Abstract
The negative consequences of customer switching behaviour in the banking industry cannot be underestimated. Since there are limited studies addressing customer switching intentions and actual switching behaviour in the banking sector of Tanzania, this study intended to bridge the knowledge gap by addressing factors influencing customer switching intentions in the context of Tanzanian commercial banks. The study followed a positivism research paradigm out of which a deductive research approach was adopted. In the same line, an explanatory research design was used. The study was conducted in the city of Dar es Salaam with 400 respondents who were customers from NMB Bank Plc, TPB Bank Plc and NBC Bank Ltd. Multi-stage sampling method was used to generate sample size for this study. Multiple linear regression was employed to analyze the collected data. The findings of Thé study indicated that subjective norms were insignificant in influencing customer switching intentions in commercial banks. These findings suggested that commercial banks customers in the city of Dar es Salaam are not under robust social pressure that requires a vital social group to approve their switching intentions. Further findings revealed that perceived control of bank charges, attitude toward service quality and convenience significantly influenced customer switching intentions in commercial banks.
Highlights
It should be noted that customer switching from bank to bank in the banking industry is a universal phenomenon
Variables on the factors influencing customer switching intentions were measured as follows; perceived control of bank charges were measured by using a multidimensional scale adapted from Chung and Petrick (2015); attitude toward service quality was measured by using a multi-item scale (SERVQUAL) adapted from Parasuraman, Zeithaml and Berry (1985) subjective norms were measured by using a multi-item scale adapted from Gall and Olsson (2012) and Keaveney’s (1995) multi-item scale was adapted to measure variables of convenience and customer switching intentions
Based on the findings of Adjusted R2 statistics, it can be pointed out that 96% of the variations on the dependent variable were explained by the independent variables used in the regression model, while 4% of the variations were explained by other factors outside the model. This implies that perceived control of bank charges, attitude toward service quality and convenience were good predictors of customer switching intentions in commercial banks of Tanzania
Summary
It should be noted that customer switching from bank to bank in the banking industry is a universal phenomenon. Ernst & Young (2011) reported that in 2009 about 36% of bank customers worldwide shifted from their original banks to other banks and 7% of the customers were planning to shift to other banks. Statistics in the United Kingdom (UK) shows that 1.16 million banks’ customers switched from their original banking services to other banks in 2014 (statista.com). It was noted in 2019 that approximately 1 million bank customers shifted from their initial banking services to other banks. In the United States of America (USA), 11% of bank customers have shifted from their primary banks to other banks in 2016 (Accenture, 2017)
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