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APJBA
11,1 Customer disloyalty in retail
banking services: attitudinal and
behavioural dimensions
46 Shakti Bodh Bhatnagar
Department of Business Administration, Aligarh Muslim University,
Received 1 August 2018
Revised 18 October 2018 Aligarh, India
Accepted 20 November 2018
Jitendra Kumar Mishra
MIME, Bangalore, Bengaluru, India, and
Asif Ali Syed
Aligarh Muslim University, Aligarh, India

Abstract
Purpose – The literature on customer behaviour has attracted significant attention towards customer
loyalty; however, customer disloyalty has not been adequately studied. The purpose of this paper is to
identify factors leading to customer disloyalty and develop a comprehensive framework for understanding
various dimensions of customer disloyalty in retail banking services.
Design/methodology/approach – The study is descriptive in nature. Variables associated with customer
disloyalty were identified from literature and subsequently factor analysis has been applied to derive
the significant factors leading to customer disloyalty. Data were collected through a structured
questionnaire administered to 357 retail banking customers. EFA and CFA have been employed to
determine relevant factors.
Findings – This study found that customer disloyalty comprises of, both, attitudinal and behavioural
components. Further, the study revealed three factors – unfair practices, unfulfilled services and poor
interaction leading to behavioural disloyalty and negative image leading to attitudinal disloyalty.
Surprisingly, the study found that pricing and competitor’s attraction do not affect, both, attitudinal
disloyalty and behavioural disloyalty.
Research limitations/implications – The study contributes to customer behaviour literature by
understanding customer disloyalty as a distinct concept in comparison to much prevalent customer
switching. It addition, this study empirically identified factors leading to behavioural disloyalty and
attitudinal disloyalty.
Originality/value – The originality lies in that fact that it is the only empirical study which has studied
customer disloyalty through attitudinal disloyalty lenses. Subsequently, it has also attempted to fill the gap in
available literature by studying the relationship between attitudinal disloyalty and behavioural disloyalty.
Keywords Retail banking, Customer relationship management, Customer disloyalty,
Loyalty-repressing factors
Paper type Research paper

Introduction
Service marketing literature lays equal emphasis on “having customers” as “acquiring
customers” (Berry, 1980). Within service marketing, retail banking is a typical service industry
wherein customers become profitable only after a certain length of relationship (Reichheld,
1996). In addition, banking services being inherently relational, contract based and usually
purchased for long term (Nordman, 2004), thus customer loyalty assumes even higher
importance in this context. Benefits of customer loyalty have been well documented in previous
literature; retaining customers is less costly than acquiring new ones (Rosenberg and Czepiel,
Asia-Pacific Journal of Business
Administration 1984; File and Prince, 1995; Evans and Laskin, 1994; Day, 1999), word of mouth (WOM)
Vol. 11 No. 1, 2019
pp. 46-67
(Reichheld and Sasser, 1990; Dick and Basu, 1994; Gremler and Brown, 1999; Shoemaker and
© Emerald Publishing Limited
1757-4323
Lewis, 1999) leads to higher revenues and more profits (Reichheld, 1993; Schlesinger and
DOI 10.1108/APJBA-08-2018-0124 Heskett, 1991; Clark and Payne, 1994; Reichheld and Sasser, 1990; Duboff and Sherer, 1997;
Ennew and Binks, 1996; Vandermerwe, 2000) and loyalty leads to competitive advantages Customer
(Bowen and Chen, 2001; Yi and Jeon, 2003; Allaway et al., 2006). With these proven benefits of disloyalty in
customer loyalty, it is imperative for banks to retain customers which can be ensured both retail banking
ways: by strengthening ties with loyal customers and reducing customer disloyalty as
explained in the previous literature; and switching (Keaveney, 1995; Mittal and Lassar, 1998; services
Bansal and Taylor, 1999; Athanassopoulos, 2000; Wieringa and Verhoef, 2007) customer exit
(Bolton, 1998; Stewart, 1998), customer defection (Garland, 2002), churn (Keaveney and 47
Parthasarathy, 2001) or by creating switching barriers to retain them (Ghazali et al., 2016).
Concluding, understanding customer disloyalty is critical to understand customer loyalty
in totality (Pandey and Chawla, 2016), leading to the development of specific customer
retention strategies.
Understanding why customers switch is important for firms to create a zero defection
culture (Reichheld and Sasser, 1990), still “many CEOs have little insight into the causes of
their customers’ switching behaviour because they do not measure customer defections or
know why customers are defecting” (Scanlan and McPhail, 2000). Sonnenberg (1990) stated
that customers who leave a company because they have been dissatisfied with the service
are believed to tell nine to ten people about their experience. Therefore, investigating the
process of customer defection and the root causes behind the decision of customers to exit is
of utmost importance for companies. Customer switching in service environment means
customer forsaking one service provider for another (Garland, 2002). Customer breaking all
ties and moving to a different service provider is termed as full switching; on the other hand,
customer switching only a part of services to another service provider is termed as partial
switching, and they are also called “dwellers” as they do not close their old accounts while
they open new accounts (White and Yanamandram, 2004).
In the existing customer disloyalty literature, customer disloyalty has been defined as the
behavioural outcome of breaking ties and moving to a new service provider. However, it has
not been further studied in terms of behavioural and attitudinal components. Scientific
literature indicates that the distinction between behavioural and attitudinal dimension is
necessary in disloyalty explanation (Zikienė, 2015). Existing literature shows evidence of
attitudinal dimension in disloyalty; however, early studies on customer switching focused
on the influence of two attitude variables, namely satisfaction and service quality, on
customer switching intention (Anderson and Sullivan, 1993). Unfavourable attitudinal view
of customer, termed as switching intentions, has been studied in the context of mobile
telecommunication (Thaichon and Quach, 2016). Williams et al. (2011) compared between the
customer attitudes of stayers and switchers in business-to-business (B2B) services using
data from a Fortune 100 company. In the context of migration theory, Bansal et al. (2005)
explained migrants’ attitudes towards migration influence the migration decision, where a
person holding a favourable attitude towards migrating will be more likely to migrate,
treating attitude as an individual characteristic that impacts switching.
Conclusively, the existing literature on attitudinal dimension of switching is limited to
the impact of attitudes on switching behaviour; however, the impact of factors affecting
attitudes and, in turn, impacting attitudinal disloyalty, in other words antecedents to
attitudinal disloyalty, has been overlooked. This study attempts to fill this void in the
service disloyalty domain. More importantly, the concept of attitudinal disloyalty has been
explored by empirically verifying the link between attitudinal and behavioural disloyalty.
This study also contributes to the service marketing literature sphere by empirically
verifying factors leading to behavioural disloyalty and attitudinal disloyalty. Last, but not
the least, this study explores the impact of behavioural disloyalty factors on attitudinal
disloyalty and vice versa.
India’s banking industry is on the cusp of a major transformation, with new banking
licences expected to bring in more players in an already competitive environment.
APJBA In addition, the slowdown in economy continues to increase the pressure on banks’
11,1 profitability (E&Y, 2014). In this context, holding on to customer becomes critical for the
banking institutions. This study provides insights into customer disloyalty, explained
through attitudinal and behavioural component which will help the policy makers to devise
the retention strategies.

