Relational banking and the importance of reputation for local banks. The case of the Banco di Credito P. Azzoaglio S.p.A.

Abstract

In today’s economy, banks play a crucial role and there are two main ways in which they can exercise their activity: transactional banking or relational banking. Nevertheless, transactional banking is based on hard information and focuses on the economic convenience of bank transactions. It is therefore not suitable for local banks that cannot compete with the economies of scale generated by larger groups and should concentrate on the establishment of relationships with their customers. In this context, reputation has a non-neglectable importance and is one of the main profitability drivers. However, it is a fragile concept and can be quickly damaged. By studying the case of Banco Azzoaglio S.p.A., which is a local bank operating in Piedmont and Liguria, this thesis analyses how an organisational change can impact the reputation of the bank, causing it problems that could damage the future of the business. The work starts by explaining what relational banking is and tries to give a definition to the notion of reputation. Then, it evaluates Azzoaglio’s overall current reputation and clients’ perception of how its change of the information system has been managed, especially considering that the transition took place at the height of the Covid-19 emergency. The assessment is made by analysing the answers gathered by a survey that has been delivered to clients in December. The survey has been projected following the Reputation Quotient SM by Harris and Fombrun (2000) and investigated six main areas with the aim to be as comprehensive as possible. It helps to infer significant insights on the importance of reputation, as well as the role of communication in adverse times and the relevance of planning and managing changes appropriately.