The Intention of Customers Use Internet Banking:

An Examination of Switchers and Stayers

Shu-Hsun Ho
Associate Professor of Marketing, Providence University

200 Chungchi Rd., Shalu, Taichung County, 43301 Taiwan ROC

shho@pu.edu.tw

Tsai-Ying Yang
Graduate student, Providence University
200 Chungchi Rd., Shalu, Taichung County, 43301 Taiwan ROC
tsaiying.yang@gmail.com

Chiung-Hui Huang
Graduate student, Providence University
200 Chungchi Rd., Shalu, Taichung County, 43301 Taiwan ROC

g9533006@pu.edu.tw

Cha-Ying Lin
Graduate student, Providence University
200 Chungchi Rd., Shalu, Taichung County, 43301 Taiwan ROC
miffysmallrabbit@yahoo.com.tw

ABSTRACT
In nowadays, creating and maintaining customer loyalty has become a strategic mandate
in bank industries. With the development of technology, it is important for bank to keep
customers and encourage customer use their e-banking (electronic banking). In this research,
we classified bank customers into three groups: stayers, satisfied switchers and dissatisfied
switchers. The results of the empirical analysis confirm four concepts. First, dissatisfied
switchers have higher levels of involvement and lower purpose to use the same bank’s
Internet banking than satisfied switchers. Second, stayers have lower levels of involvement
and lower purpose to use the same bank’s Internet banking than dissatisfied and satisfied
switchers. Third, dissatisfied switchers are more loyal and trust to their current bank and
higher purpose to use the same bank’s Internet banking than satisfied switchers and stayers.
Finally, stayers are more loyalty and trust to their current bank and higher purpose to use the
same bank’s Internet banking than satisfied switchers.
Keyword: Customer Involvement, Customer Loyalty, Internet Banking, Switching
Behavior, Trust

INTRODUCTION

With the developing of Internet technology, the number of people who use
Internet has increased very fast since the 1990s. Throughout the world, the number of
Internet users was over one hundred million in 1998, but was evaluated to be about
one billion in 2006. In Taiwan, the Internet users increased from nine million in 2004
to fourteen million in 2005 (FAND, 2005). Going with the increase in the number of
Internet users, the Internet business market and electronic commerce has grown fast.

In the bank, different kinds of electronic banking systems emerge, such as E-

banking (electronic banking) system (Liao and Cheung, 2002). These systems
include: ATMs, phone banking, Internet banking and mobile banking. It provides us
ease to use banking activities (Claessens et al., 2002) and transactions speed is faster
than traditional bank (Liao and Cheung, 2002). Internet banking services were
provided since year 1995 in America. Internet banking services provide multiple
functions, such as stock market transactions, and account enquiry (Claessens et al.,
2002; Liao and Cheung, 2002). In Taiwan, the population of people use E-banking is
over three million people in 2005. Why so many people are still do not want to use
Internet banking? Suh and Han (2003) point out customers afraid of offering their
sensitive personal information on Internet. How to let customers trust Internet banking
and use it is an important issue for bank manager.

In the past decades, researchers discovered that customers switching behavior

affect firms’ profitability and viability. How to keep customers and create new
customers are become an important issues. When a new customer becomes a loyal
customer, the company could decrease the service cost on loyal customer and the
customer’s price sensitive would lower than non-loyal customer. In addition, loyal
customers would buy more and have positive word of mouth on company (Ganesh et
al., 2000; Harris and Goode, 2004). According to Sohail and Shanmugham (2003),
consumers’ preference for e-banking and their loyalty will be dependent upon the
availability of Internet service and on several other social and psychological factors.
 However, not every loyal customer would stay at his/her original bank. They have
changed the bank provider from another one because of reasons other than
dissatisfied. In general, if customers were not satisfied with bank’s product or service,
it would lead to low loyalty and defection. Chakravarty et al. (2004) points out many
people say that they switched to a new bank because they were not satisfied with their
service or products from their old bank.

