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

• Secondary Research Questions • Q1: Is there any relationship between the Customer Satisfaction and Customer Loyalty in term of Quality in Banking Service?. RESEARCH QUESTIONS • To

BACHELOR THESIS DEFENSE

Topic: 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

By Thìn Phổ Độ – BAIU09093

Advisor DBA Nguyễn Minh Tuấn

Evaluator Ph.D Hồ Thị Bích Vân

II Literature Review

III Methodology

IV Research Findings

V Discussion & Recommendations

NATIONAL ECONOMY WEALTH

State Owned Banks

BANKING INDUSTR

PROBLEM STATEMENT

 increase the brand equity  higher consumer’s purchase intention?

Customer loyalty is important in

that it has a positive effect on

long-term profitability (Ribbink al.,

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 Customer

Loyalty? (Customer Satisfaction is

included).

RESEARCH

QUESTIONS

• 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.

OBJECTIVES

RESEARCH QUESTIONS & OBJECTIVES

I Introduction

III Methodology

IV Research Findings

V Discussion & Recommendations

Related theoretical study

 Service

 Service Quality

 Customer Satisfaction

 Customer Loyalty

 Lo Liang Kheng (2010) has conducted the

study “The impact of service quality on

customer loyalty: A study of banks in penang, Malaysia”.

Previous Study

Model adapted from Agus et al (2007) and Caruna (2002)

Suggested Model

CONCEPTUAL FRAMEWORK

Conceptual Model for Customer Satisfaction and Customer Loyalty in Banking Service

Customer Satisfaction

Customer Satisfaction

Customer Loyalty

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

I Introduction

II Literature Review

IV Research Findings

V Discussion & Recommendations

 Research process

Pilot Study

Quantitativ

e Approach

• conduct with 20 participants

• re-convince, adjust some factors,

questionnaires, information

• main method

• conduct with 291 participants

• delivery survey (questionnaire)

Gender

Marital Status

 2 Dependent Variable

 Target population and research sample (N = 291)

 Data collection: Convinient and Directly delivered to

user by online

 Data analysis:

* Reliability and factor analysis

* Statistic Descriptive analysis of the data: Means,

Standard Deviations, Correlations and Pearson r coefficients;

* Multiple Regression Analysis: Group of IVs and

DVs;

* Simple Linear Regression: Between Customer

Satisfaction and Customer Loyalty.

I Introduction

II Literature Review

III Methodology

V Discussion & Recommendations

Summary of Dependent and Independent Variables and Reliability

r of Items

Cronbac h’s Alpha (N=291)

DV

s

Factor 1: Customer Satisfaction (SAT) 5 811Factor 2: Customer Loyalty (LOY) 6 893

Factor 3: Responsiveness (RES) 7 872

Cronbach’s alpha > 0.7  ACCEPTABILITY

Exploratory Factor Analysis (EFA) for IVs

KMO and Bartlett's TestKaiser-Meyer-Olkin Measure of Sampling

Bartlett's Test of Sphericity

Exploratory Factor Analysis (EFA) for

IVs

Dimension Rotated Component Matrix ( Final Round)

RESPONSIVENESS (RES) RES3, RES4, RES5, RES6, EMP2, EMP3, TAN8, ASU1.

RELIABILITY (REL) REL1, REL2, REL3, REL4, REL5, TAN4, TAN5, RES7.

BANKING SERVICE STANDARDS (SEV) TAN1, TAN2, TAN3, ASU6, ASU7, ASU8, RES1, EMP8.

Exploratory Factor Analysis (EFA) for DVs

KMO and Bartlett's TestKaiser-Meyer-Olkin Measure of Sampling

Bartlett's Test of Sphericity

Exploratory Factor Analysis (EFA) for

IVs

Dimension Rotated Component Matrix ( Final Round)

LOYALTY (LOY) LOY1, LOY2, LOY3, LOY4, LOY5, LOY6.

