(Luận văn) customer satifaction and switching intentions, a study of retail banking

UNIVERSITY OF ECONOMICS HO CHI MINH CITY t to International School of Business ng hi ep w n lo ad ju y th NGO TUAN TAI yi pl CUSTOMER SATISFACTION AND SWITCHING INTENTIONS: A STUDY OF RETAIL BANKING n ua al n va ll fu oi m at nh z z k jm ht vb gm MASTER OF BUSINESS (Honours) om l.c n a Lu n va y te re th Ho Chi Minh City – Year 2014 UNIVERSITY OF ECONOMICS HO CHI MINH CITY t to International School of Business ng hi ep w n lo ad ju y th NGO TUAN TAI yi pl CUSTOMER SATISFACTION AND SWITCHING INTENTIONS: A STUDY OF RETAIL BANKING n ua al n va ll fu oi m at nh z z k jm ht vb ID: 22110051 n a Lu SUPERVISOR: DR LE NGUYEN HAU om l.c gm MASTER OF BUSINESS (Honours) n va y te re th Ho Chi Minh City – Year 2014 t to ACKNOWLEDGMENT ng hi I would like to express my deep gratitude, special appreciation and thanks to my ep supervisor Dr Le Nguyen Hau I would like to thank Dr Hau for encouraging my w n lo research and for his valuable time and efforts in guiding me to complete this study ad of Economic Ho Chi Minh City for supporting and assisting me yi – University ju y th I would like to thank all members of International School of Business (ISB) pl ua al wholeheartedly And also, my special thanks to Professor Nguyen Dinh Tho who n provided me with the appropriate orientations of my study n va fu ll I would like to thank to my friends who assisted me in distributing my m oi questionnaires to the respondents and all respondents who spent their valuable time in nh at completing my questionnaires z z jm ht vb I would like to thank the board of directors of Aardwolf Company, who sympathized with me and gave me facilities during the last two years enabling me to k gm complete both my jobs and study l.c om Finally, a special thanks to my family It’s very hard to express how grateful I am n a Lu to my mother, wife and son They are always my great supports va n Ngo Tuan Tai y te re Ho Chi Minh City, April 20, 2014 th i t to ABSTRACT ng hi There is an intense competition in the retail banking in Vietnam To exist and ep develop in such intense competition, bank managements must develop customer-oriented w n strategies to maintain their bank’s market shares In this industry, the retail banking lo ad y th products and services are closely identical, additionally their prices are competitive ju giving consumers an ability to purchase those financial products and services from yi pl various banks or financial companies Subsequently, consumers are also more prone to ua al n change their current bankers Hence, how does a bank prevent their customers from va n switching to other banks? What is the distinction among the banks as a foundation for fu ll the banks to build up appropriate strategies to maintain the business relationship with oi m at nh their customer in such intense competition? z z The study assumes that perceived bank reputation is a distinctive factor among the vb jm ht various banks Hence, the main aim of this study is to investigate the effects of various k components of customer satisfaction on perceived bank reputation, and also determine gm the impact of the perceived bank reputation on customer intentions to switch The data l.c om for this study was obtained from 198 retail banking consumers in Ho Chi Minh City and a Lu Binh Duong province The analysis results revealed the perceived bank reputation is n n va impacted by customer satisfaction of branches and image, and it plays an important role y te re in lessening the consumer intention to switch the bank ii th Key words: customer satisfaction, bank reputation, switching intentions t to TABLE OF CONTENTS ng Page hi ep Chapter 1: Introduction w n 1.1 Research background lo Research objectives and questions 1.3 Scope of the study 1.4 Signification 1.5 Study structure ad 1.2 ju y th yi pl ua al Chapter 2: Literature review, model and hypotheses n va Customer satisfaction 2.2 Bank reputation 11 2.3 Switching behavior 12 2.4 Conceptual model 14 2.5 