48 Theoretical background
Customer disloyalty
In the context of this study, customer disloyalty has been defined as outcome comprising
“behavioural and/or attitudinal disloyal behaviour” leading to breaking of ties. Disloyalty is
different than switching, as switching is primarily a behavioural outcome leading to
switching of service provider, whereas disloyalty is a combination of attitudinal and
behavioural dimensions (Rowley and Dawes, 2000). Switching is defined as a process or
decision to end the relationship with one service provider, whatever reason may be, by stop
purchasing products and services and establishing same relationship with another provider
of same category. Previous studies on customer switching lay emphasis on the behavioural
outcome of disloyalty, like Keaveney (1995) defined switching behaviour as when customers
leave their original service provider in favour of service from another, with the original
provider losing future profits and bearing the cost of acquiring new customers. Customer
switching has been studied in the service marketing literature in the context of retail
banking in the past. Stewart (1998) explained the process of customer exit; Colgate and Lang
(2001) investigated the relevance of switching barriers in banking. Keaveney (1995) was the
first researcher who attempted to understand customer switching through the critical
incident technique in multi industry context. Naumann et al. (2010) is one of the recent
studies based on the grounded theory discovering motives for switching. Chuang and Tai
(2016) explained the evolution of switching studies. They divided switching studies into
three stages: model exploration, model formation and model elaboration. Keaveny’s (1995)
study was one of the major studies in the model exploration stage. Before this time studies
mainly focused on the antecedents of customer switching. Keaveney’s (1995) study carried
out in the context of 45 different studies identified more than 800 critical behaviours causing
customer to switch yielding eight factors: core service failure, failed service encounters,
response to failed service, price, inconvenience, ethical problems, competition and
involuntary switching, which lead to these 800 critical behaviours. This study served
as a base for future studies on customer switching; (Roos, 1999a; Ganesh et al., 2000;
Keaveney and Parthasarathy, 2001). Model formation stage involved the introduction of
social or psychological variables into the existing studies. Bansal and Taylor (1999) through
the theory of planned behaviour (TPB), investigated the relationship between two variables:
service performance and switching cost and three determinants; attitude, subjective norm
and behavioural control. This was one the major studies in this phase and numerous studies
have tried to expand this work (Bansal and Taylor, 2002; Bansal et al., 2004, 2005;
Antón et al., 2007). Under the model elaboration phase, studies have attempted to elaborate
the switching model by applying it to different context and with different parameters
(Wieringa and Verhoef, 2007; Eshghi et al., 2007; Maicas et al., 2009; Shin and Kim, 2008;
Malhotra, 2013).
In addition to the model formation and elaboration, the process of relationship ending
has also received considerable attention in the literature. The process of ending a
relationship has been studied in B2B as well as business-to-consumer (B2C) contexts.
Since the present study is in the B2C domain, it has focused on this area only. Switching is
not a static phenomenon; in fact, it is a dynamic one. Customers over a period of time
evaluate the services and then arrive at a decision of switching (Bejou and Palmer, 1998;
Hocutt, 1998; Stewart, 1998). Also, the factors affecting switching vary from industry to
industry (Lovelock, 1983; Zeithaml et al., 1993; Keaveney, 1995). According to Stewart’s Customer
(1998) model of customer exit in the retail banking, the exit process starts with the disloyalty in
perception of a problem, leading the customer – who is engaging in efforts to resolve the retail banking
problem – to experience emotions. The catalytic switching model of Roos (1999a, b) on
service relationships in the supermarket revealed that the switching path is divided into a services
trigger, an initial state, a process and an outcome. Coulter and Ligas (2000) advocated three
stages that lead to exit in service relationships: the dissolution, exit and post-dissolution 49
stages. To summarise, customer switching literature is rich; however, the studies have
focused primarily on behavioural disloyalty.
Attitudinal disloyalty component has been scantly researched and is limited to attitudes
impacting switching intentions. Choosing to switch to new service provider is driven by
some motivational factors or variables like attitude or customer’s own opinion of the service
provider (Katono, 2013). Attitude can also be explained as tendency of a customer’s
disposition for the service provider – if customer is negatively inclined, then he is less likely
to stay (Dimitriades, 2006; Katono, 2013). In the context of migration theory, attitude
towards migration influences migration decision (Bansal et al., 2005). There is still a need to
understand the behavioural pattern and attitude of customer, both, from the perspective of
switching (Chadha and Bhandari, 2014). Conclusively, it is important to understand
customer disloyalty (both behavioural and attitudinal disloyalty) to understand the disloyal
behaviour of customers more closely. This study aims to fill this theoretical void in existing
customer disloyalty research domain.

