An executive summary for managers and
Consumer switching
behavior in the Asian
banking market
Philip Gerrard and
J. Barton Cunningham
The authors
Philip Gerrard is Associate Professor at Nanyang Business
School, Nanyang Technological University, Singapore.
J. Barton Cunningham is Professor at the School of Public
Administration, University of Victoria, Victoria, Canada.
Keywords
Banking, Service failures, Pricing, Singapore
Abstract
This study seeks to identify the types of incidents which cause
consumers to switch between banks, the weighting of each
incident on the switching decision, whether single or multiple
incidents influence switching decisions, and the extent to which
switchers explain the problems they have faced prior to exiting.
The key findings show that bank switching is strongly influenced
by three types of incident: service failures, pricing and
inconvenience, with pricing being more influential. Seventy-five
percent of bank switching is caused by more than one incident,
and some 7 percent of respondents said they had spoken to bank
staff in the period before exiting. The implications of these
findings are presented.
Electronic access
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Journal of Services Marketing
Volume 18 · Number 3 · 2004 · pp. 215-223
q Emerald Group Publishing Limited · ISSN 0887-6045
DOI 10.1108/08876040410536512
215
executive readers can be found at the end of
this article
Introduction
The switching model developed by Keaveney
(1995) represents a major step forward in
understanding consumer switching behavior
across a broad spectrum of service providers. The
study of Keaveney (1995) acts as a stimulus to
those who are carrying out research on a specific
sector of the services industry, such as banks.
Gerrard and Cunningham (2000) appraised the
eight-incident model of Keaveney (1995) when
investigating the switching behavior of bank
customers. Their findings were consistent with
Keaveney (1995) in relation to the most influential
switching incidents.
In developing a greater awareness of switching
behavior, researchers have tried to respond to
some of the limitations of past studies. Keaveney
(1995), for example, assumed that all consumers
attached equal weights to each of the incidents
causing consumers to switch between service
providers. Gerrard and Cunningham (2000)
developed a simplified weighting method which
was applied to the various switching incidents that
they created. However, to date, no one has asked
switchers themselves to weight the various
incidents which caused them to switch. As the
respondents in this study were asked to provide
weights, this in itself is a contribution to the
literature.
The purpose of this paper is to develop a model
which identifies the critical incidents that explain
bank switching and the extent to which switching
might be influenced by single or multiple
incidents. In regard to multiple incident switching,
the objective is to establish whether, after applying
the weights quoted by the respondents, the relative
influence of the various switching incidents
changes. A further aim is to establish the extent to
which consumers discuss with bank staff those
issues which are of concern to them before making
the final decision to switch.
An overview of the switching literature
Switching incidents
The pioneering study of Keaveney (1995) created
a model which contained eight switching incidents.
These incidents were pricing, inconvenience, core
service failures, service encounter failures,
employee responses to service failures, attraction
 Consumer switching behavior in the Asian banking market
Philip Gerrard and J. Barton Cunningham
by competitors, ethical problems and involuntary
switching plus seldom mentioned incidents. These
incidents, in overview, can be described as follows:
.
pricing: this category subdivides into high
prices, price increases, unfair pricing practices
and deceptive pricing practices;
.
inconvenience: this category subdivides into
location, opening hours and waiting too long
either for an appointment or for delivery;
.
core service failures: this category subdivides
into mistakes, billing errors and service
catastrophes;
.
service encounter failures: this category
subdivides into uncaring, impolite,
unresponsive or unknowledgeable staff;
.
employee responses to service failures: this
category subdivides into reluctant responses, a
failure to respond or patently negative
responses;
.
attraction by competitors: this category
subdivides into consumers whose responses
focused on the pluses of the service provider
they switched to as opposed to the negatives
relating to the service provider they switched
from;
. ethical problems: this category subdivides into
dishonest behavior, intimidating behavior,
unsafe or unhealthy practices or conflicts of
interest; and
.
involuntary switching and seldom-mentioned
incidents: this category subdivides into
switching because the service provider or
customer had shifted location or the service
provider had changed alliance.
In conducting the above-mentioned study, the
various switching incidents were not weighted.
