflect the high degree of involvement and its multi-faceted nature of financial services.Given this, integrity, managerial capability, and trust regarding client information confidentiality are identified as important credence choice criteria of consumers and indicate that due to these qualities being difficult to evaluate, they pose a particular challenge to banks (Babakus et al., 2004).Devlin and Gerrard (2004) conducted a study analysing the changing trends in selection criteria in selecting a retail bank.They found that the greatest influence over time was related to the incentives offered to clientsbanks need to create some form of incentive to begin a relationship with them.Recommendations driven particularly through word-of-mouth interactions were also found to be important.So-called 'economic factors' including interest paid and fees levied, and a wider product range have in recent times also become more prevalent choice criteria.Furthermore, a study conducted in the nineties indicated that well educated clients were more likely to engage in multiple banking relationships (Gerrard and Cunningham, 1999).
According to Lee and Marlowe (2003) convenience is found to mean different things to different categories of consumers, depending largely on their views on delivery channel interaction due to demographic characteristics such as age, life-style and technological savvy.Evidence suggests that the most probable reasons for switching banks were poor personal service and the perceived increase in bank fees (Lee and Marlowe, 2003).Beckett et al. (2000) point out that consumers are inclined to prefer the prospect of long-lasting relationships as a selection criterion due to them avoiding disruption and switching costs.They also confirm that the cost and type of bank product is important in the purchasing behaviour of consumers and that a relationship based on trust is important, especially those of professional associations that "protect consumers from third parties acting opportunistically".Coupled with the relationship with a bank, perceived service quality is also seen to be an important bank selection criterion used to select a bank (Aregbeyen, 2011;Lateh et al., 2009;Senyucel, 2009).Indeed, aspects of the service delivery process, such as ease of handling queries, delivering on services as promised, and the length of waiting time, are central tenets of the service-related criterion.Similarly, a preference for service-related selection criteria such as speed of service, number of branches, grace period, friendliness, lesser penal rate, quality of service, and personnel efficiency are identified in the study by Vanniarajan and Kannan (2008).Zineldin (1995) concludes in his study that functional quality in bank selection to be more important than traditional marketing activities.More specifically, the study found factors (1995) such as accuracy in account management, efficient mistake correction, and speedy service and decision-making more important than the convenience of location, advertising and price.The performance of contact-personnel and word-of-mouth factors also proved important criteria.The latter is consistent with Devlin and Gerrard (2004) and the attitude and behaviour of staff was also found by Narteh and Owusu-Frimpong (2011) to be an important criterion.
These studies indicate that the selection criteria clients' use varies across different spheres ranging from convenience to service quality-related criteria.For bankers, the selection criteria are an important marketing tool so that marketing campaigns can be geared towards attracting prospective clients to choose their bank as their main bank.

RESEARCH METHODOLOGY
A quantitative method was used to collect data from the client respondents.A questionnaire was used to collect data on bank selection criteria and is consistent with studies on this topic (Devlin, 2007;Devlin and Gerrard, 2005).A research agency was outsourced using twelve trained interviewers to conduct telephonic interviews.Training and briefing sessions were held between the researchers and the interviewers.
The target population were clients located in the central South African geographical area, specifically from five locations in this region where the Big Four retail banks are situated.This included Bloemfontein, Bethlehem, Kimberley, Kroonstad, and Welkom.The sampling frame was random urban residents from the telephone directory listed in these five locations.Due to the sampling frame being stratified into five "strata" (the residents from the five respective cities/towns), the sampling technique used for the client respondent group was a stratified systematic sampling procedure (Pellissier, 2007;Saunders et al., 2003).Saunders et al. (2003) suggest that a systematic sampling procedure is ideal for a geographically dispersed study if the mode of interaction with the respondents is not of a face-to-face nature.Therefore, given that the data was collected telephonically in the five locations in central South Africa, this stratified systematic sampling procedure was adopted.
Based on the latest South African Census (2001) data, the total population size for the five locations (cities or towns) totalled 244 188 (StatsSA, 2001).Although annual updates indicate an increase in the projected population figures for these locations, given the recommendations of Iarossi (2006) and Sekaran (2000), a minimum sample of approximately 380 would be representative of a population size even nearing one million.Therefore, it was decided to use a final sample of 550 client respondents.The respondents were chosen randomly using the telephone directory and contacted during weekdays by the trained interviewers in the evening time between 17:00 and 21:00 over a period of five weeks.Given that the interviews were conducted telephonically and also the sensitivities associated with information being provided on banking matters, a high refusal rate of approximately 70% occurred.However, the final sample size of 550 client respondents was achieved.
Seven broad categories of bank selection choice criteria were used as indicated in Table 1.Table 1 also provides the item (or question) number and statements in the questionnaire.The 'recommendation' category included all recommendations made by people, the media, or trusted sources; the 'convenience' category included criteria related to convenience and location of the branches and ATMs of the bank; the 'service quality' category included criteria related to the perceived service quality at the bank; the 'pricing' category included factors related to bank charges and interest rates charged on loans; the "image and reputation" category referred to perceptions of the image and reputation of the bank's brand; the 'product mix' category included the product and service offering of the bank and included statements on electronic banking facilities; and the 'relationship' category referred to criteria related to the relationship between the bank and client.A sevenpoint Likert scale was used with one being "very unlikely" and seven "very likely".Client respondents were asked to rate each of the statements according to the reasons why they would choose a bank for the first time.The average rating score provides the average score for each item based on the seven-point Likert scale.Item 21 was rated the highest and item 4 the lowest.

