The Role of Psychological Distance in Influencing Consumer’s Future Behavioural Intention in A Digital Service Encounter: A Cross-National Investigation of Motor Insurance – UK And Nigeria.

Abstract

In recent years, rapid digital transformation has brought about profound changes in service settings, prompting a central focus in contemporary service marketing literature on understanding how technology reshapes service encounters and interactions. This digital transformation in the financial services sector has driven firms to transition from traditional brick-and-mortar establishments to technology-driven environments. Digital service encounters, as a cornerstone of this digitalization, have become widely accepted and integral to customers’ lives due to its benefits, such as round-the-clock availability, ease of transactions, and queue avoidance. However, the adoption of digital service encounters in financial services presents unique complexities, as they often involve long-term relational exchanges between customers and service providers. While significant attention has been given to understanding the factors influencing initial adoption decisions around digital financial services, the subsequent future behaviour phase, which encompasses continuance intention and recommendation intention, has received comparatively less scrutiny. Yet, customers may only begin utilising more functional digital features in this phase, shaping the success of financial services, particularly within sectors like insurance, where customer retention and loyalty are paramount. A pragmatism stance guides the methodological design using mixed methods backed by a comprehensive literature review phase. The employed method includes two rounds of data collection: 20 semi-structured in-depth interviews and 624 online self-administrated surveys. The interpretive qualitative analysis extends ECM model by identifying eight distinctive factors, namely perceived usefulness, perceived ease of use, perceived risk, perceived enjoyment, trust, satisfaction, familiarity, and social influence as antecedents of continuance intention and recommendation intention. Furthermore, relevant cues of the mediating role of psychological distance particularly, temporal, social and physical/spatial distance dimensions was established, as well as the moderator including Hofstede’s cultural dimension of individualism/collectivism are identified. Overall, the findings demonstrate all three dimensions of psychological distance affect policyholder’s future behavioural intention, among which consumers perceived temporal closeness have the most influential impact. Significant differences are found among policyholders’ future behavioural intentions in developed and emerging market. 1. Unlike Nigeria policyholders, UK policyholders are not affected by social closeness towards the DSE/service provider. 2. UK policyholders tend to consider recommendation intentions of their DSE/service provider, based on their perceived physical proximity to the service provider, which is a similar trait in Nigeria policyholders, mostly due to how consumers respond more positively to a digital channel, as it allows for access to service ubiquitously, on the move and a sense of telepresence, this creates physical proximity and reduces consumer’s perception of distance related to location of the service provider. 3. Nigerian policyholders are in favour of social closeness influencing their future behavioural intentions, which supports the findings of the qualitative approach as well as past studies that have shown that importance of closer social group being influential in their purchase decision for motor insurance linking well with past studies on collectivist culture trusting their in- group more. Additional results indicated the partial moderating effects of individualism/collectivism on the proposed set of relationships in the model, particularly in the UK, the interaction between perceived enjoyment and individualism/collectivism on recommendation intentions, and Specifically in Nigeria, the interactions between individualism/collectivism and perceived risk, perceived enjoyment, and perceived trust on continuance intentions, as well as perceived enjoyment and perceived trust on recommendation intentions, which were all statistically significant, evidencing differential influences on future behavioural intentions based on the cultural differences. In conclusion, this research contributes significantly by extending the literature on future behaviour and an extended-ECM that are context-specific to motor insurance industry. In addition, the study provides the first thorough examination of psychological distance within the motor insurance, and future behavioural intention context, as well as the role of individualism/collectivism as a moderation of the proposed relations. Given the scale of the insurance industry, particularly the motor insurance in UK and Nigeria which have in the past been marketed differently (purely face to face), and in recent times have made a shift to digital channels for both search and purchase of motor insurance, the findings are of significant academic and commercial interest as well as spanning across the different countries, giving both a developed and emerging economy outlook.