Bank Loyalty Research Articles

Drivers of Bank Loyalty among Students in Nigeria: Positing the 12-Point Student Customer Bank Loyalty Index Model

This paper identifies key determinants of bank loyalty among student customers of banks in Nigeria. Data were collected from a sample of 423 student bank customers from 4 tertiary institutions in southeast Nigeria. Factor analysis was used to reduce 39 variables on student customer loyalty into 12 underlying factors explaining loyalty behaviour among student bank customers, which are collectively labeled 12-Point Student Customers Bank Loyalty Index Model . We recommend that banks located around University campuses should employ the model as an invaluable strategic tool for marketing strategy design, student customers’ bank loyalty assessment, and competitors’ customer loyalty analysis.

Effective Factors on Customers Brand Loyalty in Iranian Banks

Customer displacement is an important issue in the part of communication services, (such as banking) in which, trading models for profitability depend on long-term relationships with customers. Present study is trying to investigate the role that brand can play to retain customers, as well as to promote some of their behaviors, and it per swill leads to company’s long term benefits. Brand credibility is considered as an important effective factor on customer of based brand and his/her market share. Brand credibility is a multi-characteristics term that provides brand accuracy to customers. Customer brand loyalty is a type of brand commitment that despite the potential marketing efforts of rivals to overcome the coalition between brand and customer will causes customer’s re-buying behavior.Some of the effective factors on brand loyalty in banks are: correct and good delivery, having brand credibility, having physical inventories, accurate bills, data and information that are provided to customer or customers, responding requests and questions, effective cognitive backup, satisfying, value, variation resistance, emotions, trust, brand equity.

Moderating effect of Information technology (IT) capability on the relationship between business process reengineering factors and organizational performance of Bank

The increasing competitive pressure as a result of technological development, globalization, changing customer demand led to survival challenges of many banks in the developing countries and demanded for improvement in quality customer service and speed to enhance profitability performance and cost reduction. This study is aim to examine the moderating effects of information technology (IT) capability on the relationship between business process reengineering (BPR) factors and organizational performance of Nigerian banks. Field study survey has been conducted under natural research setting. The sample of the data was received from commercial banks, microfinance banks and primary mortgage financial institutions in Nigeria. The tool of analysis used in this study was hierarchical regression analysis using SPSS software. The findings showed that IT capability moderated the relationship between BPR factors such as change management, customer focus, management commitment and overall organizational performance of bank. Also, the result revealed that IT capability moderated the relationship between IT investment, management commitment and customer service management performance of bank. The outcome of this study provides important insight to researchers for further understanding on the effects of BPR factors and IT capability on organizational performance.

Measuring Customers Loyalty of Islamic Banking in Bahawalpur Region

Purpose: The basic purpose of measuring the customer’s loyalty in Islamic banking in Bahawalpur region is their long term commitment.Design/methodology/approach: This research has been conducted utilizing the actual data with the help of a questionnaire based on the literature extensively written on Islamic banking services, to develop a viable model to explore the attributes which lead towards the customer loyalty in utilizing the financial services of Islamic banks in Bahawalpur region. A new dimension is added by conducting research on customer’s loyalty in Islamic banking in Bahawalpur region, taking sample of 125 respondents from 20 banks operating in Islamic banking services of this region.Findings: Factors abstracted from the customers loyalty are, customers satisfaction, switching cost, customers perception, success philosophy and trust and commitment. It is found that these factors significantly affect the customer’s loyalty in Islamic banking and are greatly associated with the customer’s loyalty.Research limitations/ implication: Only available material is studied in spite of all the material and research is implicated in Bahawalpur region only. The sample size is small to only 125 respondents but the results are implicated on overall customer’s loyalty in Islamic banking.Practical implications: Pakistani banks are needed to take initiative in creating awareness about Islamic banking and providing more effective services.Originality/ value: This is one of the very first researches on customers loyalty in Islamic banking conducted in Bahawalpur region and could be very useful for countries adopting Islamic banking.Key words: Customers loyalty, Islamic banking.