Biographical data
Tables 2 and 3 provide the biographical information of the client respondent group.Table 2 indicates that the majority of clients bank at ABSA followed by Standard Bank, FNB, Nedbank and Capitec Bank.This is not unexpected as ABSA is regarded as the largest retail bank in South Africa (Cohen, 2011).The samples drawn for each location were relative to the size of their populations, resulting in the largest proportionate sample being drawn from Bloemfontein, followed by Kimberley, Welkom, Kroonstad, and Bethlehem.
Table 3 indicates the gender, age and race of the respondents.More than two-thirds of the respondents are female and slightly less than two-thirds are white.The age distribution of the respondents indicates that the majority of respondents are over the age of 36.Respondents were also asked to indicate how long they have banked at their current main bank and indicated that approximately 75 per cent have had a relationship with their main bank for longer than nine years.
Although the sample drawn for this study does not provide an evenly spread distribution across all age categories and also keeping in mind that respondents had to be over the age of 18, the age distribution especially regarding the population group older than 35 does have similarities with actual population estimates in South Africa (StatsSA, 2010).A further reason for this distribution is due to the telephone directory being the sample frame resulting in landlines being used as opposed to cell phone lines.Although the gender split for the five locations according to Census 2001 is approximately 48% male and 52% female, and the black population accounts for approximately 77% of the population, the five locations are also not regarded as metropolitan areas and only Bloemfontein can be considered a large urban city.The majority of the black population lives in rural areas, which was outside the scope of this study.Furthermore, the Free State and Northern Cape contribute less than 8% to total South African gross domestic product (StatsSA, 2011: 10), suggesting that the younger age segment of the population migrate to larger metropolitan and financial hubs such as Gauteng and the Western Cape.Census 2001 also indicates Afrikaans to be the main language for over 64% of the Coerzee et al. 10561 population in the five locations relevant to this study.

Statistical analysis
Several statistical techniques were used to analyse the data collected from the respondents.Firstly, an exploratory factor analysis (EFA) was conducted to group the variables (Hair et al., 2010).The results of this EFA were used to conduct the basis for the ensuing analysis.A cluster analysis was then conducted using the groups identified by the EFA in order to group the responses according to their response patterns and also to provide 'market segments' based on the responses.This provides bankers the framework they can use to group specific markets according to their specific set of bank selection criteria.Lastly, chi-square tests were used in order to cross-tabulate the clusters according to the biographical variables gender, age, race, choice of main bank, and geographical location.
Table 4 provides the results for the EFA.The EFA determines whether or not the clients in any way group the bank selection criteria according to the categories identified in Table 1 by grouping each item according to the factor with which it has the largest correlation.The observations were standardised before the EFA was conducted.Through the EFA, four factors were extracted from the data, namely service and image, relationship and recommendations, convenience and accessibility, and pricing and products.
The service and image group included the items of both service quality and image and reputation in the original grouping provided in Table 1.The relationship and recommendation group included items from the original relationship and recommendation categories identified in Table 1.Although item 17 (which refers to how long clients have to wait in queues to be helped in the branch) was included in this group, it has a high score for factor one (0.31363) as well.This could indicate the importance that clients place on standing in queues as being a reflection of both service quality and the quality of the bank-client relationship per se.Needless to say, waiting in queues appears to have both a service-and relationshipbased aspect to it.
The convenience and accessibility grouping includes items relating to the convenience and accessibility of banking products and services.Item 14 refers to the offering of electronic banking facilities which can be interpreted as measuring the accessibility of a bank's products through online platforms.Although item 18 refers to media recommendations of the bank, it was included in the convenience and accessibility grouping due to its high factor score.The pricing group includes the items of pricing and products and services.However, the products included here are not in accordance with the original products mix dimension identified in Table 1.Rather, the knowledge of the contact-personnel vis-à-vis the products and services is included.This indicates that clients perceive pricing-related factors just as important as the ability of contact-personnel to properly disseminate their knowledge of the products and services.It could further be argued that clients would pay more if the knowledge imparted by contact-personnel was accurate.Furthermore, all three items in this factor grouping have high scores for factor 1. This could indicate the importance clients place on products and services and their pricing as an indication of the image and reputation of the bank.
Following the EFA, a cluster analysis was done in order to group the four identified factors according to their respective response patterns.The results are depicted in Table 5. Due to the observations being standardised before the EFA was conducted, the cluster solutions indicate the average importance of a category relative to the other categories (or factors) for the respondent within that specific cluster.Keep in mind that the cluster solutions do not imply that a particular item or dimension is not important or

