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Determinants of Customer Switching Behaviour in the Zimbabwean Banking Industry

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  • Takaivona Vhimisai

    (National University of Science and Technology, Zimbabwe)

  • Thomas Bhiri

    (National University of Science and Technology, Zimbabwe)

  • Tendekayivanhu Mutambanadzo

    (National University of Science and Technology, Zimbabwe)

Abstract

The world over, retail banks are grappling with the problem of excessive customer defections which negatively impacts their cost structures, revenues and profitability. This study examined the determinants of a surge in customer defections witnessed in the Zimbabwean retail banking industry. An explanatory design was adopted to gather categorical data from 5 Customer Relationship Managers and 402 bank customers, based in 13 cities across the country, through telephone interviews and self-administered questionnaires respectively. Sampling was done in multiple stages, starting with the clustering of potential participants around their cities of residence, followed by their stratification into customers of 5 retail banks which have branches in each of the 13 cities, leading to the random selection of an equal number of participants from each stratum. Using a generalised ordinal logistic regression model, the study revealed that transaction costs, bank reputation, distance from the bank, attractiveness of competing banks’ promotional efforts and level of education are significant positive predictors whereas service quality is a significant negative predictor of customers’ likelihood of switching banks. However, factors such as a customer’s age, gender and switching experience are insignificant considerations in customer switching decisions. The study concluded that, in Zimbabwe, a customer’s bank switching decision is driven by a combination of situational, influential and reactional factors. To tame the scourge of excessive customer defections, it is imperative for retail banks to enhance customer retention by conducting frequent customer needs reviews, regular service quality checks and refresher courses for staff, improving their customer relationship management functions by fully embracing the “Know Your Customer†(KYC) principle as well as establishing secure, affordable and user-friendly electronic banking delivery channels at their customers’ doorsteps.

Suggested Citation

  • Takaivona Vhimisai & Thomas Bhiri & Tendekayivanhu Mutambanadzo, 2024. "Determinants of Customer Switching Behaviour in the Zimbabwean Banking Industry," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(12), pages 4383-4392, December.
    • Handle: RePEc:bcp:journl:v:8:y:2024:i:12:p:4383-4392
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    References listed on IDEAS

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    1. Seyed Mohammad Mosavi & Mohamad Sadegh Sangari & Abbas Keramati, 2018. "An integrative framework for customer switching behavior," The Service Industries Journal, Taylor & Francis Journals, vol. 38(15-16), pages 1067-1094, December.
    2. Wirtz, Jochen & Xiao, Ping & Chiang, Jeongwen & Malhotra, Naresh, 2014. "Contrasting the Drivers of Switching Intent and Switching Behavior in Contractual Service Settings," Journal of Retailing, Elsevier, vol. 90(4), pages 463-480.
    3. Chakravarty, Sugato & Feinberg, Richard & Rhee, Eun-Young, 2004. "Relationships and individuals' bank switching behavior," Journal of Economic Psychology, Elsevier, vol. 25(4), pages 507-527, August.
    4. Richard Williams, 2006. "Generalized ordered logit/partial proportional odds models for ordinal dependent variables," Stata Journal, StataCorp LP, vol. 6(1), pages 58-82, March.
    5. Esteves, Rosa-Branca, 2014. "Behavior-based price discrimination with retention offers," Information Economics and Policy, Elsevier, vol. 27(C), pages 39-51.
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