This aspect of the study is reflective of the initial
service quality studies of Parasuraman et al. (1985,
1988). In their later work (e.g. Parasuraman et al.,
1991), this team of researchers modified their
original model to incorporate component weights,
as provided by respondents. In the present study,
the switching literature will be developed in a way
which parallels the pattern exhibited in the service
quality literature.
Stewart (1998), in a review of what she called
the “exit process in banking”, mentioned four
types of switching incidents: “charges and their
implementation”, “facilities and their availability”,
“provision of information and confidentiality” and
“services issues relating to how customers are
treated”. Gerrard and Cunningham (2000)
identified six incidents which they considered to be
important in gaining an understanding of
switching between banks. These incidents were
labeled inconvenience, service failures, pricing,
unacceptable behavior, attitude or knowledge of
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Volume 18 · Number 3 · 2004 · 215-223
staff, involuntary/seldom mentioned incidents and
attraction by competitors.
Other researchers, such as Lewis (1982), Lewis
and Bingham (1991), Font (1993), Lunt (1993),
Colgate (1994), O’Dea (1995) and Colgate et al.
(1996) have briefly mentioned reasons why their
respondents switched between banks. These
studies generally investigated a range of matters
associated with the banker-customer relationship,
and thus their contribution to the development of
the switching literature is limited.
Single incident/multiple incident switching
Only two research papers were sourced which
quoted a number of incidents which were found to
have influenced consumers to switch between
service providers. Keaveney (1995) noted that
some 45 percent of her respondents who had
switched were influenced by one incident – or, put
another way, some 55 percent switched because of
two or more incidents. Gerrard and Cunningham
(2000) mentioned that just over two-thirds of the
switching decisions of their respondents were
influenced by more than one incident.
Single incident switching between service
providers appears to occur far less often than
multiple incident switching, especially in banking.
Consumers who use certain types of non-bank
service provider, such as car mechanics, are more
likely to switch after a single problem has been
experienced, partly because they are not locked
into a relationship with that service provider.
However, with bank customers, they become
bonded to their bank due to the existence of
account and other contractual relationships
(Gerrard and Doyle, 1990; Laidlaw and Roberts,
1990). This relationship, which begins with a
reference letter, develops as the customer requests
loans and begins to use other services. Many
consumers arrange for their salary to be paid
directly into their bank account by their employer’s
banker. Customers also provide their bank with an
authority to pay their utility and other regular bills
(such as credit card bills, telephone bills and life
assurance premiums) by way of standing order or
direct debit (the texts of Hanson (1987) and
Gerrard and Doyle (1992) explain the distinction
between these two types of payment instruction).
Some customers deposit items for safe keeping
with their bank. Over the years, customers become
progressively more committed to staying with their
bank. Customer discontentment with their bank
may have a negative impact on the complex web
that has sometimes evolved over many years.
Severing the banker-customer relationship
requires the web to be untangled and a new one to
be built with another bank. Some customers, when
considering switching, may say it is not worthwhile
 Consumer switching behavior in the Asian banking market
Philip Gerrard and J. Barton Cunningham
(see Jones et al., 2000, who make reference to
“switching costs” and Colgate and Lang, 2001
who make reference to “apathy” in their respective
investigations of switching barriers), especially if
there has only been a single incident which is
causing concern. If customers become dissatisfied
due to more than one incident, they may have a
stronger desire to switch, even if there are high
switching costs.
Because many bank relationships grow over
time, there are strong grounds for suggesting that
the majority of bank switching, especially with
more mature customers, would be caused by two
or more incidents (i.e. it would be “complex” by
the definition of Keaveney, 1995).
Extent of contact with the “previous” bank
before the switch
Boshoff (1997) reports that, in many instances,
dissatisfied consumers simply do not complain to
those service providers who have caused one or
more problems. The comments of Boshoff (1997)
reflect the experiences of one of the authors who,
for some time, worked in the retail division of one
of the UK’s largest banks. One of the
consequences of consumers not bringing negative
experiences to the attention of the service
providers is that they switch silently. Various
reasons can be suggested as to why silent switching
is so common in the banking industry. One of the
causes of silence may arise because many bank
switching decisions could be strongly influenced
by changes in bank policy. Examples of policy
changes which have a negative impact on
customers are decisions to close certain branches
or to introduce a higher fee structure. These policy
decisions are made at the highest level in banks.
