Abstract:
The emerging technology has made an exponential growth of the Internet which has changed
the pattern of organizations performing their business with customers. The banking industry
is no exception. In order to gain competitiveness, banks have been introducing more Internet
Banking Services.
Managing effective Customer Retention strategies are increasingly important in the banking
industry. Since the length in years of customer relationships are one of the most important
factors that contribute to the profitability. As a result Customer Satisfaction may be one
important driver of Customer Retention. The Switching Costs are also likely to influence
Customer Retention independently. The presence of Switching Costs can mean that
customers who are already retained are actually dissatisfied but do not defect because of high
Switching Costs. Therefore the researcher has set up five objectives to achieve the key
factors that affect the Switching Cost which has a reasonable effect on the relationship
between Customer Satisfaction and Customer Retention.
Based on the prevous literature, a conceptual framework was developed to determine the
impact of Switching Cost on Customer Satisfaction and Customer Retention for Internet
Banking Services. The conceptual framework has two main parts featuring the customer
attributes and elements of Switching Cost, Customer Satisfaction and Customer Retention
process. The part I examines demographic aspects of Customer Satisfaction and Customer
Retention while part II examines the specific elements of Switching Cost, Customer
Satisfaction and Customer Retention.
The research was mainly based on data, collected from Internet banking customers in Sri
Lankan commercial banks. The results of the statistical analysis showed that there were
specific factors that affect Switching Cost on Customer Satisfaction and Customer Retention,
the significant behavioural patterns of customers on Switching Cost were identified and there
were evidence on significant differences among the cluster of customers based on their
contextual situation. Finally the five objectives setup by the researcher was successfully
achieved. Therefore these findings will help the banks to establish a customer oriented
strategy to retain their customers in future.
