Banking system trust, bank trust, and bank loyalty

P. van Esterik-Plasmeijer, W.F. van Raaij

Research output: Contribution to journalArticleScientificpeer-review

Abstract

Purpose
The purpose of this paper is to test a model of banking system trust as an antecedent of bank trust and bank loyalty. Six determinants of trust and loyalty are included: competence, stability, integrity, customer orientation, transparency, and value congruence. The study provides insights which determinants are crucial for explaining bank trust and bank loyalty, and thus for rebuilding trust and loyalty.
Design/methodology/approach
Survey among 1,079 respondents of 18 years and older in The Netherlands on person trust, system trust, bank trust, and their scores on determinants of trust and loyalty. Structural equations modeling (AMOS) has been performed to provide insights into the relationships between concepts such as person trust, system trust, bank trust, and bank loyalty. The importance of determinants to explain bank trust and bank loyalty has been assessed as well.
Findings
Integrity is the most important determinant of bank trust. Transparency, customer orientation, and competence are also significant. Trust is a strong predictor of loyalty. Determinants explaining bank loyalty are: competence, stability, transparency, and value congruence. System trust is also a determinant of bank trust. The meaning of these results is discussed in the paper, as well as the managerial implications of these findings.
Research limitations/implications
Data were collected in May 2014 with a large sample, when the financial crisis came to an end. Distrust still remained as a consequence of the crisis. Banks are now rebuilding trust and loyalty. This research provides indications which determinants of trust and loyalty are important in this process and should be focused upon. A longitudinal study how trust and loyalty are developing would give insights and feedback on managerial actions.
Practical implications
Results provide insights into the causes and reasons of (dis)trust. From this study, banks get insights with a priority matrix which determinants are below par but important for specific banks and should be focused on and improved at the short term.
Social implications
Trust in banks and other financial institutions is crucial for the functioning of the banking system and for society at large. Restoring trust is a matter of fundamental changes of the bank-customer relationships, not only by communication but by sincere behavior (integrity) and benevolence in the customer interest.
Originality/value
The authors are not aware of research using all six determinants (competence, stability, integrity, customer orientation, transparency, and value congruence) to explain and predict bank trust and bank loyalty, and their implications for trust and loyalty in banks.
Original languageEnglish
Pages (from-to)97-111
JournalInternational Journal of Bank Marketing
Volume35
Issue number1
DOIs
Publication statusPublished - 2017

Fingerprint

Loyalty
Banking system
Transparency
Customer orientation
Integrity
Value congruence
Functioning
Structural equation modeling
Financial crisis
Communication
Distrust
Customer relationship
Financial institutions
Longitudinal study
Predictors
Benevolence
Design methodology
The Netherlands

Cite this

@article{adbdadd9f2544556a91b66181a7d3250,
title = "Banking system trust, bank trust, and bank loyalty",
abstract = "PurposeThe purpose of this paper is to test a model of banking system trust as an antecedent of bank trust and bank loyalty. Six determinants of trust and loyalty are included: competence, stability, integrity, customer orientation, transparency, and value congruence. The study provides insights which determinants are crucial for explaining bank trust and bank loyalty, and thus for rebuilding trust and loyalty.Design/methodology/approachSurvey among 1,079 respondents of 18 years and older in The Netherlands on person trust, system trust, bank trust, and their scores on determinants of trust and loyalty. Structural equations modeling (AMOS) has been performed to provide insights into the relationships between concepts such as person trust, system trust, bank trust, and bank loyalty. The importance of determinants to explain bank trust and bank loyalty has been assessed as well.FindingsIntegrity is the most important determinant of bank trust. Transparency, customer orientation, and competence are also significant. Trust is a strong predictor of loyalty. Determinants explaining bank loyalty are: competence, stability, transparency, and value congruence. System trust is also a determinant of bank trust. The meaning of these results is discussed in the paper, as well as the managerial implications of these findings.Research limitations/implicationsData were collected in May 2014 with a large sample, when the financial crisis came to an end. Distrust still remained as a consequence of the crisis. Banks are now rebuilding trust and loyalty. This research provides indications which determinants of trust and loyalty are important in this process and should be focused upon. A longitudinal study how trust and loyalty are developing would give insights and feedback on managerial actions.Practical implicationsResults provide insights into the causes and reasons of (dis)trust. From this study, banks get insights with a priority matrix which determinants are below par but important for specific banks and should be focused on and improved at the short term.Social implicationsTrust in banks and other financial institutions is crucial for the functioning of the banking system and for society at large. Restoring trust is a matter of fundamental changes of the bank-customer relationships, not only by communication but by sincere behavior (integrity) and benevolence in the customer interest.Originality/valueThe authors are not aware of research using all six determinants (competence, stability, integrity, customer orientation, transparency, and value congruence) to explain and predict bank trust and bank loyalty, and their implications for trust and loyalty in banks.",
author = "{van Esterik-Plasmeijer}, P. and {van Raaij}, W.F.",
year = "2017",
doi = "10.1108/IJBM-12-2015-0195",
language = "English",
volume = "35",
pages = "97--111",
journal = "International Journal of Bank Marketing",
issn = "0265-2323",
publisher = "Emerald Group Publishing Ltd.",
number = "1",

}

Banking system trust, bank trust, and bank loyalty. / van Esterik-Plasmeijer, P.; van Raaij, W.F.

