Retail Banking Customers Research Articles

Customer expectations of CSR, perceived service quality and brand effect in Thai retail banking

PurposeThis paper aims to explore how social responsibility initiatives can influence perceived service quality and brand effect from the perspective of retail banking customers in Bangkok, Thailand. The paper also aims to examine the impact of trust as a mediating variable between perceived service quality and brand effect.Design/methodology/approachThe study is quantitative in nature, using the responses of 275 bank customers to a closed‐end questionnaire administered on a face‐to‐face basis by trained fieldworkers. The data analysis is performed by partial least squares (PLS), a second generation statistical SEM variance‐based modeling technique.FindingsThe results of the study demonstrate how corporate social responsibility (CSR) initiatives influence service quality perceptions and also examine CSR's impact on trust and affective attitudes of customers towards their banks. The study's hypothesized relationships were principally supported, i.e. perceived service quality is positively associated with brand effect mediated by trust. CSR initiatives play an important role in perceived service quality, which in turn, influences trust and brand effect. Finally, CSR is shown to be directly related to brand effect.Research limitations/implicationsWhile the results are clear and have strong salience to the retail banking industry in Thailand, applications of the findings beyond Thailand should take into account other factors such as the nature of retail banking industry, the perception, behavior and demographics of retail banking customers as well as the strategic focus of retail banking toward CSR.Practical implicationsThe study provides a set of findings relating to CSR initiatives that could be readily incorporated into a bank's corporate plan.Originality/valueTo the authors' knowledge, their study proposes an exhaustive review of CSR activities a company could use to best match its stakeholders' interests. Also the paper demonstrates the contribution of advanced modeling methodology to understanding key relationships in the financial services sector.

Key motivations for bank patronage in Ghana

PurposeBanking in Ghana is now an intensely competitive proposition. In a competitive environment, it becomes imperative not just to attract customers, but also to design strategies aimed at maintaining these customers. Drawing on data from over 2,000 retail bank customers in Ghana, this study aims at understanding the key motivations for maintaining accounts with banks in respect of Ghanaian bank customers.Design/methodology/approachData were collected from customers of 22 retail banks in Ghana. A two‐stage sampling technique was adopted in obtaining the sample. First, for each of the banks, two branches were randomly selected from the list of all functionally operating branches. In the second stage, customers of the selected branches were randomly intercepted in the banking halls and the survey instrument administered to them. A total of 2,000 respondents were attracted. Logistic regression modelling was employed in analysing the data.FindingsOverall bank customers view proximity/accessibility as the most important factor in the opening and maintenance of accounts with banks in Ghana. Recommendations by friends appear to be the least important factor in Ghanaian bank consumers' decision to open and maintain a bank account in Ghana. The findings were strange to the extent that word‐of‐mouth marketing has been lauded as one of the most potent marketing communications tools in services marketing but the empirical findings from the study did not support this.Practical implicationsTo the extent that proximity is a key factor in the opening and maintenance of bank relationships in Ghana, distribution management must be given a more strategic imperative in bank management in Ghana. Bank branches must be sited in catchment areas with the highest propensity to attract and maintain an existing profitable bank clientele.Originality/valueThe study is one of the few on bank marketing in Ghana that draws on a large bank consumer data set and utilizes robust statistical analysis to reach its conclusions.

The Influence of Banking Service Customers’ Satisfaction Level on the Perception of Switching Costs and on Behavioural Loyalty

This article presents the results of a research aiming to evaluate whether retail banking customers' satisfaction level has some impact on the perception of switching costs and on customers' loyalty. Loyalty was measured through behaviors traditionally associated with this construct: intention to repurchase, propensity to recommend service and price sensitivity. The results of the research conducted in May 2007 with 1000 retail banking clients in the cities of Rio de Janeiro and São Paulo showed that, the higher the customers' satisfaction with banking services, the higher the propensity to adopt classical behavior related to loyalty such as the intention to remain as customers for the next 12 months, to recommend the bank to relatives and friends and to be willing to pay a higher price for the offered services than their bank's competitors. On the other hand, no significant difference was observed on perceptions of bank switching costs as a result of customers' satisfaction level. These results provide financial institution managers with a better understanding of the relation between satisfaction and loyalty behavior on the part of customers. Such understanding is paramount for banks' good performance in the long run. Moreover, attention should be drawn to elements that may not be overlooked in service projects and their operations in order to achieve quality excellence perceived by customers. In this study such perception precedes satisfaction.

