Abstract:
This paper aims to examine the role of reference group influence in
determining switching behavior of retail banking customers. Data gathered
through a survey questionnaire from a random sample of 300 retail banking
customers in the Western Province of Sri Lanka. Correlation Analysis and
Multiple Linear Regression Analysis were mainly used to analyze data to
examine the degrees of impact on switching propensity from each individual
component of reference group influence on switching behavior. Reference
group influence have been measured through influence of spouse ,family
members other than spouse, ,relatives, friends ,colleagues, neighbors and
inspirational figures .
Research findings revealed that four variables measuring the various
dimensions of reference group influence significantly impact on switching
propensity of retail banking customers and highlighted that spouse ,family
members other than spouse, friends and colleges are the main parties who
impact on switching propensity of retail banking customers of Sri Lanka. It
was found that even though many banks try to influence retail customers
using inspirational figures to attract and retain retail customers it has no
significant influence on to reduce switching behavior or retain or attract
retail customers in Sri Lankan context. The findings also revealed some
differences in reference group influence according to product categories, age
groups and gender.
The results demonstrate how referral group influence on limiting bank
switching behavior and deliver a strong message to bankers about the
importance of impact of reference group influence on in retaining retail
banking customers. Bankers need to improve overall relationships with
reference groups as to remain their customers with them. It indirectlyannounces that it is better to maintain strong image about the bank with
public and the mechanisms need to build to garter information about key
influential parties to customers while attracting and filling applications to
become customers of a bank. Research findings underscore the existing
body of knowledge about impact of reference group influence on switching
propensity of retail banking customers to understand the behavior of retail
banking customers of Sri Lanka.
