The bank switching behaviour of Singapore’s graduates: A MODEL OF SWITCHING

The model of Keaveney (1995) was designed based on an investigation of a broad range of service providers (45 in total). The model contained a number of variables which are considered to be useful in gaining an understanding of bank switching. Eight switching incidents were contained in the model:


Pricing within a banking framework may be viewed in three ways:

Lewis (1982), Lewis and Bingham (1991), Bosch (1993), Lunt (1993), O’Dea (1995), Colgate et al. (1996) and Stewart (1998) have shown that pricing has an impact on many bank switching decisions.


Inconvenience needs to be considered in relation to distance and/or time. In past studies, a change of job and/or a house move has been found to cause inconvenience. In the context of the present study, the taking up of a first permanent job may alternatively be a cause of a bank switch. A bank’s operational hours may be considered as inconvenient, especially if the opening hours of its ‘bricks and mortar’ branches are shorter than competitor banks.

Lewis (1982), Lewis and Bingham, (1991), Bosch (1993), Lunt (1993) and Colgate et al. (1996)’ all identified geographical inconvenience as having an influence on bank switching decisions.

Core service failure

A ‘core service failure’ is defined as a failure occurring because of either a mistake, a billing error or a service catastrophe. A simple illustration of a bank mistake is where a customer’s bank statement is sent to the wrong address.

Lewis (1982), Lewis and Bingham (1991) and Bosch (1993) found that the refusal to grant an overdraft or loan, having to experience long queues, being subject to slow service, dissatisfaction with the service provided and delays in providing a service are reasons that have influenced a bank switching decision. Each of these reasons, in the context of the present banking study, is considered as a ‘core service failure’.

Service encounter failure

A ‘service encounter failure’ is said to have taken place if a customer has been subject to uncaring, impolite or unresponsive behaviour or attitude of staff. It also is evidenced when a member of staff lacks or appears to lack the pertinent knowledge in relation to the service he/she is providing.

Lewis (1982), Lewis and Bingham (1991) and Bosch (1993) found that some bank switching had been caused by a ‘service encounter failure’ as defined above.

Employee responses to service failures ‘Employee responses to service failures’ exist when a service provider gives a reluctant response, fails to respond or gives a patently negative response. It would appear to be appropriate, under this heading, to include service failures that were not resolved to a customer’s satisfaction; this alternative apparently is not referred to by Keaveney (1995). Bosch’s paper (1993) appears to be the only bank study that found evidence to indicate that such types of failure had taken place.

Attraction by competitors The attraction can take the form of a competitor bank offering attractive gifts which, in relation to Singapore, may be a prestigious car or an up-market condominium. Colgate et al. (1996) found that some Irish undergraduates said that they had switched because the new bank offered such gifts.

Ethical problems

An illustration of an ethical problem, in the context of banking, arises where a customer is advised to purchase life assurance from a specified company. Some banks may act in this way because they have selected certain insurance companies with which to do business, as they pay the highest commission rate to third parties who introduce business to them.

Involuntary switching and seldom mentioned incidents

Involuntary switching arises for reasons that are not within the control of the customer. For example, a person’s employer may insist on paying his or her salary into an account at a certain bank. Because the employee has no say in his or her choice of bank, switching takes place and, in the context of the present study, this switch would be considered as having taken place involuntarily. Bosch (1993) found that third party recommendations sometimes influence a bank switching decision.