Loyalty repressing factors

“Loyalty repressing factors cannot be considered as direct opposites of loyalty supporting
factors. While loyalty-supporting factors have to exist in every relationship in order for it
to continue, loyalty repressing factors are not necessary in a relationship and from a
management point of view doesn’t exist at all” (Nordman, 2004). Factors that support
loyalty and are perceived as positive are called dedication promoting. Factors that
support loyalty by causing constraints will have a negative effect on attitude, but will
have a short-term positive effect on loyalty. However, a long-term negative effect on
attitude will ultimately also have a negative effect on behaviour and, in turn, behavioural
loyalty. Nordman (2004) suggested that repressing factors cannot be divided in this
manner. She divided loyalty-repressing factors into two parts – first, factors that have a
primary effect (negative) on attitude or as considered attitudinal disloyalty in this study,
and then the ones that have a direct negative effect on behaviour (triggers) or as
considered behavioural disloyalty. Roos (1999b) suggested that the term “trigger” has
been used to denote factors that initiate a switching process. These triggers are different
from the factors that have a negative effect on attitudes. Switching of banks could be
because of multiple factors rather than one factor alone and the composition could be
complex (Clemes et al., 2007; Colgate and Hedge, 2001).
Rust and Zahorik (1993) in their study on customer switching in the banking industry
reported that customer switching is related to perceptions of quality. Crosby and Stephens
(1987) found that customer switching is related to overall dissatisfaction in the Insurance
industry. Kelley et al. (1993) found that customer switching is related to service encounter
failures in retail stores. In a personalised type of services like health care services, technical
quality plays a greater role in switching. In case of standardized services, like in car repair
services, functional quality plays a significant role in taking decision to switch over
(Mittal and Lassar, 1998). According to Bolton (1998), cumulative satisfaction influences
duration times indirectly as well as directly. Customers form expectation about the
value of service. This value of service is governed by cumulative satisfaction over the past
duration of the length of relationship and gets continuously updated by new information.
APJBA Customers who have a longer relationship with the service provider weigh their cumulative
11,1 satisfaction heavier. And the decision of exit is not taken at once but it is a result of the
accumulation of dissatisfaction over a period of time. One occasion of dissatisfaction may
not be strong enough to cause exit, but it could be when customer remembers previous
incidences of service failure (Stewart, 1998). According to Hocutt (1998) relationship
dissolution model, with an increase in commitment, the intentions to be in a relationship
50 increase and vice versa. In order to have relationship continuity, service provider may
compensate loss in one factor with improvement in the other. Naumann et al. (2010)
classified the causes of customers’ switching into push and pull factors which assert poor
value delivery by the supplier, service failure, unmet or disconfirmed expectations,
poor complaint handling or high perceived prices as the push factors, while potential
service improvement, reputation, image, experience of the alternative provider, and/or a
lower price were categorised under the pull factors. Between push and pull factors, research
findings indicate that pull factors had a much stronger influence than push factors on
repurchase intent (Naumann et al., 2010; Bansal et al., 2005). From the attitudinal aspect,
Bansal et al.’s (2005) research suggested attitude as a part of mooring variable which
moderates the relationship between push-pull factors and switching.
Literature review clearly suggests that disloyalty has been largely studied through the
behavioural disloyalty lenses. Second, existing literature is scant on attitudinal disloyalty
and subsequently its antecedents. Third, relationship between attitudinal and behavioural
disloyalty has not been explored empirically. In order to fill these gaps in the existing
literature, this study attempts to identify loyalty-repressing factors that cause disloyalty by
negatively affecting attitudes, and factors that act as triggers of disloyalty; to study the
relationship between loyalty-repressing factors having a negative effect on attitudes, and
attitudinal and behavioural disloyalty; to study the relationship between loyalty-repressing
factors that act as triggers of disloyal behaviour, and attitudinal and behavioural disloyalty
and to study the relationship between attitudinal and behavioural disloyalty towards the
selected banks for various services in India.

