ARTICLE IN PRESS

Journal of Retailing and Consumer Services 14 (2007) 208–215

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A field study of customers’ switching behavior for bank services$

Lalita A. Manrai, Ajay K. Manrai
College of Business and Economics, University of Delaware, Newark, DE 19716, USA

Abstract

This research paper makes three important contributions with managerial implications concerning the issue of bank service switching
behavior. First, it identifies four overall dimensions of customer satisfaction with bank services. These are personnel related
considerations, financial considerations (interest earnings and interest payments), environment related considerations (atmospherics),
and convenience related considerations (ATM and hours). Next, we develop and test some hypotheses pertaining to the relationship
between customer satisfaction and bank service switching behavior as it is mediated by the importance of a particular bank service to a
particular customer and by the nature of competitive offerings for different types of banking services available from other banks. Based
on the empirical results of a large scale field study, we provide several theoretical and managerial implications.
Published by Elsevier Ltd.

Keywords: Customer satisfaction; Bank services; Switching/loyalty

1. Background
Banking industry in the USA, during 1960s and 1970s
enjoyed high customer loyalty. An earlier research study
found that 75% of the respondents changed banks only
when the change of residence necessitated it (Foster, 1968).
Traditionally, therefore, banks have focused upon attract-
ing new residents in an area. There has been a phenomenal
growth in the number of banking establishments during the
last 25 years or so (1980–2004). In the 1980s and 1990s
many banks had raised concerns with regard to the
adequacy of this strategy in the light of over 95% growth
in number of banking establishments during 1980–2004
(U.S. Bureau of the Census, 1990 and The 2006 Statistical
Abstracts). In comparison, both the population and
number of people who relocated their residence, increased
only by 28.9% and 3.5%, respectively (see Table 1). Thus,
as shown in Table 1, both the population and new residents
available to a banking establishment during 1980–2004
decreased by 34.0% and 47.1%, respectively. The growth in
number of banking establishments thus slowed down in
$ research study points out that a mere five-percentage-point
This research study was funded by a grant from the FIRE Center at
the University of Delaware.
Corresponding author. Tel.: +1 302 831 1770; fax: +1 302 831 4196.
E-mail address: ManraiA@lerner.udel.edu (A.K. Manrai).
recent times but it still exceeds the population growth rate
and new resident availability. For instance, the number of
banking establishments grew by 5% during 2000–2004
while population grew by 4.3% and new residents
decreased by 1.1%. Thus, in the period 2000–2004, both
the population and new residents available to a banking
establishment continued to decrease. A similar analysis
may be done at the bank and state/city level to gain insights
about the variation in severity of the problem faced by
various banks located in different states/cities.
This trend has led to loss of customers for many banks,
which can have detrimental impact on bank’s market share
and profit (Rust and Zahorik, 1996). Despite these negative
effects, few studies have sought to investigate bank
switching behavior more thoroughly. This trend in avail-
ability of fewer customers per banking establishment has
also led to introduction of more and better marketing
initiatives by some banks. The banks are also realizing the
need to seriously investigate the possibility of attracting
and switching competitors’ existing customers. The com-
peting banks may be thinking the same way and thus a
strategy to retain existing customers is also needed. A
raise in the retention rate will help turn around the
performance in most problematic cases (Reichheld and
Kenny, 1990). The issues of ‘‘bank switching’’ and ‘‘bank

0969-6989/$ - see front matter Published by Elsevier Ltd.

