Predicting South African consumers’ intention to continueusing their preferred retail bank’s services: A model validation

Abstract

Objective: The objective of the article is to validate a model of the factors, namely ethical responsibility, social responsibility, bank trust, attitude, and brand loyalty, that influence the behavioural intentions of consumers to continue using banking services.

Research Design & Methods: This study focuses on predicting South African consumers’ intention to continue using their preferred retail bank’s services through a validated measurement model. Using confirmatory factor analysis, reliability and validity analyses, correlation assessments and collinearity diagnostics, the study examines a dataset of 500 participants sourced from a reputable global market research database. The measurement model comprises six latent factors, namely ethical responsibility, social responsibility, bank trust, attitude, brand loyalty and behavioural intention.

Findings: Results indicate strong internal consistency (Cronbach’s alpha and CR > 0.85) and convergent validity (AVE > 0.50) across all factors. The model also exhibits good fit indices (PCMIN/DF = 2.610, IFI = 0.943, TLI = 0.937, CFI = 0.943, SRMR = 0.042, RMSEA = 0.057), confirming its psychometric properties.

Implications & Recommendations: This research highlights the interactions among the studied factors and their implications for customer retention strategies, providing actionable insights for banking professionals and policymakers. Future research should explore the relationships between these latent factors to enhance customer retention and satisfaction strategies in the banking industry.

Contribution & Value Added: Brand loyalty remains one of the biggest challenges facing banks today. As such, there is a need to investigate the factors that influence consumers’ intention to continue using their preferred retail bank’s services to build brand loyalty. This study fills a gap in existing literature regarding banking behaviours in a unique socio-economic South African context.

Keywords

confirmatory factor analysis, measurement model, validation , reliability, model fit

Author Biography

Marko van Deventer

Marko van Deventer, Ph.D., Associate Professor, North-West University, Faculty of Economics and Management Sciences, Workwell, South Africa.

Kirsty-Lee Sharp

Kirsty-Lee Sharp, Ph.D., Associate Professor, North-West University, Faculty of Economics and Management Sciences, Workwell, South Africa

Rafał Żelazny

Rafał Żelazny, Ph.D., Associate Professor, University of Economics in Katowice, Department of Economics, Poland.

