Bank e-loyalty improved by personal relationships


To be competitive, banks need to offer good self-service platforms, but e-loyalty is actually improved by face-to-face relationship building.


A new study by Massey University and Curtin University researchers shows that banks can’t rely on the strength of their technology platforms to create loyalty with their business customers.

Massey Business School’s Associate Professor Henry Chung will present the findings of his co-authored paper at the International Symposium on Branding in the Business-to-Business Context at Massey University this week. 

Mobile and online technologies have revolutionised banking, Dr Chung says, but no one has studied if technology creates brand loyalty like face-to-face relationship building. Dr Chung and his colleagues collected data from 336 New Zealand small and medium-sized businesses and compared their commitment to local and national-branded banks with their commitment to foreign-branded banks.

“Self-service technologies are now an integral way for banks to deal with customers and they offer an opportunity for large, foreign banks, with their strong brands and superior infrastructure, to penetrate markets that have been traditionally dominated by banks with a local presence,” Dr Chung says.

“We analysed participants’ e-loyalty – their preference for interacting with their bank by using mobile and online platforms – and found that e-loyalty is a critical component of doing business because it offers advantages like 24x7 access and instant payments.

“But we also found that the self-service technologies widely used by banks have become fairly standardised so those services are now expected, rather than offering a significant competitive advantage to foreign banks.”

What was interesting, Dr Chung says, was the impact building strong face-to-face relationships had on e-loyalty. The study found that good, personalised relationship building led to an increase in e-loyalty and all the cost advantages that brings to banks. 

“Our research shows that foreign banks like Citibank and HSBC can’t rely solely on their superior technological platforms to provide a competitive edge,” he says. “If locally-branded banks have a good self-service offering and also build strong face-to-face relationships with their business customers, they will create both e-loyalty and greater trust in their brand.

“So, in an industry increasingly dominated by technology, relationship building can still bring a competitive advantage – as long as there is a good level of satisfaction in their e-banking offering.”

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