doi:10.1016/j.jretconser.2006.09.005
 ARTICLE IN PRESS
L.A. Manrai, A.K. Manrai / Journal of Retailing and Consumer Services 14 (2007) 208–215
Table 1
Population and banking statistics
Information 1980a 2004b Growth (%)
U.S. population (in thousands) 227,757 293,655 28.9
Mobilityc
Number of residentsd 36,887 38,174 3.5
Who moved (in thousands)
Number of banking establishments 46,184 90,267 95.5
Population per banking establishment 4932 3253 34.0
New residents per banking establishment 799 423 47.1
a Oliver (2005) identified the key issues as the relative
US Bureau of the Census, Statistical Abstracts of the U.S., 1990,
Washington, DC.
b
US Bureau of the Census, the 2006 Statistical Abstract, The National
Data Book, http://www.census.gov/compendia/statab/
c
Statistics reported for the years 1980–1981 and 2003–2004, respectively.
d
Residents—does not include members of the armed forces living
abroad.
loyalty’’ are, therefore, of major concern in the retail
banking business. Some of the past research has focused on
such issues as selection of banks (Anderson et al., 1976;
Dupuy and Kehoe, 1976; Linneman and Davis, 1976;
Javalgi et al., 1989), relationship banking (Berry and
Thompson, 1982), market segmentation (Hood and Wal-
ters, 1985; Kinnaird et al., 1984) and customer satisfaction
(Spreng et al., 1995; Levesque and McDougall, 1996;
Fienberg, 1996; Mittal and Lassar, 1998; Mittal et al.,
1998; Athanassopoulos, 2000). The topic of bank switching
and bank loyalty is also gaining the attention of researchers
(Jain et al., 1987; Moutinho and Brownlie, 1989).
Colgate and Hedge (2001) provided empirical evidence
from banking customers in Australia and New Zealand
and classified reasons for switching banks into three major
problem areas, namely, service failure, pricing, and denied
services. Their survey results indicted that problems with
pricing had the most important impact on switching
behavior. Chakravarty et al. (2004) examined the role of
relationships between individuals and their banks in
determining switching behavior. They used survey data
from US customers and found that variables measuring the
various dimensions of a relationship significantly lowered
an individual’s propensity to switch banks. These include
the duration of an individual’s relationship with the bank,
whether or not they have had problems with the bank in
the past, and aspects of the quality of relationship. They
included finance/economic aspects of relationship with the
various dimensions of service quality relationship collec-
tively as determinants of an individual’s propensity to
switch banks. The research by Chakravarty et al. (2004)
underscores the strong importance of relationships in
retaining loyal customers and reducing switching behavior.
Yavas et al. (2004) examined the nature of relationships
between service quality, background characteristics, and
satisfaction and selected behavioral outcomes in the retail
banking industry in Germany. They showed service quality
is the foundation of customer satisfaction and is linked to
switching behavior besides other behavioral outcomes as
209
complaint and recommendation to others. They found that
different aspects of service quality seem to be associated
with different outcomes. For example, their research
suggested that tangible elements of service quality are
more closely related to positive word of mouth; while
‘‘timeliness’’ aspects of service quality are more closely
related to satisfaction and switching behavior. Chiu et al.
(2005) attempted to explain the relationships among
relational bonds, customer value, and customer loyalty in
different groups in the retail banking industry in Taiwan.
performance of banks in terms of their individual
performance indices and the attitude and behavior of their
customers towards bank switching.
Thus, the research on this subject suggests that
dissatisfaction with various aspects related to service
quality provided by a particular bank is the major reason
why customers switch banks. The contribution of our
research is to expand the understanding of relationship
between satisfaction/dissatisfaction and bank switching
behavior. Three research questions that will be addressed
in our research are:
1. What are the dimensions of bank service along which
customer satisfaction/dissatisfaction may be measured?
2. Does the relationship between satisfaction/dissatisfac-
tion and bank switching behavior vary across the
different service dimensions? Here the effect of impor-
tance of a service dimension on satisfaction–switching
relationship would be studied.
3. How does the nature of competition for a service
dimension modify the relationship between satisfaction/
dissatisfaction and bank switching behavior studied in
question 2?
We thus introduce two additional variables, i.e., the
importance of a particular service dimension and nature of
competition for a service dimension as factors influencing
bank switching besides satisfaction/dissatisfaction.
In the next section, we develop hypotheses relating to the
three research questions mentioned above. The hypotheses
are tested in a field setting using survey research. The
details of the research study are discussed in the section
following the hypotheses. Subsequently we present the
results and provide some managerial implications as well as
directions for future research.
2. Research hypotheses
2.1. Satisfaction with the banking services
In a survey done by Opinion Research Corporation in
1984, one out of four consumers moved at least one
account from one financial institution to another in 1983.
The reasons cited for the move were convenience, better
service, lower service charges and higher interest rates on
money market accounts. A recent research study suggests
 ARTICLE IN PRESS
210 L.A. Manrai, A.K. Manrai / Journal of Retailing and Consumer Services 14 (2007) 208–215
that bank customers are more likely to change banks due
