Customers’ Switching Behavior in Commercial Banks of Afghanistan (A Case Study of Kabul City)

Abstract

Banking system is the backbone of the modern economy in a country and banks provide necessary or potential services to customers based on their needs and the banks’ marketers, practitioners or managers cannot underestimate the negative consequences of customers’ disloyalty, dissatisfaction and more important the customer switching behavior. Since there is the lack of academic research or it is not available at all to address the customers’ switching behavior in the banking industry of Afghanistan, this study intends to examine and address the factors affect the customer switching behavior in the commercial banks Kabul city, Afghanistan. The objective of this study is to identify the role of price, reputation, advertisement, distance and switching costs on the behavior of commercial banks' customers. This study employed a quantitative approach and it was conducted among 398 respondents who were customers of 12 commercial banks based in Kabul-Afghanistan. The data was collected through provided questionnaires and the findings indicate that reputation, advertisement, distance, and switching costs significantly influence switching behavior. On the other hand, it showed that price is not a significant factor to affect switching banks. Also, the findings showed that four main factors including unfavorable reputations, effective advertising competitions, unfavorable perception of distance and low switching costs had positive relationship with customers’ switching behavior. The study suggests that banks should try to increase effective barriers on switching behavior to prevent customers from switching through their increased dependency, expand their face to face and online activities and provide extra benefits. In addition, this study suggests that marketers and practitioners should use mixed communication and promotion tools in order to build a good relationship between banks and customers.