Individuals or groups of individuals are unlikely to
have sufficient clout to get senior executives of
banks to reverse their earlier decisions.
Research method
Research design
A survey was conducted, this being consistent with
the style used in previous switching research. The
survey forms were designed to ensure uniformity
of interpretation and standardization of responses.
Survey form
The survey form that was used had three sections.
The first section contained a definition of bank
switching so that potential respondents would be
able to recognize if they “qualified” as a bank
switcher for the purposes of this study. To qualify as
such, they needed to have switched between two
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different banks, not between branches of the same
bank. They were eligible for this study if they began
a new bank relationship and severed the original
one, or downgraded the original bank to a subsidiary
bank. If someone was already a multiple bank
customer, the new bank needed to become a main
bank. Those who satisfied the definition of being a
bank switcher were asked to describe the reasons
which had caused them to switch. They were then
asked to weight each reason and ensure that the sum
of all the weights added up to 100 percent. A simple
illustration was provided in the instructions to show
how to record the relevant weights.
In the second section, respondents were asked if
they had spoken to the staff of their bank about the
issue(s) that, at the time, was (were) causing them
to consider switching. If contact had been made,
respondents were asked to briefly explain what
they had said, the nature of any response that bank
staff gave and, if a response was received, how
satisfied they were with the response.
Demographic information was sought in the third
section, together with the names of the respondent’s
original bank and the name of the bank to which
they had switched. The latter information was used
to verify that a switch between banks had taken
place, rather than, for example, a transfer between
branches of the same bank.
Sample
A team of surveyors was used to obtain responses.
The team members were tasked with identifying
and surveying adult consumers who had switched
banks in Singapore. The sample was contacted at
various community centers throughout Singapore.
Although the respondents did not create a random
sample, an attempt was made to systematically
target people at different times of the day and
different days of the week. The majority of the
sampling was conducted in the evenings and at the
weekends, times during which most adults are not
working.
For reference purposes, the demographic
characteristics of the respondents were as follows:
48 percent were males and 52 percent were
females; some 12 percent had taken O-levels, 53
percent A-levels and 32 percent had a degree, with
the balance of 3 percent either not having any
O-levels or having a postgraduate qualification.
The age of the respondents ranged from 18 to 65,
with the average being 30 years.
The classification of bank switching incidents
A sorting procedure was used to create the critical
switching incidents. For sorting purposes, it has
been suggested by Cunningham (2001) that those
who have experience in the underlying matter are
best suited to carry out the role of sorter, because
 Consumer switching behavior in the Asian banking market Journal of Services Marketing
Philip Gerrard and J. Barton Cunningham Volume 18 · Number 3 · 2004 · 215-223

they increase the chances of identifying unique
themes. The text of Cunningham (2001) suggests
that, in choosing sorters, it is preferable for either
the researchers themselves to undertake the task,
or some of the respondents, or people who have
experienced the problem being investigated and
who were not sampled. In this study, the
researchers carried out the sorting process as they
fulfilled two of the criteria: not only were they the
researchers but they had also both switched bank
on at least one occasion.
In following the method recommended by
Cunningham (2001), the author, who was based in
Singapore, noted down all the reasons the
respondents quoted as influencing their switching
decision. A copy of these reasons was sent to the
non-Singapore based author. The responses were
sorted into two batches of approximately 600 each.
The authors worked independently in order to
create various switching incidents and classify the
switching reasons under one of the incidents. Once
100 responses from the first batch had been
analyzed, a comparison was made. In this
preliminary phase, there was 85 percent
consistency in the sorting process. The differences
of opinion in the classification were identified and
resolved. Decisions were also made about which
was the most appropriate title to give to each
incident. The remaining 500 responses, which
made up the first batch of survey forms, were
thereafter analyzed. In this part of the analysis
there was 89 percent consistency, and again
discrepancies were resolved. Upon analyzing the
second batch of responses (i.e. the ‘confirmatory’
group), there was 95 percent consistency. The
respective differences were again resolved.