A basic assumption of this research is that a bank’s customer can be distinguish

into two groups: (1) Customer who had no switching behavior in the last two years in
their using bank (whom we refer to as “stayers”) and (2) those who have changed the
bank provider from another one (whom we refer to as “switchers”). The switchers can
be further divided into two groups: dissatisfied switchers and satisfied switchers
(customers switch to another bank because of reasons other than dissatisfied, such as
job-related relocation, the previous bank closed down or was bought out by a different
bank).

Then, we discuss what factors would affect different customer groups use Internet
banking service. So, we put, customer loyalty, involve and trust as dependent
variables to test different groups they accept the same bank’s Internet banking. In
effect, the major objectives of this paper are:

1. to examine whether the three different customer groups (stayers, satisfied

switchers and dissatisfied switchers) differ in loyalty with their traditional
bank and purpose to use the same bank’s Internet banking.

2. to examine whether the three different customer groups differ in

involvement with traditional bank and purpose to use the same bank’s
Internet banking.

3. to examine whether the three different customer groups differ in trust with
traditional bank and purpose to use the same bank’s Internet banking.
 LITERATURE REVIEW

Switching Behavior

In this research, we classified customers into three groups – stayers, satisfied

switchers and dissatisfied switchers. Stayers mean customers who have not switched.
Satisfied switchers mean customers who have switched to other bank for reasons
other than dissatisfied. Dissatisfied switchers mean that customer who has switched to
other bank because of dissatisfaction their original bank (Athanassopoulos, 2000;
Chiu et al., 2005; Ganesh et al., 2000; Sood and Kathuria, 2004; Wangenheim and
Bayòn, 2004).

Wangenheim and Bayòn (2004) point out that dissatisfied switchers have
experienced outcomes lower than expectations in their previous relationship. When
customers switched the banks, they will compare the bank with the original bank
(Aydin and Özer, 2005).

Customer Loyalty

Many managers know to keep a customer is cheaper than to create a customer

(Athanassopoulos, 2000), so marketers try to make customers accept and continue
using their products or service (Lin et al., 2003). In this article, we focus on loyalty
among bank customers on the Internet.

Customer loyalty is usually defined in terms of a deeply held commitment to

frequently rebuy or repatronize the same product or service (Oliver, 1999). Methlie
and Nysveen ( 1999) classified customer loyalty into affective loyalty and conative
loyalty. Affective loyalty means consumers perceive their banks are better than
competitors and they like the banks better than competitors. Conative loyalty means
that customer must have an intention to keep on using the bank in the future. Affect
loyalty is related to customers’ attitudes toward the bank while conative loyalty is
related customers’ behavior intentions towards the bank in the future. Wangenheim
and Bayòn (2004) thought that loyalty is multidimensional and includes rebuy,
repurchasing and resistance towards price increase.

H 1 : Compared with satisfied switchers and stayers, dissatisfied switchers are more
loyal to their current bank and higher purpose to use the same bank’s Internet
banking.
H 2 : Compared with satisfied switchers, stayers are more loyal to their current bank
and higher purpose to use use the same bank’s Internet banking.

Trust

Customers’ trust on Internet banking transactions as compared with traditional

bank face to face transactions have some unique dimensions, such as the extensive
technology use for transactions, the distant and impersonal nature of the online
environment (Yousafzai et al., 2003). Trust is an important factor in affecting
relationship commitment and customer loyalty (Aydin and Özer, 2005). In Internet
banking, customers are not comfortable when asked to provide some sensitive
information, such as credit card number or ID number (Shu and Han, 2002). Shu and
Han (2002) point out three trust characteristics: ability, benevolence, and integrity.
Ability means that the customer believes that the seller has the power to do what he
needs done for him. Benevolence is the extent to which the seller is believed to want
to do good to the customer. Integrity means that the customer believes that the sellers
make good-faith agreements, tell the truth, act ethically, and fulfill promises.

