Bank customers’ decision-making process in choosing between ethical and conventional banking: a survey-based examination

Although the banking industry is increasingly focused on the issue of sustainability, the market share held by ethical banks remains small. This study applies models of ethical decision-making to investigate the reasons why customers choose conventional rather than ethical banks, and vice versa. Firstly, a model of bank customers’ ethical decision-making process in choosing between ethical and conventional banks is developed, based on multiple established models from the extant literature. Secondly, this theoretical model is evaluated using data from an online-survey and ‘partial least squares structural equation modelling’. This reveals that the primary factors discouraging potential customers from selecting an ethical rather than conventional bank are a lack of information, limited pressure of the social context, weak moral intensity, and a perception that ethical banks are economically disadvantageous. However, the good reputation of ethical banks, a high concern for the topic, and low levels of skepticism, all indicate a positive general opinion of ethical banks. These results suggest that more factual information and emotional charging of the topic of ethical banking would strengthen demand. In terms of theory, our analysis shows how general models of ethical decision-making can be tailored for use in specific contexts and suggests that the integration of multiple established ethical decision-making models is sensible. Furthermore, we suggest that reputation and economic benefit—which we include here as domain-specific extensions of established ethical decision-making models—are concepts to consider for a general context-independent extension of ethical decision-making models.