Proceedings of Annual Tokyo Business Research Conference
15 - 16 December 2014, Waseda University, Tokyo, japan, ISBN: 978-1-922069-67-2
Factors Affecting Service Loyalty of
Commercial Bank Customers in Bangkok Metropolitan
Chatchanan Chantaweeseesuk* and Nuttawut Rojniruttikul**
This study examines the level of service loyalty of commercial bank
customers in Bangkok metropolitan and the factors affecting service loyalty
of commercial bank customers in Bangkok metropolitan. The data were
collected from 400 commercial bank customers in Bangkok metropolitan.
The research instrument is questionnaire. Data are analyzed by statistical
program. The statistics for data analysis includes percentage, arithmetic
mean, and standard deviation. Multiple linear regression analysis is used to
test the hypothesis. The results show that commercial bank customers
have service loyalty at low level. In addition, organizational image and
customer satisfaction could affect the service loyalty of commercial bank
customers in Bangkok metropolitan. All independent variables could explain
the variation in service loyalty of commercial bank customers at 62.6
percent.
Field of Research: Customer Service and Customer Relations
1. Introduction
Due to the rapidly changing financial factors including the current of the establishment of
ASEAN Economic Community (AEC) in 2015, Thailand has to liberalize the financial
sector governed by AEC fully in 2020. Apart from the liberalization of trade in goods and
services, it is expected that, in the near future, the financial institutions and banks will
have to adjust their strategies in all aspects. The applied technology has to be modern,
convenient, fast and accurate. The database management needs to manage effectively.
The personnel have to have the skills of professional service with the analytical and
research competence as well as having the excellent creativities. This is because the
competition in the future will be the competition that focuses on responding the needs of
customers as much as possible. This can create the good relationship with customers
leading to the preservation of previous customers and attraction on new customers
completely. The financial institutes must provide services with quality. Meanwhile, the
bargaining power of customers also increases causing the management to be more
difficult and complicated.
Especially, the commercial banks will also have more intense competition both from the
existing operators and new operators. This includes Non-Bank Business which
reorganizes the organization to have strength in order to build different quality of service to
serve the current of competition and retain the customers firmly. According to the analysis
of SCB Economic Intelligence Center, Thailand's economy is expected to grow only 4.0%
in 2013 lower than the original estimation resulting in higher competition between banks.
*Ms. Chatchanan Chantaweeseesuk, Administration and Management College, King Mongkut’s Institute of
Technology Ladkrabang, Thailand Email: Chatchanan.chantaweeseesuk@gmail.com
**Assistant Professor Dr. Nuttawut Rojniruttikul, Administration and Management College, King Mongkut’s
Institute of Technology Ladkrabang, Thailand Email: krnuttaw@kmitl.ac.th
Proceedings of Annual Tokyo Business Research Conference
15 - 16 December 2014, Waseda University, Tokyo, japan, ISBN: 978-1-922069-67-2
Commercial bank business nowadays has highly competition. Each bank pays attention to
the management to focus on improving the quality of products and financial services in
order to respond to customers’ demands and create customers’ satisfaction both in terms
of quality and ethics. Moreover, the policy of each bank requires the development and
improvement on the quality of services continually. This will lead to the quality
accreditation. The banks can also prepare to serve the expansion of financial services in
the future. Therefore, each bank focuses on providing quality service. The service style
has been improved by adopting the advanced equipment and technology such as the
adoption of electronic commerce used in providing services to customers. The service is
provided to be diverse and more modern. This includes the staff development in the bank
service in terms of knowledge and services provided to customer. However, each bank
still encounters the problem of competition from their competitors in the market, especially
on the problems of service provided to impress the customers and make the customers
reliable in using the services and financial transactions with the banks. Therefore, each
commercial bank has the policy in adjusting to a higher quality of service in order to
maintain market share effectively (Thanachart Bank. 2011).
Business in the bank sector in 2015is expected that the traditional values and culture of
the banking business will not be enough for making the organization grow and retain their
customers. The banks will have to plan the strategy for survival. All banks have to have
the expertise and focus on what the organization sophisticates. The service and
innovation should be provided by allowing the customers to participate. The banks with
these policies will become the leaders in the financial service industry (Hedley et al.2006).
Based on the above information, the researcher is interested in studying the factors
affecting service loyalty of commercial banks in Thailand. The researcher hopes that this
research will be able to apply to the business, commercial banks, and other business
sectors. This leads to the development in domestic economy and international competition
in the future.