to high interest rates on credit cards, low interest rates on
savings account and denial of loan applications (Moutinho
and Meidan, 1989; Colgate and Hedge, 2001). Although
better financial offerings seem to be the major reason for
changing banks, convenience and service seem to be valid
considerations too (Gwin and Lindgren, 1986; Manrai and
Manrai, 1995; Chakravarty et al., 2004). Thus a customer
may think of changing banks due to any of these
considerations, i.e., financial considerations, service con-
siderations, convenience considerations, etc.; if s/he is not
satisfied with the offerings of the bank. Thus it is
hypothesized that:
H1: Satisfaction with a particular banking service would
be negatively related to the likelihood of switching to
another bank for that particular service.
2.2. Importance of the banking services
Two questions in this context need to be addressed in
order to understand the effect of importance of a banking
service on the relationship between satisfaction and
customers’ bank switching behavior.
1. Does a given level of dissatisfaction from a particular
service lead to the same response from different
customers? And,
2. Does a given level of dissatisfaction from different services
lead to the same response from a particular customer?
An intuitive answer to both these questions is NO. And
the reason is that customers have different levels of
‘‘sensitivity across,’’ i.e., the importance of a particular
service to different customers is not the same, as also the
different levels of ‘‘sensitivity within,’’ i.e., the importance
of different services to the same customer is not the same.
Thus, ‘‘importance of a particular service to a particular
customer’’ is a critical factor in determining customers’
responses to dissatisfactory services.
Bank marketers know that various banking services are
not equally important to all bank customers. This has
resulted in the proposal of a methodology to measure
‘‘Determinant Attributes’’, a procedure involving measure-
ment of attitudes toward attributes which are most closely
related to preference or to actual purchase decisions
(Alpert, 1971; Myers and Alpert, 1968).
Determinant attribute analysis technique has been applied
to bank selection decisions to assess the relative determi-
nance of various attributes (services) in the selection of a
bank. It has also been applied to identify customer segments
such as convenience—and service—oriented customers. A
goal of our research is to apply the determinant attribute
analysis to understand bank switching behavior.
The concept of ‘‘determinance’’ was developed from the
notion of ‘‘importance’’ defined in an early study (Krech
and Crutchfeld, 1948). The underlying thinking, however,
is the same, i.e., more important an attribute is to an
individual; more determinant it will be in decision making.
In the context of bank switching behavior, this would mean
that satisfaction/dissatisfaction with a banking service
explains the bank switching behavior only to some extent.
Thus the relationship between satisfaction with a particular
banking service and the likelihood of switching to another
bank for that particular service should improve if the
importance of that particular service is also taken into
consideration. This also implies that the relationship
between satisfaction and switching is different across
different service dimensions and accounting for the effect
of importance should make these relationships more stable
or uniform across different service dimensions. These two
effects, i.e., improvement and uniformity in the relation-
ship between satisfaction and switching result due to the
mediating impact of importance of a service dimension.
Thus the hypothesis:
H2: Importance of a service dimension would mediate the
relationship between satisfaction with a banking
service and the likelihood of switching to another
bank for that service.
2.3. Nature of competitive offerings for a service
Controlling for importance of a service dimension is
expected to result in more uniform relationships between
satisfaction and likelihood of bank switching across
different service dimensions. This suggests that the changes
in relationship between satisfaction and likelihood of bank
switching are rather dissimilar across different service
dimensions. In some cases, controlling for importance
would result in a greater change than in others.
The next question to be addressed is: for which of the
service dimensions the changes are likely to be higher? This
brings in the issue of nature of competitive offerings that
exists for different service aspects. While the importance of a
particular service to a particular customer represents the
‘‘individual difference factor,’’ the nature of competitive
offerings represents the ‘‘system factor’’ in terms of the
options/alternatives available for switching. If the competi-
tive offerings are similar, i.e., there is no or negligible
difference in the competitive offerings by various competing
banks, the customer is very unlikely to switch regardless of
importance of the service or his/her level of dissatisfaction.
This is due to the customer perceptions that the switching is
not likely to improve the situation and s/he would stay with
the same bank rather than going through the trouble of time
and effort involved in making the switch. Thus for aspects of
a bank service where competitive offerings are similar, the
relationship between satisfaction and switching is less likely
to be affected by importance of the service dimension.
Interestingly, we do observe similar interest rates on savings
accounts, CDs, loans, etc., offered by competing banks in a
local geographic region within which customers will switch
bank services. The non-financial aspects of a bank service
 ARTICLE IN PRESS
L.A. Manrai, A.K. Manrai / Journal of Retailing and Consumer Services 14 (2007) 208–215 211

