Brand loyalty as a competitive advantage for South African banks

Abstract

This study investigates the role of brand loyalty in South African banking. More specifically, the study identifies brand loyalty factors in South Africa’s banking industry. Brand loyalty can significantly impact a bank’s competitiveness. Loyal customers do not switch banks and use more banking products; this earns a better income for a bank in the long run (such as home loans). The study’s primary aim is to identify factors of brand loyalty in South African banks. Data were gathered from South African banking customers using a Google Forms digitized format questionnaire with a 5-point Likert scale. More than 1,000 questionnaires were distributed, and 150 completed questionnaires were returned (representing a 15% response rate). The results show that the data are suitable for multivariate analysis. It has an adequate sample (Kaiser, Meyer and Olkin measure > 0.70), acceptable sphericity (p ≤ 0.05), and satisfactory reliability (α ≥ 0.70). The exploratory factor analysis identified four factors explaining a cumulative variance of 55%. These factors are: 1) customer service and satisfaction (34%); 2) negative publicity (7.5%); 3) regulatory compliance and trust (7.1%); and 4) trust and reputation (6.5%). South African bank managers can use the results to focus their brand loyalty strategies on their quest to be more competitive to face the strong competition in the banking industry.