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Abstract
The key to long-term success in banking is consistent improvement and delivering of quality product and or value-added service that conform to the expectations of customers. IT-innovative products/services and processes (technological innovation) facilitate these key elements of customer satisfaction and critical factors for retaining valued customers. The objective of this paper is to explore the effects of technological innovation on service consistency and the consequential effects on customer satisfaction and loyalty covering seven universal banks in Ghana. The results of the empirically tested model reveal new/improved product/process functionalities, service consistency and innovative product/process satisfaction contribute significantly to customer loyalty (p < 0.001). Service consistency has a marginal higher impact (β = .373) on customer loyalty than the others. Product/process quality contributes significantly (with β ranging from .345 to .742 and p < 0.001) to each of the above three antecedents than all other items.
Key Words: Banking, customer loyalty, customer satisfaction, regression analysis, service consistency, technological innovation
JEL classification: G20; O00; O33
Introduction
The Ghanaian banking industry is fairly saturated with 33 universal banks, 140 rural and community banks, 576 microfinance institutions, and 65 non-banking financial institutions including finance houses, savings and loans, leasing and mortgage firms (BOG, 2016). This culminated with the desire to acquire customers from the over 60% unbanked Ghanaian population (WB, 2014) has brought stiffcompetition to the industry. The key to long-term success is consistent improvement and delivering of quality product or service to customers. It is incumbent on management to assess factors that could influence their efforts to streamline innovative functional systems (Chen & Tsou, 2007); and accelerate innovation to offer individualized, shortlived, and information-rich niche products and services to new generations of clients with distinct technological preferences, attract unbanked adults, enhance customer relationship and retain existing customers.
Many banking firms in Ghana are realigning their current business strategies to include innovation due to the increasing demand for service quality through better product offering and value-added services. These firms are maximizing their IT-innovation capabilities as unique and valuable resources (Wu & Chiu, 2015) to remain competitive. Quality innovative products and services are key elements of customer satisfaction and critical factors for retaining valued customers (Parasuraman et al., 1985; Tseng et al., 2015). Innovative products are unique, improve ease...