Customer loyalty: State vs local private owned commercial bank in Colombo District Sri Lanka

Abstract

Customer loyalty has always been critical to business success thus profitability and loyal customers are usually of strategic advantage to any type of business organization. This factual is not different for the financial institutions. Thus keeping current customers is an essential marketing aim for all financial institutions in a highly competitive environment. Under this circumstances, purpose of this study is to identify which commercial bank category is taking higher level of customer loyalty among State Commercial Banks and Private owned Commercial Banks and what are the antecedents highly effected to get reach that level of customer loyalty in commercial banking sector in Colombo district where the most metropolitan area in Sri Lanka. Under this research, having defined loyalty in bank specifically through the characteristics identified through the literature review. Those are corporate image, customer satisfaction, perceived value, perceived service quality, customer rewards, customer attribute and trust. According to the study findings, both commercial banks in Sri Lanka are maintaining significant level of customer loyalty under the background of high financial frauds in financial sector in recent past and some foreign commercials banks have faced difficulties to continue their service in Sri Lanka. Not only that, state commercial banks has maintain higher level of loyalty than the private commercial banks that are officering more and more loyalty programs to attract and retain customers.