The migration of clients between financial institutions from a customer management perspectives

Abstract

In recent competitive market conditions, whereby companies need to fight for their own survival, it is evident that building, maintaining and managing relationships with customers is essential in order to understand factors that influence your customers to remain your customers for as long as they exist and not to lose them to competitors. At the basis of every relationship rests mutual understanding between the customers' needs and the extent to which the business is prepared to provide solutions to these needs. In the service industry, the foundation of customer satisfaction is the direct reflection of meeting customer expectations. The extent to which customers are satisfied has been directly linked to customer loyalty and has resulted in a long and beneficial relationship for both business and client. This paper analyses the migration of clients amongst financial institutions from a customer management perspective. The following variables were investigated in this study: - customer satisfaction, - service quality, ~ customer relationships, and - customer loyalty These variables intend to assist the big four banks operating in South Africa to attract and retain customers, resulting in achieved customer loyalty and retail banking sustainability and growth. Further than that, the study intends to understand the dynamics behind these variables and what it means for clients wanting to remain at a particular bank as opposed to migrating to a competitor bank. It is clear from literature that the South African banking industry has not fully exploited these variables. The results presented and discussed in this study support this claim. The results demonstrate that customers are willing to migrate from one banking institution to another, since banks rarely offer solutions to basic needs, and the customers are not satisfied with existing banking relations. A sizeable number of respondents indicated that given an opportunity, they will switch banks. An interesting observation is that there are clients who are very satisfied with services offered by their banks, indicating that, the banking industry still has

the potential to retain these clients, since they remain profitable assets and provide sustainability to the banking business. This study has outlined specific needs of clients in the Mahikeng and Mmabatho area, and the factors that will influence them to stay with their current bank and/or migrate to other banks.