2. Literature Review
Oliver (1999) stated that the loyalty is a profound obligation in repetitively purchasing
satisfactory goods or services consistently in the future. This style of purchase is to
repetitively purchase in the same brand or series of the same brand. Changing this
behavior is influenced by the situation with the impact and the potential of marketing
efforts. Pong & Yee (2001) stated that the loyalty to the service is formed by the behavior,
attitudes and knowledge. The factors used for measuring the loyalty to the services are
the repetitive purchase behavior, telling, moment when the consumers choose to take the
services, not susceptible to price changes, intention to repetitively purchase, preference,
reduce of options, and being the first in the mind. Bloemer, Ruyter & Wetzel (1999) stated
that the measurement of loyalty on services can be summarized to be the behavior,
telling, purchase intent, sensitivity to price, and complaint behavior. Jefkins (1993: 21-22)
stated that the image of organization means the picture of any organization including all
things related to the organization which people know, understand, and have the
experience. In creating a positive image of the organization, we partly depend on the
presentation of Corporate Identity which appears in the eyes of the public easily such as
symbols, uniforms, etc. Kotler (2000) stated that the image in the marketing context is the
image that people know about the company or its products. In addition, the image is
caused by several factors under the control of the business. When considering the image
which the organization can integrate into the management, it may limit to the types of
image associated with the marketing promotion clearly classified into 3 categories; product
Proceedings of Annual Tokyo Business Research Conference
15 - 16 December 2014, Waseda University, Tokyo, japan, ISBN: 978-1-922069-67-2
or service image, brand image, and institution or organization brand. Britt (1979) stated
that in creating the image of the organization, we need to consider 10 principles are: 1. the
primary purpose of the business should not focus on making sales but should focus on
creating satisfaction to customers, 2. the marketing purpose is needed, 3. the Frame of
Reference must be created, 4. the products and services of the company must suit the
customers, 5. it must be distinguished from other businesses, especially distinguished
from the competitors, 6. the purpose of the company on the image, 7. although the
behaviors of the majority of consumers are rational, in some cases, it may not need a
reason, 8. the products and services of the company must be of quality, 9. to make a
difference in the products and services of the company from the competitors is very
important, and 10. the image must mainly consider the needs of the consumer's mind.
Kotler (1999) stated that the customer’s satisfaction means the customer's decisions on
the presentation of market value resulting in the decision making. It is related to the
presented styles of the products and is linked to the expectations of customers. Each
customer may have different levels of satisfaction. The customer’s satisfaction means the
decision making. If the presented style of product has low expectations, the customers will
not be satisfied. With the increase in the expectations, the customers will be more
satisfied. However, the expectations are based on experience in buying of customers,
views of friends and relevant persons, including the marketing data and competitors
offered or promised. The marketers need to be careful about level of customer’s
satisfaction. Mohana (2007) estimated the satisfaction of customers using the service of
commercial banks into 7 aspects; 1) satisfaction on products or services (Product) caused
by the product or service brand, 2) satisfaction on Price which must be suitable for the
quality of service, 3) satisfaction on the channels of service provision (Place) which the
operator should consider the service provision to facilitate the transportation as well as
various channels of service provision to be in sufficient numbers, 4) satisfaction on sale
Promotion with the methods to motivate the target customers to purchase products and
services, 5) satisfaction on the employees (People), the employees play an important role
in providing services variable to the demand of customers, 6) satisfaction on the Physical
Evidence which is the element supporting the service users to feel that such service has
quality from the sense of vision, 7) satisfaction on the Process of service provision. The
service provision to the service users must be designed appropriately which will cause the
service provision to be efficient and correctly following the specified time with quality,
consistency, common, and easily to understand.
3. The Methodology and Model
Hypothesis: The image of organization and the customer satisfaction affect the loyalty of
customer of commercial banks in Bangkok metropolitan.
