‘One Size Doesn't Fit All’:Bank Switching Decisions and Customer Vulnerability in Europe

Over the last two decades multiple policies promoting financial literacy and information availability in banking markets have been deployed across Europe. The objective of these policies is to improve customers’ decision-making, including the ability to switch bank provider. Despite the widespread use of such policies, concerns persist as to whether vulnerable customers can make appropriate switching decisions in banking markets. Drawing on financial ecology and churn theories, this paper examines the relationships between these policies, bank switching and customer vulnerability, using survey data from 24 European countries. We report that the probability of bank switching is significantly lower for three groups of vulnerable customers: the elderly, the less educated and those living in deprived regions. We conclude national financial education policies and disclosure practices have no significant effects on bank switching.