Customer Loyalty Banking: Chapter Overview Essay Example

was conducted at university banks, which further supports the high level of education among respondents. The majority of respondents are employed by the government (64.4%), aligning with the percentage of government sector employees. The government sector has a strong partnership or agreement with banks to distribute monthly salaries to their employees through local banks.

The majority of bank respondents (61.5%) have an income between Baht 15000 to 20000 (USD430-USD573), which is consistent with the per capita income of South Thailand (see chapter 2, p.22). Most of these respondents have been utilizing bank services for more than three years (63.4%). Being with the banks for three years or more can be considered as loyal clients (Oliver,1999). In summary, the demographic profiles of bank clients in South Thailand consist of males, highly educated individuals (completed third degree education) working in the government sector, earning a monthly income between 15,000-20,000 Baht, and having been with the banks for three years or more. Defining market segmentation strategy in banking is useful for this research.

Investigating the Roots of Loyalty

This study seeks to analyze the underlying factors that contribute to customer loyalty within the banking industry. Additionally, our goal is to explore the cause and effect relationships between various predictors such as customer satisfaction, trust, commitment, and perceived service quality. Our examination centers around a proven and developed model (x2=178.29; df=161; normed x2=1.107; GFI=.956; RMSEA=.017; p-value=0.167). Based on these findings, we can draw the following conclusions.

The study examined multiple hypotheses and their connections, including the following:
- H1: The perceived quality of service is significantly and positively linked to client satisfaction.
- H2a: Customer satisfaction has a significant and positive relationship with commitment.
-

H2b: Client satisfaction has a significant and positive relationship with client loyalty.
- H3a: Trust is significantly and positively related to commitment.
- H3b: Trust is significantly and positively related to client loyalty.
- H4: Commitment has a significant and positive relationship with client loyalty.
- H5a: Commitment acts as a mediator in the association between customer satisfaction and client loyalty.
- H5b: Commitment acts as a mediator in the association between trust and client loyalty.
- H5c: Commitment serves as a mediator in the relationship between perceived service quality and client loyalty.
-H6a: Perceived service quality has a significant and positive relationship with client loyalty.
-H6b: Perceived service quality has a significant and positive relationship with commitment.
-H7: Customer satisfaction mediates the relationship between perceived service quality and customer commitment.
-H8:The connection between perceived service qualityand customer trustis mediated by customer satisfaction.

Based on the findings, it was discovered that there exists an important direct positive correlationbetweenclient satisfactionand clients' faithfulness (B=0.173, CR=3.426, P<.001).The decision to support hypothesis H2b is backed by previous studies in the banking industry (Ball et al., 2004;Beerli et al., 2004;Caruana, 2002;Ehigie, 2006;Liang et al., 2009).

The current survey suggests that client trueness is higher when client satisfaction is higher. Customer satisfaction is seen as an important predictor of client trueness, as satisfaction with services provided by the bank, such as interest rates on deposits and overall banking experience, leads to higher levels of personal attachment, positive emotional connection, intention to continue patronizing, recommendations, and ongoing association with the bank.

Trust and client trueness

The direct relationship between trust and client trueness was found to be positively significant (B=0.289, CR=7.338, p.001). This supports hypothesis H3b of this survey, and is consistent

with findings from previous studies (Liang et al.).

, 2009 ; Ndubisi et al. , 2007 ; Eisingerich ; A ; Bell, 2007 ; Ndubisi, 2005) . Trust plays a crucial role in loyalty as customers who trust banks completely are more likely to recommend the bank to their friends and family. Banks can establish trust with customers through honesty, reliability, and the confidentiality of bank accounts and transactions. As a result, customers who trust the honesty and credibility of their bank providers are likely to maintain long-lasting relationships with them.

Hence, trust is a crucial element in the bank customer relationships and ultimately in the development of loyalty towards Banks in South Thailand. Therefore, Banks should strive to gain customers' trust.

Committedness and customer loyalty

H4: Committedness is significantly and positively related to customer loyalty. The direct relationship between committedness and customer loyalty was found to be positive and significant (B=0.187, CR=2.659, p=008).

