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Customer switching behaviour in the Chinese retail banking industry

Michael D. Clemes (Faculty of Commerce, Lincoln University, Christchurch, New Zealand)
Christopher Gan (Faculty of Commerce, Lincoln University, Christchurch, New Zealand)
Dongmei Zhang (Faculty of Commerce, Lincoln University, Christchurch, New Zealand)

International Journal of Bank Marketing

ISSN: 0265-2323

Article publication date: 12 October 2010

8424

Abstract

Purpose

There is intense competition and increasing globalisation in financial markets. Bank management must develop customer‐oriented strategies in order to compete successfully in the competitive retail banking environment. The longer a bank can retain a customer, the greater revenue and cost savings from that customer. China's accession to the World Trade Organisation (WTO) has resulted in the liberalisation and deregulation of China's financial services market. Chinese customers now have greater choices between domestic and foreign banks. This study aims to identify and analyse the factors that influence bank customers' switching behaviour in the Chinese retail banking industry.

Design/methodology/approach

The data for this analysis was obtained using a convenience sample of 421 bank customers in Jiaozuo City, Henan Province, China. The decision to switch banks is hypothesised to be a function of price, reputation, service quality, effective advertising competition, involuntary switching, distance, switching costs, distance, and demographic characteristics. Factor analysis and logistic regression are used to analyse the data and identify and rank the factors that impact on the bank switching behaviour of customers.

Findings

The research findings reveal that price, reputation, service quality, effective advertising, involuntary switching, distance, and switching costs impact on customers' bank switching behaviour. The findings also reveal that the young and high‐income groups are more likely to switch banks.

Practical implications

The results of this research allow service marketers and practitioners to develop and implement service marketing strategies to decrease customer defection rates, and in turn, increase bank profits. Furthermore, this research provides useful information for future researchers investigating customer switching behaviour in the retail banking industry.

Originality/value

This paper provides an empirical analysis of Chinese bank switching behaviour and provides a framework for future studies on the behaviour of bank customers.

Keywords

Citation

Clemes, M.D., Gan, C. and Zhang, D. (2010), "Customer switching behaviour in the Chinese retail banking industry", International Journal of Bank Marketing, Vol. 28 No. 7, pp. 519-546. https://doi.org/10.1108/02652321011085185

Publisher

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Emerald Group Publishing Limited

Copyright © 2010, Emerald Group Publishing Limited

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