Theoretical Model: The researcher develops the conceptual framework from related
researches to supplement the research orderly; Corporate Image by applying the concept
of Kotler (2000), Jefkins(1979) and Britt(1979) Customer Satisfaction) by applying the
concept of Mohana, Ramo K. (2007) and Phillip Kotler (1997) and Customer Loyalty) by
applying the concept of Oliver (1999), Pong & Yee (2001) and Bloemer, Ruyter & Wetzel
(1999). The researcher summarizes the conceptual framework in order to be used for
researching guideline as shown in Figure 1
Proceedings of Annual Tokyo Business Research Conference
15 - 16 December 2014, Waseda University, Tokyo, japan, ISBN: 978-1-922069-67-2
Corporate Image
Loyalty of Customers Commercial Banks
In Bangkok Metropolitan
Customer Satisfaction
Figure 1: Conceptual Framework Used in the Research
In this research, the researcher studies the “factors affecting service loyalty of commercial
banks in Bangkok metropolitan”. The research population used in this research consists of
the customers using the service of commercial banks in Metropolitan. 400 samples are
collected. The data is collected from the questionnaires distributed to be filled in by the
customers using the service of commercial banks in Bangkok metropolitan. The
questionnaires used in this research are divided into 5 parts as follows:
Part 1: The questionnaires are about personal factors which are gender, age, marital
status, educational level, occupation, monthly income, frequency in using the services of
financial transaction with commercial banks, types of services chosen to use with
commercial banks, and channels of service use. The collected data is calculated to find
the frequency and percentage.
Part 2: The questionnaires are about the image of commercial banks in Bangkok
metropolitan. The questionnaires are in Likert Scale. The answers are in 5 levels and the
Multiple Linear Regression Analysis is used in testing the hypothesis.
Part 3: The questionnaires are about the customer’s satisfaction. The questionnaires are
in Likert Scale. The answers are in 5 levels and the Multiple Linear Regression Analysis is
used in testing the hypothesis.
Part 4: The questionnaires are about the loyalty to the service of commercial banks in
Bangkok metropolitan. The questionnaires are in Likert Scale. The answers are in 5 levels
and the Multiple Linear Regression Analysis is used in testing the hypothesis.
Part 5: The questionnaires are about other recommendations on the loyalty to the service
of commercial banks in Bangkok metropolitan.
Proceedings of Annual Tokyo Business Research Conference
15 - 16 December 2014, Waseda University, Tokyo, japan, ISBN: 978-1-922069-67-2
4. The Findings
Table 1: Personal factors of customers
Personal factors
1. Gender
Male
Female
Total
2. Age
Over or equal to 25 years
Over 25 years – 35 years
Over 35 years - 45 years
Over 45 years - 55 years
Over 55 years
Total
3. Current address
Bangkok
Metropolitan
Total
4. Marital status
Single
Married
Divorced/separated/widow
Total
5. Educational level
Lower than bachelor’s degree
Bachelor’s degree
Master degree
Doctoral degree
Total
6. Occupation
Employee of company/private agency
Housewife
Government official/state enterprise official
Self-employed/trade
Students/university students
Others
Total
7. Average monthly income
Less than or equal to 15,000 baht
More than 15,000 baht - 25,000 baht
More than 25,000 baht - 40,000 baht
More than 40,000 baht - 55,000 baht
More than 55,000 baht
Total
8. Banks to be used the service
consistently
Bangkok Bank
Siam Commercial Bank
Krung Thai Bank
Frequency
Percentage
204
196
400
51.0
49.0
100.0
96
134
94
50
26
400
24.0
33.5
23.5
12.5
6.5
100.0
180
220
400
40.0
60.0
100.0
224
156
20
400
56.0
39.0
5.0
100.0
106
234
46
14
400
26.5
58.5
11.5
3.5
100.0
162
42
60
68
64
4
400
40.5
10.5
15.0
17.0
16.0
1.0
100.0
114
138
98
22
28
400
28.5
34.5
24.5
5.5
7.0
100.0
46
64
26
11.5
16.0
6.5
Proceedings of Annual Tokyo Business Research Conference
15 - 16 December 2014, Waseda University, Tokyo, japan, ISBN: 978-1-922069-67-2
Personal factors
Thanachart Bank
Kasikornthai Bank
Tisco Bank
Bank of Ayudhya
Kiatnakin Bank
Thai Military Bank
UOB
Standard Chartered Bank(Thailand)
City Bank (Thailand)
Total
9. Period of consistent use of service
Less than1year
2-3 years
4-5 years
6-10 years
More than 10 years
Total
10. Times of service use per week
1-2 times
3-4 times
5-6 times
7-8 times
More than 8 times
Total
11. Type of service use
Deposit accounts
Credit card
Equity fund
Money transfer
Money exchange
Payment of products and services
Internet banking
Insurance
Total
12. Channels of services use
Bank’s branches
ATM
Mobile phone / internet banking
Call Center
Total
Frequency
44
82
4
22
8
84
12
6
2
400
Percentage
11.0
20.5
1.0
5.5
2.0
21.0
3.0
1.5
0.5
100.0
18
62
78
154
88
400
4.5
15.5
19.5
38.5
22.0
100.0
154
70
110
38
28
400
38.5
17.5
27.5
9.5
7.0
100.0
189
111
38
149
10
115
54
26
692
27.3
16.0
5.5
21.5
1.5
16.6
7.8
3.7
100.0
179
166
80
30
455
39.3
36.5
17.6
6.6
100.0
According to Table 1, it is found that the customers coming to use the service of
commercial banks in Bangkok metropolitan are mostly female in the age of 25-35 years,
single status, bachelor’s degree, living in metropolitan, being company’s employees with
the monthly income of more than 15,000 baht – 25,000 baht. The banks used consistently
most are KBANK/TMB. The period of consistent service use is 6-10 years. Times for
service use per week are 1-2 times. Type of services used most is deposit accounts. The
channel of services used most is bank’s branches.