Therefore, hypothesis H4 is supported. Previous studies in banking and finance have provided evidence in favor of this conclusion (Liang et al., 2009; Ndubisi, 2005). This result suggests that there is a positive relationship between customer commitment and customer loyalty.

It also suggests that customers of the bank are not easily swayed by situational circumstances or special offers from other competing banks, such as higher fixed deposit rates or lower loan interest rates. In simpler terms, banks always need to be vigilant for aggressive promotional offers from other banks and respond quickly to such aggression. Banks must gather marketing intelligence to combat customer snap or customer shifting. It is clear that both parties need to be committed in order to retain loyal customers.

The relationship between perceived service quality and client trueness

Perceived service quality has a significant and positive impact on client trueness. The study found that there is a direct and positive relationship between perceived service quality and client trueness (B=0.359, CR=6.550, P ; lt; 0.001). This supports hypothesis H6b. Previous studies in the banking sector have also supported this finding (Ehigie, 2006; Caruana, 2002). The study suggests that banks that offer a wide range of products, have knowledgeable employees who are willing to discuss the bank's products with customers, prioritize error-free records, and provide personalized attention are likely to retain loyal customers.

According to Wong, A., & Sohal (2006), this study supports the notion that client loyalty and commitment are dependent on the quality of client relationships in CRM. The third objective of this study is to examine the cause-and-effect connections between predictors like client satisfaction, trust, and perceived service quality in the banking sector. It was discovered that there is a positive and significant relationship between client satisfaction and commitment (B=.449, CR=11.621, P<0.001), which supports hypothesis H2a. Similar findings have been observed in previous research within the finance field (Liang et al.).

, 2009) . A satisfied customer, who is pleased with the bank service, such as a high deposit rate or prompt transaction services, will have a stronger commitment. Committed bank clients are unlikely to switch banks and trust the services provided enough to recommend them to their friends and family. Trust and commitment The study found a positive and significant direct relationship between trust and customer commitment (B=0.177, CR=4.925, p<0.001).

Hence, hypothesis H3a is affirmed. This conclusion is supported by Kassim ; A ;

Ahmed, (2006) who discovered a significant positive relationship between trust and commitment among internet banking consumers. Although there is only one study supporting this relationship in the banking industry, overall, the findings suggest that trust plays an important role in determining commitment for several reasons. Firstly, Thai culture emphasizes a relationship based on trust between a company and its customers (Vichit-Vadakhan, 2006). Therefore, once trust has been established in the minds of customers, they are expected to be more committed by showing preferences, recommending the banks, and being unwilling to switch banks. Secondly, trust leads to commitment due to the behavioral nature of trust and commitment.

It is argued that when clients come to swear a favoured bank, they will hold brand commitment (Oliver, 1999), or conative loyalty in the sense that clients tend to spread positive word of mouth, revisit banks, and encourage relations, friends, and co-workers to support certain banks.

Perceived service quality and commitment

The direct relationship between perceived service quality and client commitment was found to be positive and significant (B=0.403, CR=8.818, p<0.001). Therefore, hypothesis H6b is supported. Previous studies in banking have also supported this finding (Fullerton, 2004). The higher the bank clients perceive the service quality, the higher their commitment. Customers who receive responsive service, personal attention from bank staff, and can solve their financial problems are likely to gain commitment from these clients.

The text highlights the significance of a friendly atmosphere at Banks to attract clients and build long-term relationships. According to Caceres and Paparoidamis (2007), clients consistently return to Banks because they anticipate a positive and welcoming environment, which can lead to lasting relationships. The study also emphasizes the positive

and crucial link between perceived service quality and client satisfaction (B=0.691, CR=16.674, p0.001), confirming hypothesis H1. Previous research in the banking sector, such as Ehigie (2006), Beerli et al. (2004), and Caruana (2002), has also supported this finding.If a bank's clients perceive its service quality as good, they are likely to be more satisfied with the bank. Banks that offer a variety of products, maintain accurate records, have knowledgeable staff, handle transactions accurately, provide personal attention, and demonstrate problem-solving abilities are more likely to satisfy their clients.