While users enjoy the convenience of the Internet, the great amount of confidential
data such as credit card numbers, ID numbers, user-names and passwords transmitted
on the Internet could be intercepted, unscrambled, and changed by or exposed to
others (Chang et al., 2006).

With financial institutions having a more and more open environment for their
services, their stored data are more easily accessed but less safely protected (Chang et
al., 2006).

Trust is defined as a group of beliefs held by a person derived from his or her
perceptions about certain attributes; in marketing this involves the brand, products or
services, salespeople, and the establishment where the products or services are bought
and sold (Flavián et al., 2005).

Honesty is the belief that another person will keep his or her word, fulfil promises and
be sincere. Benevolence is the belief that one of the parties is interested in the well-
being of the other without intention of opportunistic behaviour and motivated by a
search for a mutually beneficial relationship (Flavián et al., 2005).

Trust will be considered here as a construct made up three dimensions: honesty,

benevolence and competence perceived in a website (Flavián et al., 2005).

Insecurity of the consumer when shopping online has become one of the most
important obstacles to the growth of e-commerce (Flavián et al., 2005).

H 3 : Compared with satisfied switchers and stayers, dissatisfied switchers are have
more trust to their current bank and have a higher purpose to use the same bank’s
Internet banking.

H 4 : Compared with satisfied switchers, stayers are have more trust to their current
bank and have a higher purpose to use the same bank’s Internet banking.

Customer Involvement

Involvement is described as reflecting the extent of personal relevance of the

decision to the individual in terms of basic goals, values, and self-concept (Koziey
and Andreson, 1989;Zaichovsky, 1985). Involvement as part of a person’s individual
cognitive map that affects his or her model of reality and gives form to his or her
behavior in everyday situations. Pervious studies of consumer involvement have
concentrated on establishing the personal relevance of a purchase for the individual
consumer. It is possible that different types of involvement will be accompanied with
differing levels of store trust and loyalty. In this thesis, we focus on product
involvement and ego involvement. Highly product-involved consumers would spend
to consider their product choices (Lockshin et al., 1997). Product involvement
consumers are likely to acceptance of product information, the likelihood of relying
on retail sales-people and the possible demand for specialized services (Lockshin et
al., 1997). Brand decision involvement means customers interest in making the brand
selection (Mittal, 1989). Many cases show that when customer has high product
involvement and their brand decision involvement would be high (Lockshin et al.,
1997).

H 5 : Compared with satisfied switchers, dissatisfied switchers exhibit higher levels of

involvement and lower purpose to use the same bank’s Internet banking.

H 6 : Compare with stayers, both dissatisfied and satisfied switchers exhibit lower
levels of involvement and lower purpose to use the same bank’s Internet banking.

HYPOTHESES

Structure Model

As in Fig.1, it is this study’s structure model. We classified customers into three

groups (stayers, satisfied switchers and dissatisfied switchers). When customers had
higher customer loyalty, they would have a higher purpose to use the same bank’s
Internet banking. When customers had higher trust, they would have a higher purpose
to use the same bank’s Internet banking. When customers had higher customer
involvement, they would lower purpose to use the same bank’s Internet banking.

Customer Loyalty

Trust Internet Banking

Customer Involvement

Fig. 1 Structure Model

MEASURE

This study adopts the survey methodology. We conducted a survey of banking

customers in Taiwan using a convenience sampling method. In this study, customers
were classified as stayers, satisfied switchers and dissatisfied switchers on the basis of
the duration of time that they were bank customers. Those who had been the
customers for less than two year were grouped as switchers and those who had been
using bank activities over than two years were termed as stayers. Also, because some
customers had accounts in multiple banks, in this research we requested the
respondents to answer the questionnaire with respect to their primary bank. In the
questionnaire, respondents were asked to select one bank that they regularly used in
last two years to answer the questions. To investigate whether H 1 - H 6 are supported
for the groups of stayers, satisfied switchers and dissatisfied switchers, we categorized
the data into the three groups estimated the parameter estimates freely in each group
with SPSS.