How Committed are Bank Commitments: The Case of Syndicated Corporate Credit Lines

How Committed are Bank Commitments: The Case of Syndicated Corporate Credit Lines

Bank Commitment to Ethics

This paper brings theoretical approach of ethics in financial industry as well as research results from Croatian banks. The role of ethics in financial industry becomes every day more important issue, also there are no more questions of ethics institutionalisation - it is a question of ethical behaviour. Research limitation was subject matter so sample was reduced to seven major banks in Croatia which are actively involved in creating ethical values. The paper implies stakeholders’ orientations which assure understanding, learning and improving organisation; as well as identification, development and implementation of appropriate strategy also larger attention in future should be given to institutionalisation of ethics, on every level, because main ethical dilemmas according to bank managers trace roots in society culture. The value of this paper is based on the uniqueness of the research results about ethics in Croatian banks.

New Evidence on Procyclical Bank Capital Regulation: The Role of Bank Loan Commitments

Previous research on procyclical bank capital regulation has largely focused on the role of increased losses and deteriorated credit ratings in economic downturns. Using the bank-level data of U.S. commercial banks, we present another independent source of procyclicality working through bank commitments, which we call loan commitments channel. We find that, as firms draw down more from their pre-existing credit lines when credit market conditions are tighter, this increased takedown raises bank risk-weighted assets via involuntary lending and thus lowers capital adequacy ratios of commercial banks, making them more procyclical. Our empirical results suggest that this commitments channel can explain 16.4\% of variaitions in large banks' capital buffers during the financial crisis. This effect is found to be quantitatively important during the recent financial crisis and needs to be addressed in designing the regulatory framework for reducing procyclicality.

RESTRUKTURISASI PEMBIAYAAN MURABAHAH DALAM MENDUKUNG MANAJEMEN RISIKO SEBAGAI IMPLEMENTASI PRUDENTIAL PRINCIPLE PADA BANK SYARIAH DI INDONESIA

Murabahah finance to syariah bank was restructured by rescheduling, reconditioning, and prudential principle. It means that syariah bank had considered various aspects, such as, minimizing syariah bank risk and not making customers disadvantageous, even making both parties advantageous, in the restructuring. Then, the syariah bank must also consider basic Islamic economic principles, such as, riba, gharar and maisir as carefulness in Islamic law. Furthermore, applications of customer service principles, such as, know your customer principles, syariah principle and syariah accounting principle are an inherent part which cannot be separated from prudential principle. Application of the principles is syariah bank loyalty to valid regulation in restructuring finance.Key words: restructuring, murabahah, prudential principle

Internet banking loyalty: evaluating the role of trust, satisfaction, perceived risk and frequency of use

This paper analyses the role of satisfaction, trust, frequency of use and perceived risk as antecedents of consumer loyalty to banking websites. While the literature usually focuses on the direct effects of these variables, special attention is paid here to evaluate their moderating effects on the relationship between satisfaction and loyalty. The results from a sample of 254 Spanish users of Internet banking services show that while satisfaction correlates positively with loyalty, the effect is significantly less intense with high levels of perceived risk. The results are similar for trust, which correlates more positively with high levels of perceived risk, but also when Internet banking is used less frequently. Managerial implications from these results are provided.

Information and Communications Technology Threats: Personal Data and User Behaviour

This article analyses the threats which Information and Communications Technologies currently pose to individual liberties. Indeed, the information which is collected on individuals is becoming more and more complex: via RFID chips inserted into different cards (including transport, bank and customer loyalty cards), via visits to internet sites, over surveillance cameras posted in various places (work and public spaces), each of us is leaving « traces » which make up just as much collected data, most often treated and transmitted without our knowledge, and integrated into files, the mastery of which eludes us. We wished to carry out a study in order to evaluate the use of information and communications technologies and the awareness of users to the inherent risks. We also sought to determine if there exists a significant gap between the awareness of a threat and the safety measures associated in order to reduce the vulnerability of a system.