The examination of the mediating effects

The fourth objective of this study is to examine how commitment, client satisfaction, and trust mediate the relationships between various predictors of loyalty. This examination is facilitated by using the method of structural equation modeling (SEM), which enables the identification of direct and indirect effects.

The following discussion is also based on the results of the generated model. The influence of commitment on the connection between satisfaction and loyalty (Satisfaction & Commitment & Loyalty)

H5a: Commitment does not serve as a mediator in the relationship between customer satisfaction and customer loyalty (not supported). It is found that commitment does not mediate the indirect effect between customer satisfaction and customer loyalty (direct effect=0.173; indirect effect=0.084; total effect=0.257). Since the direct effect is greater than the indirect effect, commitment does not mediate the link between customer satisfaction and customer loyalty. In other words, commitment does not play a mediating role in the indirect relationship between satisfaction and loyalty.

Previous studies (Caceres ; Paparoidamis, 2007; Dimitriades, 2007) have supported the idea that bank customer satisfaction has a stronger direct relationship with loyalty compared to an indirect effect

of commitment. This means that satisfied customers are more likely to become loyal without the need for commitment. Therefore, banks should focus on maintaining customer satisfaction to ensure their loyalty.


The role of commitment in the relationship between trust and loyalty (Trust ; Commitment ; Loyalty)

H5b: Commitment mediates the relationship between trust and customer loyalty (not supported). The relationship between trust and loyalty is not influenced by commitment (direct effect = 0.289; indirect effect = 0.033; total effect = 0.322).

Previous studies have yielded different results; some found a partial mediating effect (Caceres ; Paparoidamis, 2007), while others found no mediating effect, which supports the current study (Donio et. al, 2006). Trust and loyalty have direct effects that are strong, without being mediated by commitment. As discussed earlier in section 6.4.2, trust plays a vital role in Thailand's culture and social background. Both parties have trust for each other.

Once bank clients trust a bank, loyalty typically follows. One unique service offered by banks is the 'cycle' loan, which is provided to clients based on the amount of their monthly wages deposited with the bank. Clients can be given a loan up to ten times the amount of their monthly wage, but this is done purely on trust. Furthermore, banks in Thailand are increasing customer loyalty by acting as shopping centers, selling luxury items through product catalogs or special shopping events. Bank clients can use their bank history card to purchase luxury goods like cars, laptops, electronics, gold, diamond jewelry, and more.

The role of commitment in the relationship between perceived service quality and loyalty (Perceived service quality; A; commitment; A; loyalty)

H5c: Commitment serves as a mediator between perceived

service quality and customer loyalty (partially supported). The relationship between perceived service quality and loyalty is partly influenced by commitment (direct effect=0.359; indirect effect=0.253; total effect=0.612).

Previous research has provided support for this finding (Hennig-Thurau et al., 2001). In relation to the connection between perceived service quality and commitment, satisfaction plays a mediating role (Perceived service quality, A; Satisfaction, A; commitment). H7: Satisfaction partially mediates the relationship between perceived service quality and commitment (partially supported). The indirect effect of satisfaction on commitment is mediated by perceived service quality (direct effect = 0.403; indirect effect = 0.311; total effect = 0.713). Previous studies have also supported this finding (Vilares, A; Coelho, 2003).

In addition, satisfaction acts as a mediator in the relationship between perceived service quality and customer loyalty (Perceived service quality, A; Satisfaction, A; loyalty). H8: Satisfaction partially mediates the connection between perceived service quality and customer loyalty (partially supported). The relationship between perceived service quality and loyalty is partially influenced by satisfaction (direct effect = 0.359; indirect effect = 0.253; total effect = 0.612).

Previous surveys have demonstrated the significant impact of satisfaction (Cristobal, et. al., 2007). The suppliers at the bank must offer high-quality services and products to attract loyal customers and focus on ensuring satisfaction.
The confirmation of the accuracy of Oliver's competing model
The main objective of this study is to examine the accuracy of the loyalty competing model (Oliver, 1999) in validating the customer loyalty model in banking. The findings suggest a moderately fitting competing model based on the absolute goodness of fit index (GFI= .925; RMSEA=.048; p-value=.056; R2 (SMC)=0.75).

