Introduction To The Study

Patrons in most businesses are very conscious of their association with various enterprises due to current economic change world over. A transformation in purchasing habits is also envisaged. Therefore, patrons are very conscious about the treatment they receive from people who offer goods or services. (Ivanauskiene & Auruskeviciene, 2009). The advantages of getting patrons who are trust worthy have been documented ably. The benefits of this are apparent in the retail-banking segment. A retail bank can bring down the expenses and increase their awareness of consumer wants by enhancing reliability (Levesque & McDougall, 1996).

Over the past three decades there has been tremendous change in the retail banking sector. Immense competition between the banking sector and various other fiscal services that belong to the non-banking sector, the deregulation of this sector, the implementation of innovative know-how and the growing consumer’s fondness can be considered the reason that has a great influence in the fiscal services sector. These modifications along with the present fiscal scenario imply that banks have to search for different ways to make a distinction for themselves to stay ahead of their rivals. Competition in the banking sector is growing at a fast pace with great competition in many fields like pricing, services provided, value for the users, customer trust, brand value and status.

So as to have healthy competition and in order to enhance their status in the market, many banks have to tender much more than lower cost and original services. Beard and Dougan (2004) state that the banking sector has to change their strategies as consumer brands and be alert as to how patrons will assess their services. Banks have to recognize the issues intruding upon patrons’ experiences in banks, loyalty and allegiance to a service provider.

Maintaining customer base is considered very essential for all businesses (Coyles & Gokey, 2005). Many research papers have shown the necessity to withhold ones customer – base, that is retain that patrons’ trust in their enterprise. Grönroos (1990) implies that retaining ones clients tends to bring down sales and advertisement expenses in comparison to building a new client-base, while other researchers state that the trust of clients is what ensures the lasting fiscal show of enterprises (Reichheld, 1993; Jones & Sasser, 1995; Reichheld et al., 2000). Due to this abundant study has been taken up on loyalty of patrons (e.g., Chintagunta et al., 1991; de Ruyter et al., 1997; Desai & Mahajan, 1998; Yim & Kannan, 1999; Zins, 2001; Beerli et al., 2004; Chiu et al., 2005).

In spite of the charm of building a customer- base that remains loyal to the firms, study has shown it is rare to find cent percent client loyalty. Patrons in the banking sector and other businesses on several occasions reveal what is called ‘ polygamous loyalty’, that is customers patronize various brands at the same time, instead of being loyal to on firm (Uncles et al., 1994; Rust et al., 2004; Cooil et al., 2007). It is taxing for banks to build a loyal client-base, as the banking sector is categorized by several clients having dealings with many firms at the same time. For instance a considerable number of clients are known to utilize many banks at the same time (e.g., Chan & Ma, 1990; Denton & Chan, 1991; Nielsen et al., 1998; Trayler et al., 2000; Lam & Burton, 2005; Calik & Balta, 2006).

It is the plan of most banks to concentrate on building a strong client- base as there is heavy competition in this field. The increasing expenses to attract clients and the tendency of clients to move on to other firms are apparent when there is some economic emergency (Ennew & Binks, 1996; Manrai & Manrai, 2007). Client loyalty in the banking sector has been deeply researched earlier (e.g., Chan & Ma, 1990; Zineldin, 1995; Ennew & Binks, 1996, 1999; Madill et al., 2002), comparatively there has been less research done on client loyalty in times of economic emergency as research done on the market in retail banking. The assessment done by business clients is very complicated since their preference very often is based various norms at the same time, these include the brand of the product, its worth, significance and contentment when there is an emergency (McFadden, 1986). This difficulty is all the more confusing when buying fiscal services, where clients have the privilege of considering other vague qualities and features of the market offerings similar excellence of service and loyalty (Verma et al., 2008).

The outcome of this is a great volume of study material scrutinizing the way clients decide on their options (e.g., Bettman, 1974; Wright, 1975; Bettman et al., 1998). When there is a choice for the patrons when they are deciding between various groups of characteristics presented by different products that are competing with each other, a procedure that at times engages various tradeoffs (Bettman et al., 1998). The plan of efficient selling schedules needs a precise prediction of the options that are strategically utilized by clients in a certain assessment atmosphere (Wright, 1975). As far as fiscal service firms are concerned it is necessary to appreciate the clients’ option plans when there is an economic emergency, especially they have to pay attention to the main features, and consequently this can assist in developing the correct product stipulations and client loyalty. This research also deals with the necessity of offering better characteristics that are vital to important factions of clients and highlighting these features.

This phase of economic slump was the result of a credit crisis in the banking sector. The emergency started in mortgage sector in the US, however because of the fiscal amalgamation of the worldwide financial system Asia, the United Kingdoms and Europe was also affected.

Due to this many major Singapore banks were flushed with investment that did not do well or with assets that were bad. The outcome of this was a disaster in sanctioning loans and a downward trend in making profit. During this kind of crisis the patrons become wary of the banks and are not satisfied with the service rendered or with the modifications. Hence, a premise is projected that client allegiance in banking firms has been harmed by the fiscal downturn and a research of this issue is needed.