such as attitude of staff, appearance and layout of facility, Table 2

etc., are likely to be viewed separate from financial aspects. List of bank service attributes used for measurement of satisfaction,
importance, and likelihood of switching banks
In contrast, for these service dimensions the competitive
offerings may be more dissimilar due to the nature of the 1. Appearance of the facility
service delivery system. Therefore, for the non-financial 2. Appearance of staff
aspects of a bank’s service, the importance of service 3. ATM hours
dimension is likely to have a greater influence on the 4. Attitude and behavior of tellers
5. Attitude and behavior of other staff
relationship between satisfaction and likelihood of switch. 6. Attitude and behavior of customers
Thus the hypotheses: 7. Competence and efficiency of the staff
8. Decor and atmosphere
H3A: The satisfaction with financial aspects of a bank’s 9. Evening business hours
service would not be different across banks whereas 10. Hours on weekends
for non-financial aspects, the satisfaction would be 11. Interest rate on CDs/Time deposits
different. 12. Interest rate on home mortgage
13. Interest rate on IRAs
14. Interest rate on money market funds
15. Interest rate on other loans
H3B: The change in the relationship between satisfaction 16. Interest rate on savings account
with a particular banking service and likelihood of 17. Layout and furniture arrangement
switching to another bank for that particular service 18. Procedures for handling complaints
would be greater for non-financial aspects than for 19. Reliability of staff
financial aspects, when the importance of service is 20. Response to customer feedback
21. Safety of bank location
controlled for. 22. Size of the facility
23. Wait time at ATMs

3. Research study

3.1. Participants and response rate
We initiated contact with 750 existing customers of five
major banks in one state on the east coast. The survey was
conducted around the two largest cities of the state and the
nearby suburbs. The area was divided into six county
clusters and a random sample was drawn from each cluster
via one stage cluster sampling. The participants were
randomly selected and the data were collected via personal
interviews. The selected sample units were first contacted
by an interviewer in person and if not readily available to
respond, a follow up visit was made to complete the survey.
This method of survey administration ensured high
participation in this research—578 customers agreed to
participate yielding 77% response rate. The primary goal
of this research study is to test the previously stated
hypotheses using a large scale field study.
3.2. Survey instrument
The survey instrument was a questionnaire that con-
tained questions to measure the three basic constructs
included in this research, i.e., satisfaction, importance, and
likelihood of switching to another bank for various bank
service attributes. The data on several demographic
questions were also collected. The scales/specific questions
to measure these three constructs are described next.
service attributes along which satisfaction was measured in
this research. This list was generated based on extensive
review of the existing bank marketing literature (Anderson
et al., 1976; Dupuy and Kehoe, 1976; Laroche et al., 1986;
Manrai and Manrai, 1995; Keaveney, 1995; Holmlund and
Kock, 1996; Levesque and McDougall, 1996; Mittal and
Lassar, 1998). The respondents were asked to provide the
belief ratings for their bank on each of these 23 attributes
using a satisfaction scale ranging from 1 being ‘‘Extremely
Dissatisfied’’ to 5 being ‘‘Extremely Satisfied’’.
3.4. Importance of bank services
The same set of 23 attributes was also used to generate
importance scores. The respondents were asked this time to
indicate the importance of each of these 23 service
attributes on an importance scale ranging from 1 (Not
Important at All) to 5 (Extremely Important).
3.5. Likelihood of switching for a service
The respondents were asked to consider one service
attribute at a time and indicate their likelihood of switching
to another bank for that particular service attribute. The
same set of 23 service attributes was used and the scale
ranged from 1 (Extremely Unlikely to Switch) to 5
(Extremely Likely to Switch).

