Mobile banking service quality, customer perceived value, corporate image and customer retention in the Kenyan banking industry

Abstract

Customer retention is increasingly becoming an important managerial issue, especially in this era which is characterized by high levels of competition and assertive customers who make stay or switch decisions guided by their rational and emotional influences. Moreover, customers are quality conscious, value driven and get attracted by strong and positive corporate images. To date, there is limited evidence of studies that investigated the effects of mobile banking service quality, perceived corporate image, customer perceived value and customer retention constructs in a single framework, hence, the study seeks to fill the gap. The purpose of this study was to examine the effect of; mobile banking service quality, customer perceived value and perceived corporate image on customer retention. Specific objectives were to examine the effect of; mobile banking service quality, customer perceived value perceived corporate image on customer retention, the mediating effect of customer perceived value on the relationship between mobile banking service quality and customer retention, the moderating effect of perceived corporate image on the relationship between; mobile banking service quality and customer perceived value, mobile banking service quality and customer retention and customer perceived value and customer retention. Finally, the study sought to determine the moderating effect of perceived corporate image on the indirect relationship between mobile banking service quality and customer retention via customer perceived value. The study was guided by the customer value/retention model, the ‘leaky bucket theory’ of marketing and the MS-QUAL model. Positivism research philosophy and explanatory research design were adopted, employing Multistage, simple random and systematic sampling techniques in collecting data from a sample size of 400 university staff drawn from two public and two private universities based in Nairobi County who are consumers of mobile banking services, using a self-administered questionnaire. Hierarchical and multiple regression models using Hayes Process macro were used to analyze data obtained and to test the hypotheses. The study found that; mobile banking service quality (β= 0.565, p = 0. 000), perceived customer value (β= 0.363, p = 0.000), perceived corporate image (β = 0.142, p = 0.002), significantly affect customer retention. Additionally, the results show that customer perceived value mediates the relationship between mobile banking service quality and customer retention (β =. 193, CI = .127, .266). Moreover, the study established that Perceived corporate image moderates the link between; mobile banking service quality and customer perceived value (β = -.091, p =.039), the link between mobile banking service quality and customer retention (β = -.112, p = .032) and the link between customer perceived value and customer retention (β =.139, p = 0.007).Finally, perceived corporate image was found to moderate the indirect relationship between mobile banking service quality and customer retention via customer retention at all the three levels of perceived corporate image (low level b =.114, CI =.024, .224, mean level b =.163, CI =.100, .240 and high level b = .187, CI =.100, .296). This study concludes that, customers will remain committed to patronize a bank whose services are considered to be of high quality, high value, and one having high corporate image. The study contributes to knowledge by revealing customer perceived value mediates the relationship between mobile banking service quality and customer retention. Additional contribution is evident in the moderation model of perceived corporate image between the variables of the study. Finally, the study brings new insights that perceived corporate image moderates the indirect links between mobile banking service quality via customer perceived value, thus, provides greater predictive power than when testing the direct, mediating and moderating effects alone. Bank management and policy makers should; develop quality assurance policies, devise value-centered strategies that focus on customer perceived value, and device promotional strategies that project the banks image that is attractive, caring and friendly in order to enhance customer retention rates. The study adopted a cross-sectional research design where all data was collected at one point in time, which makes it difficult to generalize the findings and account for changes that may occur in the mobile banking technologies which may tilt the customer’s attitude and perception of quality, value and image. Future research may, therefore, consider using longitudinal designs to seek more evidence for the assumptions that have been made in this study.