SATISFACTION (SAT) SAT1, SAT2, SAT3, SAT4.

Summary of Dependent and Independent Variables and Reliability

Items

Cronbac h’s Alpha (N=291)

DV

s

Factor 1: Customer Satisfaction (SAT) 4 783Factor 2: Customer Loyalty (LOY) 6 893 IVs Factor 1: Responsiveness (RES) 8 906

Factor 3: Banking Service Standards

Cronbach’s alpha > 0.7  ACCEPTABILITY

Revised Research Model

Customer Satisfaction

Customer Loyalty

H4a

Banking Service

Standards Responsiveness

Reliability Empathy

H2 a

H 1a

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

Descriptions and Variables’ Correlations of the Customer Loyalty

Multiple Regression Analysis: Coefficients between IVs and SAT

Variables Standardized

Coefficients (Beta)

Note: Dependent Variable: SAT – Customer Satisfaction

Predictors: RES, REL, SEV, EMP ANOVA: F (4, 290) = 82.074, Sig = 0.000, p <0.005

Model summary: R 2 = 0.534

RES, REL and SEV effect to the Customer Satisfaction

Multiple Regression Analysis: Coefficients between IVs and LOY

Variables Standardized

Coefficients (Beta)

Note: Dependent Variable: LOY – Customer Loyalty

Predictors: RES, REL, SEV, EMP ANOVA: F (4, 290) = 98.968, Sig = 0.000, p <0.005

Model summary: R 2 = 0.581

RES and REL with significance (Sig.) of 000 and SEV with significance (Sig.) = 012, have direct effect to Customer Loyalty

Simple Linear Regression: Coefficients between

SAT and LOY

Variables Standardize

d Coefficients (Beta)

Sig Correlations (Part)

CUSATIS 0.701 0.000 0.701

Note: Dependent Variable: LOY – Customer Loyalty

Predictors: SAT – Customer Satisfaction

ANOVA: F (4, 290) = 279.372, Sig = 0.000, p <0.005

Model summary: R 2 = 0.492

SAT contributed to explaining LOY with Beta= 701

Final Research Model

Customer Satisfaction

Customer Loyalty

Banking Service

Standards Responsiveness

H 1a

 RES, REL and SEV effect to both Customer Satisfaction and Customer Loyalty

 Customer Satisfaction has direct effect to Customer

Loyalty

 Previous research about measuring the service

quality, satisfaction and loyalty of customer about Banking Service of Lo Liang Kheng (2010) He concludes:

 The results of applied research have contributed to the judgment confirms the quality of the service component is unstable; it is depending on

characteristics of market and timely.

 In order to achieve high customer satisfaction, Banking Service provider in HCM City should:

 pay more attention to: pleasure in providing customer with a good, quality and prompt service (Responsiveness), promote knowledge, attitude,

technologies and abilities of employees to convey trust and confidence (Reliability);

 Provided reliable scales to measure theoretical dimensions such as Empathy, Reliability, and Tangibles.

 To increase customer loyalty:

 should care more about Reliability, and Standards of Banking Service (increase employee’s qualifications of Banking Service , immediately respond to

customer’s requests, increase conviniences in making transactions and diversification of Services provide);

 improve relationship between users and provider;

 increase the level of customer satisfaction;

 try to measure customer loyalty through Customer Satisfaction.

Research Scope & Limitations

Banking Service users;

some recommendations  the result may be provided relatively, not wholly;

and knowledge are limited.

Implication for further research

 Have more definitions of Tangibles, Assurance and Empathy factor in order to develop items, which could help to

determine this factor

 Indicates that there are other factors that influence Customer Satisfaction and Loyalty judgment  important to investigate such other factors to increase the rate of explanation  there are some other factors that may affect customers' satisfaction and loyalty as services elements of the brand, tangible, etc that has not been addressed in this study.

 Conduct research with a larger sample in order to increase the accurateness of results

Thank You