Drivers of customers’ switching behaviour in Indian banking industry

Abstract

Purpose – The price war and intense competition in Indian banking industry have exposed banks to one of the major threat of switching. Consumers are now more price and service conscious in their financial services purchasing behaviour. They are more prone to change their banking behaviour as banking products and services are nearly identical in nature. The purpose of this paper is to provide an insight of the drivers that lead a customer switch from one service provider to another in Indian banking industry using exploratory design. Design/methodology/approach – The impacts of the influencing factors have been studied and tested empirically using exploratory factor analysis. Quantitative data have been collected by means of questionnaire employed from Clemes et al. and administered to 296 banking customers of Rajasthan utilizing convenience sampling. Findings – Results reported that price, reputation, responses to service failure, customer satisfaction, service quality, service products, competition, customer commitment and involuntary switching have their significant effect on customers’ switching behaviour. Research limitations/implications – The findings of present study can be used by the Indian banks for their product and service designing strategies, marketing strategies and customer services practices in order to reduce customer switching. It would help them in improving their service operations and also in increasing customer satisfaction and loyalty by understanding the banking behaviour of their customers. Originality/value – The originality lies in the fact that this study is one of few which have focused on the drivers leading to the switching intentions of Indian banking customers.