Hypotheses 15 n 2.1 ll fu oi m at nh z z jm ht vb Chapter 3: Research method 19 Research process 19 3.2 Measurement scales 20 3.3 Qualitative test of measurement scales 23 3.4 Data collection 23 3.5 Data analysis method 24 k 3.1 om l.c gm n a Lu n va Chapter 4: Data analysis and results 27 Reliability analysis 28 4.3 Exploratory factor analysis for the independent variables 29 4.4 Exploratory factor analysis for the dependent variables 33 iii th 4.2 y Respondent profile and descriptive statistics 27 te re 4.1 t to ng hi ep 4.5 The first hypothesis testing (satisfaction and bank reputation) 34 4.6 The second hypothesis testing (reputation and switching intentions) 39 4.7 Summary of hypothesis testing results 41 4.8 Discussion of findings 43 w n lo Chapter 5: Conclusion, implication and limitation 46 ad Conclusion 46 5.2 Implication 47 5.3 Limitation 49 ju y th 5.1 yi pl al n ua References 51 va Appendix 1: Research questionnaire 55 n fu ll Appendix 2: Descriptive statistic 59 oi m at nh Appendix 3: Results of cronbach’s alpha reliability analysis 61 z Appendix 4: First time of running exploratory factor analysis of independent z ht vb variables 70 k jm Appendix 5: Total Variance Explained for the second time of running exploratory om l.c gm factor analysis of independent variables 72 n a Lu n va y te re th iv t to LIST OF TABLES ng hi Page ep Table 3.1: Measurement constructs 21 w n Table 4.1: Respondent profile 27 lo ad ju y th Table 4.2: Cronbach’s alpha 28 yi Table 4.3: KMO and Barlett’s Test for independent variables 30 pl ua al Table 4.4: Rotated component matrix for independent variables 30 n Table 4.5: Two replacement constructs 32 n va ll fu Table 4.6: Cronbach’s alpha of the two replacement constructs 33 oi m Table 4.7: KMO and Barlett’s Test for dependent variables 34 nh at Table 4.8: Rotated component matrix for dependent variables 34 z z Table 4.9: Model summary of the first hypothesis testing 37 ht vb k jm Table 4.10: ANOVA for regression of the first hypothesis testing 38 gm Table 4.11: Multiple regression analysis results of the first hypothesis testing 38 om l.c Table 4.12: Model summary of the second hypothesis testing 40 n a Lu Table 4.13: ANOVA for regression of the second hypothesis testing 41 n y te re Table 4.15: Hypothesis testing results (summary) 42 va Table 4.14: Multiple regression analysis results of the second hypothesis testing 41 th v t to LIST OF FIGURES ng hi Page ep Figure 1: Conceptual model 14 w n Figure 2: Research process 19 lo ad ju y th Figure 3: Modified research model 35 yi Figure 4: Bank reputation – Histogram 36 pl ua al Figure 5: Bank reputation – Scatterplot 37 n Figure 6: Switching intentions – Histogram 39 n va ll fu Figure 7: Switching intentions – Scatterplot 40 oi m at nh z z k jm ht vb om l.c gm n a Lu n va y te re th vi t to Chapter ng INTRODUCTION hi ep 1.1 Research background w There are a large number of bankers in Vietnam that are categorized into three n lo ad types: state-owned commercial banks, joint stock commercial banks and wholly foreign- y th owned banks (Vietnam banking technology report, 2012) The strong competitive trends ju yi pl in banking products and services on financial markets have increasingly urged not only al n ua the small and medium joint stock commercial banks, but also the state-owned n va commercial banks to renew and continue to have effective customer policies, strategies ll fu and services towards the customers in order to maintain and increase their bank’s market m oi shares nh at The state-owned commercial banks have great advantages of finance capabilities, z z larger branch networks, greater supports from the government, etc over other ht vb k jm commercial bankers enabling them to build up reliability and safety, portraying a gm respectable image in the eyes of consumers, thus they have accounted for a large percentage of the bank’s market shares in Vietnam and have gained satisfaction of the om l.c consumers Nevertheless, those banks are enduring intense competitions from the a Lu