Results
Table I presents the results of the classification of
switching incidents. A seven-incident model is
depicted. Figures from the analysis of the original
set of responses appear in the left-hand section of
Table I, while figures relating to the confirmatory
set are presented in the middle section of Table I.
The results in the right-hand section of Table I
summarize both the original and confirmatory
responses. The pattern illustrated by the two sets
of responses shows a high level of consistency.
Various reasons which respondents indicated had
influenced their switching decision are presented
below.
Service failures: This incident was divided into
two subcategories, namely staff failures and
product failures. Staff failures refers to the
inefficiency, bad attitude, lack of product
knowledge, inflexibility, rudeness and
unfriendliness of staff, staff giving poor investment
advice, providing a poor counter service, being
impersonal, and not managing queues efficiently.
Product failures refers to the offering of an inferior
range of services, being relatively backward in the
bank’s use of technology, having an inadequate
range of unit trusts, lacking well-developed
Internet banking services, not offering debit cards
and the inability to transfer money between banks
using Internet banking.
Pricing: Pricing refers to fee implementation,
increasing bank charges, low interest rates paid on
credit accounts by a former bank, higher interest
rates paid on credit accounts by a new bank and/or
lower loan rates.
Inconvenience: This incident, with regard to
geographical inconvenience, refers to either the
nearest bricks-and-mortar branch or the nearest
ATM being too distant following a job move or a
house move or through the closure of a branch.
With regard to time inconvenience, this incident
refers to shorter opening hours.
Reputation: This incident refers to the integrity
of a bank and its senior executives and the bank’s
perceived financial stability.

Table I Classification of bank switching incidents

Initial responses Confirmatory responses Aggregate responses
(n 5 606) (n 5 589) (n 5 1,195)
N N% W W% N N% W W% N N% W W%
Service failures 400 32.1 198.0 32.7 396 30.3 177.9 30.2 796 31.2 376.0 31.5
Pricing 376 30.2 198.0 32.7 414 31.7 220.9 37.5 790 30.9 418.8 35.0
Inconvenience 346 27.8 165.6 27.3 330 25.2 143.6 24.4 676 26.5 309.2 25.9
Reputation 53 4.2 17.1 2.8 85 6.5 21.3 3.6 138 5.4 38.4 3.2
Promotions 41 3.3 10.6 1.7 48 3.7 11.6 2.0 89 3.5 22.2 1.9
Involuntary 19 1.5 13.3 2.2 29 2.2 12.3 2.1 48 1.9 25.6 2.1
Recommendations 11 0.9 3.4 0.6 6 0.4 1.4 0.2 17 0.6 4.8 0.4
Total 1,246 100.0 606.0 100.0 1,308 100.0 589.0 100.0 2,554 100.0 1,195.0 100.0
Spoke to bank prior to switching 40 6.6 47 8.0 87 7.3
Notes: N is the number of respondents who mentioned each respective incident; W is N after being adjusted for the weighting the respondents indicated

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Philip Gerrard and J. Barton Cunningham Volume 18 · Number 3 · 2004 · 215-223

Promotion: This incident, in the context of
switching, refers to the various offers banks make
to consumers in an attempt to attract new accounts
and other banking business. Inducements may
take the form of free gifts (such as mobile
telephones) or lucky draws (the first prizes for
which may be upmarket cars or condominia).
Involuntary switching: This incident primarily
refers to those consumers who, having changed
job, are obliged to open an account with the bank
at which their new employer maintains its main or
only bank relationship.
Recommendations of others: This incident refers
to the influence of family, friends or fellow
employees, whose comments have some impact on
a bank switching decision.
Single incident switching (simple switching)
Table II shows the number and percentage of
single incidents causing respondents to switch
between banks. About one third of respondents
who had switched for a single reason indicated a
service failure or a pricing problem. Just over a
quarter indicated they had switched due to relative
inconvenience, and the balance of 6.7 percent was
attributed to involuntary switching, promotions
and reputation.