Proceedings of Annual Tokyo Business Research Conference
15 - 16 December 2014, Waseda University, Tokyo, japan, ISBN: 978-1-922069-67-2
Table 2: Mean ( ) and standard deviation (S.D.) of organization’s image, satisfaction, and
loyalty of customers on the service use of commercial banks
Levels
Variables
S.D.
Organization’s image on commercial
Low
2.288
0.512
banks
Satisfaction on the service use of
Low
2.522
0.570
commercial banks
Loyalty to
the service use of
Low
2.295
0.488
commercial banks
According to Table 2, it is found that the level of loyalty of customers using the service
of commercial banks in Bangkok metropolitan, the organization’s image and the
satisfaction on the service use of commercial banks are in the low level.
Table 3: Test of hypothesis by using the multiple linear regression analysis
Factors
b
t
Constant
0.412
3.804
Organization’s image
0.536
11.725
Satisfaction on the service use of
0.233
4.581
commercial banks
R=0.793, R2= 0.628, S.E.=0.299, F = 166.425, p-value = 0.000**
Remark**having the statistical significance at the level of 0.01
P-value
0.000**
0.000**
0.000**
According to Table 3, it is found that R2 is 0.628 representing that all independent
variables can explain the variation of loyalty of customers using the service of commercial
banks in Bangkok metropolitan for 62.8 percent. The organization’s image affects the
loyalty of customers using the service of commercial banks in Bangkok metropolitan most,
followed by the satisfaction of customers using the service of commercial banks.
5. Conclusions
The organization’s image affects the loyalty of customers using the service of commercial
banks in Bangkok metropolitan most. This is because the customers using the service of
commercial banks in Bangkok metropolitan have the perception on the organization’s
image and trademark from the advertisement through various media. This makes the
customers using the service accept the products or services as the first choice. If the
customers want to use the service, it will lead to the consistent use. In addition, talking
about the advantages of service providers and service provision will stimulate other people
to be interested in using the service followed by the loyalty to the service use. This is in
accordance with the research of Nguyen Quoc Cuong (2009) who studies the factors
affecting the loyalty of customers using the service of Asia Commercial BANK in Ho Chi
Minh City, Vietnam. It is found that the factor of Perceived Service Quality, Corporate
Image, Customer Satisfaction and Switching Costs have the relationship to the loyalty of
customers with statistical significance at the level of 0.01.
The satisfaction of service use of commercial banks affects the loyalty of customers using
the service of commercial banks in Bangkok metropolitan. This is because the customers
using the service evaluate their satisfaction on the service use and service quality from
their experience in regular service use affecting their loyalty of service use. This is in
accordance with the research of Butcher, Sparks, & Callaghan (2001) stating that the
thing influences the loyalty of service use is the satisfaction on the service use which is the
variable directly affecting with the statistical significance at the level of 0.01. Therefore,
Proceedings of Annual Tokyo Business Research Conference
15 - 16 December 2014, Waseda University, Tokyo, japan, ISBN: 978-1-922069-67-2
when the customers of commercial banks are satisfied with the service of the banks, it will
result in the loyalty of customers using the service of commercial banks as well.
Recommended
According to the study on the factors affecting service loyalty of commercial banks in
Bangkok metropolitan, it is found that the loyalty of customers using the service of
commercial banks in Bangkok metropolitan in the entire picture is in the low level. The
researcher, therefore, has some recommendations to the sector of commercial banks to
improve the service quality and satisfaction, for example, improving the employees to
have skills, knowledge, and competence in service provision to meet the demands of
customers including the use of Social Media more. In increasing the level of perception on
the corporate image can increase the loyalty of customers using the service of commercial
banks in Bangkok metropolitan as well.
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