Mobile Banking Service Quality and Customer Retention among Commercial Banks in Kenya

Abstract

Globally, the banking industry is confronted with a competitive atmosphere. Therefore, it is imperative for banks to not only meet but significantly surpass consumers' expectations in order to secure customer loyalty. Enhancing client loyalty improves the likelihood of customer retention. In addition, in today’s globalised world, banks are compelled to embrace new technologies in their processes. Therefore, the purpose of this study was to examine the effect of mobile banking service quality dimensions on customer retention among commercial banks in Kenya. Data was collected using a self-administered and closed-ended questionnaire from a sample of 400 customers. Both the dependent and the independent variable were measured on a five-point Likert scale. The rating was 1 “strongly disagree”, 5 “strongly agree”. Study findings revealed that the efficiency of mobile banking services had a positive and significant effect on customer retention (β= 0.469, ρ=0.00<0.05), hence hypothesis 1 was accepted. Results indicated that flexibility had a positive and significant effect on customer retention (β = 0.202, ρ=0.00>0.05), hence hypothesis 2 holds. The study therefore concluded that for each unit increase in flexibility, there is up to 0.202 units’ increase in customer retention. Moreover, security had a positive and significant effect on customer retention (β = 0.121, ρ<0.05); hence, hypothesis 4 was accepted. However, the cost of the mobile banking service had a negative and significant effect on customer retention. Hence, it is imperative for banks to improve their mobile banking service quality. The study suggests that banks should leverage mobile banking service quality to improve customer satisfaction and retention, which may drive long-term profitability.