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Factor affecting customerFactor affecting customerloyalty in retail bankingloyalty in retail banking

Presenter: Wong Yan YeeNg Kai XinHo Suk KuanMichelle Lim Pei WenLoh Su HuiTan Kah Hou


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Introduction

Why do your customer leave you?Death- 1%

Move or relocating-3%Buy from friend-5%Sold by competitor-9%

Price-14%Perceived indifference-68%(Webb, C. R. ,2009)


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Research Background Retail banking refers to banking in which

banking institutions execute transactionsdirectly with customer, rather thancorporation or other banks.

(Retail Banking,2010) 4 types- Commercial bank

Community development bank

Private bankSavings bank


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Problem Statement

To what extent has the service quality,relationship banking, online channel,

appropriate technology on customerloyalty in retail banking

Sub problem- Rude services

- Ignore customer feedback


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Research ObjectivesGeneral objectiveIdentify the factor that affecting customer loyalty in retail

banking

2 Specific Objectives

To determine whether there is a significant positive relationshipbetween service quality and customer loyaltyTo determine whether there is a significant positive relationshipbetween relationship banking and customer loyaltyTo determine whether there is a significant positive relationship

between availability of online channel and customer l

oyalty.To determine whether there is a significant positive relationshipbetween appropriate technology and customer l

oyalty


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Research Question

Is there any significant relationship between service

quality, relationship banking, online channel,technology(independent variables) and customerloyalty(dependent variables)?

Hypothesis of the Study

H1: There is a significant positive relationship betweenservice quality and customer loyalty

H2: There is a significant positive relationship betweenrelationship banking and customer loyalty

H3: There is a significant positive relationship betweenavailability of online channel and customer loyalty.

H4: There is a significant positive relationship betweenappropriate technology and customer loyalty


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Significance of thestudy customer loyalty may boost market

share and profitability

Conclusion


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Literature review

prevents researchers from copying previous

researchers

answer all research questions

clarification of problem

develop understanding

Improvement


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Service loyalty refers the degree towhich a customer exhibits repeatpurchasing behavior from a serviceprovider, possesses a positive attitudinal

disposition toward the provider, andconsiders using only this provider when aneed for this service arises

Gremler and Brown (1996)


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Review ofLiterature

rival in marketing increase gradually and makesexisting loyalty customers difficult (Anderson &Ponnalovu, 2002)

online banking is an important distribution channel(Daniel Singer, 2008)

customers who receive the relationship banking offerare more loyalty (Louis Johannes, 2005)

internet based application plays an important role forprogressing and delivering information (Ram N.Acharya, 2007)

design on the technology should be flexible and user-friendly (Dabholkar ,1994)


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Theoretical Models

How s rvi lit ts t stomers loyalty How is t e relations i ankingaffects customers loyalty Howonlinechannel affects customers loyalty

How anking technologyaffects customer loyalty

Customerloyalty

OnlinechannelRelationshi

anking

Service uality

BankingtechnologyH1

H2

H3

H4


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Conceptual Framework

Service quality

Bankingtechnology

Online channel

Relationshipbanking Customer

loyalty

Independent variables Dependent variables


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Hypothesis Development H1: There is a significant positive relationship

between service quality and customer loyalty

H2: There is a significant positive relationshipbetween relationship banking and customer loyalty

H3: There is a significant positive relationshipbetween availability of online channel and customerloyalty.

H4: There is a significant positive relationshipbetween appropriate technology and customer loyalty


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Research Methodology - Introduction

Business research is basically the applyingscientific methods to find the answer orproof of the problems and also hypothesis.

Firstly, we will specify the type ofresearch. Secondly, we will continue to specify our

data collection methods.

Explain on the target population, samplingframe and sampling location, samplingelements, sampling technique, and alsosample size.


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Research Design

Qualitative research mostly used inexploratory research and the researcher goingto observe and interpret their data from what

they observed. We choose quantitative method in our study. By using quantitative methods, the results are

more objective since we do not involve inobserver.

This is causal research since we want to findout the cause-and-effect relationship oncustomer loyalty in the retailing bank industry.


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DataCollection Methods

3.2.1 Primary DataPrimary data is those data that we obtainedfirst hand. This means that we obtained thedata by ourselves.Questionnaire3.2.2 Secondary DataSecondary data are gathered and recorded bysomeone else; they are already assembled and

usually are historical.Databases, text books, reference book, and somearticles .


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Sampling Design

The process of sampling involves usinga portion of a population to makeconclusions about the whole population.

Reasons for having sampling : Pragmatic reasons- We need to be

efficient in term of money and time

Accurate and Reliable results- Itmight be inaccurate when conducting aresearch on large population


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Target Population

Target population is our concern foridentify the right person for thisresearch.

Those always involve in the retailingbank and understand the proceduresdealing with banking.

Students , housewives, professional,working adults, businessmen or businesswomen.


