IMPACT OF CUSTOMER RELATIONSHIPS ON CUSTOMER SWITCHING PROPENSITY: RETAIL BANKING INDUSTRY OF SRI LANKA

Abstract

This paper aims to examine the role of customer relationships in determining switching behavior of retail banking customers. Data gathered through a survey questionnaire from a random sample of 360 retail banking customers in the Western Province of Sri Lanka was used in the study. Correlation analysis and multiple linear regression analysis were used to analyze data to examine the degrees of impact on switching propensity from each individual component of relationships. Relationships have been measured through empathy of banking employees on the customers, duration of customer relationships with bank, past problems faced by the customers with bank and the level of affective commitment of customers at the bank. The research findings revealed that affective commitment, empathy and duration significantly reduced switching propensity and the past problems significantly increased switching propensity of retail banking customers. Affective commitment and empathy are the two critical relational factors which impact on switching propensity of retail banking customers of Sri Lanka. The results demonstrate how customer relationships help in limiting bank switching behavior and delivers a strong message to the bankers about the importance of customer relationships in retaining retail banking customers.

Keywords : customer, relationships, Sri Lanka, switching propensity, retail banking

For full paper: fmscresearch@sjp.ac.lk