Multiple incident switching (complex
switching)
The results relating to multiple incident (complex)
switching are presented in respect of two, three and
four/five switching incidents. Some 76 percent of
switching was found to be complex.
With the two-incident results, service failures
and pricing were mentioned by about one third of
the respondents, inconvenience by about a
quarter, while the other four types accounted for
some 7 percent of incidents. Once the incidents
had been weighted, some shifting of the figures
resulted. Pricing assumed a more influential role,
while service failures and inconvenience appeared
to be slightly less influential. The less frequently
mentioned incidents continued to be of low
influence.
The percentage of respondents who switched
due to three incidents mentioned service failures,
pricing and inconvenience as being almost equally
influential, with the percentage responses being in
the range 28.8-30.0. Pricing again was seen to have
a stronger influence after the various incidents had
been weighted, while all the other incidents
became less influential.
The profile exhibited by four/five incident
switching shows some differences in comparison
with single, double or treble incident switching,
after weights had been applied. Pricing became far
more dominant, inconvenience assumed a slightly
stronger influence, while service failures were seen
to be less influential, as were all the less frequently
mentioned incidents, with the exception of
reputation.
Extent of contact with the bank before
switching
Table I shows that some 6.6 percent of the original
group of respondents indicated that they had
spoken to bank staff prior to switching, while in the
confirmatory group some 8.0 percent had spoken
to bank staff. The overall percentage was 7.3
percent. Some respondents indicated voluntarily
that there was no point in speaking to bank staff as
they would be told that the problem which had had
the strongest influence on their decision to switch
had arisen through a change in bank policy and, as
individuals, neither they (i.e. the bank staff) nor

Table II Simple and complex bank switching

Single
incident Two incidents Three incidents Four/five incidents
(n 5 284) (n 5 523) (n 5 338) (n 5 50)
N N% N N% W W% N N% W W% N N% W W%
Service failures 97 34.2 353 33.7 172.1 32.9 299 29.5 97.5 28.8 47 22.4 9.4 18.8
Pricing 91 32.0 347 33.2 188.8 36.1 305 30.0 120.2 35.6 47 22.4 18.9 37.8
Inconvenience 77 27.1 260 24.9 126.6 24.2 292 28.8 92.6 27.4 47 22.4 13.0 26.0
Involuntary 13 4.6 18 1.7 9.3 1.8 13 1.3 3.0 0.9 4 1.9 0.3 0.6
Promotions 4 1.4 29 2.8 10.2 1.9 30 3.0 4.9 1.4 26 12.3 3.0 6.0
Reputation 2 0.7 35 3.3 14.1 2.7 66 6.5 17.5 5.2 35 16.7 4.8 9.6
Recommendation 0 0.0 4 0.4 1.9 0.4 9 0.9 2.3 0.7 4 1.9 0.6 1.2
Total 284 100.0 1,046 100.0 523 100.0 1,014 100.0 338 100.0 210 100.0 50 100.0
Spoke to bank prior to
switching 19 6.6 40 7.6 26 7.6 2 4.9
Notes: N is the number of respondents who mentioned the respective incidents; W is N after being adjusted for the weighting the respondents indicated;
for single incident switching, N = W and N% = W%, and therefore figures after weighting are not provided; there were 40 respondents who stated four
incidents, ten who stated five incidents, with no one stating six or seven incidents

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Philip Gerrard and J. Barton Cunningham
the customer felt they were in a position to get the
policy decision reversed.
Managerial implications
The relevance of the findings of this bank-specific
study may usefully be considered in the context of
the findings of the general switching study
conducted by Keaveney (1995) in a North
American setting. In making a comparison of the
separate sets of results, two common features are
observed. First, in both studies, the majority of
switching was found to be influenced by more than
one incident, and second, the major influences of
switching were found to be service failures, pricing
and inconvenience. It can be said that the reasons
which influence switching decisions are relatively
similar in Singapore and North America, i.e. the
switching behavior of consumers is often provoked
by more than one incident and usually involves
service failures, pricing and inconvenience.