Using a multiple‐attribute approach for measuring customer satisfaction with retail banking services in Kuwait

PurposeThe purpose of this paper is to attempt to identify the most salient attributes that influence customer satisfaction with retail banks in Kuwait and to determine the level of the overall satisfaction of the customers of these banks.Design/methodology/approachA multiple‐attribute approach proposed by Shin and Elliott in 2001 was employed. This approach was applied in the analysis of data collected from a convenient sample of 863 actual customers of retail banks in Kuwait.FindingsThe most crucial attributes for predicting customer satisfaction with retail banks in Kuwait were fast service, courtesy and helpfulness of employees and availability of self‐banking services. The vast majority of the customers of retail banks in Kuwait (nearly 81 percent) are either satisfied or very satisfied with the services of their banks.Research limitations/implicationsA number of very important attributes, such as those related to loans and credit cards, were not examined due to social reasons. The unavailability of lists of existing customers and their contacts made it not possible to draw a random sample from the target population of this study.Practical implicationsTo maintain a competitive edge in the market, the managers of retail banks in Kuwait need to be updated about technological advances and to invest in those that satisfactorily enhance technology‐based encounters with their customers. These managers also need to focus on minimizing encounter failures in service delivery. For a retail bank in Kuwait, sufficient recovery efforts are needed so that dissatisfied customers do not end up defecting.Originality/valueUse of a single‐item approach to measure customer satisfaction is common. This approach has been shown to suffer from inherent drawbacks, rendering its practical utility questionable. To the best of the authors' knowledge, the present study represents the first attempt to apply Shin and Elliott's multiple‐attribute methodology to retail banking services in a different culture.

Antecedents to customer satisfaction with financial services: The moderating effects of the Need to Evaluate

In this study, we examine how the personality trait Need to Evaluate (NES) moderates the effects benevolence, image and service quality have on customer satisfaction. We initially establish a theoretically derived baseline model of causes to customer satisfaction, and then argue how these effects should be moderated by NES. Based on a survey of retail banking customers, the hypothesised effects are tested by means of two-group analysis, and we find that the effects differ dependent of the NES levels of the consumers. The results are then discussed and their implications briefly offered.

Consumer resistance to internet banking: postponers, opponents and rejectors

PurposeThe purpose of this paper is to further the understanding of innovation resistance by dividing internet banking non‐adopters into three groups based on their intentions to use the innovation. Thereafter, the aim is to identify how the resistance differs in these customer groups.Design/methodology/approachThis study identifies three groups of internet banking non‐adopters, namely postponers, opponents and rejectors. The data were collected by conducting an extensive postal survey among the retail banking customers in Finland who had not adopted internet banking. The measurement development was based on consumer resistance theory and the earlier literature on internet banking. Principal component analysis was used to classify the resistance items into five adoption barriers derived from the earlier literature. Thereafter, analysis of variance was used to analyse the statistical differences in resistance to internet banking between the three groups.FindingsSignificant differences were identified between the groups explored. The resistance of the rejectors is much more intense and diverse than that of the opponents, while the postponers show only slight resistance. The results also indicate that psychological barriers are even higher determinants of resistance than usage and value, which are constructs related to ease‐of‐use and usefulness determining acceptance in the traditional technology acceptance model. Moreover, the findings highlight the role of self‐efficacy in bank customers' risk perceptions to internet banking.Originality/valueThis study provides further understanding of what inhibits internet banking adoption by comparing three non‐adopter groups with respect to their resistance to internet banking. It also has implications for management in overcoming non‐adopters' resistance to the innovation.

Does trust in the bank build trust in its technology-based channels?

Trust appears as an important factor for the adoption of technology-based distribution channels. This paper investigates the construct of trust and its antecedents in the context of technology-based distribution channels, such as ATMs, the internet and phone banking. Specifically, it tests the role of trust in the bank in building trust in these channels. It reports findings from a retail bank customer survey, which revealed two dimensions of trust, affective and cognitive trust, and the significant role of three variables in forming trust in these channels: trust in the company, reputation of the company and disposition to trust. Implications of further research on understanding the antecedents of trust towards channels as well as managerial recommendations on how to build such trust are discussed.