Hypothesis formulation
Customer loyalty has been studied for long as a single measure. Jacoby and Chestnut (1978)
clearly indicated in their study that most of the earlier studies have been performed in
consumer goods and loyalty was measured in behavioural terms. Day (1969) was one of the
first scholars who questioned behavioural measure alone to predict loyalty. He noted that
“there is more to brand loyalty than just consistent buying of the same brand, attitudes, for
instance”. Jacoby (1971) stated that repeat purchase behaviour is “a necessary but non-
sufficient condition for brand loyalty”. Dick and Basu (1994) suggested that behavioural
measures only measure the outcome and not the reasons for purchase or the factors which
influence choices. Attitudinal dimension was then added to behavioural measures to
measure loyalty as it was argued by researchers that in order to fully understand the
concept of loyalty, it must be measured as a combination of attitudinal loyalty and
behavioural loyalty (Day, 1969; Lutz and Winn, 1974; Snyder, 1984). Dick and Basu (1994)
too developed a framework which explained customer loyalty by combining both
behavioural and attitudinal measures. They suggested that loyalty is a function of both
repeat purchases and relative attitude. Relative attitude, he suggested, is understood as
attitude strength and attitudinal differentiation. Baldinger and Rubinson (1996) proposed a
framework which consists of groups depending upon the extent of behavioural and
attitudinal loyalty. As per his framework, customers who are genuinely loyal in terms of
both behavioural and attitudinal loyalty are termed as real loyals. Role of attitudes in
switching can be understood from TPB which is the extension of the theory of reasoned
action (TRA). Behavioural intentions can be understood by exploring how attitudes
influence behaviours (Ajzen, 1991). TPB suggests that if an individual believes that the Customer
outcome of switching is going to be positive, then the individual will have positive attitude disloyalty in
towards switching. TPB is an extended form of TRA (Ajzen, 1991); the latter suggests that retail banking
the intention to perform a specific behaviour is affected by belief that performing a specific
behaviour will lead to a certain outcome (Madden et al., 1992) and beliefs, in turn, are services
affected by attitude towards the behaviour. As cited in Farah (2017) in the specific context of
switching behaviour, one’s attitude indicates the degree and manner by which a customer 51
favourably or unfavourably considers switching behaviour (Nimako et al., 2014; Yadav et al.,
2015). Attitudes derive from salient behavioural beliefs that reflect one’s perceived outcomes
and the desirability of the related switching consequences (Ajzen, 1991; Han et al., 2011;
Rawashdeh, 2015). Concluding, both attitudinal loyalty and behavioural loyalty indicate
that true loyalty and attitudinal components in measuring or judging loyalty are significant.
Taking this conclusion forward in the disloyalty domain, we propose that attitudinal
disloyalty will have an impact on the behavioural aspect of disloyalty. Deriving hypothesis:
H1. Attitudinal disloyalty has a direct effect on behavioural disloyalty and vice versa.
Keaveney (1995) identified factors affecting service switching behaviour and proposed a
model consisting of eight main causal variables of switching in services industries, and the
consequences of a switch. In total, 45 per cent of respondents attributed the causes to only
one factor (simple service switching), while 55 per cent of the respondents found two or more
reasons to switch (complex service switching). Keaveney (1995) identified pricing,
inconvenience, core service failure, service encounter failures, reasons for service failure,
competition, ethical problems and involuntary switching as the reasons for switching.
WOM has been found as a predictor of switching by many researchers in the past.
Wangenheim and Bayon (2004) showed that WOM influences switching decisions. They
concluded that both source expertise and similarity have an effect not only on perceived
influence and attitudes, but also on subsequent decision making. East et al. (2008) suggested
that negative WOM is strongly related to the pre-WOM probability of purchase, the
strength of expression of the WOM, and whether the WOM is about the respondent’s
preferred brand. Keaveney and Parthasarathy (2001) found that switchers were more likely
to have relied on WOM sources when making their subscription decisions.
Peer behaviour has also been a reason why customers switch their service providers.
Lai et al. (2012) studied consumer switching behaviour towards mobile shopping and
concluded that pull forces such as alternative attractiveness and peer influence have a
strong effect on switching intentions. Sahay and Sharma (2010) also concluded that peer
influence impacts switching intentions. Lee and Murphy (2005) suggested that reference
group influence is a determinant of intentions to switch from current service provider.
Lai et al. (2012) and Wen et al. (2005) showed that the attractiveness of alternatives has
negative impact on customer loyalty. According to Eliashberg and Robertson (1988), the
attractiveness of competitor environment can be construed as significant predictors of
preannouncing behaviour. Bansal et al. (2005) also established that alternative
attractiveness plays an important role in consumers’ intentions to switch.
Nordman (2004) identified that advertising, negative relationship, unavailability and
customer’s life situation also lead to customer disloyalty. Another factor, physical
accessibility, has been an outcome of Keaveney’s (1995) study wherein it has been concluded
that inconvenience causes customer switching. Functional dissatisfaction has also been
identified as the reason for customer switching. In line with this, Keaveney (1995) suggested
that service catastrophe leads to customer switching service provider. Triggers considered
in this study are as follows: WOM, peer behaviour, competitors’ attraction, advertising, lack
of or negative relationship activity, physical accessibility, life situation, functional
dissatisfaction, unavailability, pricing, inconvenience, core service failure, service encounter
APJBA failure, response to service failure, competition, ethical problem and involuntary switching.
11,1 Deriving hypothesis:
H2. Triggers to disloyalty have a positive relationship with behavioural disloyalty.
H3. Triggers to disloyalty have a positive relationship with attitudinal disloyalty.
Izogo (2016) noted the paucity of studies done on attitudinal loyalty. Nordman’s (2004) study
52 has been the one that identified factors leading to attitudinal disloyalty. She identified
factors that have a negative effect on customer loyalty status which were termed as
loyalty-repressing factors. These factors have a negative effect on customer attitudes and
lead to disloyalty. The factors as identified by Nordman (2004) were as follows: press,
negative image, merger, customer deposition, lack of expertise, negative relationship
history, lack of process-based trust, lost or unfulfilled relational benefits, lack of social bond
and technical dissatisfaction. Factors such as merger, customer deposition, negative
relationship history, lack of process based trust and technical dissatisfaction were dropped
after review done by experts. Deriving hypothesis:
H4. Loyalty-repressing factors having a negative effect on attitudes have a positive
relationship with attitudinal disloyalty.
H5. Loyalty-repressing factors having a negative effect on attitudes have a positive
relationship with behavioural disloyalty (Figure 1).

Research framework
Methodology, data collection and analysis
The study was descriptive in nature conducted with the aim of arriving at statistical
conclusions on the stated hypotheses. During the first stage, factor analysis was done to
identify significant factors that explain the relationship. Thereafter, the proposed model was
analysed through CFA in order to assess the fit. The study was conducted on nationalised
and private retail banks operating in India. The top banks operating in the state of