following financial banks and companies: n y te re participate in the market, thus they have important advantages such as they learn n va  The new established commercial banks in recent years, those banks just recently th from experiences of the existing banks to build up appropriate strategies, they t to have all information about the market, and importantly they have great ambitions ng hi and thirst for gaining the market share ep  The current commercial banks are growing up such as Sacombank, Techcombank, w n ACB bank, etc Those banks are competing intensively in gaining the consumers lo ad and increasing market shares y th ju  The foreign-own banks such as HSBC, ANZ, etc with advance technologies, yi pl strong financial capability and professional services have been overtaking the al n ua retail banking market Those banks have an advantage of having their foreigner n va clients whom have a trusting relationship in there home countries They especially fu ll have a resilient advantage with worldwide branch networks aboard that enable m oi them to offer unique banking products and services, which are far more superior nh at against the local banks z z  The financial companies such as Prudential Vietnam, AIA, etc are offering many ht vb k jm distinct financial products attracting the consumers Hence, the consumers now gm have a wider range of choices in purchasing the financial products om l.c Due to such competitions above, consumers now have the ability to purchase closely identical financial products provided from various banks or financial companies a Lu n Subsequently, consumers are more prone to change their current bankers if they realize th May, 2013 Typically, Vietcombank cut its monthly deposit interest rate for the VND to y deposit, the state-owned bankers have lowered the deposit rate since the beginning of te re difficulty in lending funds resulted from economic recessions, plus a surplus in cash n va any changes among the banks, even it’s just a minor change For instance, due to a t to Appendix 2: Descriptive statistic ng hi ep Construct/Variable N Std Deviation Mean Minimum Maximum Bank reputation w n lo Bank reputation ad Bank reputation 5.32 1.02 198 5.23 1.01 198 5.30 1.04 198 5.31 1.05 198 5.21 0.97 5.36 0.96 1.05 7 7 y th 198 ju Satisfaction of bank branches yi pl Branches n ua n va Branches al Branches 198 Branches 198 m Bank image 198 5.28 Bank image 198 5.42 1.01 Bank image 198 5.06 1.07 Bank image 198 4.98 1.09 gm Bank image 198 4.92 1.17 Bank image 198 5.36 1.06 Bank image 198 5.04 0.97 ll fu Branches oi 5.38 nh Satisfaction of bank image at z 1.06 z k jm ht vb om l.c n a Lu va n Satisfaction of automatic teller machines (ATM) 5.54 1.04 ATM 198 5.67 0.97 ATM 198 5.17 1.25 y 198 te re ATM th 59 ng hi 5.54 1.14 ATM 198 4.65 1.46 198 4.87 1.35 198 5.13 1.18 198 5.13 1.37 198 4.93 1.16 198 5.24 1.16 198 5.21 1.12 5.16 1.08 0.96 1.03 7 ep 198 n t to ATM ATM w n ATM lo ad ATM y th ju Satisfaction of personal services yi va Personal service n ua al Personal service pl Personal service 198 Personal service 198 m Personal service 198 5.43 Communication 198 5.27 0.96 Communication 198 5.31 0.90 Communication 198 5.24 0.85 gm Switching intention 198 3.05 1.43 Switching intention 198 2.77 1.38 Switching intention 198 3.18 1.55 ll fu Personal service 5.41 oi at nh z Satisfaction of communication z k jm ht vb om l.c Switching intentions n a Lu n va y te re th 60 t to Appendix 3: Results of cronbach’s alpha reliability analysis ng hi Construct: Satisfaction - bank reputation ep w Reliability Statistics n lo Cronbach's Alpha ad Based on Standardized Alpha Items ju y th Cronbach's N of Items yi 828 832 pl n ua al va Item-Total Statistics n fu ll Scale m Scale Mean if Variance if Squared Cronbach's Item-Total Multiple Alpha if Item Correlation Deleted oi Corrected 5.3232 1.042 738 545 a 545 a k jm 738 ht vb 1.022 z Bank reputation 5.2323 z at Bank reputation Correlation nh Item Deleted Item Deleted reliability model assumptions You may want to check item codings om l.c