THE 10th ISLAMIC BANKING, ACCOUNTING AND FINANCE INTERNATIONAL CONFERENCE 2022
(iBAF 2022)
The Impact of Branding on Long-Term Customer Loyalty of Prime Bank Raju Biswas
Faculty of Economics and Muamalat, Universiti Sains Islam Malaysia (USIM), Bandar Baru Nilai, 71800 Nilai, Negeri Sembilan Malaysia
Tel: +6017 3680304 E-mail: [email protected]
Abstract
This article aims to determine the significance of branding in advertising Retail Banking and that it is helping in analyzing the establishment of customer loyalty to the retail banking processes. The building of long-term customer loyalty is essential which can be carried out by the execution of repetitive transactions. It leads to an increase in the economic performance of the bank present in Bangladesh, especially Prime Bank Ltd. The long-term effect is created on customer loyalty as the bands help to strengthen the financial decisions of the customers. However, the lack of analytical skills has created issues for the banking sector in Bangladesh. This article has developed based on this issue. An explanatory research design was used and a questionnaire was constructed and made available online to collect data from the working people in the Retail Banking Industry. A total of 300 responses were collected and coded into Statistical Package for Social Science (SPSS) which was then generated for the analysis. The data analyse the reliability, correlation and regression analyses towards brand awareness, brand trust, brand equity and perceived service quality to customer loyalty. The findings confirmed that branding has a big effect on customer loyalty and also carries a positive and direct impact on Prime Bank Ltd.
Keywords: Brandind; Customer Loyalty; Prime Bank
1. Introduction
The building of long term customer loyalty is essential which can be carried out by the execution of repetitive transactions. The more and more conscious nature is determined by the inclusion of branding processes present in marketing for retail banking products and services. It acts as a key concern related to the financial institutions that are creating a negative impact on the credibility of the customers. As a result of this, the execution of the appropriate financial transactions leads to an increase in retail banking products and services by nature. It helps to improve the offering of the products and services from the existing competitors present in Bangladesh. The long term effect is created on customer loyalty as the bands helps to strengthen the financial decisions of the customers.
The dependable and the reliable nature illustrate the long term effect on customer loyalty with the inclusion of strong marketing processes (Sardar, 2019). Retail banking includes a wide range of banking services that are belonging to similar categories such as checking accounts, savings accounts, consumer lending processes, debit cards, credit cards, mortgages, e-banking services, and phone-banking services. This research has focused on the factors behind the development of consumer’s loyalty. Corporate banking has associated with the companies or corporates and retail banking has focused on the service of consumers. Therefore, retail banking has a direct connection with the consumers. Due to this reason, this study has selected to develop research on retail banking rather than corporate banking. The impact of branding in marketing is seen to be establishing an erosion environment in the confidence of the customers with the integration of different safeguarding activities.
Availability of proper branding is important in this case to build a trust on consumers. Engagement with the consumers by the development of practice on social media is sufficient in this case to enhance the loyalty of the consumers as well. In the practice of retail banking and fulfilling the demand of the consumers with this, it is important to develop the analytical skills of the employees of the banking sector. However, in the practice of Prime bank in Bangladesh, it has found that this organization is lacking with the development of analytical skills.
Different technologies like “Google analytics” and “multichannel attribution” have played a key role for this bank in the evaluation of consumer demand. It is useful for them to develop their services and gain loyalty from consumers as well. The cost for transaction has decreased by 90% compared to the traditional transaction in Prime bank (Primebank.com.bd, 2022). On the other hand, it has generated a negative influence on the financial stability of Bangladesh as well (Banna, 2020).
2. Literature Review
2.1 Concept of branding
Prime Bank in Bangladesh was introduced in 1995 and it is a top-rated commercial bank. Green banking is a new concept which helps an organisation to maintain its brand image in market. On the other hand, this concept gives priority to all social along with ecological factors. This banking sector to maintain its branding has established Prime Bank Foundation so that it can regulate its corporate social responsibility or CSR approaches effectively. Besides this business organisation has introduced Education Support Program to support society (Primebank, 2022).