The Effect of Trust, Customer Satisfaction and Image on Customers’ Loyalty in Islamic Banking Sector

This study attempts to investigate the role of customer trust, satisfaction and image in enhancing Malaysian Islamic bank customers' loyalty. This study was carried out using data from Islamic banks and dual-window Islamic banks in Malaysia, with respect to two different customer segments (i.e., Muslim and non-Muslim). Two leading fully fledged Islamic banks (Bank Islam Malaysia Berhad and Bank Muamalat Malaysia Berhad), and two dual-window Islamic banks (Maybank and Public Bank) were involved in this study. A multiple group data analysis was used to test the significant differences between Muslim and non-Muslim customers. The results show that there were not significant differences between Muslim and non-Muslim customers on customer satisfaction, image, trust, and customer loyalty in Islamic banks. The study revealed that image was found to be positively significant to trust, and the highest level of trust leads to enhanced customer loyalty. The results of this study explain that both Muslim and non-Muslim customers trust islamic banks. However, the possibility of customers' distrust of their banks always exists. INTRODUCTION In Malaysia, the characteristics of Islamic banks are not merely of interest to Muslim customers but clearly non-Muslims customers see benefits from such a system. For Muslim customers, they have an opportunity to invest in a bank that operates based on their religious beliefs. Meanwhile, non-Muslim customers also have the same opportunity to choose to invest their money in Islamic banks or conventional banks. In this situation, Islamic banks are competing m the same market segmentation with conventional and foreign banks. Although, there is a difference between Islamic banks and conventional banks, they are nonetheless competing in the same market in terms of offering complementary products and services (Naser and Moutinho, 1997). Islamic banking is different from the conventional banking system, but there are some similarities between the two. For example, all banking facilities such as saving accounts, current accounts, credit cards and other products and services are available at Islamic banks (Naser and Pendlebury, 1997; and Naser et al., 1999). Today, due to availability of innovative products and services in Malaysian banking sector, the competition to attract and retain Muslim and non-Muslim customers is likely to increase. For example, Bank Islam Malaysia Berhad (BIMB) reported that some 70-80% of the banks' trade and corporate financing are with non-Muslim customers (Ngui, 2004). Interestingly, both Muslim and nonMuslim customers showed a good understanding in term of products and services offered by Islamic banks in Malaysia (Muslim and Zaidi, 2008). This evidence indicated that Islamic banks in Malaysia are widely accepted by nonMuslim customers. In business, trust is viewed as one of the most relevant antecedents of stable and collaborative relationships. Researchers had established that trust is essential for building and maintaining long-term relationships (Rousseau et al, 1998; and Singh and Sirdeshmukh, 2000). Morgan and Hunt (1994) stated that trust exists only when one party has confidence in an exchange partner's reliability and integrity. While defining trust Moorman et al (1993) referred to the willingness to rely on an exchange partner in whom one has confidence, according to Lau and Lee (1999), if one party trust another that eventually engenders positive behavioral intentions towards the second party. Moreover, from Anderson and Narus (1990), it can be safely deduced that if one party may bring positive outcomes to the first party, trust can be developed. Similarly, Doney and Cannon (1997) added that the concerned party also must have the ability to continue to meet its obligations towards its customers within the cost-benefits relationship; so, the customer should not only foresee the positive outcomes but also believe that these positive outcomes will continue in the future. …

Remedy or cure for service failure?