References

1. Abou-El-Fotouh, H. (2016). Corporate Social Responsibility in Banks; What does it mean?. Retrieved from https://www.linkedin.com/pulse/corporate-social-responsibility-banks-what-does-mean-abou-el-fotouh/ on October 1, 2024.
2. Aren, S., Güzel, M., Kabadayı, E., & Alpkan, L. (2013). Factors affecting repurchase intention to shop at the same website. Procedia-Social and Behavioral Sciences, 99(1), 536-544. https://doi.org/10.1016/j.sbspro.2013.10.523
3. Ajzen, I. (1991). The theory of planned behavior. Organizational Behavior and Human Decision Processes, 50(2), 179-211. https://doi.org/10.1016/0749-5978(91)90020-T
4. Azjen, I. (2011). The theory of planned behaviour: Reactions and reflections. Psychology and Health, 26(9), 1113-1127. https://doi.org/10.1080/08870446.2011.613995
5. Byrne, B.M. (2010). Structural Equation Modelling with AMOS: Basic Concepts, Applications, and Programming. Routledge, New York, NY.
6. Caporal, J. (2024). What Customers Want From Banks: Online Banking Trends and Consumer Priorities. Re-trieved from https://www.fool.com/the-ascent/research/digital-banking-trends/ on October 1, 2024.
7. Cheung, M.L., Pires, G., & Rosenberger, P.J. (2020). Exploring synergetic effects of social-media communication and distribution strategy on consumer-based Brand equity. Asian Journal of Business Research, 10(1), 126-149. https://doi.org/10.1108/apjml-04-2019-0262
8. Cowling, N. (2024). Number of registered banks in South Africa 2006-2023. Retrieved from https://www.statista.com/statistics/915598/number-registered-banks-south-africa/#:~:text=As%20of%20October%202023%2C%20there,stabilizing%20at%2030%20in%202022 on Oc-tober 1, 2024.
9. Clarke, A. (2022). Financial Services Firms Need To Learn How To Earn Customers’ Trust. Retrieved from https://www.forrester.com/blogs/financial-services-firms-need-to-learn-how-to-earn-customers-trust/ on October 1, 2024.
10. Crossett, S. (2024). Consumer Trust in Banking: Why it Matters Now, More than Ever. Retrieved from https://www.lightico.com/blog/consumer-trust-in-banking/ on October 1, 2024.
11. De Leon, M.V. (2019). Factors influencing behavioural intention to use mobile banking among retail banking clients. Journal Studi Komunikas, 3(2), 118-137. https://doi.org/10.25139/jsk.v3i2.1469
12. De Visser, S. (2019). How to effectively Increase Account Opening and Usage. Retrieved from https://www.fpsgold.com/blog/how-to-effectively-increase-account-openings-and-usage on October 1, 2024.
13. Dubina, O., Us, Y., Pimonenko, T., & Lyulyov, O. (2020). Customer Loyalty to Bank Services: The Bibliometric Analysis. Virtual Economics, 3(3), 52-66. Retrieved from https://www.virtual-economics.eu/index.php/VE/issue/view/8 on October 1, 2024.
14. du Toit, G., Glusac, N., Cuthell, K., Goossens, C., & de Gooye, C. (2023). Customer Behavior and Loyalty in Banking: Global Edition 2023. Retrieved from https://www.bain.com/insights/customer-behavior-and-loyalty-in-banking-global-edition-2023/ on October 1, 2024.
15. Fornell, C., & Larcker, D.F. (1981). Evaluating structural equation models with unobservable vari-ables and measurement error. Journal of Marketing Research, 18(1), 39-50. Retrieved from https://psycnet.apa.org/doi/10.2307/3151312 on October 1, 2024.
16. Ha, H., Wong, M.C., & Lo, H.S. (2024). Corporate social responsibility initiatives of banks and customers’ selection of banks in Hong Kong. Journal of Asian Business and Economic Studies, 31(2), 124-136. https://doi.org/10.1108/JABES-08-2023-0289
17. Hair, J.F., Black, W.C., Babin, B.J., & Anderson, R.E. (2018). Multivariate data analysis: a global perspective. 8th ed. India: Cengage.
18. Henseler, J., Ringle, C.M., & Sarstedt, M. (2015). A new criterion for assessing discriminant validity in vari-ance-based structural equation modeling. Journal of the Academy of Marketing Science, 43(1), 115-135. https://doi.org/10.1007/s11747-014-0403-8
