Socioeconomic Determinants of Banking Term Deposit Subscriptions: A Multivariate Analysis Approach BY PRAKARSHA MITRA
Introduction
Results
Customer deposits are vital for financial liquidity, and understanding consumer behavior allows banks to design better financial products. Telemarketing is a key tool in promoting term deposits. By analyzing socioeconomic factors influencing deposit decisions, banks can identify patterns, reduce telemarketing bias, and optimize targeted marketing strategies for broader industry application.
PCA identified 7 factors: past contact, timing, demographics, call quality, financial status, campaign frequency, and socioeconomic background.
Methods The study utilizes data from direct telemarketing campaigns conducted by a Portuguese banking institution, where customers were contacted via phone calls to promote term deposits. The dataset comprises a sample size of 4,521 observations, capturing various socioeconomic attributes and responses to the marketing efforts.
PCA (Principal Component Analysis) Reduced dimensionality by consolidating similar variables into significant components
Logistic Regression Insights: Positive predictors: age (+1%/year), higher education (+17%), longer calls, and recent successful contact (+21%). Negative predictors: loans (−42–47%), poor contact methods (−44%), and excessive outreach (−9%). Factor Analysis Highlights: Campaign success history and demographics are strong predictors. Communication style and financial risk profiles guide decision-making.
17%
21%
Age
Higher Education
Recent/Successful Interactions
89%
44%
9%
Housing Loans
Inefficient Communication Channels
Excessive Contact
Factor Analysis
INTERACTION HISTORY
DEMOGRAPHICS
CAMPAIGN ACTIVITY
Modeled the probability of success based on identified patterns and predictors
Revealed hidden relationships by reducing highly correlated variables into root factors, uncovering patterns influencing customer decisions
1%
PCA (Principal Component Analysis)
Logistic Regression
Factor Analysis
Results
Logistic Regression
Campaign Success History
Demographics
Communication Style
Financial Stability
CONTACT TIMING
FINANCIAL STABILITY
SOCIOECONOMIC BACKGROUND
COMMUNICATION QUALITY
Paper Accepted And Presented At NEDSI 2025 (Hershey , PA) April 2025
Summary of Findings: Socioeconomic factors such as age, education, and financial stability are strong predictors of term deposit subscriptions. Additionally, communication quality and timing significantly influence the effectiveness of marketing campaigns. Future Research: Future work could incorporate advanced machine learning algorithms for dynamic personalization and explore the crosscultural relevance of these findings in diverse banking markets.
Research Contribution This study bridges behavioral theories with advanced multivariate techniques, offering a robust framework for understanding customer decision-making in financial services. It delivers actionable insights to optimize telemarketing strategies for term deposit campaigns. The methodology and findings set the foundation for expanding this research to American banking datasets, enabling broader applicability and comparison across financial markets.