Switching which results from more than one
incident appears to be very prevalent in the
banking industry. The finding that a higher
percentage of switching in the banking sector in
comparison with other service industries is
multiple-incident is not unexpected, given the
relative complexity of many banker-customer
relationships. It is easier for consumers to switch
between service providers where there is a simple
relationship in existence. For example, if a garage
mechanic does not service a car properly, it is very
easy for consumers to switch to a new garage.
There are few, if any, costs associated with
switching between this type of service provider. In
contrast, many bank customers in contrast tend to
use a range of services, and consequently it takes
time to make alternative arrangements. For
example, a customer might have a portfolio of
investments consisting of 50 equities and bonds for
which the dividends or interest receipts are paid
into his/her bank. Switching banks requires
alternative payment instructions to be sent to 50
different organizations, a tedious task when added
to all the other matters which need to be dealt with.
Banks could possibly set out to develop wide-
ranging relationships with their customers in an
attempt to make the switching process more
onerous. A consequence is that, even if customers
experience a single non-trivial problem with their
bank, the thought of closing off the relationship
and setting up a new one may be viewed with
horror. Such consumers might say to themselves
“one strike, I will forgive; two strikes, I may not
forgive; and three strikes, I will definitely leave”. In
other words, experiencing a single problem, even a
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Volume 18 · Number 3 · 2004 · 215-223
very annoying one, appears to cause only a
minority of dissatisfied customers to switch.
Banks really ought not to rely on onerous
obligations associated with switching in an attempt
to preserve their customer base. Doing so could
have numerous downsides resulting, amongst
other things, from the negative word of mouth of
disgruntled customers. Instead, positive efforts
should be made by banks to minimize the
incidence of problems which may cause customers
to consider switching. More attention ought to be
placed on those incidents which are the stronger
influences of switching.
The above comments imply that banks need to
simultaneously place greater emphasis on the
management of their relationships with their
customers across three key areas. This involves
ensuring the “service”, as defined in this study, is
as good as or exceeds customer expectations, their
prices are competitive, and they remain
convenient. Managing each of these effectively
should reduce the extent to which switching takes
place, not just in banking but across the services
industry in general. While commenting on these
three key service areas and their implications for
managers in the banking industry, the authors
remained mindful of the wider range of service
providers upon which Keaveney (1995) based her
North American study.
The service incident, as defined in this study,
was seen to have both a product and a people
component. Banks are different from most other
types of service provider because many of them
offer a broad range of services. Many consumers
believe that banks offer the same range of services,
but the findings in this study and that of Stewart
(1998) show that is not always so. Some banks are
prohibited by their constitution from offering
certain types of financial product; other banks may
be less innovative. There is some evidence of the
latter in respect of Internet banking. Innovative
banks have been seen to have a competitive
advantage over laggards, and customers who are
techno-savvy and techno-seekers will be attracted
to the more progressive banks which offer a higher
quality Internet provision. Banks which are
laggards cannot quickly offer this delivery method,
as developing an Internet banking operation
requires a massive capital outlay and a long lead-in
time.
While products are one feature of the service,
people are another. There is thus a need to
consider staff, and to do so in respect of their
relative banking knowledge and the way they
conduct themselves when serving customers. In
this aspect of their service, banks need to spend
time and money on staff training, not merely in
respect of inculcating product knowledge, but also
 Consumer switching behavior in the Asian banking market
Philip Gerrard and J. Barton Cunningham
in training staff to serve customers in appropriate
ways at all times. Product knowledge may be far
easier for staff to acquire in comparison with
developing the “right” personal skills.
Switching which is influenced by pricing seems
to be at much higher levels in banking compared
with the service industry in general. This is
attributed to the fact that, across the broader
services industry, consumers merely pay a fee for
the service given (i.e. they pay a fee for their car to
be serviced, etc.). Pricing in the context of banking
has other components. Banks charge not only fees
for the services they provide, but impose interest
charges on loans that have been given and pay
interest on certain types of accounts. Hence,
pricing has a wider meaning in the context of
banking. It is not just a case of banks having to be
competitive in relation to fees charged for services
rendered: competitiveness also applies to interest
rates charged and paid.
