Abstract:

Online banking has grown rapidly in the last few years and the importance of customer retention for banks has been analyzed and discussed extensively. Yet, extant literature offers few empirical investigations or real understanding of the factors that affect switching barriers in online retail banking in particular. Why customers switch banks has been examined but very few researchers seem to have focused on why customers refrain from switching after having considered switching. On the whole, efficacy of effects of switching barriers on different customer groups in online banking needs further exploration. This research aims to (1) identify factors that function as switching barriers and dissuade online retail banking users from switching even after having thought of switching; and (2) examine how users with different levels of online banking usage react to switching barriers. For measuring switching barriers and their effects, four factors are identified; two positive switching barriers (service recovery and trust) and two negative switching barriers (switching costs and lack of alternative attractiveness). Confirmatory factor analysis and reliability tests show that the four- factor structure has high internal consistency and reliability. Independent-samples t- tests show that perceptions of these factors vary significantly among basic and advanced users. It is obvious that the efficacy of switching barriers varies with the magnitude and sophistication of use of online banking service by individual users.