Factors Leading to
Disloyalty Status
Disloyalty

H3 Attitudinal
Triggers of
Disloyalty Disloyalty
H2

H4 H1

Negative effect H5
on Attitudes Behavioural
Disloyalty

Figure 1. Direct effect

Research framework
In-direct effect
Madhya Pradesh, India, as per the number of branches (RBI, 2010) were considered. Customer
The name of the bank associated with a disloyal customer was the bank which they disloyalty in
switched from i.e. their previous primary bank. The scope of the study was limited to retail banking
customers with a savings account and customers with a current account. Since this study
involved locating disloyal customers, a large set of customers had to be contacted. services
Convenience sampling procedure was adopted, and it gave the researcher complete freedom
in selecting respondents. The researcher planned to sample 390 disloyal customers in order 53
to achieve an acceptable response rate (based on an assumed ratio of 10:1). Target sample
size of 390 was arrived considering the recommended ratio of ten responses per item in the
questionnaire (O’Rourke et al., 2013). Bank customers were approached, with a printed
questionnaire, while they were exiting bank branches/ATMs for savings account customers
and current account customers were approached by visiting local shops. Questionnaire had
a screening question to check the qualification of disloyal customer to collect the necessary
information. In the present study, disloyal customers were the ones who switched their
previous bank in last two year (Nordman, 2004). A total of 1,832 respondents were
approached and given the questionnaire out of which 671 were qualified, meaning that
they were disloyal to their earlier bank. Out of 671 respondents, 357 were completed
questionnaire. Thus, the response rate was 19 per cent. Table I gives the final number
of respondents.
Measures. Items were identified from the literature review for the study of loyalty-
repressing factors. Second, these items were finalised through a pilot of the final study.
Scales for triggers of disloyal behaviour and factors having a negative impact on attitudes
leading to disloyalty were adopted from the studies of Nordman (2004) and Keaveney (1995).
Factor names and sources of scales are detailed out in Table II.
Other factors that cause disloyalty are those that have a negative effect on attitudes.
The details of these factors are given in Table III.
Behavioural disloyalty scale was adapted (reverse coded) from Zeithaml et al. (1996) and
attitudinal disloyalty was measured adapting scale (reverse coded) from Caruana (2003) as
given in Table IV.
Data analysis. The loyalty-repressing factors were subjected to principal component
analysis through Varimax rotation. The final output of the factor analysis is outlined
in Table V.
The reliability of the instrument was assessed using Cronbach’s α. Cronbach α for each
factor was calculated using SPSS Ver. 20, and it was found that the calculated value
exceeded the cut-off value of 0.7 (Nunally, 1978; Chow and Chan, 2008). The factor-wise
Cronbach’s α is described in Table VI.

Number of Number of
respondents Number of Number of respondents
nationalised respondents respondents Private Total
Loyalty banks – nationalised private banks banks – Total – –
Services status Planned Banks – Actual – lanned actual Planned Actual

Savings Disloyal 150 152 150 110 300 262

account
Currentaccount Disloyal 45 34 45 61 90 95
Total 195 186 195 171 390 357
Notes: Explanatory note on Sample: Disloyal customers are the ones who have changed/switched their bank
in last two years (Nordman, 2004). Therefore, the sample of disloyal customers will have customers who have Table I.
changed their bank in last two years Sampling plan
APJBA Triggers No. of items Source of scale
11,1
Word of mouth 2 Adapted from Nordman (2004)
Peer behaviour 1
Competitors’ attraction 3
Advertising 2
Lack of or negative relationship activity 3
54 Physical accessibility 2
Life situation 4
Functional dissatisfaction 4
Unavailability 1
Pricing 4 Keaveney (1995)
Inconvenience 3
Core service failure 3
Service encounter failure 4
Response to service failure 3
Competition 1
Table II. Ethical problem 4
Triggers of disloyalty Involuntary switching 2

Factors affecting attitude No. of items Source

Table III.
Loyalty-repressing Press 1 Adapted from Nordman (2004)
factors through Negative image 4
negative effect on Lack of expertise 1
attitude and their Lost or unfulfilled relational benefits 3
number of items Lack of social bond 1

Table IV.
Sources of Scale No. of items Scale adapted from the following study
behavioural
and attitudinal Behavioural disloyalty 3 Reverse coded from loyalty scale (Zeithaml et al., 1996)
disloyalty scale Attitudinal disloyalty 3 Reverse coded – (Caruana, 2003)

The discriminant validity and convergent validity were assessed as well as reliability
(using composite reliability (CR)). CR and the average variance extracted (AVE) are outlined
in Table VII.
Considering Table VII, it is clear that the convergent validity AVE was above or
approaching 0.5, with 0.4 as acceptable AVE (Verhoef et al., 2002), except for TRGR2 – which
is lower than 0.4. In addition, comparison of the square root of AVE with the inter-factor
correlations showed that all factors met the criteria (SQRT of AVE W inter-factor
correlations) of discriminant validity (Fornell and Larcker, 1981). Considering the CR, all
factors met the criteria for CR of more than 0.7, except for TRGR2 – which is also approaching
0.7. The construct TRGR2, with AVE less than 0.4 and CR less than 0.7, needs to be studied in
a different context with a different sample to validate it further. This is one of the limitations
of the study.
The path diagram for loyalty-repressing factors is given in Figure 2.
According to McIver and Carmines (1981), the relative χ2should be in the 2:1 or 3:1 range
for an acceptable model. Ullman (2006) suggested that a value of two or less reflects a good fit.
 % of
Customer
Factor Factor name Item Factor variance Cumulative disloyalty in
category abbreviation Factor name code Item loading rotation % rotation retail banking
Trigger TRGR1 Pricing KP1 The fees charged by my 0.733 10.68 10.68 services
Issues bank were higher as
compared to the other
players in the market 55
KP2 My bank used to 0.73
overcharge for the services
that they offer
KP3 The fees charged by banks 0.728
were higher than what I
thought they should charge
KP4 Fees charged by my banks 0.703
were deceptive. The actual
price/fees that I used to pay
was much higher than what
they promised at the start
Trigger TRGR2 Unfair UP1 My bank’s employees were 0.637 9.12 19.80
Practices using lots of unsafe practices
UP2 I thought of switching/ 0.619
switched bank because my
friends/family/colleagues
have told me that my
current bank charges more
for its services
UP3 My bank intimidated me 0.528
by forcing me to go for
services which were not
required at all
UP4 The bank employees 0.512
lacked knowledge and
expertise which is required
for their job. That is why I
felt changing my bank
Negative NEA1 Negative NAI1 The bank was cold and 0.739 8.104 27.90
affect on affect bureaucratic
attitude attitude NAI2 This bank is not for normal 0.729
customers like me, it is
more interested in its own
business
NAI3 I feel that large banks 0.701
are poor at services for
normal customers, the
larger the branch poorer
will be the services
Trigger TRGR3 Unfulfilled US1 I needed a loan and my bank 0.719 7.423 35.33
Services refused that loan to me
US2 The bank has failed on 0.716
its service and which
were very serious and
hence I thought of
changing my bank Table V.
US3 Bank had inconvenient 0.611 List of loyalty-
working hours repressing factors
with factor loadings
and percentage
(continued ) variances
APJBA % of
11,1 Factor Factor name Item Factor variance Cumulative
category abbreviation Factor name code Item loading rotation % rotation