Switching which is influenced by inconvenience
has two facets: geographical inconvenience and
time inconvenience. As regards geographical
inconvenience, many retail banks are in the process
of rationalizing their branch networks, for example
closing some branches which they identify as being
unprofitable. Such branch closures have the
impact of reducing geographical convenience for
those customers who want their banking services
to be delivered on a face-to-face basis. Customers
changing jobs may also experience geographical
inconvenience if, after moving to a new place of
work, there is no bricks-and-mortar branch
nearby. Banks, though, cannot have branches
everywhere.
Bank management has tried to minimize the
impact of inconvenience by introducing various
types of self-service technology over the past 40
years. Self-service technology initially took the
form of ATMs, while more recently phone banking
and Internet banking have been made available.
These self-service techniques offer various
advantages to customers in terms of geographical
convenience and time convenience. They remain
open 24 hours per day, 365 days per year, and
ATMs need not be sited through the wall of the
owning bank but can be located at supermarkets,
railway stations, airports, etc. Customers, it is
accepted, still have to go out of their homes or
offices to access an ATM. Customers registered as
phone bank users or Internet banking users enjoy
far greater geographical convenience. If bank
management can convert a higher proportion of
their customers into phone and/or Internet bank
users, switching due to relative inconvenience
ought to be considerably reduced. Once registered,
there should be no reason for customers to
complain that the bank’s opening hours do not suit
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Volume 18 · Number 3 · 2004 · 215-223
them, or that the bank does not have a convenient
branch.
This study adds to the literature by illustrating
the benefits of weighting the importance of various
switching incidents. The findings show that, upon
applying the weights which respondents gave, the
relative importance of the incidents to a switching
decision changed. In general, pricing became more
influential and the other incidents less influential.
The implication for management is that they
should not merely rely on the frequency with
which each type of problem influences a switching
decision, but the intensity of that problem.
A final implication for management relates to
what happens after a customer has made a decision
to switch banks. It seems that few consumers make
bank staff aware of the problems they have
experienced. If banks could encourage customers
to air their opinions, banks would be better placed
to address the problems (Fornell and Wernerfelt,
1987). This could result not only in higher
retention rates, but also a more loyal pool of
customers. Even if dissatisfied customers are
adamant that they will switch, the bank will have
acquired valuable information. Such information
could be used by management to implement
policies which aim to reduce future levels of
switching.
Conclusions
Pricing, service failures and inconvenience appear
to be the dominant types of incident which
influence consumers in a bank switching decision.
These incidents were found to account for about
90 percent of bank switching, irrespective of
whether the incidents were weighted or not, or
whether the switching was caused by a single
incident or multiple incidents.
After applying the weights to the reasons which
respondents indicated had influenced their
switching decision, pricing was found to have a
more influential role, while service failures,
inconvenience and infrequently mentioned
incidents were seen to be less influential.
About a quarter of bank switching resulted from
a single incident, the balance being attributed to
multiple incidents. The high percentage of
multiple incident switching is believed to be due to
the complex web that develops between banker
and customer as the relationship between them
grows over the years. This finding implies that the
majority of consumers will only switch if they have
experienced more than one incident. The costs
incidental to switching prior to that may be
considered to be too high.
 Consumer switching behavior in the Asian banking market
Philip Gerrard and J. Barton Cunningham
More than 90 percent of respondents chose not
to approach bank staff to discuss the underlying
matters prior to switching. The reason why the vast
majority of respondents chose to remain silent is
attributed to their belief that they would be wasting
their own time if they “voiced”. The setting up of a
scheme which seeks feedback from discontented
customers may prove to be helpful to banks
wishing to retain a proportion of those customers
who would otherwise have defected.
Further studies
The findings show that certain incidents become
more influential and some less influential, based
on the weights that people apply to them. The
results after weighting are believed to provide a
better awareness of the influence each incident has
on a bank switching decision. An awareness of the
more influential components allows researchers
and bank managers to make suggestions which
focus on more important aspects of the banker-
customer relationship. Further studies could
usefully be conducted using other members of the
services sector in order to establish the extent to
which weighting changes the intensity of each
switching incident.
