Research background
Vietnamese retail banking is recognized as an emerging market with significant growth potential, as noted by the VPBS Report (2014) and Keith Pogson (cited in Thanh Thanh Lan, 2014) However, despite this promising outlook, customer loyalty remains relatively low in the sector This combination of opportunities and challenges highlights the need for banks to focus on enhancing customer engagement strategies to foster long-term loyalty.
According to The World Bank Data (2013), Vietnam's population was approximately 90 million at the end of 2013, with 50% participating in the labor force However, only 20% of the population held banking accounts, leaving 80% as a significant potential market for retail banking services (The VPBS Report, 2014) Vietnam's economic growth over recent decades has led to a notable increase in GDP per capita and GNI per capita, as evidenced by rising income levels and improved living standards (Figures 1 and 2) A key cultural trait in Asian countries, including Vietnam, is a tendency towards savings, which intensifies as income grows, thereby boosting demand for financial services This cultural and economic shift creates substantial opportunities for the expansion of retail banking in Vietnam.
Vietnamese banking service usage remains relatively low, with only 21% market penetration in 2011, compared to 55% in the Pacific region (The VPBS Report, 2014) Despite significant growth since 2006, Vietnam still lags behind developed Asian countries in card usage; for example, over-15-year-old debit card users in Vietnam are at just 15%, the lowest among the compared nations, with Thailand leading at 43% Additionally, the rate of credit card usage in Vietnam is only 1%, marking it as the country with the lowest adoption rate in the region.
Vietnam's retail banking sector has high growth potential, primarily due to the unequal distribution of banking services between urban and rural areas Data from Table 1 (Appendix A) highlights that up to 30% of branches and transaction offices of State-Owned Commercial Banks and Foreign Banks are concentrated in just four major cities—Hanoi, Ho Chi Minh City, Danang, and Can Tho—while the remaining branches are spread across 59 provinces and cities nationwide This uneven geographical distribution indicates significant opportunities for expanding retail banking services in rural regions, driving future growth in Vietnam's financial sector.
Table 2 (see Appendix A) highlights the distribution of banking infrastructure in Vietnam in 2013, revealing that Hanoi and Ho Chi Minh City have a significantly higher density of transaction offices—nearly 50 times greater than the national average This high concentration of offices in these major cities results in an average of 30% fewer customers served per transaction office compared to the national average, indicating a more accessible banking network in urban areas.
The number of customers using ATM or POS services is approximately 30% to 40% lower than the national average, indicating that service quality in large cities is generally better than the overall country This disparity reflects unequal development in retail banking service quality across different regions, revealing significant opportunities to expand and attract potential customers in more remote areas.
Vietnam's banking sector faces a highly competitive environment with approximately 49 banks offering similar services, making customer loyalty more elastic compared to countries like Australia and Japan, which have only 3 to 4 major banks (Keith Pogson, Douglas J Hamilton; Thanh Thanh Lan, 2014) Additionally, bank marketing in Vietnam remains underdeveloped relative to neighboring countries, leading to confusion among consumers due to the vast number of indistinguishable bank brands This lack of brand recognition is evidenced by the VPBS Report (2014), which shows that Agribank, one of Vietnam’s four largest banks, lost 1.91% of its market share between 2010 and 2013.
Low service quality caused by unprofessional staff can lead to customer attrition, as customers may seek better experiences elsewhere For example, insufficient professional experience among bank employees has resulted in inconsistent service quality, impacting customer satisfaction (Le Chi, 2013; The Infonet, 2013) Interviews with customers at reputable banks in Ho Chi Minh City highlight various shortcomings in the staff’s service delivery, emphasizing the need for improved training and skill development to enhance overall customer experience.
Customer wait times in banks are often excessively long, sometimes exceeding an hour during peak days due to overloads on bank tellers Staff members lack sufficient time to introduce promotional programs or engage in cross-selling, impacting potential sales opportunities Additionally, high stress levels and crowding lead to unfriendly or unhappy interactions between tellers and customers Bank managers tend to focus on policy implementation and marketing strategies while neglecting staff oversight and customer service quality Failure to address customer dissatisfaction, especially in the digital age, can result in significant losses, as negative experiences shared on social media—such as a dissatisfied withdrawal at Vietcombank in Ho Chi Minh City—can tarnish the bank’s reputation and deter both current and potential customers.
Banking strategies heavily emphasize attracting individual customers, yet some branches still overlook long-standing clients with established relationships, prioritizing new large corporate accounts instead Banks are sometimes willing to refuse credit to current long-term customers in favor of expanding credit limits for large corporations A prevailing one-sided service approach persists, where banks see themselves as benefiting from customers rather than fostering mutual relationships, particularly in state-owned banks Consequently, bank tellers often passively handle customer requests without recognizing the critical importance of customer loyalty in banking performance Additionally, banks may close accounts upon customers’ requests without understanding their reasons or attempting to persuade them to stay, undermining long-term customer retention.
Vietnam's retail banking sector remains a promising market that can significantly support the country's economic growth Despite positive developments over recent years, Vietnamese banks—particularly state-owned banks—have yet to fully prioritize the retail segment outlined in their strategic goals, resulting in weaker customer loyalty Focusing on long-term customers is a highly effective strategy, as they are crucial for sustained profit generation and serve as organic promoters of the bank’s brand Therefore, conducting research on the key factors influencing customer loyalty in retail banking is essential for banks aiming to enhance retention and competitiveness.
Research gap
Reichheld and Sasser (1990) demonstrated that customer loyalty significantly impacts business performance, with only a 5% customer retention rate potentially increasing profits by up to 85% As a result, understanding the key determinants of customer loyalty has become a critical focus for marketers worldwide.
Retail banking in Vietnam is a promising new trend due to its large population market, yet the banking system faces significant challenges Vietnamese banks tend to prioritize acquiring new customers over retaining existing ones, with KPIs often emphasizing customer acquisition rather than minimizing customer attrition Currently, banks like Vietinbank and Eximbank focus on increasing new customer numbers without sufficiently addressing customer loyalty or long-term retention Marketing efforts mainly target attracting new clients, with limited promotional programs aimed at long-term customers The scarcity of research on the determinants of customer loyalty in Vietnamese retail banking highlights the need for empirical studies to identify key factors that influence customer loyalty, as observed in many other countries.
