Analysis of the Factors Influencing Customer Switching Behaviour of The Millennials in Digital Banks

Abstract

The 21st century saw rapid technological advancements that penetrated almost all industry sectors, including banking.One of the digital transformation results is the emergence of banks with new, utterly digital-based business models ("neobanks").Digital banks take advantage of this opportunity and cause a decrease in millennial customers in non-digital banks as they switch to digital banks.This study aims to provide insight for non-digital banks so that in the digitalisation process, non-digital banks can prioritise which factors should be developed to retain their millennial customers.The push-pull-mooring (PPM) model is chosen as the basis for this research to investigate the elements that have an impact on customer switching behaviour millennials towards the digital bank.The study examines the effect of price, service quality, switching cost, perceived ease of use, perceived usefulness, digital collaboration, and CRM quality through an online survey of 540 respondents using a convenient random sampling technique.SmartPLS 4 is used to perform the data analysis.Findings reveal that digital collaboration, CRM quality, switching cost, and perceived ease of use significantly impact customer switching behaviour among millennials toward the digital bank.In contrast, perceived usefulness, price, and service quality do not have a considerable effect.Based on the results of this study, millennials are quick to switch as long as the banking application is easier to use, has lots of collaboration with third parties that benefit them, and bank product information channel appropriately.However, millennials hesitate to switch if they already depend on the products used.The findings further elaborate the knowledge of customer switching behaviour in the context of millennials, especially in the Jakarta Metropolitan Area, Indonesia, towards the digital bank so that non-digital banks can retain and acquire new millennial customers.

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