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Target population

Sampling frame

Conduct research

Sample size

Plan procedures

Probability or nonprobability sampling method

Select actual sampling units

Sampling Frame&

Sampling Location


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Sampling frame (working population)Sample may be drawn

Banking customer-students,housewives, and academic workers,working adults, businessmen and alsobusiness women


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Sampling

Kampar area

Kuala Lumpur areas Different areas (working adults ,

businessmen or business women )


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Sampling Elements

Student(younger group ) Deal with bank (0nline) Different view (retailing bank industry)A

cademic workers & adult workers Knowledge (bank industry ) Information (royalty in that bank industry)Businessmen and businesswomen (Kampar

areas ) Experiences (dealing with the retailing bank

industry)


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SamplingTechnique

Probability sampling

Population is known

Nonzero probability of selection Probability sampling

Nonprobability sampling

Population is unknown Personal judgment or convenience


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Four methods of non-probability

sampling

Convenience sampling

Judgment sampling

Snowball sampling

Quota sampling


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Five types of probability sampling

Simple random Systematic sampling

Stratified sampling

Cluster sampling

Multistage sampling

Probabilitysampling

- Combinationmethod of simple randomsamplingand clustersampling


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Samplingsize

30 respondents have been

selected for the pilottest


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Research InstrumentAccording to Micuda Ion dan, servicequality can divided into fivedimensions which are :

Tangible Reliability Responsiveness Assurance Empathy


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According to Nicolae A.P., philosophy of

relationship marketing relays on gainingcompetitive advantages for the company.

Four dimensions of relationship banking Management

Instrumental

Informational organizational


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According to GIS & Geospatial

Technology,they provide seven technology dimensions:

Utility service based

Custom application services Engineering R & D services Enterprise application services IT infrastructure management Business process outsourcing


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Harry Gold outline four dimensions in

online channel

Targeting

compensation Advertising units

Metrics


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Construct Measurement

Measures the variables in this study would affectthe relationship of customer loyalty in retailingbanking

Operationalization is the process of identifying

scales that correspond to variance in a concept Nominal scale - most elementary level of

measurement Interval scale - having both nominal and ordinal

properties and also differences in quantities of aconcept Ordinal scale - a ranking scales


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DataProcessing

After getting questionnaire fill byrespondents, we will coded, key in, and edit alldata.

Checking for any blank answers and

inconsistencies Editing process include double check the

questionnaires to confirm no missing data andensure respondents are understand questionsin our questionnaire

Enter data into SPSS version 16.0 to help usanalysis data in later stage


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Data Analysis

Descriptive Analysis

Maximum

Minimum

Mean

Standard deviation

Variance


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Age of Respondents


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Ages frequency distribution


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Frequency ofAge


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Occupation of Respondents


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Respondents occupation frequency distribution


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Frequency of Respondents occupation


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Gender of Respondents


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Respondents gender frequency distribution


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Frequency of Respondents gender


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Respondents choice of bank


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Respondents choice of bank frequency distribution


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Frequency of Respondents choice of bank


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Years of Respondents become customer of bank


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Years of Respondents become customer of bank frequency

distribution


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Frequency ofYears of Respondents become customer of

bank


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Scale Measurement

Reliability consistency & stability

Low reliability Problem checking


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Variable of service quality


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Variable of relationship banking


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Variable of online channel


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Variable of banking technology


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Inferential Analysis

Independent sample t-test between male andfemale in retailing banking industry

: There is a significant difference of customer loyaltybetween

male and female customers

: There is a significant difference of customer loyaltybetween

male and female customers


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Conclusion


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References:

Daniel S. , Albert A. & Babu M. (2008). Management innovation and culturaladaptivityin international online banking. Retrieved March16, 2010, fromhttp://www.emeraldinsight.com/Insight/viewPDF.jsp?contentType=Article&File

name=html/Output/Published/EmeraldFullTextArticle/Pdf/0210310403.pdfMohammadSuhainyAbdul Rahim. (2009). Service Quality, CustomerSatisfaction AndLoyaltyTowards JKR Malaysia. RetrievedMarch 22, 2010,fromhttp://dspace.fsktm.um.edu.my/bitstream/1812/550/1/Service%20Quality%20Customer%20Satisfaction%20and%20Loyalty%20towards%20JKR%20Malaysia%20(Mohammad%20Suhainy%20Abdull%20Rahim%20CGA%20060082).p

dfRamN. Acharya & Albert Kagan (2007). Online bankingapplications andcommunitybank performance. RetrievedMarch16, 2010, fromhttp://www.emeraldinsight.com/Insight/viewPDF.jsp?contentType=Article&Filename=html/Output/Published/EmeraldFullTextArticle/Pdf/0320260603.pdf

Retail Banking. (2010,March). RetrievedMarch 16,2010,from

http://en.wikipedia.org/wiki/Retail_bankingWebb, C. R. (2009, December 30). Whydoour customer leave us? RetrievedFebruary6, 2010, fromEzine Article: http://ezinearticles.com/?Why-Do-Our-Customers-Leave-Us?&id=3493881


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Q & A

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