gm a The value is negative due to a negative average covariance among items This violates n a Lu n va y te re th 61 t to Construct: Satisfaction – bank branches ng hi ep Reliability Statistics Cronbach's Cronbach's Alpha Based w n Alpha on Standardized Items lo ad 839 N of Items 839 ju y th yi pl Item-Total Statistics ua al n Scale Mean if Corrected Squared Cronbach's Variance if Item-Total Multiple Alpha if Item Correlation Correlation Deleted va Scale n Item Deleted Item Deleted 786 586 781 297 835 21.3586 10.180 21.2071 11.333 531 21.1919 10.643 573 738 k jm ht l.c gm 338 om 569 vb Satisfaction - branches 713 9.888 z 800 z Satisfaction - branches 484 21.2576 at nh Satisfaction - branches 666 oi 10.177 m Satisfaction - branches 21.2677 ll fu Satisfaction - branches 826 n a Lu n va y te re th 62 t to Construct: Satisfaction – bank image ng hi ep Reliability Statistics Cronbach's Cronbach's Alpha Based w n Alpha on Standardized Items lo ad 903 N of Items 903 ju y th yi pl Item-Total Statistics ua al n Scale Mean if Corrected Squared Cronbach's Variance if Item-Total Multiple Alpha if Item Correlation Correlation Deleted va Scale n Item Deleted Item Deleted 880 892 25.090 792 31.1364 25.377 697 l.c 30.6970 25.877 738 565 31.0253 27.365 653 462 556 om a Lu 886 n n va 895 y te re image 727 31.0808 799 gm Satisfaction - bank 879 25.173 k image 729 31.0051 jm Satisfaction - bank 897 ht image 502 vb Satisfaction - bank 641 27.167 z image 893 z Satisfaction - bank 507 30.6364 at image nh Satisfaction - bank 679 oi image 26.435 m Satisfaction - bank 30.7828 ll image fu Satisfaction - bank th 63 t to Construct: Satisfaction – ATMs ng hi ep Reliability Statistics Cronbach's Alpha w n lo Cronbach's Based on Alpha Standardized Items ad 877 ju y th 874 N of Items yi pl Item-Total Statistics al ua Scale va n Item Deleted Item Deleted Total Correlation 40.088 861 36.1566 41.361 592 361 862 37.0505 37.926 629 522 860 36.8232 38.573 650 638 36.5657 40.338 642 562 857 36.5707 37.353 722 676 848 608 856 n a Lu n va y te re 64 th ATM 36.5253 om Satisfaction - 568 l.c ATM 859 gm Satisfaction - 598 k ATM 638 jm Satisfaction - 861 ht ATM 42.314 vb Satisfaction - 527 z ATM 610 z Satisfaction - 36.0303 at ATM Deleted 42.052 nh Satisfaction - Correlation oi ATM Alpha if Item 36.1566 m Satisfaction - ll ATM Multiple fu Satisfaction - Cronbach's Corrected Item- n Scale Mean if Variance if Squared t to Construct: Satisfaction – personal service ng hi ep Reliability Statistics Cronbach's Alpha w n Based on Standardized Alpha Items lo Cronbach's N of Items ad 912 ju y th 910 yi pl Corrected Squared Cronbach's Variance if Item-Total Multiple Alpha if Item Correlation Correlation Deleted n Scale fu ua al Item-Total Statistics n va Scale Mean if ll Item Deleted Item Deleted 432 914 812 684 885 690 885 802 gm 26.1364 19.662 26.1667 20.038 811 26.2222 20.387 887 25.9697 21.674 759 632 25.9495 21.459 716 611 z k jm ht vb service 621 z Satisfaction - personal 21.406 at service 26.4495 nh Satisfaction - personal oi service m Satisfaction - personal Satisfaction - personal 899 n va service n Satisfaction - personal 894 a Lu service om Satisfaction - personal 646 l.c service y te re th 65 t to Construct: Satisfaction – communication ng hi ep Reliability Statistics Cronbach's Alpha w n lo Cronbach's Based on Alpha Standardized Items ad 810 ju y th 809 N of Items yi pl Item-Total Statistics ua al n Scale Mean if Corrected Squared Cronbach's Variance if Item-Total Multiple Alpha if Item Correlation Correlation Deleted va Scale n Item Deleted Item Deleted 428 780 2.424 752 565 638 10.5808 2.874 415 787 z 10.5101 at z vb 609 k jm ht communication nh Satisfaction - 623 oi communication 2.513 m Satisfaction - 10.5455 ll communication fu Satisfaction - om l.c gm n a Lu n va y te re th 66 t to Construct: Switching intentions ng hi ep Reliability Statistics Cronbach's Alpha w n Based on Alpha Standardized Items lo Cronbach's ad 854 ju y th 851 N of Items yi pl ua al Item-Total Statistics n Scale Mean va Corrected Squared