Using management information systems to determine the client loyalty drivers in small and medium–sized enterprises within the banking industry
Stewart, Anna Isabella
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The landscape of banking has changed drastically over the past two decades. Client loyalty is key for banks to stay relevant and deliver sustainable growth. In that context the objective of this research is to identify the main factors that determine client loyalty of small to medium sized businesses to banks and to rank these according to importance. The purpose of the study is using management information systems to determine the client loyalty drivers in SME's within the banking industry as well as ranking them according to the level of importance. The study defines and provides a broad overview of the different concepts. It further provides an overview of the banking industry and casual factors driving the need to focus on client loyalty. A high-level overview of SMEs are also covered The current problem statement has a look at the various areas of concern to the banking industry such as high level debt ratios, weak corporate demand, and more The research methodology; objectives; design; scope; significance and the limitations of the study are outlined. Obtaining high levels of client loyalty remains a challenge for banks; failing, places banks at risk and hampers their ability to grow. MIS is the main enabler in understanding client loyalty, tracking client behaviour and changing needs. For this purpose a questionnaire was employed to obtain a deeper understanding of what drives client loyalty. A secondary source of information incorporated into the study is recent surveys done by KPMG, Accenture, Ernest & Young, and others. The model currently used by banks is based on the net promoter system. Client satisfaction, and Relationship and Service Quality are factors that get measured and incorporated in the net promoter system. Other factors that showed relevance and impact on client loyalty are Product Quality, Skills/EQ and Corporate/brand image. The researcher aims to explain the effect and influence the aforementioned have on client loyalty as well as rank these in order of importance in small to medium-sized business banking clients in South Africa. Primary data has been used in this study complemented by secondary data. A quantitative method has been adopted for this study. The techniques employed are: Frequency, Reliability (including the mean, standard deviation & Cronbach’s Alpha coefficient) and the Spearman Rank Order Correlations. The sample consisted of SMEs in Johannesburg Central Region and 200 questionnaires were distributed to conveniently selected SME's out of a total population of 550. Sixty one (61) SMEs responded resulting in a 31% response rate. The study evidenced that the factors listed are interlinked and have an influence on client loyalty. The study has also demonstrated that the link between customer loyalty and true sustainable organic growth is well established. Limitations of the study are discussed. The researcher also recommends that a management information system be employed; that the study be extended to include large and corporate business and that the framework be broadened to include trust, product/channel, skills/EQ and brand/image.