PurposeThis paper aims to contribute to a growing body of service recovery knowledge by examining the relationship between service recovery, consumer satisfaction and loyalty in a commercial banking environment.Design/methodology/approachA conceptual framework encompassing th\e concepts of service recovery, communication, customer satisfaction and customer loyalty in the commercial bank setting is developed. A questionnaire is designed to focus on issues related to efforts made to investigate causes of service failure and to develop recovery strategies that meet customer expectations of how their banks should handle such problems.FindingsResults show that communication had a significant relationship with service recovery and that higher levels of redress independently increase positive consumer responses. The findings also show that the interaction of employee responsiveness and courtesy can also have a positive impact on consumer evaluations. Satisfaction was highest and negative word‐of‐mouth intentions lowest only under conditions of high responsiveness and courtesy.Research limitations/implicationsService recovery is process‐oriented, and does not assess whether the reported problem that led to the actual complaint has been resolved. This aspect of the study opens a number of directions for future research with the goal of increasing the still limited understanding of service recovery issues in commercial banks. To achieve an in‐depth view, a more comprehensive qualitative study that pursues the same research questions may be appropriate.Practical implicationsAn implication is that, when managing complaints related to customer dissatisfaction, the approaches undertaken by service quality leaders should aim to provide just resolutions/fairness in service recovery. This study also provides insight into a company's customer relationship management practices. However, in order to encourage customers to complain directly, a company, if complained to, needs to enhance the perception of a possible outcome.Originality/valueA conceptual framework is developed and used to investigate the relationship between service recovery, consumer satisfaction and loyalty.

Comparative Evaluation of Customers’ Satisfaction and Loyalty in Conventional and Islamic Banks of Pakistan

The intention of this paper is to examine the level of customer’s satisfaction inboth conventional and Islamic banks and to find out that the customers of which type of bank are more satisfied. A modified SERVQUAL model has been used for this purpose. Field survey was carried out through questionnaire based on modified SERVQUAL model. Data were collected from 500 walk-in customers of Islamic and conventional banks andanalysed through SPSS 16. The results show that the customers of Islamic banks are more satisfied and loyal than the customers of conventional banks.This study will help policy makers of Islamic and conventional banks understand the behavioural differences of customers and will also help them to align their service quality according to customer’s perceptions.

The importance of perceived service quality in banking loyalty for large business customers

El comportamiento de las grandes empresas no financieras a la hora de seleccionar aquel que será su banco principal y el grado de fidelidad al mismo, es una cuestión a la que se ha prestado hasta ahora muy poca atención. La mayor parte de las empresas portuguesas que componen nuestra muestra, señala que trabaja con más de 5 bancos y se observa una relación positiva entre tamaño de la empresa y el número de bancos con los que opera, por lo que la competencia por el cliente aumenta, de ahí la relevancia de profundizar en la justificación de la elección del banco principal. Demostramos que el grado de fidelización al banco principal depende de la calidad percibida que se tenga del mismo, que es de carácter unidimensional, y es explicada por la variedad de productos, fiabilidad del servicio y la relación con el responsable de la sucursal que lleva su cuenta. En cambio, ni las condiciones de precio, de capacidad de respuesta de los empleados, ni el tipo de sucursal, intervienen significativamente. Este resultado puede ayudar a orientar eficazmente las estrategias de fidelización de las entidades financieras hacía sus clientes corporativos de mayor dimensión.The behaviour of the large corporate banking customers when selecting the main bank and the level of their bank loyalty, are subjects that haven't been much investigated in previous studies.Most of Portuguese large companies in our sample work with more than 5 banks and there is a positive relation between the size of the company and the number of banks used. The competition in this bank segment is fierce, so it's important to investigate the selection of the main bank.The data showed that Banking Loyalty for large corporate banking customers depends on Perceived Service Quality, which in turn is one factor construct explained by the variety of products, reliability and by the interpersonal relationship established between the decision maker of the company and the business bank manager. There is no statistical evidence to suggest that the variables Tangibles, Responsiveness and Price conditions are important to predict Perceived Service Quality for large corporate customers.The results of his study can help banks to build a loyalty strategy towards the segment of large corporate customers.

Technology Fears

The Internet and all other types of networks have changed life in general and doing business in particular, and as a result, many companies are now conducting and transferring their businesses online. In this paper, the authors evaluate whether loyalty issues are the major obstacles to the growth of e-commerce in Jordan. A survey conducted for the study reveals that technology fears are major barriers to loyalty in Internet banking and e-commerce activities among consumers. The results suggest that unless the technology fears of adopters are acknowledged, some of them are not successful.