3.3. Satisfaction with bank services 3.6. Other measures

Satisfaction is conceptualized as a multidimensional The other questions included in the survey were demo-
construct in our research. Table 2 provides a list of 23 graphics such as age, gender, marital status, educational
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212 L.A. Manrai, A.K. Manrai / Journal of Retailing and Consumer Services 14 (2007) 208–215

background, work status, occupation, income, etc. These
were used to check the representativeness of the sample.
4. Results
4.1. Dimensions of bank service
The customer satisfaction data on the 23 service
attributes was factor analyzed to obtain dimensions of
bank service. The details of the methodology and the
results are given in Table 3. Four dimensions of customer
satisfaction were identified. These are personnel related
considerations (‘‘staff’’), financial considerations (‘‘interest
earnings’’ and ‘‘interest payments’’), environmental con-
siderations (‘‘atmospherics’’), and convenience related
considerations (‘‘ATM’’ and ‘‘hours’’).
Some interesting insights about dimensions of bank
service are provided by these results. First, as conjectured
earlier, the financial aspects of the bank service did stand
out separately compared to the other (non-financial)
aspects like convenience, atmospherics, and personnel.
Furthermore, within the financial aspects category, the
customers distinguished ‘‘earnings’’ from ‘‘payments’’ as is
evident by identification of these as two separate factors.
Similarly, the convenience dimension has two elements, i.e.,
ATM convenience and convenience related to bank’s
hours.
The variance explained by different factors is an
indication of the extent of variability that existed in the
surveyed population in their satisfaction with the bank
service along the six service dimensions. Thus the variance
describes the range of responses, i.e., how scattered the
customer responses were along each of the six service
dimensions. The financial aspects including interest pay-
ments and interest earnings explained only 11.7% of the
variance as against the non-financial aspects including
staff, atmospherics, ATM, and hours that explained 58.2%
of the variance. This finding suggests that greater
variability exists in customer satisfaction on account of
non-financial aspects than on account of financial aspects.
The first factor included attributes related to staff
reliability, staff competence and efficiency, and attitude
of personnel. Accordingly this factor was labeled ‘‘staff’’.
The ‘‘staff’’ factor explained the largest variance (36.9% of
total variance). This was followed by ‘‘atmospherics’’
related considerations about the facility (e.g., appearance
of the facility, size of facility, etc.) and this factor explained
11.5% of the variance. The convenience aspects of a bank’s
service, captured in two factors, i.e., ‘‘ATM’’ and ‘‘hours’’
together explained 9.8% of the variance.

Table 3
Dimensions of bank service (results of factor analysis)

Factora Attributesb Rotated loadings Factor label (Cronbach a)c Variance explained (%)

Factor 1 Appearance of Staff 0.61 Staff (a ¼ 0.92) 36.9

Attitude and behavior of tellers 0.74
Attitude and behavior of other staff 0.77
Attitude and behavior of customers 0.51
Competence and efficiency of staff 0.57
Procedures for handling complaints 0.63
Reliability of staff 0.57
Response to customer feedback 0.55
Factor 2 Appearance of the facility 0.71 Atmospherics (a ¼ 0.90) 11.5
Decor and atmosphere 0.86
Layout and furniture 0.87
Safety of bank location 0.68
Size of the facility 0.77