Figure 1: Changes in Assets of Prime Bank (Source: Primebank, 2020)
This banking sector already launched Prime Campus which introduces affordable charges and shows compassion to local communities. This is a way through which brand identity of this organisation has been maintained. Due to its brand image, this banking sector won several awards out of which in 2020 this organisation received an award for its excellent leadership approach. Moreover, brand culture consists of innovative ideas and because of its innovative ideas this organisation has been considered the best banking sector in Bangladesh in 2020. According to a viewpoint of Jan & Shafiq, (2021), brand personality can raise customers' satisfaction easily.
It has been observed that if banking sector offers features of humans then customers can relate themselves to this type of organisation. Prime Bank has started internet banking which helps to maintain customers' privacy and it can be considered a human-type feature of banking sector.
2.2 Concept of loyalty journey of Prime Bank
Figure 2: Milestones of Prime Bank (Source: Primebank, 2020)
Customer loyalty defines an emotional bonding within organisations along with its customers. According to a view of Ewanlen & Benson, (2022), this can be achieved by any organisation with help of consistency in business, loyalty programs along with great services. By analysis of above picture, it is understood that organisation does not only have elements of process of Islamic banking but also achieves a Prime Dealer license. In order to satisfy needs of customers, this organisation is able to launch two types of subsidiaries named local subsidiary along with overseas subsidiaries. Now, this organisation not only exists in Bangladesh but also in Hong Kong, UK along with Singapore. On the other hand, this organisation has opened three types of banking namely conventional banking, alternative channels related to delivery along with Islamic banking.
Moreover, this banking sector to acquire customers on a long-term basis introduces biometric capable Agent banking, eKYC and others (Primebank, 2021). This banking sector introduces a liquidity system which is based on long-term for maintaining financial disruptions caused by COVID-19 pandemic. This corporation has launched several programs for its customers named ‘Prime Assist’ along with ‘Prime Plus’ so that scope of online banking can be developed.
2.3 Relation of Branding to loyalty
It is responsibility of a corporation to present best services through branding so that customers can acquire positive influence. According to a view of DAM & DAM, (2021), marketing activities should be designed in a way that an organisation can increase customers' loyalty. Prime Bank through help of marketing activities launches three categories under Islamic Banking named deposit products, foreign trade along with investment products. As per view point of Parvin et al. (2019), prime Bank has now more than three functional committees to understand needs of customers. These functional committees by understanding needs of customers maintain brand image of this banking sector. In order to manage brand image along with customer loyalty for long term, it is necessary to employ skilled employees. This organisation not only employs skilled labourers but also nurtures a good relationship with its employees. It can be analysed through above picture that because of a wide range of directors, employees and other stakeholder’s amount of loans, advances along with deposits are going to be increased. Due to enhanced customer loyalty customers are now depositing more money and in 2020 rate of deposit was 230000 BDT per Million. In case of loans, advances rate amount in 2020 was raised up to 231400 BDT per Million. All this statistical information reveals that Prime Bank has a positive brand image in market for which customer loyalty along with customer satisfaction has increased.
Figure 3: Loans and deposits data for customers of Prime Bank (Source: Primebank, 2021)
2.4 Customer Services
Customer service is main priority of a banking sector as it can enhance customers’ loyalty for long term as well as branding image. According to a view of Hamid & Islam, (2019), interest rate in Bangladesh has started to decrease for why Prime Bank maintains negative gaps in its business operations. These negative gaps help this organisation to maintain liabilities so that customer services along with customer satisfaction can be increased.
On the other hand, based on these negative gaps this banking sector is able to re-price its financial services for maintaining brand image. As per view point of Huda et al. (2020), Prime Bank becomes influential in Bangladesh because of its highly operative e-banking. This is main reason why this banking sector has gained more than 39%
of sponsors during COVID-19 pandemic.
