Abstract:
High level of competition has become the global influential factor in the structure and activities
of the banking system. Moreover, commercial banks are not only competing with themselves but
also with other deposit taking financial institutions and building societies within the financial
industry. They have therefore realized the need to focus on the previously neglected retail sector,
as a source of deposits and much needed income. To attract these customers, banks need to know
the factors they consider in their bank selection. The purpose of this study was therefore to find
out the factors influencing the customers' choice of banks in Kenya. In this regard, the case study
of Equity banks was undertaken. The specific objectives were to establish the role of
technological innovation, personal factors, quality of service and marketing effort as influencing
factors in the customer choice of a bank.
This study used descriptive research design that utilized the case study approach. In terms of
sampling, this study employed random sampling technique. The target population of this study
was the Equity bank management and customers. Primary data was collected using a
questionnaire while secondary data was obtained from bank's annual reports, website and other
accessible publications. The study collected quantitative data using a self-administered
questionnaire. The data was then coded to enable the responses to be grouped into various
categories and analyzed using the statistical software, SPSS. The findings were finally presented
in tables and charts. The study revealed that service quality, technological innovation, personal
factors and marketing effort influences the customer preference of a commercial bank; as
indicated by their combined coefficient of determination (R2) with a value of 0.752. This implies
that the joint independent variables explain 75.2% of the factors influencing customers'
preference of commercial bank. The study further revealed that technological innovation had the
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greatest influence followed by, personal factors, customer service and marketing effort
respectively.
The study recommends that growth oriented banks should innovate and adopt technologies that
cheaply delivers convenience and better service quality to the customers. They should also
design flexible products to accommodate the wide variety of customers. Customer preference is
also significantly influenced by the bank's marketing effort.