Survey items were transformed into Likert-scales and the respondents were
asked to indicate their perceptions of their bank on each item using a seven-point
scale ranging from “7 = strongly agree” to “1 = strongly disagree”.

CONCLUSION

The research presented here provides perspectives on customers who switch and
how they differ among themselves (depending on why they switch) and from stayers
in terms of trust, customer loyalty and customer involvement. The findings and
contribution of this research including the fellowing:

1. Satisfied switchers have higher levels of involvement and lower purpose to use the
same bank’s Internet banking than dissatisfied switchers.

2. Stayers have lower levels of involvement and lower purpose to use the same
bank’s Internet banking than dissatisfied and satisfied switchers.

3. Dissatisfied switchers are more loyalty to their current bank and higher purpose to
use the same bank’s Internet banking than Satisfied switchers and stayers.

4. Stayers are more loyalty to their current bank and higher purpose to use use the
same bank’s Internet banking than satisfied switchers.
5. Dissatisfied switchers are more trust to their current bank and higher purpose to
use the same bank’s Internet banking than Satisfied switchers and stayers.

Stayers are more trust to their current bank and higher purpose to use the same
bank’s Internet banking than satisfied switchers.

Research limits

A central limitation of this study is that the differentiation into groups like stayers or
switchers represents simplistic categorization and the internal homogeneity of these
groups can be questioned.

Two main limitations exist in this study. The first limitation is the differentiation
into groups like stayers, satisfied switchers and dissatisfied switchers represents
simplistic categorization and the internal homogeneity of these groups can be
questioned. Second, the sampling method for this study was a convenience sampling
that was not scientifically designed. Therefore, significant efforts should be devoted to
detecting any potential biases in these nonrandom samples.

REFERENCE

Athanassopoulos, A. D. 2000. Customer satisfaction cues to support market

segmentation and explain switching behavior. Journal of Business Research, 47,

191-207.

Aydin, S. & Özer, G. 2005. How switching costs affect subscriber loyalty in the

Turkish mobile phone market: An exploratory study. Journal of Targeting, 14 (2),

141–155.

Bloch, P. H. & Richins, M. L., 1983. A theoretical model for the study of product

importance perceptions. Journal of Marketing, 47, 69-81.

Chakravarty, S., Feinberg, R. & Rhee E. Y. 2004. Relationships and individuals’

bank switching behavior. Journal of Economic Psychology, 25, 507–527.

Chang, I. C., Hwang, H. G. & Yen, D. C. 2006. An empirical study of the factors

affecting Internet security for the financial industry in Taiwan. Telematics and
Informatics, 23, 343-364.

Chiu, H. C., Hsieh, Y. C., Li, Y. C. & Lee, M. 2005. Relationship marketing and

consumer switching behavior. Journal of Business Research, 58, 1681-1689.

Churchill, G. A. 1979. A paradigm for developing better measures of marketing

constructs. Journal of Marketing Research, 16 (1), 64-73.

Claessens, J., Dem, V., Cock, D. D., Preneel, B. & Vandewalle, J. 2002. On the
Security of today’s online electronic banking systems. Computer & Security, 21 (3),
257-269.

Day, E., Stafford, M. R. & Camacho, A. 1995. Opportunities for involvement

research: A scale-development approach. Journal of Advertising, 24, 69-75.

Evanschitzky, H., Iyer G. R., Plassmann, H., Niessing, J. & Meffert, H. 2006.

The relative strength of affective commitment in securing loyalty in service

relationships. Journal of Business Research, 59, 1207-1213.

FIND, Domestic Internet user by year, http://www.find.org.tw/find/home.aspx.

Flavián, C., Guinaliu M. & Gurrea, R. 2005. The role played by perceived usability,

satisfaction and customer trust on website loyalty. Information & Management,

43, 1-14.

