Exploring the reasons for bank-switching behavior in retail banking
International Journal of Bank Marketing
ISSN: 0265-2323
Article publication date: 2 November 2021
Issue publication date: 9 March 2022
Abstract
Purpose
The development and maintenance of a long-term relationship with customers are essential for banks to bolster their profits and thrive in a competitive environment. This study aims to explore the key factors that influence individuals' bank-switching behavior in the Malaysian retail banking industry to provide insights to bank managers to develop effective customer retention strategies.
Design/methodology/approach
A convenient sampling technique was used to distribute questionnaires to bank customers in Malaysia. A total of 312 utilizable questionnaires were obtained for further analysis. For the data analysis, the authors used explanatory factor analysis (EFA), confirmatory factor analysis (CFA) and logit and probit models to identify the determinants of bank-switching behavior of bank customers in Malaysia.
Findings
This study revealed that switching costs, effective advertising from competitors, inconvenience, price factor and service failures significantly influence customers' retail bank-switching behavior in the Malaysian context. The findings bring some significant policy implications for bank management decisions.
Research limitations/implications
The non-probability, convenience online sampling method may not be generalized to the population. However, the descriptive demographic statistics show that the findings provide a reasonable representation of the Malaysian population.
Originality/value
This study empirically investigates the determinants of individual customers' retail bank-switching behavior in the Malaysian context. This study is the first of its kind to observe the unique feature of price factor as a determinant of individual customers' switching behavior in the Malaysian retail banking industry, contrasting previous similar studies in different countries.
Keywords
Acknowledgements
Special thanks are due to the Editor-in-Chief (Prof. Hooman Estelami) and two anonymous referees for their constructive comments and suggestions. The authors believe that the quality of the paper has been substantially improved after addressing the comments and suggestions. Financial support provided by Fundamental Research Grant Scheme, Grant: FP076-2019A is gratefully acknowledged. All remaining errors are the authors’ own. The usual caveats apply.
Citation
Zhao, C., Noman, A.H.M. and Asiaei, K. (2022), "Exploring the reasons for bank-switching behavior in retail banking", International Journal of Bank Marketing, Vol. 40 No. 2, pp. 242-262. https://doi.org/10.1108/IJBM-01-2021-0042
Publisher
:Emerald Publishing Limited
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