Clients invariably might lose their confidence, faith and allegiance in the banking sector in Singapore if they happen to incur huge financial losses. Parallel research has been done in other nations also. For instance the study conducted by Hermansdóttir et al. (2009) which was taken up post the insolvency in Iceland, reveals that clients are in general not satisfied and are annoyed and the apparent image of banking firms is not positive. The precise decline in the level of trust has not been completely scrutinized. Nevertheless, Eklöf and Söderberg (2009) took into consideration most of the banking firms in nations in northern Europe and the Nordic region. The research reveals that in the years 2008 and 2009, contentment, faith and allegiance in general has declined from the start of the fiscal crisis. Hence, it is supposed that parallel results may mirror the banking firms in Singapore since it has been greatly troubled by the fiscal emergency.

Background of the study

Fiscal establishments have an important part in making possible the build up and distribution of funds by means of investments into finance to governments, industries and the public. The part played by banking firms in fund sharing and concentration has never been in question, in Singapore. The present credit crisis has influenced the functioning of most banks worldwide. In order to be successful in the banking sector it is essential to use methods that are performance oriented. As far as banking firms are concerned the allegiance of patrons to businesses is very important to stay ahead in the race. This research scrutinizes the cause client allegiance and norms that impact this allegiance when there is financial crisis in the banking sector.

The international fiscal emergency that is unfolding is slowly getting worse as days pass by. The beginning of 2007 was when all this became apparent. The fiscal emergency or crisis became more apparent in nearly every big nation by the year 2008. Currently in the year 2010, almost all the nations across the globe are under the influence of the fiscal crisis. When we take the global scenario major fiscal enterprises have been taken over or they have gone bankrupt, the stock markets have crashed and above all nations which are economic super powers also are hoping to spring back by invigorating their financial system and increase bail outs to recompense for fiscal collapse.

The international fiscal crisis is playing havoc on the lives of the common man, trade, industries and financial businesses that survive in a world that is inter dependent. The monetary crisis has had an adverse influence on every economic region, encompassing the entire globe. After the surfacing of fiscal problems globally, the retailers find it necessary to change to suit the liking and wants of the consumers which transforms client approach and the trading scenario in a notable manner when the world faces fiscal emergency.

Added to this clients’ individual behavioural pattern is vital for the success of any enterprise. As there is no increase in funds or improvement in trading, the workforce is facing retrenchment, there is no money for expansion and additional ventures have been put on hold. This crisis is snow-balling in the society and people who used to spend a lot of money on inconsequential action are not able to do so and have to kerb those expenses. Hence, due to this awakening, the industrial and marketing zones need to rethink the way they conduct their business, persuade clients, and try to make a success of their enterprise amidst stiff competition.

Singapore which was until recently considered an economically very sound state is also facing the ill effects of its fiscal problems. Hitherto Singapore’s economic status was seen as being in a position where it remains unaffected by the global economic emergency.

Focus of the study

The significance of this research is that there is very little written matter that emphasizes the importance for patrons’ loyalty and the ability to withhold this loyalty to succeed. Research that has been done earlier on this issue has not covered the situation during the international fiscal emergency. This discrepancy in studies that are already available should be addressed as there are many banking firms that would benefit from this thesis. This thesis is intended for banking firms that have witnessed a turn down in their total banking process as a result of the global economic crisis. Questions that have been scrutinized in this study are as follows

This research intends to find out how one can go about retaining their customer base and about loyalty behaviour in the Icelandic banking trade. It also intends to help in developing more congenial schemes to retain clients. The emphasis of this study will be formed on a virtual hypothetical structure; raising these issues can assist stopping clients from switching over to other banks.

Aim of the study

This research intends to find out how one can go about retaining their customer base and about loyalty behaviour in the Icelandic banking trade. It also intends to help in developing more congenial schemes to retain clients. The emphasis of this study will be formed on a virtual hypothetical structure; raising these issues can assist stopping clients from switching over to other banks.

In addition, taking into account earlier research papers and the outcome that the economic crisis has had on the banking firms in other nations, it is deemed necessary to scrutinize whether contentment and the quality of service can have an impact on trust and in retaining the customer base. To deal with the above mentioned problem statement, this study intends to find an appropriate answer to questions that are given below

• To identify the consumer views on economic crisis affecting banks in Singapore and identify the impact of the same on their banking operations.
• To identify the antecedents of customer loyalty and retention during times of economic crisis
• To identify the importance given by customers to service quality, customer satisfaction and value during times of economic crisis
• To identify the impact of consumer demographics and banking relationship on impacting customer loyalty and retention
• To arrive at recommendations for the Singapore banking industry in order to improve their customer base during times of economic crisis.

Outline of dissertation

The research comprises of six primary chapters which includes,

Chapter one: The introduction of thesis is discussed in chapter one. It gives the environment of the research, the problem declaration, the research goal and objectives, the research queries, the methodology implemented and structure of the thesis.

Chapter two: The review of the literature with respect to customer loyalty and satisfaction is described in this chapter along with identifying the planned research theory.

Chapter three: The research technique implemented in the dissertation is presented in this chapter. It presents the reason behind the adopted research plan and gives an outline of the principles followed while carrying out the research.

Chapter four: The outcomes of the study are represented in this chapter.

Chapter five: This chapter gives the discussion of the outcomes. The research questions are answered using the outcomes of the questionnaire. In this chapter the suggestions of the study, the drawbacks and proposals for future research are given as a summary.