In: International Journal of Bank Marketing, Vol. 35, No. 1, 2017, p. 97-111.

Research output: Contribution to journalArticleScientificpeer-review

TY - JOUR

T1 - Banking system trust, bank trust, and bank loyalty

AU - van Esterik-Plasmeijer, P.

AU - van Raaij, W.F.

PY - 2017

Y1 - 2017

N2 - PurposeThe purpose of this paper is to test a model of banking system trust as an antecedent of bank trust and bank loyalty. Six determinants of trust and loyalty are included: competence, stability, integrity, customer orientation, transparency, and value congruence. The study provides insights which determinants are crucial for explaining bank trust and bank loyalty, and thus for rebuilding trust and loyalty.Design/methodology/approachSurvey among 1,079 respondents of 18 years and older in The Netherlands on person trust, system trust, bank trust, and their scores on determinants of trust and loyalty. Structural equations modeling (AMOS) has been performed to provide insights into the relationships between concepts such as person trust, system trust, bank trust, and bank loyalty. The importance of determinants to explain bank trust and bank loyalty has been assessed as well.FindingsIntegrity is the most important determinant of bank trust. Transparency, customer orientation, and competence are also significant. Trust is a strong predictor of loyalty. Determinants explaining bank loyalty are: competence, stability, transparency, and value congruence. System trust is also a determinant of bank trust. The meaning of these results is discussed in the paper, as well as the managerial implications of these findings.Research limitations/implicationsData were collected in May 2014 with a large sample, when the financial crisis came to an end. Distrust still remained as a consequence of the crisis. Banks are now rebuilding trust and loyalty. This research provides indications which determinants of trust and loyalty are important in this process and should be focused upon. A longitudinal study how trust and loyalty are developing would give insights and feedback on managerial actions.Practical implicationsResults provide insights into the causes and reasons of (dis)trust. From this study, banks get insights with a priority matrix which determinants are below par but important for specific banks and should be focused on and improved at the short term.Social implicationsTrust in banks and other financial institutions is crucial for the functioning of the banking system and for society at large. Restoring trust is a matter of fundamental changes of the bank-customer relationships, not only by communication but by sincere behavior (integrity) and benevolence in the customer interest.Originality/valueThe authors are not aware of research using all six determinants (competence, stability, integrity, customer orientation, transparency, and value congruence) to explain and predict bank trust and bank loyalty, and their implications for trust and loyalty in banks.

AB - PurposeThe purpose of this paper is to test a model of banking system trust as an antecedent of bank trust and bank loyalty. Six determinants of trust and loyalty are included: competence, stability, integrity, customer orientation, transparency, and value congruence. The study provides insights which determinants are crucial for explaining bank trust and bank loyalty, and thus for rebuilding trust and loyalty.Design/methodology/approachSurvey among 1,079 respondents of 18 years and older in The Netherlands on person trust, system trust, bank trust, and their scores on determinants of trust and loyalty. Structural equations modeling (AMOS) has been performed to provide insights into the relationships between concepts such as person trust, system trust, bank trust, and bank loyalty. The importance of determinants to explain bank trust and bank loyalty has been assessed as well.FindingsIntegrity is the most important determinant of bank trust. Transparency, customer orientation, and competence are also significant. Trust is a strong predictor of loyalty. Determinants explaining bank loyalty are: competence, stability, transparency, and value congruence. System trust is also a determinant of bank trust. The meaning of these results is discussed in the paper, as well as the managerial implications of these findings.Research limitations/implicationsData were collected in May 2014 with a large sample, when the financial crisis came to an end. Distrust still remained as a consequence of the crisis. Banks are now rebuilding trust and loyalty. This research provides indications which determinants of trust and loyalty are important in this process and should be focused upon. A longitudinal study how trust and loyalty are developing would give insights and feedback on managerial actions.Practical implicationsResults provide insights into the causes and reasons of (dis)trust. From this study, banks get insights with a priority matrix which determinants are below par but important for specific banks and should be focused on and improved at the short term.Social implicationsTrust in banks and other financial institutions is crucial for the functioning of the banking system and for society at large. Restoring trust is a matter of fundamental changes of the bank-customer relationships, not only by communication but by sincere behavior (integrity) and benevolence in the customer interest.Originality/valueThe authors are not aware of research using all six determinants (competence, stability, integrity, customer orientation, transparency, and value congruence) to explain and predict bank trust and bank loyalty, and their implications for trust and loyalty in banks.

U2 - 10.1108/IJBM-12-2015-0195

DO - 10.1108/IJBM-12-2015-0195

M3 - Article

VL - 35

SP - 97

EP - 111

JO - International Journal of Bank Marketing

JF - International Journal of Bank Marketing

SN - 0265-2323

IS - 1

ER -