Trigger TRGR4 Service SF1 I had number of problems 0.715 6.968 42.3
failure in one single transaction
that I wanted to do with my
56 bank which made me to
think on changing the bank
SF2 The bank employees were 0.654
interested in achieving
their own business and
cared least about me
SF3 My bank made billing 0.654
errors for my account
SF4 The bank only focused on 0.652
wealthy customers. They
cared least about
individuals who were not
rich
Trigger TRGR5 Poor PI1 My bank was unresponsive 0.773 6.874 49.17
interaction and uncommunicative
PI2 My bank did not listen to 0.749
me. They were very
uncaring
PI3 The staff at my bank were 0.667
impolite – rude and
uncooperative
Trigger TRGR6 Competitor’s CA1 I switched because the new 0.823 6.588 55.76
attraction bank has an attractive
image
CA2 I switched because they 0.81
were giving me an
attractive offer
CA3 I switched after seeing new 0.711
Table V. bank’s advertising

S. No. Factor name Cronbach’s α Cronbach’s α based on standardized items Number of items

1 NEA1 0.734 0.733 3

2 TRGR6 0.762 0.762 3
3 TRGR1 0.815 0.815 4
Table VI. 4 TRGR2 0.749 0.749 4
Cronbach’s α for 5 TRGR3 0.728 0.728 3
loyalty-repressing 6 TRGR4 0.725 0.725 4
factors 7 TRGR5 0.726 0.727 3

The value of CMIN/DF of 1.610 indicated a good fit for the analysed model. Another index that
this study took into account was RMSEA. Hu and Bentler (1999) suggested RMSEA ⩽ 0.06 as
the cut-off for a good model fit. The RMSEA in the tested model was 0.41 (see Table V ).
PCLOSE was more than 0.05, and it can hence be concluded that RMSEA is less than 0.05
(which is under the acceptable limit). Table VIII summarises the fit indices.
Tables IX and X outline the null hypotheses and their status as tested within the model.
Results Customer
The loyalty-repressing factors that resulted from this study are given in Table XI. disloyalty in
Previous studies, such as Bloemer et al. (1998) and Nguyen and LeBlanc (1998), suggest retail banking
that positive image acts as a loyalty-supporting factor. Upon empirically testing the
negative image as a factor for disloyalty as proposed by Nordman (2004), this study services
empirically concludes it as a factor for disloyal behaviour, both attitudinal and behavioural.
Competitor’s attraction and pricing were identified by Keaveney (1995) as triggers for 57
switching. Surprisingly, this study did not find it as the reason for disloyalty in this study’s
context of retail banking in India. Similarly, service failure was suggested by Keaveney
(1995) as one of the factors for service switching; however, this study indicates that though
it shares a significant relationship with attitudinal disloyalty, it has no relationship with
behavioural disloyalty. Unfair practices, unfulfilled services and poor interaction are found
to be the reason for switching in the context of this study.
The factor “negative image” has been identified by Nordman (2004) as a loyalty-repressing
factor, as is confirmed by this study as well; it finds a significant positive relationship with
behavioural disloyalty. This implies that “negative image” represses both attitudinal loyalty
and behavioural loyalty.
The hypothesis testing conducted in this study concluded that attitudinal disloyalty and
behavioural disloyalty have a significant positive relationship with each other. This implies
that factors that increase attitudinal disloyalty will also have a direct effect on behavioural
disloyalty and vice versa.

Discussion
The relationship between the attitudinal and behavioural components of loyalty has been
well established in the customer loyalty literature. Some of the most prominent
studies include Dick and Basu (1994) and Oliver (1999). This study took a small step
towards contributing to the literature by empirically studying the link between attitudinal
and behavioural disloyalty, and found that there exists a significant and positive
relationship between attitudinal disloyalty and behavioural disloyalty. This also implies
that all those factors that have a positive and significant relationship with attitudinal
disloyalty will further weaken behavioural loyalty. Similarly, factors that have a
significant positive relationship with behavioural disloyalty will have an adverse impact
on attitudinal loyalty.
This study reinforces the finding of Nordman (2004) by suggesting negative image as a
factor that has a negative effect on customer attitude, and a significant positive relationship
with attitudinal disloyalty and behavioural disloyalty. This study indicates that negative
image has a much stronger relationship with attitudinal than with behavioural disloyalty.
However, the trigger competitor’s attraction, which survived the measurement model of this
study, does not have a significant relationship with attitudinal and behavioural disloyalty.