5
Your parents recommend the bank to you.

13
A work colleague recommends the bank to you.

18
The media recommends the bank.

19
A bank is recommended to you from a trusted source.4.48

Convenience
The convenience and location of branches and ATMs.

2
A branch is near your home.

11
A branch is near your work.

15
The bank has ATMs that are conveniently situated for you.

Service quality
The perceived service provided by the bank.

7
Although you don't bank at the bank, when you visit a branch of theirs you are always impressed with their service.

16
The staff in the branch is friendly.

17
You do not have to wait long in queues for someone to help you.

Pricing
The bank charges or interest rates.

3
The bank charges are low compared to other banks.

9
The interest rates charged on loans and paid on deposits are competitive.

Image and reputation
The image and reputation of the brand. 6 The branch has a reputation for excellent service.

10
You can associate yourself with the image and brand of the bank.

21
A bank has a good image and reputation.6.32

Product mix
The products and services offered.

8
The products and services offered by the bank address your banking needs.

14
The bank offers online banking facilities.

5.81
Relationship A relationship with bank staff.unimportant per se.Rather, each item is important or unimportant relative to the other responses identified within that particular cluster grouping.Therefore, the categories identified are maintained due to the rationale that banks must be reactive to the selection criteria by adapting their marketing strategies accordingly to attract the clients.
A four-way cluster solution was identified for the client respondent group.The characteristics of each cluster are:

Cluster 1
Cluster one for the client respondent group is the largest of the four clusters including 233 respondents.The cluster associates a strong relative unimportance attached to the relationship-and pricingrelated criteria relative to the other criteria groups when choosing a bank for the first time.Rather, service-, image-and conveniencerelated factors rank as most important when choosing a bank for the first time.

Cluster 2
Cluster two of the client respondent group includes 142 clients.Once again, relationship-and pricing-related criteria are ranked as unimportant relative to the other criteria.In contrast to cluster one, only service and image is regarded as important by this cluster.

Cluster 3
Cluster three includes 81 respondents.This group regards service and image as the only important criterion relative to the other criteria when choosing a bank for the first time.In addition, relationship-, pricing-, and convenience-related criteria were considered much less important by this cluster.

Cluster 4
Cluster four is the smallest of the four clusters and has similar characteristics to cluster one.They regard service-and accessibility-related issues as the most important criteria relative to the other criteria and more important than cluster one.They also regard relationship and pricing features as unimportant but more important than cluster one.Cluster four could therefore be regarded as a sub-cluster or grouping of cluster one reflecting the same preferences as a whole, but differing on the degree of importance they attach to the criteria.
A noticeable feature of the cluster analysis is that the factor entitled image, reputation and service quality was the only one found to be important for all four clusters (see the positive scores for each cluster in Table 6).This indicates that this factor is considered to be important for clients to select a bank no matter how market segments are determined and according to whatever segmentation criterion.It is clear therefore, that if a bank intends to attract clients to select their bank, they must ensure that perceptions of image, reputation, and service quality must be central to every operational and marketing approach they adopt.Bank acquisition policy must therefore explicitly reflect this.
Table 6 provides the chi-square tests used to cross-tabulate the four client clusters identified in Table 5 with selected biographical data of the respondents.
The cross-tabulations of the biographical variables gender, age, race, income, main bank, and location reveal that no statistically significant relationship exists between any of the variables and the

