Customer Defection In Banking Industry

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The word defection means behavior to switch from exiting service provider to another supplier in other word customer exit. The term customer defection is intention to switch from one product or service to any alternative. (Garland, 2002). When customers decide not to repurchase from the same brand the customers feel dissatisfaction their expectations in the response of this he break his relationship is called customer defection. (Crie, 2003). Defection is customer decision to end his relationship with firm’s product or service completely. Defection is complex process which is faced by customer due to some problems (Asku, 2006). The defection in the banking industry can be discrete as ending relationship…show more content…
There is a correlation between customer defection and satisfaction. (Zeithaml, V. A., and Berry, L. L., 1985). The service quality is further divided in two sub categories Technical quality and Functional quality. First one deal with core service which customer perceive from his supplier and it will get from the professionals competencies as they are more competent as the return will be maximum from customers, and the functional quality deals with your way of delivering the service to your customers rather than your delivered service it is highly subjective manner and shows the relation of service provider and customer. Trust has a great impact on both technical and functional quality delivery process when customer perceive more technical quality actually he is showing more trust in relationship. (Sharma N & Patterson P.G,…show more content…
As an evidence to prove this view “bank customer switching and acquisition study of J.D. powers & associates U.S. 2012” describe that due to increase in fees of the larger and medium size banks there defection rate increase by 11.3% as compare to small banks and credit unions. A survey of “Deloitte center for financial services” shows the correlation of customer switching behavior and fees increase. The conclusion of the survey describes that customer always shows hating attitude when they feel the banks are not fair in increasing the fees or charges. A concept from “behavioral economics and psychology” explain that why many customers of banks feel unpleasant and shift away from the services of the bank to some alternative due to small increase in price. The customer shows these kinds of negative reaction to the bank fee increase when the customers are not fully aware or realize the value which he is getting against his payment. Large and medium size banks face more these kind of situation because they offer a range of services such as “multichannel access points, reward programs, and a broad array of products and options” but customers are not clear and realizing these. The result of survey also concludes that many customers have not or a very little idea of the bank cost which its bear to provide these services. (Services,

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