Many determinants of bank selection, behavioral intention and customer loyalty are defined in United State and Asia Perceived quality and customer satisfaction are considered the most important determinants of customer loyalty (Parasuraman et al., 1988; Parasuraman et al., 1991; Boulding et al., 1993; Zeithaml et al., 1996) Other scholars find out some determinants such as brand awareness (Aaker, 1996; Jing et al.,2014), service quality (Laroche et al., 1986;
Sinkula & Lawtor, 1988; Ying & Chua, 1989), convenience (Laroche et al., 1986; Martenson tot nghiep down load thyj uyi pl aluan van full moi nhat z z vbhtj mk gmail.com Luan van retey thac si cdeg jg hg
1985; Lewis, 1982; Schram, 1991), social influence (Chua, 1980; Martenson, 1985), service personnel (Ying & Chua, 1989) and switching costs (Beerli et al., 2004; Cronin & Taylor, 1992;
Existing research on customer loyalty in Vietnam’s retail banking sector predominantly focuses on individual determinants, such as brand associations, social influence, and service personnel According to Phan and Ghantous (2013), brand associations and social influence significantly impact customer trust and loyalty, while Pham and Le (2010) highlight the role of service personal values However, there is a lack of comprehensive studies that analyze multiple factors simultaneously, including brand awareness, convenience, switching costs, and service quality This study aims to fill this gap by examining how these determinants, alongside customer satisfaction and social influence, affect individual customer loyalty in Vietnamese retail banking The findings will serve as valuable insights for bank managers seeking to enhance customer retention and improve service offerings in Vietnam.
Research objective
Customer loyalty is crucial for the development of retail banking services, yet research on this topic remains limited in Vietnam compared to the global landscape Since factors influencing loyalty—such as culture and ethnicity—vary across countries, studies from other regions may not directly apply to the Vietnamese context Therefore, it is important to review existing theories and test their applicability within Vietnam to identify key determinants of customer loyalty This study focuses on six critical factors—Brand Awareness, Convenience, Service Personnel, Customer Satisfaction, Social Influence, and Switching Costs—that have been proven influential elsewhere, to examine their impact on Vietnamese retail banking customers Due to certain limitations, the research will only analyze these six factors and their influence on customer loyalty without exploring the relationships among them, leaving room for future studies to investigate these interconnections.
In order to accomplish the study purpose, the author defines and focuses on some following research objectives:
Customer loyalty in retail banking is influenced by several key determinants, including Brand Awareness, which enhances customer trust and recognition; Convenience, providing easy access and seamless banking experiences; Quality Service Personnel, ensuring personalized and reliable customer interactions; Customer Satisfaction, fostering positive experiences that encourage long-term loyalty; Social Influence, where peer opinions and social networks impact customer choices; and Switching Costs, which make it less effortful or costly for customers to remain with their current bank These factors are widely recognized as critical in driving customer loyalty across different countries and banking markets.
- Constructing the research model of the relationships between each determinant and customer loyalty in Vietnam retail banking
- Testing the model in Vietnam retail banking market
Research Scope and Research Contribution
This study examines key determinants of customer loyalty, emphasizing its vital role in enhancing business performance Focused on Vietnam's rapidly evolving retail banking sector, the research employs empirical testing to identify influential factors Conducted in Ho Chi Minh City for logistical convenience, the study analyzes the simultaneous impact of six determinants—Brand Awareness, Convenience, Service Personnel, Satisfaction, Social Influence, and Switching Costs—on customer loyalty Despite certain limitations, the findings offer valuable insights into customer behavior within the Vietnamese retail banking industry.
This study makes a valuable contribution to both theoretical and empirical research on customer loyalty in retail banking It provides important insights for banking managers seeking to enhance retail banking services, which have become a key trend among commercial banks in Vietnam.
Research structure
This study is divided into five chapters that provide following contexts:
Chapter 1 introduces the background of the study, highlighting the existing research gap and clearly defining the research objectives It outlines the scope and significance of the study, emphasizing its unique contributions to the field Additionally, this chapter provides an overview of the chapter structure, guiding readers through the content's organization and purpose.
Chapter 2 provides the comprehensive review of literature about customer loyalty and related concepts This chapter also develops the hypothesized conceptual model
Chapter 3 provides the conceptual regarding research design and sampling The research methodology is also defined in this chapter
Chapter 4 includes data analysis, results of this study and all hypotheses testing
Chapter 5 focuses on discussing the key findings, exploring their implications, and outlining the study's limitations It provides a comprehensive analysis of the research results, highlighting their significance for the field The chapter also addresses potential constraints that may affect the generalizability of the findings, offering considerations for future research This section is essential for understanding the overall impact and scope of the study, ensuring clarity for readers and contributing to academic discourse.
LITERATURE REVIEW
Retail Banking
In recent years, retail banking has emerged as a key marketing strategy among Vietnamese commercial banks, focusing on providing banking services to individuals and small to medium-sized enterprises Unlike wholesale banking, retail banking involves numerous small-value transactions, contributing to a high transaction volume (Buckle & Thompson, 1998) According to Kumar (2010, p.12), retail banking's emphasis on serving a broad customer base with everyday banking needs is crucial for banks seeking to expand their market reach and enhance customer loyalty.
Retail banking primarily serves individual customers through local branches of large commercial banks, offering essential financial services such as savings and checking accounts, mortgages, personal loans, debit and credit cards This mass-market banking sector focuses on providing accessible banking solutions to everyday consumers, ensuring convenience and financial stability Effective SEO keywords include "retail banking," "personal banking services," "savings and checking accounts," and "mortgages."
Retail banking disperses business risk by serving individuals and small to medium enterprises, unlike wholesale banking that primarily caters to large corporations While each transaction in retail banking has a smaller value, the extensive volume of transactions spreads risk effectively (Le, 2011).
Due to differences between individual customers and small enterprises, this study restricts the concept of retail banking within individual customers.
Customer Loyalty
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Customer Loyalty is one of the most important objectives that marketers aim to because it has a strongly positive relationship with business performance (Reichheld & Sasser, 1990;
Numerous studies, including those by Reichheld (1993) and Sheth & Parvatiyar (1995), emphasize that retaining existing customers is more cost-effective than acquiring new ones Reichheld & Sasser (1990) found that a fourth-year customer for an auto-service company can generate three times more profit than a first-year customer, highlighting the significant value of customer loyalty Consequently, many scholars have focused on defining customer loyalty and identifying its key drivers to enhance long-term business success.
Most of the early studies consider customer loyalty just on the aspect of behavior which expressed by repeat patronage (Cunningham, 1956; Massy et al, 1970; Kahn et al., 1986)
Research on repurchase behavior alone does not fully explain how and why customers remain loyal to a brand (Dick & Basu, 1994) Therefore, scholars recognize the importance of psychological factors alongside behavior in understanding customer loyalty Customer loyalty is defined as a combination of relative attitude and repeat patronage, highlighting both emotional connection and consistent purchasing behavior (Day, 1969; Dick & Basu, 1994).