An examination of the impact of product and service quality perceptions on customer loyalty in rural banks in Ghana: the importance of social networks for nascent entrepreneurs

This study focuses on a national sample of customers who used commercial bank products/services in Ghana. The results demonstrate that social and cultural influences are important determinants of marketing practices of banking institutions in Ghana. Although, societal leaders are critical of the customer service and process components of bank products/services, these leaders encourage individuals to remain within the commercial banking system. Consumers who rely on these same societal leaders for financial advice remain with commercial banks for a longer period of time than other individuals who rely on surrogate advisors. Thus, in commercial bank relationships within Ghana, strategies should be tailored around instilling trust as reflected by the opinions of informal/formal societal leaders and family members. The results overall provide critical insight into how formal financial institutions may adapt their marketing practices in Ghana and other emerging African nations for long-term sustainability/customer retention.

Optimal Monetary Policy with Overlapping Generations of Policymakers

In this paper I study the effect of imperfect central bank commitment on inflationary outcomes. I present a model in which the monetary authority is a committee that consists of members who serve overlapping, finite terms. Older and younger generations of Monetary Policy Committee (MPC) members decide on policy by engaging in a bargaining process. I show that this setup gives rise to a continuous measure of the degree of monetary authority's commitment. The model suggests that the lower the churning rate or the longer the tenure time, the closer social welfare will be to that under optimal commitment policy.

Optimal Monetary Policy with Overlapping Generations of Policymakers

In this paper I study the effect of imperfect central bank commitment on inflationary outcomes. I present a model in which the monetary authority is a committee that consists of members who serve overlapping, finite terms. Older and younger generations of Monetary Policy Committee (MPC) members decide on policy by engaging in a bargaining process. I show that this setup gives rise to a continuous measure of the degree of monetary authority's commitment. The model suggests that the lower the churning rate or the longer the tenure time, the closer social welfare will be to that under optimal commitment policy.

Electronic payments and remote deposits: Will banks move past products to solutions?

The shift to electronic payments throughout the US economy is driven by an irresistible logic of cost savings and convenience for customers and financial institutions, but, in some ways, the changeover from paper to digital has been piecemeal and slow. Adoption of electronic payments has advanced the most through consumer use of credit and debit cards, as well as banks' and businesses' provision of technology to support the cards. Although cheque writing has declined in the past decade, cheques remain the most common form of non-cash payment. Businesses still handle billions of those cheques manually and deposit them through traditional processes, which involve carrying stacks of paper to a bank. Since the Check Clearing for the 21st Century Act (Check 21) took effect in 2004, electronic cheque-handling systems have broached the mainstream of business. Users range from giant retail chains to small independent companies, and techniques such as remote deposit capture have gained acceptance. But studies show that adoption has a long way to go. The latest Federal Reserve survey of depository institutions found 57 per cent of inter-bank cheques in 2007 were presented to the paying bank in the form of original paper cheques, and 15 per cent more were presented as substitute cheques or electronic with paper to follow. Fewer than one-third were converted to electronic form and deposited remotely — a lost opportunity for businesses and their banks. This paper argues that financial institutions must integrate tools such as remote deposit into comprehensive solutions for businesses, driven by the customers' desire to drive efficiency and strengthen security in treasury management. The increasing commitment of banks to building customer relationships on a digital platform will accelerate a shift from products to solutions — and transform bankers from selling services to serving as true partners.

Factors Behind HRD in Retail Banking Sector in Bangladesh

The Human Resource Development in retail banking sector, it is always as a challenge for country like Bangladesh. The aim of this paper is to review the literature related to service quality, service recovery, satisfaction and customer loyalty especially in retail banking sector. This paper will provide a through explanation regarding HRD in the banking sector in Bangladesh n its factors. This study investigates customer satisfaction as the most important factor behind loyalty in retail banking. However, the researcher tried to find out some factors, which may affect the HRD program of a bank and does have some impact to the bank industry in Bangladesh.