The bank switching behaviour of Singapore’s graduates: DISCUSSION

The bank switching behaviour of Singapore’s graduates: DISCUSSION

First, the suggested model appears to be appropriate for explaining bank switching among Singapore’s graduates. The results, in Table 2, indicate that all six switching incidents were mentioned by respondents. The two incidents that were discarded from the ‘general’ model of Keaveney (1995) did not get mentioned at all.

The implication for local banks is that if they wish to prevent or minimise graduate bank switching, they would be well advised to focus on being ‘convenient’ from both a geographical and a time viewpoint. This would imply that banks need to have conveniently located branches and that their operational hours must compare favourably with their competitors. The extent to which convenience, as defined, will continue strongly to influence future switching decisions remains to be seen. This is because many banks, in Singapore and elsewhere, are spending vast sums of money developing and making available services through an e-banking arm. Once e-banking has been made available, this would enable bank researchers to place customers of banks into one of three categories: those who use traditional banking alone; those who use a combination of traditional and e-banking; and those who use e-banking alone. Even though the number of branches of many retail banks is falling, the branch network is far from dying. Thus, within the above categorisation, it is believed that, in the foreseeable future, a majority of consumers will still source banking services in traditional ways; while it is believed that many consumers who register for e- banking will continue to source some banking services in traditional ways. That being the case, only a minority of customers would be expected to use e- banking solely to satisfy their financial services needs. It is probable, then, that relative convenience will remain a strongly influential factor in the bank switching decision for many years to come.

Inconvenience, in the present study, was found to be the type of incident that had the strongest influence on a switching decision. The finding, though, needs to be considered in relation to the type of sample that was taken, namely, a graduate one. There is only one ‘bricks and mortar’ branch on each university campus and so choice of bank is very restricted. Once their university course has been completed and the graduates have taken up employment, they may decide to switch bank because the nearest branch of the bank they used as undergraduates is no longer convenient. For example, if graduates take up employment in Singapore’s Central Business District (CBD), the area contains the widest choice of banks, both local and foreign. Even though the bank they used while undergraduates will have a number of branches in the CBD, if graduates want the ultimate in convenience (ie their bank to be located next door or in the block where they work), a switch will result. Other graduates may find themselves working in or close to an industrial park. Again, if the bank that they used as undergraduates does not have a very proximate branch once they take up their job, this may cause a bank switch. Geographical inconvenience may also be a cause of a bank switch at a later date for those graduates who change their job.

Service failures were seen to be the second ranked cause of bank switching among graduates. Banks, presently and in the future, will need to offer a range of services which are appropriate to customers as they pass through their own life cycles. Banks, when delivering their services, should ensure that they do so in a time- efficient way.

The lower percentage of complex switches (ie those caused by more than one incident) that were found in this study in comparison with Keaveney (1995) is attributed to the relatively higher ‘costs’ involved in bank switching. For discussion purposes, a comparison is now made of switching between dry cleaners and switching between banks. With a dry cleaner, if a problem has been experienced in the past, the next time a consumer requires some clothing to be dry cleaned, it is merely necessary to take the clothes to a different business. Switching banks is likely to be much more complicated.

First, the bank that is approached will want to see evidence that the person is who he or she says he or she is. Many banks require one or more references to be given and, only after the person is established as being suitable, will the person be confirmed as a customer. There is, then, the issue of ‘transferring the bank relationship over’. Some of the tasks that need or may need to be carried out are as follows: a customer may receive monies, such as monthly salary, dividends, interest payments on bonds, etc, by inward Giro. The parties who send such monies need to be advised of details of the new bank and the customer’s account number. The remitting parties need to cancel the original arrangement and set up a new one based on the current circumstances. Any outward Giro payments, say, for the settlement of telephone bills, taxes, credit card bills, etc would also need to be modified. The original instruction would need to be cancelled and a fresh arrangement set up with the new bank. Additionally, if the customer had a loan or overdraft with the bank, arrangements would have to be made to clear that debt. In a nutshell, the process for many customers would be far more involved than switching dry cleaners and, thus, more ‘costly’. It probably is the case that far more consideration would be given to bank switching than to switching between many other types of service provider. This may mean, as indicated by the survey results, that it is much more likely that switching between banks is caused by more than one incident (ie it is complex, by Keaveney’s definition). This means that customers must have been subject to a number of negative experiences before they decide to switch and face the burden of the incidental ‘costs’. The deeper the banker—customer relationship, the more the switching costs would be — and, maybe the greater the annoyance would have to be before a switch takes place.

The findings of this study indicate that traditional demographics do not appear to distinguish graduate bank switchers from their counterparts. There appears to be a need to compare bank switchers and non- switchers in other ways, such as testing various psychographic or behavioural characteristics).