Ganesh, J., Arnold, M. J. & Relnolds, K. E. 2000. Understanding the customer base of

service providers: an examination of the differences between switchers and

stayers. Journal of Marketing, 64, 65-87.
Gefen, D. 2000. E-commerce: the role of familiarity and trust. The International

Journal of Management Science, 28 (6), 725-737.

Goldsmith, R. E. & Emmert, J. 1991. Measuring product category involvement: a

multitrait-mulmultimethod study. Journal of Business Research, 23, pp. 363-371.

Hansotia, B. 2002. Gearing up for CRM: antecedents to successful Implementation.

Journal of Database Marketing, 10( 2), 121-132.

Harris, L. C. & Goode, M. M. H. 2004. The four levels of loyalty and the pivotal role

of trust: a study of online service dynamics. Journal of Retailing, 80, 139-158.

Koziey, P. W. & Anderson, T. 1989. Patterning interpersonal involvement. Journal of

Psychology, 123 (3), 217-235.

Liao, Z. & Cheung, M. T. 2002. Internet-based e-banking and consumer attitudes: an

empirical study. Information & Management, 39, 283-295.

Lin, C. T., Wang, S. M., & Hsieh, H. Y. 2003. The brand-switching behavior of Taipei

female consumers when purchasing U-V skincare products. International Journal

of Management, 20 (4), 443-452.

Lockshin, L. S., Spawton, A. L. & Macintosh, G. 1997. Using product, brand and
purchasing involvement for retail segmentation. Journal Retailing and Consumer
Service, 4 (3), 171-183.

Merisavo, M. & Raulas, M. 2004. The impact of e-mail marketing on brand Loyalty.

Journal of Product & Brand Management, 13( 7), 498-505.

Methlie, L. B. & Nysveen, H. 1999. Loyalty of on-line bank customers. Journal of

 Information Technology, 14, 375-386.

Mittal, B. & Lee, M. S. 1989. A causal model of consumer involvement. Journal of

Economic Psychology, 10, 363-389.

Newman, J. W. & Staelin, R. 1972. Prepurchase information seeking for new cars and

major household appliances. Journal of Marketing Research, 9 (3), 249-257.

Nunnally, J.C. 1978. Psychometric Theory. McGraw-Hill, New York.

Oliver, R. L. 1999. Whence consumer loyalty. Journal of Marketing, 63, 33-44.

Rosenberg, L. J. & Czepiel, J. A. 1983. A marketing approach to customer Retention.

Journal of Consumer Marketing, 2, 45–51.

Simpson, J. 2002 The impact of the Internet in banking: Observations and evidence

from developed and emerging markets. Telematics and Informatics, 19, 315-330.

Sohail, M. S. & Shanmugham, B. 2003. E-banking and customer preferences in

Malaysia: An empirical investigation. Information Sciences, 150, 207-217.

Sood, S. & Kathuria, P. 2004. Switchers and stayers: An empirical examination of

customer base of an automobile wheel care center. Journal of Service Research, 4

(2), 75-90.

Suh, B. & Han, I. 2002. Effect of trust on customer acceptance of Internet Banking.

Electronic Commerce Research and Applications, 1, 247-263.

Suh, B. & Han, I. 2003. The impact of customer trust and perception of security

control on the acceptance of electronic commerce. International Journal of

Electronic Commerce, 7 (3), 135-161.
Tsao, H. Y. & Chen, L. W. 2005. Exploring brand loyalty from the perspective of

brand switching cost. International Journal of Management, 22 (3), 436-441.

Wangenheim, F. & Bayòn,T. 2004. Satisfaction, loyalty and word of mouth with the

customer base of a utility provider: Differences between stayers, switchers and

referral switchers. Journal of consumer Behavior, 3 (1), 211-220.

Yousafzai, S. Y., Pallister, J. G. & Foxall, G. R. 2003. A proposed model of e-trust for

electronic banking, Technovation, 23, 847-860.

Zaichowsky, J. L. 1985. Measuring the involvement construct. Journal of Consumer

Research, 12 (3), 341-352.