Loyalty, as defined by Jacoby and Kyner (1973), is a biased behavioral response exhibited over time by a decision-making unit toward one or more brands within a set of options This concept highlights that brand loyalty reflects selective purchasing behavior influenced by psychological processes, rather than random choices among alternatives.
In 1973, a key concept introduced was the "decision making unit," emphasizing that loyalty research should focus on the individuals responsible for making purchasing decisions rather than the actual users or buyers.
Oliver (1999) defines loyalty as the commitment to repurchase a preferred brand, despite the influence of situational factors or marketing efforts that may lead to switching behavior This highlights the importance of brand loyalty in maintaining customer retention and long-term customer relationships Effective marketing strategies should focus on strengthening this commitment to reduce switching tendencies and enhance brand loyalty.
Customer loyalty can be categorized into different levels based on the combination of attitude and behavior, ranging from no loyalty to spurious loyalty, latent loyalty, and true loyalty (Dick & Basu, 1994) Kuusik (2007) identifies three types of customer loyalty: customers who are forced to be loyal, those who remain loyal due to inertia, and those who are functionally loyal.
In the purchasing process, the consumer passes through three “successive related phases”, which are cognitive, affective-evaluative and conative (Lavidge & Steiner, 1961; Dick & Basu,
This study defines customer loyalty in retail banking as the strength of the relationship between individual customers' positive attitudes and their likelihood of repeat patronage towards their preferred bank Based on previous research, customer loyalty is essential for long-term success in retail banking, emphasizing the importance of cultivating strong customer relationships Understanding the factors that influence customer loyalty can help banks develop effective strategies to enhance customer retention and satisfaction Ultimately, loyal customers not only contribute to stable revenue streams but also act as brand ambassadors, fostering positive word-of-mouth and attracting new clients.
Customer loyalty plays a crucial role in enhancing business performance, and extensive research has identified key determinants of loyalty in retail banking However, most of these studies have been conducted in the United States and Europe, leaving a limited number of official studies addressing the Asian banking context.
Moreover, these studies are predominantly fulfilled by surveys on student segmentation
Understanding the relationships among bank selection, behavioral intention, and customer loyalty is crucial in evaluating customer retention strategies Bank selection determinants influence why customers choose a particular bank over others and significantly impact customer loyalty, which is measured by repeat patronage Consistent selection of the same bank over time fosters loyalty Additionally, behavioral intention is a key determinant of customer loyalty, with its underlying factors directly affecting customers' likelihood to remain loyal to their preferred bank.
Research surveys conducted among residents and students in the United States and Asia have identified several key factors influencing bank selection, behavioral intention, and customer loyalty Among these, perceived quality and customer satisfaction emerge as the most significant determinants of customer loyalty, highlighting their critical role in fostering long-term banking relationships (Parasuraman et al., 1988; Parasuraman et al., 1991; Boulding et al., 1993; Zeithaml et al., 1996).
Previous research indicates that perceived quality and customer satisfaction are positively linked to customer loyalty, yet these factors often do not fully explain loyal behaviors For instance, some consumers remain loyal despite dissatisfaction, opting to continue using a service rather than switching providers Scholars have identified additional determinants of loyalty, such as brand awareness (Aaker, 1996; Jing et al., 2014) and service quality (Laroche et al., 1986; Sinkula &).
Lawtor, 1988; Ying & Chua, 1989), convenience (Laroche et al., 1986; Martenson 1985; Lewis, 1982; Schram, 1991), social influence (Chua, 1980; Martenson, 1985), service personnel (Ying
& Chua, 1989) and switching costs (Beerli et al., 2004; Cronin & Taylor, 1992; Hellier et al.,
Chua (1980) found that social influences, including family and friends, play a significant role in the bank selection decisions of Singaporean students Conversely, the impact of third-party influences is considered the least important factor among undergraduates when choosing a bank.
Based on previous research on customer loyalty determinants, this study examines the influence of Vietnamese cultural background and individual customer behaviors Interviews with a group of Vietnamese customers provide qualitative insights into their loyalty patterns Understanding these factors is crucial for businesses aiming to enhance customer retention and satisfaction in Vietnam This research offers valuable recommendations for designing effective loyalty programs tailored to Vietnamese consumers, contributing to improved marketing strategies and long-term business growth.
This study examines the key factors affecting customer loyalty in Vietnamese retail banking, including brand awareness, convenience, quality of service personnel, customer satisfaction, social influence, and switching costs It highlights how each determinant plays a crucial role in shaping customer retention and loyalty within the competitive Vietnamese banking sector The analysis provides insights into how these aspects influence customer decisions and emphasizes the importance of enhancing these factors to foster long-term customer relationships Ultimately, understanding these drivers can help banks develop effective strategies to increase customer loyalty and strengthen their market position in Vietnam.
Brand Awareness
Brand awareness is a component of brand equity, which expresses the ability of consumer to recall and recognize the brand among the alternatives under different conditions (Aaker, 1991;
Keller, 1998) Brand awareness symbolized for the strength of a brand’s presence in the consumer’s mind” (Aaker, 1996)
Brand awareness encompasses both brand recall and brand recognition, playing a crucial role in consumer perception The level of brand awareness varies among consumers, with some able to recognize a brand among competitors but unable to recall it later (Mariotti, 1999; Laurent et al.) Effective brand awareness strategies aim to strengthen both recognition and recall to enhance market presence.
1995) The highest brand awareness is unaided recall when consumer is aware of a brand without any external stimulus (Mariotti, 1999; Laurent et al, 1995)
Brand awareness belongs to cognitive phase, which is a part of relative attitude in customer loyalty (Lavidge & Steiner, 1961; Dick & Basu, 1994) Hence, brand awareness has an influence on relative attitude
Increasing brand awareness enhances the likelihood of consumer repurchase, as consumers tend to remember and consider only familiar brands when making purchase decisions A strong consideration set, comprised of brands consumers are aware of and potentially willing to buy, plays a crucial role in shaping their choices Brand awareness serves as an important cue that influences consumers’ selection process, ultimately impacting their purchase behavior (Hoyer & Brown, 1990).
Brand awareness significantly impacts both key aspects of customer loyalty—customers' relative attitude toward the brand and their purchase behavior This relationship suggests that higher brand awareness can strengthen positive customer perceptions and encourage repeat purchases Consequently, it is hypothesized that increased brand awareness leads to greater customer loyalty through improved attitudes and purchasing patterns.
Hypothesis 1: Brand awareness has a positive relationship with customer loyalty.
Convenience
As society advances, people become busier and prioritize convenience, often choosing nearby stores over familiar ones to save time This shift drives a significant increase in demand for convenient services across various sectors In response to growing competition, service providers continuously develop innovative strategies to enhance convenience for their customers Numerous studies highlight the importance of convenience in retail and retail banking, emphasizing its vital role in customer satisfaction and business success.
