Causal Factors of Customer Loyalty in Sri Lankan Banks

Abstract

Aim: This study investigates the key factors influencing customer loyalty in the banking sector of Sri Lanka.Methodology: The research adopted a quantitative methodology using a survey design. The sample comprised 200 banking customers from the Colombo district, selected through random sampling. Data were collected via a structured questionnaire and analyzed using multiple regression in SPSS.Findings: The results revealed four factors as significant drivers of customer loyalty - perceived quality, corporate image, trust, and perceived value. However, switching costs were found to impact loyalty negatively. Interestingly, customer satisfaction showed no significant relationship. The model explained approximately 66% of the variance in loyalty.Implications: The findings provide valuable insights for academic literature on loyalty antecedents in banking and have practical implications for managers seeking to improve customer retention. Enhancing positive drivers is recommended, while high switching costs should be cautiously implemented to avoid alienating customers.Originality: This study makes an essential contextual contribution as existing knowledge on customer loyalty in Sri Lanka's banking sector is limited. The findings advance understanding by revealing how established determinants operate in this context, with unexpected results for satisfaction. The research provides a springboard to address gaps through expanded sampling, longitudinal approaches, and qualitative research.