Determinants of retail bank choice in Nigeria: a focus on gender-based choice decisions

As the Nigerian retail banks customers become more sophisticated, it is now very important that retail banks determine the factors that are important and relevant to the customers’ retail bank choice decisions. By using a survey of retail bank customers, this study evaluates the relative importance attached to retail banks’ choice criteria used by male and female customers in Nigeria. The results show that there are some differences in choice factors used by male and female customers in selecting a retail bank for patronage. The recommendation is that bank managers should take both female and male market segments into consideration when making retail bank strategic planning in order to become competitive. The findings can assist retail bank managers in refining their marketing strategies as a means of overcoming the intense competition that exists in the Nigerian banking system.

Loyalty, naivety and powerlessness among Norwegian retail bank customers

AbstractThe quantitative analysis presented in this paper builds on a qualitative focus group study of mobility among bank customers. The main finding from the focus group study was that mobile bank customers had a reflective – often critical − relation to their banks, while the immobile bank customers had an unreflective – often trusting – relation to their banks. The study also resulted in a typology identifying different bank customer orientations. In the present paper, this typology has been operationalized and modified for further quantitative estimation and investigation. Nine different bank orientations are distinguished, and the results indicate that at least two of three bank customers do not regularly monitor their banking terms and conditions. In other words, it is reasonable to believe that the ordinary bank customer is not acting as expected according to the theory of well‐functioning market mechanisms.Resourceful consumers, with high incomes and education levels, tend to be more financially oriented than others. When people with meagre financial resources tend to end up in the more unfavourable banks, this is not solely a result of the banks’ own discrimination of the poor; it is also due to the fact that people with high incomes and education levels are more likely to monitor their banking conditions than people with low incomes, irrespective of whether or not they have bank loans.The quantitative material analysed was collected in February 2007 by computer‐assisted telephone interviews. One thousand randomly selected respondents answered the questions.

Migration and the Retail Banking Industry - an Examination of Immigrants' Bank Nationality Choice in Germany

We study the choice of bank nationality by foreign-born retail banking customers in the context of bank globalization. We argue theoretically that banks enter foreign markets to follow their non-corporate customers and thereby are able to exploit competitive advantages over domestic banks. Using detailed survey data on more than 1000 Turkish immigrants in Germany, we find that product differentiation explains the choice of a home nation bank and that ethnic origin in itself provides the strongest comparative advantage for foreign banks. We find evidence for a persistent ‘home-bias’ of customers with an immigration background even with increasing integration into the host country’s culture. This result may be surprising given that a systematic difference in the choice of bank nationality should not be observable with more integrated immigrants. Our results contribute to the existing economic research on multinational bank expansion by providing insights into bank globalization as an accompaniment to labor market internationalization.

Relationship quality antecedents: the Malaysian retail banking perspective

PurposeThe purpose of this research is to examine the impact of relationship marketing (RM) underpinnings namely, trust, commitment, communication and conflict handling on the quality of firm‐customer relationship as well as the levels of contribution of these underpinnings.Design/methodology/approachThe model of relationship quality based on literature was developed and tested empirically among customers of retail banks in Malaysia. A structured questionnaire was used in the study. Sample selection was based on a systematic random sampling technique. Factor and multivariate analyses techniques were used to process the data.FindingsThe findings of the study support most of the hypothesized relationships. There is a significant positive relationship between trust, commitment and conflict handling on relationship quality. The independent variables contribute differentially to relationship quality.Research limitations/implicationsThe relationship marketing underpinnings can predict relationship quality well. Banks can build and maintain quality customer relationship through trust, commitment and conflict resolution. The outcome of the study can help banks in developing effective strategies for enhancing the quality of firm‐customer relationships and in designing and delivering banking service strategies, tactics, and training programmes that would enable bank employees and managers to function effectively as relationship builders, nurturers, managers, and custodians in service settings.Originality/valueIt has been suggested that in order to keep customers loyal, firms should constantly improve overall relationship quality. However, little is understood about the key antecedents of relationship quality and the actual contributions of each of these antecedents from a relationship marketing viewpoint. By comparing the levels of contributions of the RM underpinnings, banks are now able to decide on the level of attention and effort to be assigned to each, based on their importance.