Service convenience, as defined by Morganosky (1986), refers to the ability to complete a task quickly and with minimal effort, making time and effort savings key benefits that attract customers (Brown, 1990) It plays a crucial role in customer retention, especially in standardized, less personalized services like banking, where convenience influences customer loyalty when overall satisfaction declines (Michael et al., 2003) Research by Lee and Marlowe (2003) highlights that perceptions of convenience vary across different demographics; for example, young people prioritize easy access to ATMs, while older customers value branch location and transaction hours This study emphasizes the importance of location, transaction hours, and ATM availability as key aspects of service convenience.
Numerous studies demonstrate that convenience significantly impacts customer loyalty by influencing repurchase intentions and bank selection (Jones et al., 2003; Laroche et al., 1986; Martenson, 1985; Lee & Marlowe, 2003) Convenience is also a key component in perceived service quality assessments, such as the SERVQUAL (Parasuraman et al., 1988) and SERVPERF (Cronin & Taylor, 1992) scales, highlighting its role as a criterion for service quality Since service quality is a crucial antecedent of behavioral intention (Parasuraman et al., 1988; 1991; Boulding et al., 1993; Zeithaml et al., 1996), it can be inferred that convenience directly influences customer loyalty Based on this, Hypothesis 2 posits that convenience has a positive effect on customer loyalty.
Hypothesis 2: Convenience has a positive influence on customer loyalty.
Service Personnel
Service personnel are crucial in shaping customer experiences through their skills and attitudes during interactions Despite Jones et al (2003) categorizing banking services as semi-customized and less personal, the role of service staff remains vital in differentiating banking institutions from their competitors Effective and attentive service can enhance customer satisfaction and loyalty, making personnel performance a key competitive advantage in the banking industry.
In Vietnam, the differences in service quality and interest rates among commercial banks are minimal due to government-controlled ceiling rate policies Key distinguishing factors among banks include the size of their capital and the quality of service provided by staff As banking services are intangible and rely heavily on interactions with knowledgeable employees, the professionalism and competence of banking staff are crucial to customer satisfaction However, the quality of banking employees in Vietnam varies widely due to diverse backgrounds and regional cultures, impacting overall service consistency.
Similar to convenience, service personnel is also one of standards used to estimate service quality Service personnel is also mentioned in SERVQUAL scale (Parasuraman et al.,
Several models have been developed to measure service quality, including the SERVPERF scale (Cronin & Taylor, 1992), the DTR scale (Dabholkar et al., 1996), and the MLH model (Mehta et al., 2000) Research consistently shows that high service quality positively influences customer behavioral intentions, such as loyalty and repurchase intent (Parasuraman et al., 1988, 1991; Boulding et al., 1993).
Zeithaml et al., 1996) Therefore, service personnel also influences on the loyalty The hypothesis 3 is supposed as follow
Hypothesis 3: Service Personnel has a positive influence on customer loyalty.
Customer Satisfaction
Customer satisfaction is the key antecedent of customer loyalty (Oh, 1999; Cronin &
Customer satisfaction is a unidimensional construct that reflects the overall feeling after consumption (Taylor, 1992; Dick & Basu, 1994) It is often viewed as the result of the trade-off between expected service quality and perceived service quality Consumers feel satisfied when the perceived service quality exceeds their expectations, while dissatisfaction arises when the perceived quality falls below expectations.
Dick and Basu (1994) define satisfaction as the post-purchase response to a brand after matching expectations and perceived performance
Numerous studies demonstrate that customer satisfaction positively influences repurchase intention, with satisfied customers being more likely to repurchase than dissatisfied ones (Cronin & Taylor, 1992; Oh, 1999) Repurchase behavior serves as an important indicator of customer loyalty, where loyal customers may not always be fully satisfied, but satisfied customers are more inclined to develop loyalty (Fornell, 1992; Dick & Basu, 1994) Satisfaction is therefore considered a key antecedent to fostering customer loyalty.
Due to previous points of view on the relationship between satisfaction and loyalty, the hypothesis 4 is given as below
Hypothesis 4: Customer satisfaction has a positive influence on customer loyalty.
Social Influence
Social influence refers to the influence caused by reference groups such as media, family, friends, and peers on an individual’s consumption behavior (Ryan, 1982; Ryan & Bonfield, 1975; Mei Min et al.2012)
Deustch and Gerard (as cited in Phan & Ghantous, 2013) state that consumers can be influenced by the others when seeking information for products/service (informative influence) or choosing products/service approved by others (normative influence)
Social influence is a determinant of patronage behavior (Darden, as cited in Evans et al.,
1996) Many previous studies show the social influence on purchase behavior (Bloch et al., 1994; Feinberg et al., 1989; Evans et al., 1996)
Hofstede’s research highlights that collectivism and individualism significantly influence consumer behaviors In collectivist cultures, individuals tend to be interdependent and group-oriented, with behaviors heavily influenced by social factors such as reference groups and social norms Conversely, those in individualistic cultures are independent and self-oriented, exhibiting more autonomous purchasing decisions Consumers in collectivist societies are more likely to conform to social influences compared to their counterparts in individualistic cultures, emphasizing the importance of understanding these cultural dimensions in marketing strategies.
Vietnam's strong collectivist culture significantly influences consumer purchase behaviors and customer loyalty through social influence Phan and Ghantous (2013) highlight the impact of social influence on customer loyalty specifically within Vietnamese retail banking Building on these findings, we hypothesize that social influence plays a crucial role in shaping consumer loyalty in Vietnam, emphasizing the importance of social factors in marketing strategies within the country.
Hypothesis 5: Social influence has a positive influence on customer loyalty.
Switching Costs
Switching costs significantly influence customer loyalty by encompassing both financial and non-financial burdens, such as time and effort, that customers incur when switching service providers (Cronin & Taylor, 1992; Klemperer, 1995; De Ruyter et al., 1998) Selnes (1993) describes switching costs as technical, financial, or psychological barriers that make changing brands difficult and costly for customers, thereby fostering brand loyalty.
About the impact of switching cost on customer behavior, it can be explained as follow
Customers often consider switching to another brand when dissatisfied with their current service; however, they face various switching costs, including time and effort for researching alternatives, account closing and opening fees, and the risk of poor service with a new provider These costs significantly influence customer switching behavior; if perceived switching costs outweigh dissatisfaction, customers may continue with their current service to avoid incurring additional expenses For example, customers unhappy with bank staff attitudes might consider transferring savings to another bank, but must evaluate fees such as early withdrawal penalties, high remittance charges, cash transfer risks, and uncertainty about the new bank’s service quality before making a decision The interplay between dissatisfaction and switching costs ultimately determines whether customers choose to switch or remain with their current provider.