19. Hinson, R.E., Renner, A., & van Zyl, H. (2016). Bank customers’ preferences and responses to Corporate So-cial Responsibility (CSR) initiatives in Ghana. African Journal of Business Ethics, 10(1), 1-18. https://doi.org/10.15249/10-1-107
20. Humphreys, R. (2017). The top five things a customer needs from their bank. Retrieved from https://www.technologyrecord.com/article/the-top-five-things-a-customer-needs-from-their-bank on October 1, 2024.
21. Hurd, A. (2022). Ethical Banking: The Top Socially Responsible Banks. Retrieved from https://www.forbes.com/advisor/banking/ethical-banking/ on October 1, 2024.
22. Hsu, M.H., Yen, C.H., Chiu, C.M., & Chang, C.M. (2006). A longitudinal investigation of continued online shopping behavior: An extension of the theory of planned behavior. International Journal of Human-computer Studies, 64(9), 889-904. https://doi.org/10.1016/j.ijhcs.2006.04.004
23. Ivascu, L., Ali, W., Khalid, R., & Raza, M. (2022). The Impact of Competitive Strategies on Performance of Banking Sector; The Mediating Role of Corporate Social Responsibility and Operational Excellence. Ener-gies, 16(297), 1-18. https://doi.org/10.3390/en16010297
24. Jackson, M. (2023). Building brand loyalty: Three reasons customer engagement programs are vital for finan-cial institutions. Retrieved from https://www.bai.org/banking-strategies/building-brand-loyalty-three-reasons-customer-engagement-programs-are-vital-for-financial-institutions/ on October 1, 2024.
25. Jones, A. (2024). Do Customers Trust Their Banks? The Jury Is Still Out For Now. Retrieved from https://internationalbanker.com/banking/do-customers-trust-their-banks-the-jury-is-still-out-for-now/ on October 1, 2024.
26. Khalifa, M., & Liu, V. (2007). Online consumer retention: contingent effects of online shopping habit and online shopping experience. European Journal of Information Systems, 16(6), 780-792. https://doi.org/10.1057/palgrave.ejis.3000711
27. Khour, M. (2017). Significance of Ethics in Banks. International Journal of Management and Social Sciences Research, 6(12), 6-9. Retrieved from https://www.researchgate.net/publication/340966403_Significance_of_Ethics_in_Banks on October 1, 2024.
28. Khowjoy K., Petmee P., Phakamach V., Sriplang N., Kaewsrem S., & Chayomchai, A. (2023). Factors influencing brand loyalty: the mediating effect of brand satisfaction and trust. Polish Journal of Management Scienc-es, 27(2), 136-154. https://doi.org/10.17512/pjms.2023.27.2.09
29. Kita, P., Maciejewski, G., Čvirik, M., & Kitová Mazalánová, V. (2022). New factors of consumer behaviour in the context of business models used in retailing during the COVID-19 era. Forum Scientiae Oeconomia, 10(3), 75-92. https://doi.org/10.23762/FSO_VOL10_NO3_4
30. Lake, R. (2022). What Is a Bank and How Does It Work? Retrieved from https://www.forbes.com/advisor/banking/how-do-banks-work/ on October 1, 2024.
31. Malhotra, N.K. (2020). Marketing research: An applied orientation. 7th ed. New Jersey: Pearson Prentice-Hall.
32. Man, M., Păunescu, C.F., & Bogeanu-Popa, M.M. (2021). Analysis of the influence of financial factors on corporate social responsibility: evidence from Romania. Polish Journal of Management Sciences, 24(1), 202-219. https://doi.org/10.17512/pjms.2021.24.1.12
33. Mansour, I.H.F., Eljelly, A., & Abdalla, A. (2016). Consumers’ attitude towards banking services in Islamic banks: the case of Sudan. Review of International Business and Strategy, 26(2), 244-260. https://doi.org/10.1108/RIBS-02-2014-0024
34. Mehta, K. (2024). What Is Ethical Banking? Retrieved from https://www.wallstreetmojo.com/ethical-banking/ on October 1, 2024.
35. McInnis, K. (2024). South Africa’s Financial Services Industry: Top Marketing Trends. Retrieved from https://www.meltwater.com/en/blog/marketing-trends-financial-services-south-africa on October 1, 2024.
36. Ngan, N., & Khoi, B. (2020). Behavioral Intention to Accept and Use Banking Service. Journal of Asian Finance, Economics and Business, 7(11), 393-400. https://doi.org/10.13106/jafeb.2020.vol7.no11.393