Ethnicity and customer satisfaction in the financial services sector

PurposeThe purpose of this paper is to describe research carried out to determine whether South Florida's heterogeneous retail banking customers have differing perceptions of the importance of service quality dimensions; and to ascertain whether various ethnic groups report different levels of customer satisfaction with their retail banks.Design/methodology/approachThis study examines three distinct ethnic groups vis‐à‐vis the most significant dimensions of service quality causal to customer satisfaction with retail banking institutions. Because of the ethnic diversity of its residents, South Florida was chosen for this research.FindingsAs a group, 230 banking customers rated reliability and responsiveness as having the greatest impact on their satisfaction levels. Although no statistically significant differences were apparent in the overall levels of satisfaction among the groups, respondents from the three largest regional ethnic groups (African‐Americans, Latinos, and non‐Latino Caucasians) weighted the importance of several of ten service quality dimensions quite differently.Research limitations/implicationsIn general, the results of this study offer significant implications for retail banks seeking to improve customer satisfaction and striving for better retention rates, using customer‐oriented processes and training programs within an increasingly diverse marketplace.Originality/valueAlthough significant research has been done regarding issues and factors contributing to customer satisfaction in the banking industry, very little has been published regarding individual perceptions of the dimensions that contribute to customer satisfaction in ethnically diverse marketplaces.

Customer retention measurement in the UAE banking sector

This aper investigates how image, perceived service quality and satisfaction determine retention in a retail bank setting. Data were collected from retail banking customers in the United Arab Emirates. The results show that image is both directly and indirectly related to retention via satisfaction, while perceived service quality is indirectly related to retention via satisfaction. The paper concludes that satisfaction is not the sole determinant of retention in retail banking. The managerial and research implications of the study are also discussed.

Customers' perception of electronic service delivery in the UK retail banking sector

PurposeThis study aims to explore the key factors of the electronic service quality (e‐SQ) perceptions of UK banking customers and to evaluate the customers’ perceptions of their banks’ actual performance on the identified e‐SQ dimensions.Design/methodology/approachA survey has been used to collect primary data and 135 usable questionnaires were used in the analysis. Questionnaire items were developed through a two‐stage process involving a review of the main measurement scales employed in previous studies and two focus group interviews to identify a series of attributes for assessing electronic banking service quality. Factor analysis procedure was employed to identify the underlying structure among the explored e‐SQ attributes.FindingsExploratory factor analysis uncovered six composite dimensions of electronic service quality, including the provision of convenient/accurate electronic banking operations; the accessibility and reliability of service provision; good queue management; service personalisation; the provision of friendly and responsive customer service; and the provision of targeted customer service. Further analysis using importance‐performance analysis revealed that the UK customers’ perceptions of their bank actual performance on these revealed that e‐SQ dimensions were largely modest.Research limitations/implicationsGenerally relate to the one industry focus, the exploratory factor analysis employed, and the rather generalized view of electronic banking adopted. Future research should aim to improve on these by replicating the study in multi‐industry settings, assessing the stability of the revealed factor structure, and examining whether particular e‐SQ factors vary in importance across different technology types.Originality/valueThis study has drawn on a sample of 135 UK retail banking customers in exploring the key dimensions of the relatively new electronic service quality (e‐SQ) construct, and evaluating how the survey respondents perceive their respective banks' performance on those critically regarded e‐SQ dimensions.

Segmenting retail banking customers

The desire to treat all customers equally, irrespective of their value to the organisation reflects the laudable but uneconomic service mantras of the past. New Zealand banks, using modern database management tools in conjunction with individual customer information, are migrating customers to cheaper delivery systems and adjusting their customer service levels (customer support, privileges, fee waivers, discounts, etc) according to customer profitability. The essence of this database management is still customer segmentation. Using a retail bank's proprietary customer contribution data in combination with survey-based customer data, this paper presents a quantitative eight segment ‘extension’ of Reinartz and Kumar's (2002) behavioural segmentation solution. Potential profitability in the customer-bank relationship is drawn from incorporation of share of wallet into the segmentation solution, providing insight into the management of each segment's customers, especially the ‘barnacles’ (loyal, loss-making customers) and the ‘butterflies’ (short-term, profitable customers).

Towards a model of adoption in internet banking: Strategic communication challenges

It has been established that increasing the role of technology in a service organisation can serve to reduce costs and often improve service reliability. It remains the case however that there is an important role for personalised relationships in the delivery of any service proposition. Throughout this paper both of these perspectives will be discussed. The key managerial challenge exists in establishing an appropriate balance between remote and personal interactions where both customer and provider needs are met. Quantitative findings derived from over 2,000 retail bank customers categorised as high net worth and low net worth indicate that while all see Internet banking as important irrespective of their relationship status, neither group surveyed shows a desire to replace face-to-face interaction with e-banking solutions. The strategic communications challenges in managing this paradox are discussed.