Numerous studies indicate that higher perceived switching costs reduce the attractiveness of competing brands and decrease the likelihood of customers switching to alternatives (Selnes, 1993; Klemperer, 1995; De Ruyter et al., 1998) Switching costs act as barriers that encourage customer retention, even if this results in spurious loyalty characterized by low overall attitude but high repeat patronage (Dick & Basu, 1994) Building on this research, Hypothesis 6 has been introduced to examine the impact of switching costs on customer loyalty and brand switching behavior.
Hypothesis 6: Switching costs have a positive influence on customer loyalty.
Research Model
According to research objective and questions, research model is established based on literature review and the relationships between customer loyalty and its determinants in Vietnamese retail banking
Hypothesis 1: Brand awareness has a positive relationship with customer loyalty in Vietnamese retail banking tot nghiep down load thyj uyi pl aluan van full moi nhat z z vbhtj mk gmail.com Luan van retey thac si cdeg jg hg
Hypothesis 2: Convenience has a positive influence on customer loyalty in Vietnamese retail banking
Hypothesis 3: Service Personnel has a positive influence on customer loyalty in Vietnamese retail banking
Hypothesis 4: Customer satisfaction has a positive influence on customer loyalty in Vietnamese retail banking
Hypothesis 5: Social influence has a positive influence on customer loyalty in Vietnamese retail banking
Hypothesis 6: Switching costs have a positive influence on customer loyalty in Vietnamese retail banking
The six hypotheses above are presented in the figure of research model below
Figure 4 – Research Model tot nghiep down load thyj uyi pl aluan van full moi nhat z z vbhtj mk gmail.com Luan van retey thac si cdeg jg hg
RESEARCH METHODOLOGY
Research Design
According to Singleton and Straits (2005), there are various research methods available such as survey research, experimental research, qualitative research and historical research
Researchers select their research design based on the study's purpose, often utilizing various methods In this study, a survey research method is employed to examine the relationship between customer loyalty and its key determinants, providing valuable insights into consumer behavior and loyalty factors.
Survey research is a valuable method for examining the characteristics, attitudes, behaviors, and opinions of specific populations It enables researchers to gather comprehensive data from a large group, providing insights into population trends and patterns By directly collecting information from real-world scenarios, survey research ensures accurate and relevant results, making it an essential tool for data-driven decision-making.
Straits, 2005) Singleton and Straits (2005) also claims that survey research is the most effective mean of social description
The measurement scales for seven concepts in the research model were developed based on reviewed theories from Chapter 2 An initial questionnaire was designed using these scales and tested through in-depth interviews with eight customers of commercial banks in Vietnam The purpose of these interviews was to ensure respondents fully understood the questionnaire, thereby enhancing the validity and reliability of the measurement scales and collected data Following the interviews, all feedback was carefully noted to revise and refine the questionnaire, resulting in the final version used for data collection.
The final questionnaires were distributed via email, Google Surveys, and direct contact to the study population, as defined in the research sampling Collected data was carefully filtered, cleaned, and entered into an Excel sheet for subsequent SPSS analysis Incomplete questionnaires and those with identical responses to all survey statements were excluded to ensure data quality Using SPSS, necessary statistical tests were conducted to analyze the data accurately.
- Test of Reliability to ensure the measurement scales were reliable and significant
- EFA test to clutch 25 items into meaning groups
- Correlation test to make the necessary condition for regression
- Test for the assumption of Regression Model to ensure the model did not violate the assumption
- Regression Model Research process is below in figure 5:
Research Objective Literature Review Initial
Questionnaire Pilot Test Final Questionnaire
Regresstion Analysis Factor Analysis Reliability Analysis Main Survey
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Sampling
Sampling is a crucial step before hypothesis testing, as it helps reduce costs and save time To obtain accurate results, the sample must be representative of the research population There are two main types of sampling: probability sampling, which offers better population representation but requires more time and resources, and non-probability sampling, which is more efficient but less representative For this study, non-probability sampling is selected to balance efficiency and practicality.
This study investigates how Brand Awareness, Convenience, Service Personnel, Customer Satisfaction, Social Influence, and Switching Costs influence Customer Loyalty in Vietnam's retail banking sector The research focuses on individuals and households who are current customers of commercial banks in Vietnam, aiming to identify key factors that drive customer retention and loyalty Understanding these relationships can help banks enhance their services and build stronger customer relationships in a competitive market.
Ho Chi Minh City was selected as the sample area due to its status as Vietnam’s largest and most developed city, offering better access to modern banking facilities The high level of banking service quality in Ho Chi Minh City, compared to Hanoi and rural regions, reflects its advanced infrastructure and educated population Additionally, the strong interaction between bank staff and customers enhances the reliability of survey data Sampling in Ho Chi Minh City provides a diverse and representative sample, making it ideal for capturing comprehensive insights into banking service perceptions across Vietnam.
Vietnam's banking sector is highly competitive, with approximately 49 banks operating across the country Ho Chi Minh City stands out as the only city in Vietnam where nearly all commercial banks have established branches, providing a comprehensive snapshot of the retail banking landscape in Vietnam.
This study focuses on customer loyalty within Vietnam's retail banking sector, targeting individuals and households who are banking customers in Ho Chi Minh City The research aims to understand the factors influencing customer loyalty among retail banking clients in this key urban center By analyzing these populations, the study provides valuable insights into customer retention and satisfaction in Vietnam's dynamic banking industry.
Conducting surveys on current customers is a convenient way to gather valuable data through questionnaires Since key concepts in the research model, such as service personnel and customer satisfaction, are experience-based, obtaining firsthand insights from customers who have used banking services is essential Using measurement scales that target these experienced individuals ensures more accurate and meaningful results, supporting effective analysis of customer perceptions and improving service quality.
Determining an appropriate sample size is crucial for research validity, alongside selecting the sample area The sample size should be based on the study's nature and the statistical methods used, ensuring that findings can be generalized to the target population Adequate sample size is essential to achieve sufficient statistical power (Hair et al., 2009) For validation purposes, Babbie and Mouton (2001) recommend approximately 50 subjects, depending on the number of assessments employed.
The minimum sample size in research is typically based on established guidelines to ensure validity For studies utilizing Exploratory Factor Analysis (EFA) and multiple regression, sufficiently large samples are essential According to Hair et al (2009), a recommended sample size for EFA is at least five observations per item, with a minimum of 100 participants, while the regression sample size should follow the formula n = 50 + 8k, where k is the number of independent variables In this study, with one dependent variable (Customer Loyalty) and six independent variables (Brand Awareness, Convenience, Service Personnel, Customer Satisfaction), the appropriate sample size was determined to meet these criteria, ensuring reliable results for both EFA and regression analysis.
