DETERMINANT FACTORS FOR BANK SELECTION DECISION IN A CUSTOMERS PERSPECTIVE AND ITS IMPACT ON CUSTOMERS LOYALTY: EVIDENCE FROM SELECTED ETHIOPIAN COMMERCIAL BANKS

Abstract

Customer choice of bank is an important element of banking strategy in today’s increasingly competitive environment. Bank management must identify and improve upon factors that can increase customer retention.To plan a suitable marketing strategy,to keep existing customers and for attracting new customers, commercial banks need to identify the criteria on which customers determine their bank selection decision. Hence, the purpose of this study is to examine the significance of bank selection criteria and to present the most determinant factor influencing customers in respect of selecting a bank by customer in Ethiopia.Using responses given by 101 customers,both quantitative and qualitative approach is employed in the analysis. Six factors including 38 attributes on 5 point Likert scale wereused to determine the criteria of selecting bank. A non-probability convenience sampling was used and data was factor analyzed to reduce the number of total variables in to manageable way.The findings revealed that the chief factors determining customers’bank selection are:the speed of services,the extent of the branch network,the location of branches,Forex resources influence as fundamental determinants of bank selection,among others. On the reverse price,innovation, financial performance,e-banking are the least factors that customers consider when they make a bank selection. Given this findings, It is recommended that there should be frequent marketing research by the banks to monitor and evaluate the ever changing customer perspectives in order to develop products or services to meet the current tastes of their customers