CR AVE NEA1 TRGR6 TRGR1 TRGR2 TRGR3 TRGR4 TRGR5

NEA1 – NI 0.767 0.523 0.723

TRGR6 0.826 0.613 0.057 0.783
TRGR1 0.815 0.524 0.256 0.313 0.724
TRGR2 0.664 0.332 0.519 0.252 0.648 0.577
Table VII.
TRGR3 0.724 0.468 0.381 0.470 0.504 0.586 0.684 Composite reliability
TRGR4 0.764 0.448 0.571 0.231 0.274 0.572 0.546 0.669 and average variance
TRGR5 0.774 0.534 0.436 0.329 0.324 0.452 0.563 0.515 0.731 extracted for loyalty-
Source: Data Analysis using manual calculation repressing factors
APJBA
11,1

58

Figure 2.
Path diagram for
loyalty-repressing
factors
Source: Data Analysis using AMOS version 20

This clearly reflects that customers have become more aware of players that operate in the
market, and that they are not moved by competitors’ activities.
The triggers, such as unfair practices, unfulfilled services, and poor interaction, are
found to have a significant positive relationship with attitudinal and behavioural disloyalty.
Unfair practices, as suggested by this study, have its root in the study of Keaveney (1995),
who suggested ethical problems as one of the reasons for customer switching. The triggers
of disloyalty that survived the measurement model of this study – namely, pricing issue and
service failure – were from the study of Keaveney (1995). Both of these triggers are found to Customer
have insignificant relationships with both behavioural disloyalty and attitudinal disloyalty. disloyalty in
The triggers unfulfilled services and poor interaction have significant relationships with retail banking
both behavioural disloyalty and attitudinal disloyalty. Although both of these factors were
introduced by this study, unfulfilled services have its roots in Keaveney (1995) and factor services
poor interaction has its roots in the study of Nordman (2004).
59
Managerial implications of the study
The study shows that customers switch because of both kinds of factors, that is, factors that
affect the customers’ attitudes negatively and factors that act as a trigger of disloyal
behaviour. One of the factors that affect the attitudes negatively and that also have a
relationship with behavioural disloyalty is “negative image”.
This study revealed that customers change their banks because bank managers give the
impression that they are interested in their own business rather than in the customers.
Another reason for their disloyal behaviour was customers’ impression of bank staff having
a lack of expertise; this implies that bank staff lack the knowledge and expertise that is
required for the job. Loan rejection and non-transparency about charges are highlighted as
reasons for customers changing their bank. The second factor of unfulfilled services
suggests that customers change their bank because of denial of some of the services, or

Recommended values of measures of model fit and test values

Fit index Recommended value Adopted from Test value Fit

χ /df
2
⩽5 Yu et al. (2010) 1.61 Good fit
GFI ⩾ 0.9 0.90 Good fit
AGFI ⩾ 0.9 0.87 Moderate fit
RMSEA ⩽ 0.08 0.04 Good fit
Table VIII.
NFI ⩾ 0.9 0.85 Moderate fit
Summary of fit
CFI ⩾ 0.9 0.94 Good fit indices – loyalty-
Source: Data Analysis using AMOS version 20 repressing factors

Hypothesis
number Null hypothesis

H 01 ADL has no relationship with Behavioural disloyalty of Behaviourally disloyal customers

H 02a TRGR1 has no relationship with Behavioural disloyalty of Behaviourally disloyal customers
H 02b TRGR2 has no relationship with Behavioural disloyalty of Behaviourally disloyal customers
H 02c TRGR3 has no relationship with Behavioural disloyalty of Behaviourally disloyal customers
H 02d TRGR4 has no relationship with Behavioural disloyalty of Behaviourally disloyal customers
H 02e TRGR5 has no relationship with Behavioural disloyalty of Behaviourally disloyal customers
H 02f TRGR6 has no relationship with Behavioural disloyalty of Behaviourally disloyal customers
H 03a TRGR1 has no relationship with attitudinal disloyalty of Behaviourally disloyal customers
H 03b TRGR2 has no relationship with attitudinal disloyalty of Behaviourally disloyal customers
H 03c TRGR3 has no relationship with attitudinal disloyalty of Behaviourally disloyal customers
H 03d TRGR4 has no relationship with attitudinal disloyalty of Behaviourally disloyal customers
H 03e TRGR5 has no relationship with attitudinal disloyalty of Behaviourally disloyal customers
H 03f TRGR6 has no relationship with attitudinal disloyalty of Behaviourally disloyal customers
H 04 NEA1 has no relationship with attitudinal disloyalty of Behaviourally disloyal customers Table IX.
H 05 NEA1 has no relationship with behavioural disloyalty of Behaviourally disloyal customers Null hypotheses
APJBA Null hypothesis
11,1 Hypothesis number Estimate SE CR p Label (rejected/accepted)

H 01 ADL ↔ BDL 0.295 0.051 5.786 *** Rejected

H 02a TRGR1 ↔ BDL 0.075 0.040 1.881 0.060 Accepted
H 02b TRGR2 ↔ BDL 0.182 0.048 3.784 *** Rejected
H 02c TRGR3 ↔ BDL 0.109 0.051 2.116 0.034 Rejected
60 H 02d TRGR4 ↔ BDL 0.045 0.025 1.809 0.070 Accepted
H 02e TRGR5 ↔ BDL 0.189 0.048 3.946 *** Rejected
H 02f TRGR6 ↔ BDL 0.087 0.046 1.876 0.061 Accepted
H 03a TRGR1 ↔ ADL 0.066 0.048 1.373 0.170 Accepted
H 03b TRGR2 ↔ ADL 0.203 0.057 3.577 *** Rejected
H 03c TRGR3 ↔ ADL 0.225 0.065 3.478 *** Rejected
H 03d TRGR4 ↔ ADL 0.185 0.040 4.578 *** Rejected
H 03e TRGR5 ↔ ADL 0.119 0.054 2.209 0.027 Rejected
H 03f TRGR6 ↔ ADL 0.069 0.056 1.236 0.216 Accepted
H 04 NEA1 ↔ ADL 0.331 0.057 5.795 *** Rejected
Table X. H 05 NEA1 ↔ BDL 0.112 0.040 2.774 0.006 Rejected
Hypothesis testing Note: Null hypothesis is rejected for value of p less than 0.05

Relationship status
S. No. Loyalty repressing factors Category Attitudinal disloyalty Behavioural disloyalty

