A METACOGNITIVE DECISION MAKING BASED-FRAMEWORK FOR BANK CUSTOMER LOYALTY MEASUREMENT AND MANAGEMENT

Fernando A F Ferreira,Ieva Meidutė-Kavaliauskienė,Marjan S Jalali,Bianca A C P Viana

doi:10.3846/20294913.2014.981764

Abstract

Bank customer loyalty is becoming a priority concern for banking institutions, as a means of gradually increasing complementary margins and eliminating the lack of liquidity caused by the current economic climate. Following a top down process, this focus culminates at the branch level, where banks’ front office employees are seen as a driving-force for building customer loyalty. At the same time, however, the difficulty in identifying and operationalizing the factors or determinants that most contribute to creating and maintaining bank customer loyalty has long been recognized. In this sense, based on the integrated use of cognitive maps and measuring attractiveness by a categorical based evaluation technique (MACBETH), this study proposes a multiple criteria framework for bank customer loyalty measurement and management. The results show that our framework allows bank customers with higher rates of customer loyalty to be identified and, from a benchmarking perspective, indicates what best practices should be followed to boost long-term relationships. Implications for scholars and practitioners are discussed.

Highlights

The banking activity has long been recognized as a major driving-force for economic development, and few would contest that the vast majority of the population has a close business relationship with their banks
As a result, attracting and retaining customers, as a means of gradually increasing complementary margins and eliminating the lack of liquidity caused by the current economic climate, has become a priority concern for banking institutions (Farquhar, Panther 2008; Minami, Dawson 2008; Kowalski, Shachmurove 2011)
We have found no prior documented evidence reporting this integrated metacognitive decision making based-approach in the context of bank customer loyalty evaluation

Summary

Introduction

The banking activity has long been recognized as a major driving-force for economic development, and few would contest that the vast majority of the population has a close business relationship with their banks. As a result, attracting and retaining customers (i.e. ensuring bank customer repurchase intention or loyalty), as a means of gradually increasing complementary margins and eliminating the lack of liquidity caused by the current economic climate, has become a priority concern for banking institutions (Farquhar, Panther 2008; Minami, Dawson 2008; Kowalski, Shachmurove 2011). It has long been recognized that identifying and operationalizing the factors (i.e. the internal determinants) that most contribute to bank customer loyalty is not an easy process; “the fact that there are multiple intangible variables influencing branch attractiveness and profitability complicates the identification and development of evaluation systems” (Ferreira et al 2012: 255)

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Conclusion