Discussion and managerial implications based on the factor analysis
The study identified four factors that clients group bank selection criteria into.These are service and image, relationship and recommendations, convenience and accessibility, and pricing and products.Of particular interest is that service and image items are grouped together.The clients regard the image, reputation and perception of service quality as being part of the same construct.The image and reputation of a bank is therefore crucially dependent on perceptions of service quality by clients.As such, the pressure placed on banks to consistently provide superior levels of service is immense.This holds important implications for banks because the impacts of poor service quality and client dissatisfaction in general are detrimental to the image and reputation of a bank due to emerging media platforms that publicly display this dissention.Internetbased complaint websites such as "Hellopeter" and "Get Closure!" can cause major reputational risk for a bank.
Given that reputation was found to be an important selection criterion, banks must actively manage these complaints in order to not negatively affect market perceptions.The study therefore supports the notion that perceived service quality has an influence on the image and reputation of banks, which in turn supports the efforts of banks to manage the perceptions of clients as they do when they respond to problems posted on public media platforms.For this reason, the aggressive advertising campaigns banks use to publicise their nationally ranked service ratings and also their internal drive to reduce poor service levels is justified and the importance of this does not only attract new clients, but can also be seen as promoting the soundness of banks especially amongst older clients.
The clients further group relationship and recommendations together and perceive the personal relationship with bank contact-personnel as being related to the recommendations they receive.Although the rating scores in Table 1 indicate that the relationship-based items did not rate particularly high in comparison to the other items, it would nevertheless seem to suggest that recommendations could be driven by the quality of the relationship with contact-personnel.In other words, the extent of the recommendations made could be influenced by the quality of the relationship with bank contactpersonnel.Following from the earlier point, if recommendations are made by clients, the image and reputation of the bank is influenced.The quality of the bank-client relationship therefore appears to be an important aspect resulting in clients recommending and ultimately influencing the perceived image and reputation of the bank.It should be borne in mind however that the majority of client respondents had established banking relationships over a period of many years and that the relationship with contact-personnel rated low in comparison to other criteria.All four clusters attributed a relative unimportance attached to relationships and recommendations.
Banks have realised the importance of having a good relationship with clients from both an operational and strategic perspective.For example, South African banks regard the speed of management decisions, client service, and sales and marketing strategy as some of the Coerzee et al. 10565 most important aspects of competitive advantage in past and coming years.They also regard service quality, client focus, profit performance and growth, client retention, and the availability of key skills as several of the most pressing issues they face (PWC, 2009: 21, 23-24;2007: 25, 27-28;2005: 20;2003: 16;2002: 13;2001:17).In recent years, South African banks also acknowledge poor levels of service as being a major criticism of the banking sector.These factors all relate in some way to managing the bank-client relationship and the service quality derived from this relationship.
The pricing factor grouping includes the items of pricing, products and services, and also the knowledge of the contact-personnel of the products and services they offer at the bank.The complexity of banking products and services and the ability of the contact-personnel to reduce this perceived complexity is a possible reason explaining this.The cluster analysis also indicates that pricing is deemed as being relatively unimportant as a factor when choosing a bank for the first time.The age distribution of the respondents probably explains this as the pricing structures offered to the clients would in all likelihood reflect a relationship with the bank that spans several years.Research shows that retaining clients is cheaper than acquiring new clients (Zeithaml and Bitner, 2003: 514) and over a period of time where the relationship is established, there are mutual benefits to both the bank and the client.These include preferential access to credit for the client, perceived risk associated with complex banking products is reduced, and the bank gains a competitive edge and increased bargaining power to being privy on privileged information on the client (Proença and De Castro, 2000: 338).The age and duration of the bank-client relationship is most likely the main reason explaining the relative unimportance of pricing and could be a reflection of the loyalty the clients have to their particular banks.Further research should be done to establish this.
The convenience and accessibility grouping reflects the need for clients to have both physical (branches and ATMs) and electronic (Internet banking) distribution channels to provide their products and services.This grouping also indicates that these distribution channels need to be near the homes of the clients.Given that the study was conducted in relatively small cities and towns when compared to larger South African cities, these findings indicate the importance the clients place on being near their banks from their homes.It may also indicate the reliance of these clients being able to easily access their banking facilities via the distribution channels.In other words, perhaps the relative importance these clients attach to convenience and accessibility is because they are used to being able to access the channels given that they stay in towns or cities that are not metropolitan in nature and have little or no traffic congestion.Given the size of the locations these clients are situated within, it is no hassle for these clients to quickly go to the branch or to the nearest ATM.Further research could focus on determining to what extent clients in large metropolitan areas rely on online or Internet-based channels compared to brick-and-mortar channels when accessing their banking facilities.The size and nature of the location a client lives within therefore appears to have an impact on what they perceive to be accessible or not when accessing their banking facilities and this in turn may be an important determinant whether or not they choose to make a bank their lead bank.