Factor 3 Interest on CDs/TDs 0.83 Interest earnings (a ¼ 0.89) 6.0

Interest of IRAs 0.78
Interest of MMF 0.78
Interest on savings 0.63
Factor 4 Interest on other loans 0.78 Interest payments (a ¼ 0.80) 5.7
Interest on home mortgage 0.77
Factor 5 ATM hours 0.85 ATM (a ¼ 0.72) 5.1
Wait time at ATMs 0.81
Factor 6 Evening business hours 0.80 Hours (a ¼ 0.74) 4.7
Hours on saturdays 0.79
a
Eigen value for all six factors reported here is greater than 1.
b
Factor structure was rotated using varimax rotation. The attributes listed against a factor have a loading value larger than 0.50 on that particular
factor.
c
Measure of reliability of the composite factor. Range from 0.00 to 1.00. Higher values are better, acceptable values X0.60.
 ARTICLE IN PRESS
L.A. Manrai, A.K. Manrai / Journal of Retailing and Consumer Services 14 (2007) 208–215
Thus, overall a bank’s service can be described in terms
of four dimensions. These are staff, atmospherics, financial
considerations, and convenience. The financial considera-
tions seem to be further distinguished in terms of interest
earnings and interest payments and convenience seems to
be captured by ATM and extra business hours. For each of
these six factors, composite variables were constructed by
aggregating customer responses on the respective attributes
that loaded on a particular factor.
4.2. Relationship between satisfaction and likelihood of
switching
For each of the six factors discussed above, simple
correlation (Pearson) between satisfaction and likelihood
of switching was computed. These correlations and their
statistical significance are given in Table 4. As can be seen,
satisfaction was negatively correlated to likelihood of
switching as predicted by hypothesis H1. Thus these results
provided support for the hypothesis H1.
4.3. Effect of importance on relationship between
satisfaction and likelihood of switching
Next, partial correlations (Pearson) between satisfaction
and likelihood of switching were computed controlling for
the importance of different services. These results are also
summarized in Table 4. As can be seen, the relationship
between satisfaction and likelihood of switching continues
to be negative. However, the size of the correlation and the
statistical significance improves for each of the six service
dimensions when importance of different services is
controlled for. Furthermore, controlling for the impor-
tance of a particular service also stabilizes the relationship
between satisfaction and switching across different services
dimensions. When importance was not controlled for, the
correlation coefficients ranged from þ0:02 to 0:18. This
range was reduced when importance was controlled for
Table 4
Relationship between satisfaction and likelihood of switching (simple and partial correlations (Pearson))
Factor label Simple correlation between
satisfaction and likelihood of
switching (p-value)a
Staff 0.11 (0.05)
Atmospherics 0.10 (0.05)
Interest earnings 0.17 (o0.05)
Interest payments 0.18 (o0.01)
ATM 0.02 (ns)
Hours 0.16 (o0.01)
a
Measure of statistical significance. Values p0.05 considered statistically significant. Lower values are better.
b
First order partial correlations are computed here. Note these are same as beta-weights of ‘satisfaction’ in a multiple regression of ‘‘likelihood of
switching’’ on ‘satisfaction’ and ‘importance’ of a service dimension.
213
(from 0.11 to 0.21). These results thus provide support
for the mediating role of importance as hypothesized in H2
and suggest that satisfaction alone is not sufficient to
predict the likelihood of switching but the importance of a
service also plays a critical role.
4.4. Satisfaction by service category
Hypothesis H3A predicted that satisfaction with finan-
cial aspects of a bank’s service would not be different
across banks whereas for non-financial aspects, the
satisfaction scores would differ across banks.
To test this hypothesis, differences in satisfaction scores
across the five banks were compared using Analysis of
Variance (ANOVA). The results are given in Table 5. As
these results indicate, for financial aspects, e.g., interest
earnings and interest payments, there were no differences
across the five banks. On the other hand, the banks differed
significantly on their satisfaction scores on non-financial
aspects like staff, atmospherics, and convenience, e.g.,
ATM and hours. Thus hypothesis H3A was supported.
4.5. Effect of importance on relationship between
satisfaction and likelihood of switching by service categories
A comparison of the simple correlations between
satisfaction and likelihood of switching and partial
correlations between these two variables after controlling
for importance is given in Table 4. These results suggest
that effect of importance varies across different service
categories. For interest earnings and interest payments,
there was only a slight difference between simple and
partial correlations. In contrast for the other four