The study explores the impact of social influence and switching costs, utilizing measurement scales consisting of 25 items to assess these factors For the analysis, an adequate sample size is essential; specifically, the exploratory factor analysis (EFA) requires at least 125 observations, calculated as 25 items multiplied by a minimum of 5 observations per item Additionally, the regression model demands a minimum sample size of 98 observations, based on the formula: 50 plus 8 times the number of predictors (6) Ensuring sufficient sample sizes for both analyses strengthens the validity and reliability of the study’s findings in understanding how social influence and switching costs affect consumer behavior.
To conclude, the minimum sample size for this study is 125 observations because it satisfies all requirements of Exploratory Factor Analysis and regression model.
Questionnaire Design
The questionnaire translates research concepts into measurable items based on respondents' answers, ensuring accurate data collection It can be developed through in-depth interviews or by leveraging established theories, depending on the research approach In this study, a measurement scale was constructed for seven key concepts, building upon prior research to ensure reliability and validity.
The measurement scale for Brand Awareness was adapted from Aaker (1996), consisting of five key items, ensuring reliable assessment of brand recognition Convenience factors were evaluated through three items adapted from Lee and Marlowe (2003), highlighting ease of access and usability The Service Personnel scale, developed based on Hellier et al (2003), includes five items to measure customer perceptions of service staff Customer Satisfaction was assessed using three items adapted from Cronin et al (2000), capturing overall satisfaction levels Social Influence was measured by three items adapted from Phan and Ghantous (2013), reflecting the impact of social factors on consumer decisions.
Finally, the measurement scales for Switching Costs and Customer Loyalty included in each of three items from Beerli et al (2004) Totally, the initial questionnaire had 25 items
A preliminary test of the questionnaire was conducted with a diverse group of eight bank customers in Ho Chi Minh City, including an architect, a pharmaceutical representative, a student, a retired individual, two logistics staff members, and two business professionals, all of whom utilized Vietinbank, Vietcombank, and Asia Commercial Bank The participants understood 25 questionnaire items well; however, some statements required clearer wording for better comprehension All feedback from interviewees was documented for subsequent questionnaire refinement The measurement scales for the seven key concepts in the research model are detailed in the accompanying table.
Table 3 - Construction of Measurement scale
I clearly know my bank Adapted from
Aaker (1996) When talking about banking, I will remember my bank
I can recognize my bank among others
I can distinguish my bank from others Characteristics of my bank could come to me quickly
This bank has convenient location Adapted from Lee and Marlowe
(2003) This bank has many ATMs
This bank has convenient hours
Employees understand my specific needs Adapted from
Hellier et al (2003) Employees are always willing to help me
Employees tell me exactly when a service can be provided Behavior of employees instills confidence to me
Employees give me prompt service
My choice to avail this bank service is a wise one Adapted from
I chose this bank for its exceptional services, which proved to be the right decision Their reliable banking solutions and customer support have consistently met my financial needs I am highly satisfied with their comprehensive offerings and professional assistance, making my banking experience smooth and trustworthy.
Services of this bank are exactly same what I need
I often consult other people to help choose the best banking service from various banks
Adapted from Phan and Ghantous
I frequently gather information from other people about the banking service I intend to use
I often observe what banking service others are using
To change to another bank requires me to invest time in searching for information about other banks
Adapted from Beerli et al (2004)
To change to another bank involves me much effort in deciding which bank to use
To change to another bank involves me a risk in choosing another bank which might turn out not to satisfy me
I do not like to change to another bank because I value the selected bank
Adapted from Beerli et al (2004)
I am a customer loyal to my bank
I would always recommend my bank to someone who seeks my advice
For the survey research, the final questionnaire was adapted based on previous studies and insights gained from in-depth interviews with a Vietnamese group (refer to Appendix C) To ensure relevance in the Vietnamese context, the 25 survey items were translated into Vietnamese (see Appendix D), facilitating accurate data collection from the study population.
The questionnaire was divided into two sections, each designed to gather specific information essential for the study Section I focused on demographic data, while Section II aimed to collect detailed insights related to the research topic This structured approach ensures comprehensive data collection, enhancing the accuracy and validity of the research findings Properly designed questionnaires are crucial for obtaining relevant and reliable information, which ultimately supports the study's objectives and contributes to meaningful results.
Section I : is the main part beginning with the two open questions about the bank the respondents frequently visit and the kinds of banking service they are using in that bank The purpose of these two questions is to help the respondents focus on the bank they answered to do the whole survey The next in this section was 25 items constructed above, measured with five- point Likert Scale from 1-Strongly Disagree, 2-Disagree, 3-Neutral, 4-Agree to 5-Strongly agree
This section measures all seven concepts in the research model
Section II: is the general information of the respondent, including gender, age, occupation and average monthly income This section was designed to acquiring specific demographic information.
Data Collection Result
In the sampling section, we defined the minimum size for this survey is 125 observations
A total of 330 questionnaires, translated into Vietnamese, were distributed to bank customers in Ho Chi Minh City through email, Google Forms, and direct distribution at bank branches.
A total of 120 questionnaires were randomly distributed directly to customers at selected bank branches in Ho Chi Minh City, including Vietinbank Branch 7, Eximbank Tan Dinh Branch, and Vietcombank Phu My Hung Branch Of these, 283 questionnaires were received; however, 25 responses were invalid due to missing information or identical answers across all questions The final dataset comprised 258 valid responses, providing reliable insights into customer perspectives, as detailed in the accompanying table.
Table 4 – Source of questionaire collection
Source Distributed Collected Eliminated Valid
The collected data was conducted by SPSS software version 19 using enter method
The study assessed the validity and reliability of measurement scales using Cronbach’s Alpha and Exploratory Factor Analysis (EFA), ensuring accurate data before proceeding Items that did not meet reliability and validity standards were removed to enhance measurement accuracy Subsequently, six hypotheses were tested through multiple regression analysis to explore the impact of various determinants on customer loyalty, providing valuable insights into factors influencing customer retention.
This chapter outlines the research methodology, covering research design, sampling techniques, measurement scale construction, data collection methods, and data analysis procedures The findings from the data collection will be presented in the next chapter.
Based on the survey data collected earlier, this section presents statistical analyses to support the research hypotheses and model It includes descriptive statistics, reliability testing, exploratory factor analysis, correlation analysis, regression assumption checks, and the development of the regression model These analyses provide a comprehensive foundation for validating the research framework and ensuring data validity and reliability.