The findings of previous studies have supported the robustness of the original theoretical model proposed

by Oliver (1997, 1999) in understanding customer loyalty factors in general and in South Thailand specifically. However, these studies have only used this conceptual model for developing their research frameworks (Pedersen & Nysveen, 2001; Caruana, 2002; Bennett & Thiele, 2004; Aydin & Ozer, 2005; Ehigie, 2006). Moreover, none of these studies have validated the accuracy of the model using their own collected data. In an attempt to address this gap and confirm the model's validity based on bank customers' perception data in South Thailand, my study aims to fill this void.

The initial attempt in this video has provided valuable support for Oliver's theoretical model. It appears that the model can be applied in other research and cultural contexts, such as Thailand and the banking industry. The accuracy of the underlying model for bank customers in South Thailand can be attributed to the reliable and valid measurement scale used in the research model, as well as its simplicity.

Managerial implication

To summarize, the findings of this research are significant for commercial bank practitioners, the Thailand government, academics, and the general public in South Thailand. In addition to highlighting the uniqueness of this first empirical research in Thailand, this study has also generated new findings and expanded knowledge on customer loyalty in South Thailand. For commercial bank practitioners, the important predictors of loyalty can indicate potential strategies for enhancing and maintaining customer loyalty among bank clients.

Most banks recognize the importance of improving their service quality and merchandise offerings to clients in order to stay competitive in today's economically uncertain environment. Commercial banks play a crucial role in managing this financial crisis to the best of their ability. However, there

are certain limitations to consider in this research study. Firstly, the study was limited to the South of Thailand due to constraints in terms of money and time. Therefore, the generalizability of the results to a wider population may be limited. Additionally, the study focused solely on the banking sector, so caution should be exercised when generalizing the findings to other industries and areas. Furthermore, although efforts were made to include common predictors of loyalty, the variables used in this research were not comprehensive and some factors such as performance, complaints, communication, conflict management, segmentation, perceived value, and image were omitted due to their lack of alignment with the underlying conceptual framework of this study. Finally, it should be noted that the Oliver underpinning theory of customer loyalty may not be the only applicable model to consider.While efforts have been made to survey participants using systematic random sampling, limitations of convenience samples are acknowledged, particularly when dealing with existing bank clients. For instance, the fifth client mentioned may choose not to cooperate for any reason.

Recommendations for future research are as follows:

1. This study should be expanded to include a larger population or country, allowing the results to be generalized to the entire population of Thailand. Additionally, industry limitations could be addressed by including other service industry settings such as internet banking, hotels, tourism, healthcare, education, and retail.

2. Future studies should enhance existing knowledge in this area by incorporating variables such as image and convenience as direct factors influencing customer loyalty.

3. It is suggested that more empirical studies be conducted in future research using alternative theoretical frameworks, such as the loyalty typology proposed by Dick and

Basu (1994).

4. It is important for future research to involve actual customers, despite the challenges of obtaining cooperation during data collection. The inclusion of real-life behavioral and perceptual insights is crucial in present-day marketing and consumer research.

Decision
This research has achieved its nonsubjective by studying the demographic profiles of bank users in South Thailand and identifying factors that predict client trueness in Bankss.
The demographic profiles of the bank clients in the South of Thailand consist of males who belong to the highly educated sector (completed third degree instruction) of the population. They are employed in the government sector and earn a monthly income between 15000-20,000 Baht. They have also been with the Bankss for three or more years.

The main factors influencing client trueness are customer satisfaction, trust, commitment, and perceived service quality. Similarly, factors influencing commitment include customer satisfaction, trust, and perceived service quality.

For the mediating effects, committedness does not fully mediate the relationships between client satisfaction and trust with client trueness. However, committedness partially mediates the relationships between perceived service quality and trueness. Similarly, satisfaction partially mediates the relationships between perceived service quality and trueness, as well as perceived service quality and committedness. Finally, empirical observation supports Oliver's (1999) theory of trueness underpinning.