Abstract
Which Consumer Groups Are More Loyal? Evidence in Indonesian Banking Industry
Highlights
Indonesia's economy growth in 2019 hit the lowest point in the last two years, grew 5.02 percent compared to year 2018 and 2017 respectively at 5.17% and 5.07% (Badan Pusat Statistik Republik Indonesia, 2019)
Satisfaction-loyalty link is stronger for younger customers, yet their level of loyalty is lower compared to older customers, whose level of loyalty increases in a higher percentage than increase in satisfaction, indicating that fac- tor other than satisfaction might contribute in escalating the loyalty level
Negative and significant moderation of age indicates that the relationship between satisfaction and loyalty is stronger in younger customers where loyalty is predominantly determined by satisfaction and less of other factors
Summary
Indonesia's economy growth in 2019 hit the lowest point in the last two years, grew 5.02 percent compared to year 2018 and 2017 respectively at 5.17% and 5.07% (Badan Pusat Statistik Republik Indonesia, 2019). Declining investment and low commodity prices which weakened global demand, dragged growth down in 2019. The country’s economy affects banking industry performance, where Indonesian banking industry was experiencing slow growth. It was reflected in a number of indicators: asset and loan growth in 2019 were 7.07% and 7.89% respectively, compared to 8.65% and 12.69% in 2018 (Financial Service Authority Republic of Indonesia, 2019). Competition has become even tighter with continuing increase in the number of fintech operating in Indonesia. Loan growth of these finteches reaching 98% during the year (AFTECH, 2019). Loyal customers have a tendency not to switch bank, conduct various banking activities in one bank, and recommend their bank to others (Indiani et al, 2016)
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