Figure 4: Shareholding Position of Prime Bank (Source: Primebank, 2020)
3. Methodology
Research in this study adopted positivisms research paradigm in its quantitative methods to test and verify hypotheses. Using positivism ease the investigation of human behaviors and social reality using measurable factors and logic in interpreting the observations (Guna & Lincoln, 1994 and Fedhel, 2002). Therefore, this ease understanding of the causal relationship by researcher among the variables and factors for predicting and determining its impact on independent variable (brand awareness, brand equity, brand trust and perceived service quality) known as explanatory or predictor and dependent variable (customer loyalty) referred as explained or latter variables (Burns, 2000). There are various issues occurred during investigation as the researcher will be collecting empirical data to support the theoretical framework (Cohen, Manion, & Morrison, Research Methods in Education, n.d). The approach using positivism enable researcher to align its purpose with the objective of study whilst minimize biasness with broader criterion. This is also mentioned in study by Myrdal (1969).
Positivism and its nature will focus on the questions and hypotheses among the variables to verify the fundamental relationship. This is done through empirical testing and is also used to generalize the findings that carefully incorporate tremendous effort (Swanson & Holton, 2005). The results will not be influence as the conditions will be controlled independently, and falsification can be avoided (Guba & Lincoln, 1994). Moreover, the quantitative research can be examined, and quality maintain by validating its data and perform reliability test. The usefulness will draw its meaning as interferences will be tested and measure from the sample on its consistency (Creswell, 2009). This shows positivism will be yielding an acceptable and common outcome with higher rigor standards based on the formulate methods (Ashby, 1964). According to Saunders, et al. (2007) there are three categories are included in the research design, such as exploratory and explanatory research, as well descriptive. In this study, explanatory research design using qualitative method will be adopted based on illustration. The test on hypotheses and method formulation will be experimented during the qualitative studies to drive conclusion by providing definitions when uncovering truths from empirical and mathematical equations. Nevertheless, the reality derived from the knowledge will not be altered (Henning, et al., 2004). In this research paper, the focus will be on homogenous target population of customers from Prime Bank, Dhaka, Bangladesh without being bias on their ethics, age, religion, socioeconomics and business size. In another study by Hill (1998), 5% significance level is known to be the acceptable confidence level on most behavioral sciences whilst it is 10% as rule of thumb by Roscoe (1975) (Table 1).
Table 1: Calculation on Ideal Sample Size Calculation (Qualtrics, 2018).
Total Population Margin of Error Confidence Level Ideal Sample Size
1000 10% 95% 100
This means researcher will be adopting non-profitability. This study will use self-questionnaires as it will cover larger population coverage, avoid biasness and cost effective (Keith, 2003). The questionnaires will be categorized with topic for easy understanding (McColl, et al., 2001). Close-ended questions will be used for respondents to easy respond to the given set and easier to analyze the data by researcher (McIntyre, 1999), for comparison (Oppenheim,1992), whilst the open-ended questions is difficult to analyze due to contemplation and greater thoughts (Salant & Dillman, 1994). For this study purpose to analyse the quantitative analysis researcher used Statistical Package for Social Sciences (SPSS) software to analyse the data collected from survey questionnaires.
There are number of statistical software Hair J, et al., (2011) packages but SPSS was a chosen for this analysis due to it is flexible, adjustable approach to get very granular on even the most mind boggling informational
indexes. Which give researcher more time to do what researcher specialize in and distinguish patterns, create prescient models, and reach educated determinations. (Hair J, Ringle C, & Sarstedt M, PLS-SEM: Indeed a Silver Bullet, 2011). To examine data researcher, adopt two statistical methods known as scale reliability and descriptive reliability.
4. Conclusion
Branding is considered to be one of the vital elements in the execution of the marketing processes. The branding enables the organization to focus on meeting customer loyalty as well as is helping in understanding the importance of the branding for the organization. As a result of this, Prime Bank Bangladesh can be easily able to focus on understanding the pros and cons of the branding processes appropriately. The effective decision-making process should be considered to analyze the branding strategy of the bank, as well as the preparation of appropriate branding processes, can be strongly determined. It establishes a successful branding environment as a whole for the organization as which is seen in this situation. The respective research will be implementing the inductive form of research approach so that stable research outcome measurement processes can be carried out. This will also help to provide success to the organization with the inclusion of all the branding processes so that it can be easily able to strengthen the customer base as a whole.
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