An analysis of Loyalty and Satisfaction in Banking Service – The case of Retail Banks in Ho Chi Minh City

VIETNAM NATIONAL UNIVERSITY – HOCHIMINH CITY INTERNATIONAL UNIVERSITY SCHOOL OF BUSINESS BACHELOR THESIS DEFENSE Topic: An analysis of Loyalty and Satisfaction in Banking Service – The case of Retail Banks in Ho Chi Minh City By Thìn Phổ Độ – BAIU09093 Advisor DBA Nguyễn Minh Tuấn Evaluator Ph.D Hồ Thị Bích Vân OUTLINE I II III IV V Introduction Literature Review Methodology Research Findings Discussion & Recommendations BACKGROUND State Owned Banks Monetary policy BANKING Required reserve INDUSTRY Commercial Banks Interest rate NATIONAL ECONOMY WEALTH  increase the brand equity  higher consumer’s purchase intention? - the banks have to deal with bad debt; long-term proftability (Ribbink al.,( 2004)) - Implicit risks for Vietnamese Banks Customer loyalty is important in that it has a positve efect on - Inflation fluctuation; before the foreigns PROBLEM STATEMENT RESEARCH QUESTIONS & OBJECTIVES RESEARCH QUESTIONS & OBJECTIVES • Main Research Question: To what extent are customer satisfaction and their loyalty affected by service quality? • Secondary Research Questions • Q1: Is there any relationship between the Customer Satisfaction and Customer Loyalty (in term of Quality) in Banking Service? • Q2: Which are the main factors that influence on the overall Customer Satisfaction? • Which are the main factors that influence on the overall • To understand the overall picture of Banking Service in Ho Chi Minh City; • To identify quality factors affecting Customer Satisfaction in Banking Service; • To determine and measure the direct and indirect effects of the Customer Loyalty through the Customer Satisfaction; • To carry out solution for improvement and raising the Customer Loyalty as well as Bank’s performance through important factors Customer Loyalty? (Customer Satisfaction is included) RESEARCH QUESTIONS OBJECTIVES OUTLINE I Introduction III IV V Methodology II Literature Review Research Findings Discussion & Recommendations Related theoretical study  Service  Service Quality  Customer Satisfaction  Customer Loyalty Previous Study  Lo Liang Kheng (2010) has conducted the study “The impact of service quality on customer loyalty: A study of banks in penang, Malaysia” Suggested Model Model adapted from Agus et al (2007) and Caruna (2002) CONCEPTUAL FRAMEWORK H1b Tangible Tangible Customer Loyalty H2b Responsiveness H3b b H4 Reliability Reliability b H5 H6 H 2a a H1 H3 a Assurance H4a Customer Empathy H5a Satisfaction Conceptual Model for Customer Satisfaction and Customer Loyalty in Banking Service Research Hypothesis H1a: There is a positive impact of TANGIBLES on CUSTOMER SATISFACTION H1b: There is a positive impact of TANGIBLES on CUSTOMER LOYALTY H2a: There is a positive impact of RESPONSIVENESS on CUSTOMER SATISFACTION H2b: There is a positive impact of RESPONSIVENESS on CUSTOMER LOYALTY H3a: There is a positive impact of RELIABILITY on CUSTOMER SATISFACTION H3b: There is a positive impact of RELIABILITY on CUSTOMER LOYALTY H4a: There is a positive impact of ASSURANCE on CUSTOMER SATISFACTION H4b: There is a positive impact of ASSURANCE on CUSTOMER LOYALTY H5a: There is a positive impact of EMPATHY on CUSTOMER SATISFACTION H5b: There is a positive impact of EMPATHY on CUSTOMER LOYALTY H6: There is a positive impact of CUSTOMER SATISFACTION on CUSTOMER LOYALTY Revised Research Model Banking Service Standards  H1b Customer Loyalty H2b Responsiveness H3b b H4 H3 a a H1 Empathy H 2a H5 Reliability H4a Customer Satisfaction Revised Conceptual Model for Customer Satisfaction and Customer Loyalty in Banking Service Main Research Hypothesis H1a: There is a positive impact of RESPONSIVENESS on CUSTOMER SATISFACTION H1b: There is a positive impact of RESPONSIVENESS on CUSTOMER LOYALTY H2a: There is a positive impact of RELIABILITY on CUSTOMER SATISFACTION H2b: There is a positive impact of RELIABILITY on CUSTOMER LOYALTY H3a: There is a positive impact of BANKING SERVICE STANDARDS on CUSTOMER SATISFACTION H3b: There is a positive impact of BANKING SERVICE STANDARDS on CUSTOMER LOYALTY H4a: There is a positive impact of EMPATHY on CUSTOMER SATISFACTION H4b: There is a positive impact of EMPATHY on CUSTOMER LOYALTY H5: There is a positive impact of CUSTOMER SATISFACTION on CUSTOMER LOYALTY Descriptions and Variables’ Correlations of the Customer Loyalty   LOY  RES ** 0.644 1.000 REL ** 0.687 0.661 SEV ** 0.693 ** 0.727 0.680 EMP ** 0.527 ** 0.636 SAT 0.701** Mean Std Deviation       1.000     1.000   ** 0.550 ** 0.606 1.000 0.659** 0.595** 0.682** 0.521** 1.000 3.42 3.33 3.23 3.60 3.23 3.31 0.734 0.750 0.843 0.726 0.865 0.796 ** ** All IVs and SAT have positive correlation with LOY Multiple Regression Analysis: Coefficients between IVs and SAT Variables Standardized Sig Correlations (Part) 0.273 0.000 0.659 0.145 0.015 0.595 0.352 0.000 0.682 0.055 0.315 0.521 Coefficients (Beta) RES REL SEV EMP Note: Dependent Variable: SAT – Customer Satisfaction Predictors: RES, REL, SEV, EMP ANOVA: F (4, 290) = 82.074, Sig = 0.000, p