Financial Factors Influencing Client Retention in Microfinance Institutions in Kenya: A Case of Kenya Women Microfinance Bank - Nyeri County
Keywords:
Financial products, Interest rates, Bank charges, Bank environment and Client retentionAbstract
Customer retention is an effective tool that banks can use to support their survival in the industry. Retaining customers is a primary factor in firms that practice any form of relationship marketing. The motive of this study was to assess the financial factors that influence customer retention, using a case study of the Kenya Women Microfinance Bank. The study used a case study design approach and targeted 340 inactive clients, the operations manager and the branch manager. From this target population, the study used sample size of 186 respondents. The study revealed that financial products offered, the interest rates, banking charges and the banking environment have an important influence on customer retention. Moreover, the values were less than the acceptable significance level, hence the null hypothesis was rejected. It was concluded that the financial products on offer, that include but not limited to loans, bank accounts, ATM services and fund transfers do influence how the customers perceive the bank. Bank charges on ATM, mobile banking, and bank statement provision and general service charges influence the perception of clients in banks thus affect whether to maintain their accounts in the banks. The study recommended that banks need to maintain good quality relationships with their clients, maintain favorable interest rates, charge favorable fees on services and maintain a good banking environment as these factors directly influence client retention.
Key words: Financial products, Interest rates, Bank charges, Bank environment and Client retention
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