37. Nkoyi, A., Madele, T., & van der Walt, F. (2019). Predicting the attitude towards electronic banking contin-ued usage intentions among rural banking customers in South Africa. South African Journal of Infor-mation Management, 21(1), 1-8. https://doi.org/10.4102/sajim.v21i1.1016
38. Pallant, J. (2020). SPSS survival manual: A step by step guide to data analysis using IBM SPSS. 7th ed. London, UK: McGraw-Hill Education.
39. Paluri, R.A., & Mehra, S. (2018). Influence of bank’s corporate social responsibility (CSR) initiatives on con-sumer attitude and satisfaction in India. Benchmarking: An International Journal, 25(5), 1429-1446. https://doi.org/10.1108/BIJ-01-2017-0010
40. Rasheed, S. (2024). Ethics in Finance: Importance of ethics & its dilemmas. Retrieved from https://www.linkedin.com/pulse/ethics-finance-importance-its-dilemmas-sajjad-rasheed-gp3ff/ on Oc-tober 1, 2024.
41. Safari, K., Bisimwa, A., & Armel, M.B. (2020). Attitudes and intentions toward Internet banking in an under-developed financial sector. PSU Research Review, 6(1), 39-58. https://doi.org/10.1108/PRR-03-2020-0009
42. Safdie, S. (2023). Ethical Banking: 3 Banks Trying to Become Socially Responsible. Retrieved from https://greenly.earth/en-us/blog/ecology-news/ethical-banking-3-banks-trying-to-become-socially-responsible on October 1, 2024.
43. Sang, N.M. (2023). The influence of social media marketing on brand loyalty and intention to use among young Vietnamese consumers of digital banking. Innovative Marketing, 19(4), 1-13. https://doi.org/10.21511/im.19(4).2023.01
44. Sarker, S., Rose, T.K., & Khan, A. (2012). Attitudes of customers towards the financial institutions – A com-parison between private commercial banks and nationalized commercial banks in Bangladesh with im-plications of Fishbein model. International Journal of Managing Value and Supply Chain, 3(4), 13-25. https://doi.org/10.5121/ijmvsc.2012.3402
45. Shah, S.S.A., & Khan, Z. (2019). Corporate social responsibility: a pathway to sustainable competitive ad-vantage?. International Journal of Bank Marketing, 38(1), 159-174. https://doi.org/10.1108/IJBM-01-2019-0037
46. Sharma, A.K. (2024). Banking Industry: How to Build Loyal Relationships with Customers in the Age of Declining Customer Loyalty. Retrieved from https://binmile.com/blog/how-banking-industry-can-improve-its-customer-loyal-ty/#:~:text=Brand%20Loyalty%3A%20Loyal%20customers%20are,brand%20reputation%20and%20market%20share on October 1, 2024.
47. Shrestha, D., Wenan, T., Rajkarnikar, N., & Jeong, S.R. (2020). Consumers attitude towards Internet banking services in an underdeveloped country: A case of Pokhara, Nepal. Journal of Internet Computing and Ser-vices, 21(5), 75-85. https://doi.org/10.7472/jksii.2020.21.5.75
48. StatWiki. (2022). CFA Model Fit Metrics. Retrieved from https://statwiki.gaskination.com/index.php?title=CFA on October 1, 2024.
49. Vo, H.D., Van, T.H.L., Dinh, T.H.L., & Ho, M.C. (2020). Financial inclusion, corporate social responsibility and customer loyalty in the banking sector in Vietnam. Journal of International Studies, 13(4), 9-23. https://doi.org/10.14254/2071-8330.2020/13-4/1
50. Waqar, A., & Nabeel, N. (2021). The Impact of Social Networking on Customer Loyalty in an Emerging E-Market Context. Virtual Economics, 4(2), 76-87. https://doi.org/10.34021/ve.2021.04.02(4)
51. Yoo, B., Donthu, N., & Lee, S. (2000). An examination of selected marketing mix elements and brand equity. Journal of the Academy of Marketing Science, 28(2), 195-211. https://doi.org/10.1177/0092070300282002
52. Zia, A. (2020). Discovering the linear relationship of service quality, satisfaction, attitude and loyalty for banks in Albaha, Saudi Arabia. PSU Research Review, 6(2), 90-104. https://doi.org/10.1108/PRR-07-2020-0023
53. Zungu, N.P.G., & Mason, R.B. (2017). Young clients’ attitudes to service quality at retail banks in a develop-ing country. Banks and Bank Systems, 12(1), 44-53. https://doi.org/21511/bbs.12(1).2017.05