The demographic statistic conducted by SPSS in the table below illustrated the study population
No Demographic Description Frequency Percent
This study investigates the impact of various determinants on retail banking customer loyalty in Vietnam A convenient survey was conducted with current banking customers in Ho Chi Minh City who have experienced banking services The demographic data reveal that women tend to visit banks more frequently than men, with females making up over half of the respondents—specifically, 150 females out of 258 participants—while men constitute 42%.
This is consistent with Vietnamese culture In most of Vietnamese families, managing financial budget is allotted to women
In this sample, office staff and businesspeople represent the largest group, accounting for up to 70%, highlighting their prominence in retail banking customers Workers and students follow, making up 17.8% and 7.4% respectively, and are key demographics for banking services These groups—particularly workers, students, businesspeople, and office staff—exhibit high demand for credit, accounts, money remittance, payments, and savings, making their feedback highly valuable for banking industry studies.
Over half of Vietnam's population is of working age, primarily concentrated in major cities with financial centers and large industrial zones, creating significant potential for the retail banking sector Our data indicates that over 70% of respondents are aged 18 to 45, a key period for earning and wealth accumulation Therefore, this demographic represents one of the most important segments for retail banking growth in Vietnam.
Over 50% of respondents in the study earn between 10 million and 20 million dong per month, while nearly 23% have a monthly income ranging from 5 million to 10 million dong Only 15.1% of participants earn more than 20 million dong monthly, and a modest 10% earn under 5 million dong According to Maslow's hierarchy of needs, income initially fulfills physiological requirements like food and living expenses, with savings and banking services considered subsequent needs Therefore, higher income levels correlate with increased usage and consideration of banking services Notably, more than 90% of respondents earning over 5 million dong per month demonstrates a significant relationship between income and banking service engagement, underscoring the importance of income in financial behavior.
The survey data from individual banking customers in Ho Chi Minh City provide a robust basis for testing the impact of model determinants on customer loyalty in retail banking Given Ho Chi Minh City's status as a major financial hub, the study population accurately represents Vietnam’s retail banking market Consequently, the findings from this sample are valuable and can offer meaningful insights into the development of the retail banking industry in Vietnam.
The reliability test is necessary before running any regression model Cronbach’s alpha is a measurement of internal consistency The Cronbach’s alpha is usually used to evaluate whether the measurement scales are reliability or not The Cronbach’s alpha coefficient ranges between 0 and 1 The measurement scale of a variable is reliable if the value of Cronbach’s alpha is higher than 0.6 and the corrected item – total correlation is above 0.4 If the corrected item-total correlation score is negative or less than 0.3, it is neccessary to examine the item for wording problems or conceptual fit and decide whether such items should be deleted or not (Leech et al.,
2005) The result of reliability test for 25 items in this study was presented in the table below tot nghiep down load thyj uyi pl aluan van full moi nhat z z vbhtj mk gmail.com Luan van retey thac si cdeg jg hg
Scale Mean if Item Deleted
Scale Variance if Item Deleted
Cronbach's Alpha if Item Deleted
LOY25 9.13 1.796 591 720 tot nghiep down load thyj uyi pl aluan van full moi nhat z z vbhtj mk gmail.com Luan van retey thac si cdeg jg hg
The analysis revealed that all seven variables demonstrated Cronbach’s alpha values exceeding 0.6, indicating good internal consistency Specifically, the Cronbach's Alpha if Item Deleted for items BAW1 to BAW5 was below the overall Brand Awareness alpha of 0.842, suggesting these items contribute positively to the scale's reliability The Convenience variable, comprising three items (CON1, CON2, CON3), also showed Alpha if Item Deleted values lower than its Cronbach’s alpha of 0.626, reflecting its reliability Similarly, variables such as Service Personnel, Satisfaction, Social Influence, Switching Cost, and Loyalty displayed consistent internal reliability Additionally, all 25 items had Corrected Item-Total Correlation values above 0.4, confirming the measurement scale’s robustness Therefore, the seven-variable measurement scale is reliable, and no items require removal.
Exploratory Factor Analysis (EFA) is a valuable tool for testing construct validity by identifying underlying components within data It groups related items into distinct components, each representing a specific concept or construct The number of components to retain is typically determined by examining eigenvalues, with those greater than 1.0 indicating meaningful factors Conversely, eigenvalues less than 1.0 suggest that the factor explains less information than a single item, and such factors are usually not retained in the analysis Using EFA helps ensure that measurement instruments accurately reflect the underlying theoretical constructs.
This study conducted two Exploratory Factor Analysis (EFA) tests using the Principal Component Analysis extraction method combined with Varimax rotation The first EFA analyzed 22 items across six independent variables, identifying underlying factor structures The second EFA focused on the three items related to the dependent variable, helping to clarify their dimensionality and relationship within the model These analyses provide valuable insights into the data’s factor composition, supporting the study's overall validity and reliability.
Regression Analysis
tot nghiep down load thyj uyi pl aluan van full moi nhat z z vbhtj mk gmail.com Luan van retey thac si cdeg jg hg
The regression analysis demonstrated that a significant relationship exists between six key determinants—Brand Awareness (BAW), Condition (CON), Service Personnel (SP), Satisfaction (SAT), Social Influence (SI), and Switching Costs (SC)—and customer loyalty (LOY), with all regression assumptions validated The multiple regression model, conducted using SPSS with the enter method, confirmed that these six independent variables collectively influence customer loyalty, providing valuable insights for enhancing customer retention strategies.
Std Error of the Estimate
1 818 a 669 661 36872 669 84.588 6 251 000 1.671 a Predictors: (Constant), SC, SP, CON, SI, BAW, SAT b Dependent Variable: LOY
The analysis in Table 14 revealed a strong correlation between the variables, with a coefficient (R) of 0.818 and an R-squared value of 0.669, indicating that 66.1% of the variance in customer loyalty within Vietnam retail banking can be predicted by six key factors: Brand Awareness (BAW), Conditions (CON), Service Personnel (SP), Satisfaction (SAT), Social Influence (SI), and Switching Costs (SC) This suggests that the regression model is highly effective in explaining customer loyalty in this context.
Model Sum of Squares Df Mean Square F Sig
The analysis focuses on predicting the dependent variable LOY using several key predictors, including SC, SP, CON, SI, BAW, and SAT The study aims to identify significant factors influencing LOY to enhance understanding of the underlying relationships Results highlight the importance of these predictors in explaining variations in LOY, providing valuable insights for further research and practical applications.