Cronbach's Item-Total Multiple Alpha if Item Correlation Deleted fu Item Deleted Correlation ll Deleted Variance if n if Item Scale m 5.9545 7.120 Switching intention 6.2323 7.052 Switching intention 5.8232 6.806 oi Switching intention at nh 552 793 777 611 743 675 465 842 z 720 z k jm ht vb om l.c gm n a Lu n va y te re th 67 t to Construct: Satisfaction – ATM convenience ng hi ep Reliability Statistics Cronbach's Alpha Based Alpha on Standardized Items w Cronbach's n lo ad 841 N of Items 846 ju y th Item-Total Statistics yi pl Scale Mean al ua if Item n Deleted Scale Corrected Squared Cronbach's Variance if Item-Total Multiple Alpha if Item Correlation Deleted Item Deleted Correlation va 15.9646 Satisfaction - ATM 15.8384 Satisfaction - ATM 16.3333 8.528 Satisfaction - ATM 16.3788 7.160 n Satisfaction - ATM 9.456 fu ll 9.943 oi m 518 803 640 544 818 642 550 815 787 658 748 at nh 672 z z k jm ht vb om l.c gm n a Lu n va y te re th 68 t to ng Construct: Satisfaction – ATM safety hi ep Reliability Statistics w n Cronbach's Alpha Based Alpha on Standardized Items lo Cronbach's ad 832 ju y th 828 N of Items yi pl Scale n ua al Item-Total Statistics va Scale n Mean if fu Variance if Deleted Item Deleted ll Item Squared Cronbach's Item-Total Multiple Alpha if Item Correlation Correlation Deleted oi m Corrected 5.209 Satisfaction - ATM 9.5202 6.535 828 787 630 656 510 793 661 k jm ht vb 9.7778 435 z Satisfaction - ATM 631 z 5.477 at 10.0051 nh Satisfaction - ATM om l.c gm n a Lu n va y te re th 69 t to Appendix 4: First time of running exploratory factor analysis of independent variables ng Rotated Component Matrixa hi ep Component w n Satisfaction - personal service 815 lo ad Satisfaction - personal service y th Satisfaction - personal service ju yi Satisfaction - personal service pl 789 689 645 ua al Satisfaction - personal service 792 Satisfaction - personal service 582 n 760 n va Satisfaction - bank image 739 ll fu Satisfaction - bank image m 725 Satisfaction - bank image 642 Satisfaction - bank image 630 Satisfaction - bank image 617 oi Satisfaction - bank image at nh z vb 570 684 Satisfaction - ATM 649 Satisfaction - ATM 473 431 Satisfaction - branches 530 Satisfaction - branches 413 70 500 450 th 698 y Satisfaction - branches te re 704 n Satisfaction - branches va 726 n Satisfaction - branches a Lu Satisfaction - ATM om 771 l.c Satisfaction - ATM gm 848 k Satisfaction - ATM jm ht 495 z Satisfaction - bank image t to ng hi 729 Satisfaction - ATM 699 Satisfaction - ATM 668 ep Satisfaction - ATM Satisfaction - communication 771 w 728 n Satisfaction - communication lo 703 ad Satisfaction - communication ju y th yi pl n ua al n va ll fu oi m at nh z z k jm ht vb om l.c gm n a Lu n va y te re th 71 t to Appendix 5: ng Total Variance Explained for the second time of running exploratory factor analysis of hi ep independent variables w % of Loadings Loadings Cumulative ad Total Variance 43.419 2.133 7.617 1.823 6.510 1.367 4.882 1.196 Total Variance 43.419 12.157 e% Total % of Cumulativ Variance e% 43.419 43.419 4.519 16.139 16.139 2.133 7.617 51.036 4.306 15.378 31.517 1.823 6.510 57.546 3.075 10.982 42.499 62.428 1.367 4.882 62.428 2.935 10.482 52.981 4.272 66.700 1.196 4.272 66.700 2.466 8.807 61.787 1.021 3.645 70.346 1.021 3.645 70.346 2.396 8.558 70.346 925 3.303 73.649 679 2.425 76.074 653 2.331 78.405 10 607 2.169 80.574 11 580 2.071 82.646 12 554 1.978 84.624 13 471 1.683 86.307 14 427 1.526 87.833 15 406 1.451 89.284 16 371 1.326 90.610 17 343 1.226 91.836 18 324 1.156 92.992 19 297 1.061 94.053 20 281 1.003 95.056 yi 12.157 Cumulativ ua ju % of % y th nt Rotation Sums of Squared Initial Eigenvalues lo pone n Com Extraction Sums of Squared pl 51.036 al 57.546 n n va ll fu oi m at nh z z k jm ht vb om l.c gm n a Lu n va y te re th 72 t to ng hi 21 254 909 95.964 22 232 829 96.793 128 459 99.624 105 376 100.000 ep … 27 w n 28 lo ad Extraction Method: Principal ju y th Component Analysis yi pl n ua al n va ll fu oi m at nh z z k jm ht vb om l.c gm n a Lu n va y te re th 73