1 Negative image Negative effect Significant Significant

on attitude
2 Competitor’s attraction Trigger Not significant Not significant
3 Pricing issues Trigger Not significant Not significant
Table XI. 4 Unfair practices Trigger Significant Significant
Relationship status of 5 Unfulfilled services Trigger Significant Significant
loyalty-repressing 6 Service failure Trigger Significant Not significant
factors 7 Poor interaction Trigger Significant Significant

because of failure on services that customers regarded as very important. Bank managers
have to guard against customer disloyalty due to such mishandling. A service catastrophe
wherein a customer has faced a major and serious service failure should be examined and
reviewed by bank managers from time to time in order to develop a proper corrective
system. While such systems might currently be prevalent, this study shows that this still
was indeed playing a big role in customers changing their banks. Poor interaction was
another factor which caused customers to switch their banks. It implies that banks are
unresponsive, uncommunicative, not listening to customers, and that their staff were
impolite and rude. All of the above points clearly suggest that the handling of customers
is extremely critical for the customer loyalty.
Physical accessibility as a factor for changing banks has been a clear outcome of this
study. Here, physical accessibility refers to banking hours. Bank managers may have to
reconsider the operational hours so as to ensure convenience. Thus, the findings of the
study will be useful for banks in designing various services and standardizing
processes to ensure lasting customer loyalty. The insight about the factors leading to
customers disloyalty to banks provided by the study could be used in designing training
programs for the bank employees to help them reducing the negative behaviour of
customers towards bank.
Contribution to theory Customer
It broadens the scope of understanding of customer disloyalty in the banking industry, and disloyalty in
provides a cultural perspective of the concepts of disloyalty as it pertains to Indian retail banking
customers. This study has extended the Nordman (2004) study by taking relevant factors
from other studies, as suggested by the literature review, and testing them empirically in the services
Indian retail banking context, suggesting loyalty-repressing factors that lead to disloyalty,
either by having a negative effect on attitudes or by acting as a trigger of disloyalty. The 61
factor “negative image” has a negative effect on attitude and is related to disloyalty. Further,
the factors unfair practices, unfulfilled services and poor interaction have positive and
significant relationships with disloyalty. Service failure is significantly related to attitudinal
disloyalty, but not to behavioural disloyalty.

Conclusion and limitations of the study

Bank managers have to ensure that banks guard against an image of being cold and
bureaucratic, or of giving the impression to customers that they are interested in business
rather than in the customers. This may lead to customers developing a negative image, which
may ultimately lead to customers thinking of changing their bank. Bank managers may also
develop a training plan for their staff to guard against the development of a negative image.
The training plan is expected to be highly effective, as these reasons are largely under the
control of staff and can easily be eliminated if customers are dealt with properly.
Bank managers should also be completely transparent about bank charges, so as
to avoid the negative WOM, which has been proven as a factor in changing banks.
Greater emphasis should be placed on designing employee training programs that are
updated with current banking knowledge, to ensure that customers do not have the
perception that bank staff are not knowledgeable and are confident to stay with the bank.
This study clearly shows that this factor leads to customers changing their bank.
Bank managers should develop a rapid and customer-friendly system where customers
are given a fair idea of their loan eligibility through various communications, so that the
sudden disappointment of loan rejection is avoided.
This study has highlighted that operating hours is one of the major reasons for customers
to switch; bank managers should therefore assess the operating hours so as to ensure
convenience. Bank managers should take action on issues of banks being unresponsive and
uncommunicative, not listening to customers, and their staff being impolite and rude, to
ensure that customers do not change their banks. These issues can be taken care of by the
bank manager by ensuring a proper training and putting a system in place for the same.
Some of the limitations of the study include.
The sample base is limited to only four major Indian cities. Generalisation will require a
larger and more varied sample. AVE and CR for the construct of unfair practices are lower
than the threshold value, so it needs to be further investigated with a different sample.
This study is limited to retail banking sector. Other industries have different factors that
affect customers differently. Hence, an industry specific factor will have to be accounted for
before generalising it for a specific industry.
This study is limited to current accounts and savings accounts (CASA) only. Retail
banking is a much larger gamut, and can include various other services such as credit cards,
and retail loans with many sub-categories (including home loan, car loan, consumer durable
loans, gold loans and many others).

Scope for future research

This study aimed to understand the various factors that are related to disloyalty.
A longitudinal study could be carried out in order to understand and apply this research
framework to customers who are currently loyal but become disloyal later on.
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Further reading
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Thousand Oaks, CA.

About the authors

Dr Shakti Bodh Bhatnagar recieved Bachelor of Engineering (Mechanical), Post Graduate Diploma in
Management (Marketing) from India’s top B-School – SCMHRD, Pune and PhD from India’s one of
top 10 Universities – Aligarh Muslim University. He is academician with corporate experience in
some of world’s leading multinationals (General Motors India, SKF India and LG Electronics India).
His work has been published in some of top international journals like Journal of Relationship
Marketing, etc. Dr Shakti Bodh Bhatnagar is the Corresponding author and can be contacted at:
[email protected]
 Dr Jitendra Kumar Mishra has been actively engaged in teaching, training, research and academic Customer
administration for over 19 years. His research interests lie in the fields of economic policy, international disloyalty in
trade and consumer behaviour with an emphasis on economic well-being and happiness. He has
published books and monograph on contemporary issues related to globalisation; and management retail banking
cases and research papers in international and national Journals of repute. services
Dr Asif Ali Syed, BSc (Phy), MBA, PhD is Assistant Professor in the Department of Business
Administration, Faculty of Management Studies and Research, Aligarh Muslim University. He is a full-
time faculty for the last 15 years and teaches Marketing, Entrepreneurship, Communication Export 67
Import Process Documentation and Quality Processes. He has authored three books along with
numerous papers in international and national journals of academic repute.

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