The table 15 showed the F value was 84.588 and the significance value was lower than 0.05 This means that the model significantly predicted the changes of dependent variable
B Std Error Beta Tolerance VIF
Based on Table 16, the significance values, Standardized Coefficients (Beta), and Collinearity Statistics were analyzed for each independent variable to determine their impact Since all six determinants had significance values below 0.05, each hypothesis was supported and accepted, indicating statistically significant effects Additionally, the Unstandardized Coefficients for all six variables were positive, demonstrating that these factors positively influence customer loyalty.
Brand awareness has a positive relationship with customer loyalty in Vietnamese retail banking
0.27 0.000 Supported tot nghiep down load thyj uyi pl aluan van full moi nhat z z vbhtj mk gmail.com Luan van retey thac si cdeg jg hg
Convenience has a positive influence on customer loyalty in Vietnamese retail banking
Service Personnel has a positive influence on customer loyalty in Vietnamese retail banking
Customer satisfaction has a positive influence on customer loyalty in Vietnamese retail banking
Social influence has a positive influence on customer loyalty in Vietnamese retail banking
Switching costs have a positive influence on customer loyalty in Vietnamese retail banking
Based on SPSS analysis, Unstandardized Coefficients were converted to Standardized Coefficients Beta to compare the impact of various determinants on customer loyalty in Vietnam retail banking Overall, Brand Awareness (Beta = 0.270), Satisfaction (Beta = 0.240), and Switching Costs (Beta = 0.212) emerged as the most influential factors affecting customer loyalty Among these, Brand Awareness had the strongest influence on customer loyalty, highlighting its critical role in Vietnam’s retail banking sector Meanwhile, Service Personnel (Beta = 0.163), Convenience (Beta = 0.158), and Social Influence (Beta = 0.158) had a comparatively lesser but still noteworthy impact The subsequent section provides a detailed analysis of each hypothesis to further explore these relationships.
Hypothesis 1: Brand awareness has a positive influence on customer loyalty in Vietnamese retail banking
This hypothesis was accepted because of the significance value lower than 0.05
Brand Awareness positively influences customer loyalty in retail banking in Vietnam, evidenced by an Unstandardized Coefficient B of 0.262 and a high Standardized Coefficient Beta of 0.270, the highest among six determinants This indicates that customers are more likely to remain loyal when they can easily recognize and recall their banks, highlighting Brand Awareness as a key cognitive factor driving loyalty These findings align with previous research by Lavidge and Steiner (1961) and Dick & Basu (1994), emphasizing the role of Brand Awareness as a vital antecedent of customer loyalty in the banking sector.
Hypothesis 2: Convenience has a positive influence on customer loyalty in Vietnamese retail banking
This hypothesis was accepted because of the significance value lower than 0.05
Moreover, the Unstandardized Coefficient B was 0.172 (greater than 0) showed that Convenience positively influences on customer loyalty This was consistent to previous research (Lee & Marlowe, 2003; Mokhlis et al., 2009; Almossawi, 2001; Thwaites & Vere, 1995;
In Vietnam retail banking, customer convenience is the least prioritized factor among six determinants, as indicated by the Standardized Coefficient Beta value of 0.158, which is the lowest among all factors studied (Laroche et al., 1986; Schram, 1991).
Research by Thwaites and Vere (1995) highlights that convenience, particularly bank and ATM location, is a key factor influencing Canadian and British consumers' choice of banking services However, in Vietnam, convenience has less impact on banking customer preferences due to the country's rapid expansion of bank branches, transaction offices, and ATMs in major cities like Hanoi, Ho Chi Minh City, and Danang Additionally, the widespread adoption of advanced banking technology allows customers to perform transactions across any branch within the same banking system, regardless of their account's location, thereby diminishing the significance of physical proximity.
Hypothesis 3: Service Personnel has a positive influence on customer loyalty in Vietnamese retail banking
This hypothesis was supported because of the significance value lower than 0.05
The analysis revealed that the Unstandardized Coefficient B was 0.139, indicating a positive relationship, while the Standardized Coefficient Beta of 0.163 demonstrated that Service Personnel positively influence customer loyalty This finding aligns with previous research by Laroche et al (1986) and Khazeh & others, confirming the significant impact of service staff on fostering customer loyalty.
Decker, 1993; Thwaites et al., 1997; Almossawi, 2001)
Hypothesis 4: Customer satisfaction has a positive influence on customer loyalty in Vietnamese retail banking
The analysis revealed that customer Satisfaction has a significant positive impact on loyalty in Vietnam retail banking, with a significance value below 0.05 The Unstandardized Coefficient B of 0.177 indicates that increased satisfaction directly enhances customer loyalty Moreover, the Standardized Coefficient Beta of 0.240 positions Satisfaction as the second most influential factor after Brand Awareness on customer loyalty This suggests that higher customer satisfaction leads to greater loyalty, while dissatisfaction can cause customers to defect from their banks These findings align with previous research highlighting the strong positive relationship between customer satisfaction and loyalty (Oh, 1999; Cronin & Taylor, 1992; Fornell, 1992).
Hypothesis 5: Social influence has a positive influence on customer loyalty in Vietnamese retail banking
This study confirmed that social influence significantly impacts customer loyalty in Vietnam retail banking, evidenced by a p-value less than 0.05 Similar to research by Ta and Har (2000) and Gerard and Cunningham (2001) on bank selection among Singapore undergraduates, reference from others was the least important factor for customer loyalty locally, indicated by the lowest standardized coefficient beta (0.158) Nonetheless, social influence’s positive effect on loyalty remained significant, with an unstandardized coefficient B of 0.186, aligning with Phan and Ghantous (2013)’s findings that collectivist culture in Vietnam encourages decision-making based on reference groups, thereby reinforcing the role of social influence in fostering customer loyalty.
Hypothesis 6: Switching costs have a positive influence on customer loyalty in Vietnamese retail banking
Switching costs have a significant positive influence on customer loyalty, with an unstandardized coefficient B of 0.196 and a p-value below 0.05 The standardized coefficient Beta of 0.212 indicates that switching costs are the third most impactful factor on customer loyalty in Vietnam's retail banking sector, following Brand Awareness and Satisfaction These findings align with previous research by Beerli et al., highlighting the importance of switching costs in fostering customer loyalty.
(2004) in retail banking that Satisfaction and Switching Costs were Loyalty‘s determinants, in which the influence from Satisfaction was stronger than Switching Costs
This study confirms that Brand Awareness, Customer Satisfaction, and Switching Costs are the most significant factors influencing customer loyalty in the Vietnamese banking sector Conversely, Social Influence and Convenience have a relatively minimal impact on loyalty The findings support all six hypotheses of the research model, highlighting the critical role of brand perception and customer satisfaction in fostering loyalty The subsequent chapter will explore practical implications and recommendations based on these results for banking institutions aiming to enhance customer retention.