A conceptualisation of a customer‐bank bond in the context of the twenty‐first century UK retail banking industry

PurposeThis paper has two purposes. First, it is to highlight the importance of customer retention and bonding in the context of twenty‐first century banking environment. Second, it is to propose a conceptual model of the customer‐bank bond.Design/methodology/approachThe paper is written based on both extant literature and the author's observation. The paper begins by discussing the context of UK retail banking industry and stressing the importance of retaining bank customers. It then discusses various perspectives of interaction, relationship and bond between customers and providers of services, particularly between retail banking customers and banks. Finally, the paper proposes a conceptual model of bond between retail banking customers and their banks and discusses the implications for managers and theories.FindingsA conceptual model – a triplex bond, which comprises three categories: the primary, secondary, and superlative bond.Research limitations/implicationsThe paper acknowledges that further research is needed to validate the relevance of various dimensions to those proposed categories of bond and to test the power of related measuring instruments.Practical implicationsThe proposed model of a bond could potentially help UK bank managers in mapping out a plan for strengthening customer‐bank bond and, ultimately, in retaining their customers.Originality/valueThe key contribution of this paper is a conceptualisation of customer‐bank bond that takes into account customer non‐personal interactions with their banks.

Measuring Customer Relationships: The Case of the Retail Banking Industry

Arguing that GAAP is ill suited for estimating the future profitability of intangibles, the accounting literature (e.g., Kaplan and Norton 1996, Lev 2001) has recently proposed alternative measurement models. These models view intangibles as composed of a set of fundamental business activities and use multiple financial and nonfinancial metrics causally interlinked to profits to represent this view. Using a unique and proprietary cross-sectional data set of the retail banking industry, we provide some of the first tests on the empirical validity of such measurement models. We characterize the core deposit intangible, an important retail banking intangible representing a bank’s relationships with its customers, using financial and nonfinancial metrics on price, service, customer usage, and customer satisfaction. We find that the metrics do not individually predict future earnings, but gain individual significance in a collective setting, increasing the predictive power substantially. We argue that this result occurs because the activities underlying the measures are causally interlinked to profits and explicitly illustrate these linkages with a structural path model. Our measurement model also predicts significant interactive effects in the way our measures are informative about future profits, and we document such effects, not just among the individual measures, but also across the measures and environmental factors such as the bank’s strategy. In sum, our measurement model illustrates the key drivers, measures, and interactions in retail banking customer relationships.

Determinants of customer loyalty and share of wallet in retail banking

Previous research has investigated the determinants and consequences of customer loyalty, but, in banking, a critical measure largely neglected in previous studies is the customer's ‘share of wallet’. This study, based on a survey of 1,924 retail banking customers, suggests that a large proportion of the variance in stated behavioural intentions can be predicted, in particular, by customers' attitude measures. More importantly, the study shows that a substantial amount of the variance in share of wallet can be predicted, allowing banks to identify and focus on customer segments where there is most potential for growth. In recognition of the fact that dissatisfied customers are a distinct segment, the study models actual behaviour in terms of share of wallet for dissatisfied customers. Implications for research and for business are discussed.

Customer service quality in the Greek Cypriot banking industry

PurposeTo measure the service quality perceptions of Greek Cypriot bank customers and to examine the relationship between service quality, customer satisfaction and positive word of mouth, in the light of changing bank market dynamics due to EU accession.Design/methodology/approachA total of 260 retail bank customers responded to a Greek translated version of SERVQUAL. After descriptive and factor analysis, multivariate regression analysis was used to estimate the impact of service quality dimensions on overall customer satisfaction and the impact of satisfaction on positive word of mouth.FindingsThe SERVQUAL scale proved to be of a three‐dimensional structure in this study. Results revealed that the expectations of bank customers were not met where the largest gap was obtained in the responsiveness‐empathy dimension. Reliability items had the highest effect on customer satisfaction, which in turn had a statistically significant impact on the positive word of mouth.Research limitations/implicationsThere were some difficulties in conducting interviews, which may have restricted the potential sample size. Future research could be directed at how the service is delivered by front‐line employees.Practical implicationsFindings of this study will help Greek Cypriot banks to redefine their corporate image to one that is customer‐focused and emphasizes service quality. The findings will also be important for other countries that need to restructure their banking system as a prerequisite to EU membership.Originality/valueThis study assesses the five‐factor fit of the much debated SERVQUAL instrument to a new country setting, that of Cyprus, whose already developed banking system has undergone significant restructuring prior to EU accession.