Discussion and managerial implications based on the cluster analysis
The cluster analysis provides a four-way cluster solution.The first two clusters are similar in that they regard the relationship and pricing grouping as very unimportant relative to the other groups.This is their distinct feature, although one group considers service-, image-and convenience-related as being most important and the second considers service quality and image as important.In contrast, the third cluster regards only service quality and image as important criteria when choosing a bank for the first time.Cluster four regards only service quality and accessibility selection criteria as important.
The cluster groupings indicate a noticeable feature: relatively speaking, relationships, recommendations and pricing are not distinctly used to make a decision to select a bank for the first time.The only factor that is important for all four clusters is the factor grouping service quality, image, and reputation.This indicates that when banks want to attract new clients, the service quality they provide and the image and reputation associated with their bank is the most important indicator of selecting a bank for the first time.It should be kept in mind that although the cluster solutions indicate that relationship and pricing factors are not as important for clients to choose a bank, the age composition and number of years the clients have had a bank account indicate that the majority of the respondents have established relationships.This implies that the respondents are less sensitive to recommendations and pricing changes due to their banking products and services in all likelihood being established for several years.Further research should focus on whether or not this is the case for younger respondents, especially given that banks place heavy emphasis on building mutually beneficial bank-client relationships and have in recent times been very competitive on the pricing front.

Discussion and managerial implications based on the chi-square tests
Given that none of the demographic variables were found to play a significant role in determining the selection criteria within the identified clusters, this has important implications for bankers because it indicates that their marketing strategies must be aligned to specific bank selection criteria rather than to specific demographic factors.The study reveals that choosing a bank is therefore a function of what the bank offers the client rather than what characterises the specific client from a demographic point of view.The results of the average rating scores do however indicate that age does appear to be an important aspect in the results of this study in that the highest rated item was that banks must have a good reputation and image.With over 43% of the respondents being over 56 years of age, this follows that they are more inclined to choose a bank if it has a sound image and reputation.With the majority of these respondents most likely being in retirement and relying on the bank with their life savings, the soundness of the bank is understandably a vital consideration given that their survival is dependent on the bank safeguarding their wealth or paying their monthly income that is generated from interest-bearing bank accounts.

CONCLUSION
The value of this study is that it identifies the bank selection criteria used by retail clients and is the first of its kind in South Africa.Although the respondents in the study were randomly selected, the majority were elderly in nature and should be borne in mind given the results.This may be seen as a limitation to the study, but reflects the demographics of the population that typically still have telephones at home and is a characteristic of the respondents in the cities/town of central South Africa.Nevertheless, the results indicate a clear preference for banks that exhibit a sound image and reputation as well as perceptions of service quality.The 'soundness' of the bank that is perceived through its image and reputation is therefore an important bank selection criterion.The pricing of banking products also appear to be relatively unimportant for the respondents and indicate that if the bank appears to be reputable and offers good perceived service quality, the respondents may very well be undeterred to upward changes in pricing.Of course, this needs to be verified by further research.Indeed, perceptions of service quality were found to be important for all market segments identified in the study.Therefore, the emphasis banks place on promoting their image and addressing issues of service quality are justified as this study has found that it is the major criterion used to select a bank for the first time in the central South African region.Further studies need to be conducted to verify whether or not the bank selection criteria in other provinces are consistent with this finding.Moreover, given the unique and challenging nature of the South African financial services industry, further studies should focus on criteria that different races use to select a bank for the first time.This is especially relevant given the emphasis banks are placing to tap unto the unbanked market and also given the competitive nature for banking clientele in South Africa.

Table 1 .
Bank selection criteria categories, questionnaire statements and average rating scores.

Table 2 .
Client respondents according to choice of main bank and location.

Table 3 .
Respondents according to gender, race and age.

Table 4 .
Exploratory factor analysis results.

Table 5 .
Cluster means of clients for bank selection criteria.

Table 6 .
Chi-squares of biographical variables by cluster.none of the biographical variables have any significant relationship with the client clusters.This indicates that neither gender, age, race, income, main bank, nor location play a significant role in the decision of clients to choose a bank for the first time.
clusters due to the chi-square's p-value for each of the six variables being greater than 0.1 at the 90% significance level.Therefore,