Banks seem to use pricing as a policy to attract
new customers (e.g. running campaigns which
illustrate that the interest rate they are charging on
mortgages is lower than that of competitors). At
the same time, some of same banks which have
lowered their loan rates may start imposing
minimum charges on consumers or increase fee
rates, and these changes appear to have exactly the
opposite effect (i.e. they encourage outward
switching and discourage inward switching or new
account creation). The overall impact of bank
pricing and the behavioral responses of customers
to price changes arising from policy-making
decisions is worthy of study. Pricing, it appears, is
double edged.
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Executive summary and implications for
managers and executives
This summary has been provided to allow managers
and executives a rapid appreciation of the content of
this article. Those with a particular interest in the topic
covered may then read the article in toto to take
advantage of the more comprehensive description of the
research undertaken and its results to get the full benefit
of the material present.
Gerrard and Cunningham identify the types of
incident that cause customers to switch between
banks in Singapore, customers’ weighting of each
 Consumer switching behavior in the Asian banking market
Philip Gerrard and J. Barton Cunningham
incident on their decision to switch, whether one
or several incidents affected the decision to switch,
and the extent to which people who switch explain
to their bank, before they leave, the problems they
have faced.
Multiple reasons for switching
The survey reveals that about three-quarters of
people who switched banks did so for more than
one reason. This is probably because, over the
years, customers become increasingly bonded to
their bank through the existence of account and
other contractual relationships. They tend to use a
range of services, which it would be time-
consuming and inconvenient to change. It is easier
for customers to switch between providers where
there is only a simple relationship. For example, if
a garage mechanic does not service a car properly,
customers can easily switch to another garage next
time.
Banks should not, however, rely on this in order
to keep up their numbers of customers. For one
reason, disgruntled customers may spread negative
comments about the bank to family and friends.
Banks should try to prevent the kinds of problems
that cause people to consider switching in the first
place. Gerrard and Cunningham reveal that these
are service failures, pricing and inconvenience –
factors, which, together, account for 90 per cent of
bank switching.
Service failures
Service failures include product and staff failures.
Product failures could be, for example, offering an
inferior range of services, being relatively
backward in using new technology, having an
inadequate range of unit trusts, lacking well
developed internet banking services and not
offering debit cards.
Staff failures could cover staff inefficiency, bad
attitudes, lack of product knowledge, inflexibility,
giving poor advice and not efficiently managing
queues. To correct such problems, banks may need
to spend more time and money on staff training.
Pricing
Gerrard and Cunningham reveal that pricing
seems to influence switching behaviour among
bank customers more than customers of other
services. A garage customer, for example, simply
pays a fee for his or her car to be serviced. Banks,
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Journal of Services Marketing
Volume 18 · Number 3 · 2004 · 215-223
in contrast, not only charge fees for the services
they provide, but also impose charges on loans
they have made and pay interest on certain types of
account. Pricing therefore has a wider meaning in
the context of banking.
Inconvenience
Geographical inconvenience refers to either the
nearest bank branch or nearest “hole in the wall”
being too distant, perhaps because a branch has
been closed or the consumer has moved house or
job. Time inconvenience refers to shorter opening
hours.
Although many banks have reduced their
number of branches, they have often tried to
minimize the impact of inconvenience by
introducing telephone banking, Internet banking
and more ATMs. If bank management can convert
a higher proportion of their customers into
Internet- and telephone-banking customers,
switching because of relative inconvenience ought
to fall.
Customer weightings
Gerrard and Cunningham reveal that, when
applying the weighting that the survey respondents
gave to the various factors that caused them to
switch banks, the relative importance of the
incidents to a switching decision changed. Pricing
generally became more influential and the other
factors less so.
Do people who switch explain the reasons to
their bank?
The survey shows that fewer than 10 per cent of
customers who decide to switch approach bank
staff to discuss the underlying matters before
switching. Most of the rest believe that they would
be wasting their time raising the matters with their
bank.
Banks that can encourage customers to air their
opinions will be better placed to solve the
problems. This will help to keep customers loyal.
Even if dissatisfied customers are adamant that
they will switch, the bank will have acquired
valuable information that could reduce future
levels of switching.
(A précis of the article “Consumer switching behavior
in the Asian banking market”. Supplied by Marketing
Consultants for Emerald.)