categories of service aspects, controlling for importance
made a substantial difference as is evident from the
difference between simple and partial correlations. Thus
the effects of importance on relationship between satisfac-
tion and likelihood of switching varied across different
Partial correlationb between Difference between simple and
satisfaction and likelihood of partial correlations
switching controlling for
importance (p-value)a
0.18 (0.00) 0.07
0.19 (0.00) 0.09
0.19 (0.00) 0.02
0.19 (0.00) 0.01
0.11(0.00) 0.09
0.21 (0.00) 0.05
 ARTICLE IN PRESS
214 L.A. Manrai, A.K. Manrai / Journal of Retailing and Consumer Services 14 (2007) 208–215
Table 5
Differences in satisfaction scores across banks (results of one-way analysis of variance)
Factor label Sum of squares
Between group (df ¼ 4) Within group (df ¼ 570)
Staff 6.79 332.88
Atmospherics 11.83 315.95
Interest earnings 1.55 342.00
Interest payments 2.84 439.84
ATM 5.21 310.04
Hours 74.27 584.46
a
Measure of statistical significant. Values p0.05 considered statistically significant. Lower values are better.
service dimensions. This finding is in line with the
predictions made by and thus supports hypothesis H3B.
5. Managerial implications and future research
This research makes three important contributions with
managerial implications concerning issues of ‘‘bank switch-
ing’’ and ‘‘bank loyalty’’.
First, it identified four overall dimensions of customer
satisfaction with bank services. These were personnel
related considerations, financial considerations, atmo-
spherics of the facility, and convenience. Further, for the
five banks included in this research, the competitive
offerings were fairly similar for financial factors like
interest rates. However, for the other three factors,
significant differences existed amongst the five banks. Even
today, most of the local promotional efforts by the banks
continue to place more emphasis on interest rates and
similar other financial considerations. The findings of this
research suggest that bank marketers need to pay much
more attention in promoting factors like personnel, atmo-
spherics, and convenience than what was done in the past.
This will help the banks to differentiate their offerings in
customers’ perceptions and thus attract them from
competitors.
This research goes beyond customer satisfaction as a
determinant of bank switching. As a second contribution,
the findings of this research suggest that importance of a
particular service in addition to satisfaction plays a critical
role in the decision to stay or switch. Understanding the
importance of a particular service will help a bank
marketer understand how critical the satisfaction would
be in a customer’s decision to stay or switch.
Finally, the findings suggest that the nature of competi-
tion for different aspects of a bank’s service plays an
important role in a customer’s decision to stay or switch.
Even if a customer was dissatisfied with a service and the
service was extremely important, the customer may not
switch to another bank if the competitive offering was the
same. This holds true for financial aspects of a bank’s
service where competitive offerings are similar. On the
other hand for non-financial aspects, the relationship
between likelihood of switching and satisfaction was
F statistic p-Valuea
Between group Within group
1.70 0.58 2.91 0.02
2.96 0.55 5.34 0.00
0.39 0.60 0.65 0.63
0.71 0.77 0.92 0.45
1.30 0.54 2.39 0.05
18.59 1.03 18.13 0.00
significantly affected by the importance of the service.
Once again from a strategic consideration, this would
suggest that understanding the importance of a service is
especially critical for non-financial aspects.
There are several avenues for future research. As far as
we know, this is the first study that examines the interplay
among constructs such as customer satisfaction, impor-
tance of a service dimension, nature of competition, and
likelihood of switching. There is scope for replication of
this research using samples of customers from banks in
other states and other geographical regions. Secondly,
considering the critical role ‘‘importance of a service’’ plays
in mediating the effect of satisfaction on likelihood of
switching, it will be worthwhile for marketers to under-
stand the determinants of importance. Such efforts could
focus on identifying customer profiles in terms of demo-
graphics, psychographics, and other behavioral variables.
Also this research has focused on switching banks for a
particular service. It will be worthwhile to investigate the
issue of switching entire banking operations and to
examine other factors besides those studied in this research.
In summary, this research contributes to our understand-
ing of some important issues related to customers’ bank
switching behavior and provides several useful managerial
insights into this subject.
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