Abstract

It is almost 20 years since the Indian banking sector was liberalized and paradigm shift happened in the Indian banking services. All banks have either totally implemented ‘Core banking Systems’ or halfway through Indian markets provide growth opportunities, which are unlikely to be matched by the mature banking markets around the world. New information technologies and emerging business forces have triggered a new wave of financial innovation -Virtual banking (e-banking). In the modern customer centric competitive arena, satisfaction, quality and loyalty prove to be key factors reciprocally interrelated in a causal, cyclical relationship. The higher the (perceived) service quality, the more satisfied and loyal are the customers. In particular, financial institutions (i.e. banks) realized the strategic importance of customer value and seem to be continuously seeking innovative ways to enhance customer relationships. In fact, as the offers of many financial services are very similar and slightly differentiable, loyal customers have a huge value, since they are likely to spend and buy more, spread positive word-of mouth, resist competitors’ offers, wait for a product to become available and recommend the service provider to other potential customers. The focus of this paper lies in the simultaneous consideration of the perceptions of both financial service providers and their clients for the management of long term marketing relationships, in which social bonds play a very important role. Firstly, the paper will try to investigate which dimensions are important in customer relationship with the banks. Then, the paper tries to study the effect of social network in establishing long lasting relationships that will minimize the customers’ switching costs, according to the perceptions of both relationship bankers and their clients.

Keywords: Customer Satisfaction, Loyalty, Retail Banking, Social Network