Journal of Economics and Behavioral Studies (ISSN: 2220-6140) Vol. 9, No. 3, pp. 192-201, June 2017 192 The Role of E-Banking on the Switching Behaviour of Retail Clients of Commercial Banks in Polokwane, South Africa Reginald Masocha, Tafadzwa Matiza School of Economics and Management, University of Limpopo, South Africa reginald.masocha@ul.ac.za, matizata@hotmail.com Abstract: This study focused on investigating the role of E-banking on the switching behaviour of retail bank clients in Polokwane, South Africa. Recently, studies have shown that people are switching banks more often than in the past. Circumstances that are beyond control cause people to switch. This has become a challenge in the banking industry as many banks lose their clients. However, newly developed technologies have brought many changes in the operation of banks. The new E-banking services have enabled bank clients to have access to their bank account for 24 hours without visiting the physical branch. A sample of 98 respondents was surveyed in Polokwane, South Africa using the convenience sampling technique. The cronbach alpha test was used to ascertain reliability of the findings. The findings reveal that demographic characteristics have much impact on the switching behaviour of commercial bank clients and acceptance of e- banking services. Switching factors such as bank charges, low interest rates on savings, promotion activities, location and switching costs were the major reasons for bank customers to switch banks. Keywords: E-banking, Customer Switching behaviour, Switching Barriers, South Africa’s banking industry 1. Introduction Within the contemporary business environment, the propensity of financial service consumers switching service providers has significantly increased - buoyed by the competitive pressures arising from the deregulation of the banking sector by individual economies from the early ͳͻͺͲ’s to pr esent day, economic integration associated with globalisation and more pertinently, advances in information and communication technology - ICT (Clemes, Gan & Zheng, 2007; Kura, Mat, Gorondutse, Magaji & Yusuf, 2012; Wu, 2005). The proliferation of electronic banking (E-banking) in the South African banking services sector has, since its introduction in 1996, become a major component of banking services and product delivery - debunking the traditional bank-branch oriented services (Addae-Koranye, 2014; Chavan, 2013; Wu, 2005). The utilisation of internet-based services and products within the South African banking sector is extensive and has been found to have a critical impact on the consumer behaviour of bank clients (Gouws, 2012; Redelinghuis & Rensleigh, 2010; Wu, 2005). This shift in consumer behaviour includes the subject matter of this paper, customer switching behaviour. Customer switching is the undesirable effect of an increasingly innovative and competitive market in any service oriented industry, more-so in the South African financial services sector. The literature (Khan, Ghouri, Siddaqui, Shaikh & Alam, 2010; Pirzada, Nawaz, Javed & Asab, 2014) intrinsically links customer retention with the profitability of banking institutions. Khan et al. (2010) and Gouws (2012) consider customer switching to have a discernible antipodal relationship with the operating costs of organisations, as increased customer switching ultimately results in increased marketing and customer retention costs. To this end, Onditi (2013) argues that there is a golden thread between service features and customer loyalty, in relation to customer retention and organisational performance, respectively. The South African banking sector is highly competitive and is characterised as saturated by Chigamba and Fatoki (2011), who go on to ascertain that consumers are privy to unlimited switching options. The extent of technological innovation in the South African banking sector through e-banking and the subsequent impact on customer switching behaviour is a relatively novel discourse. This is so especially within a predominantly rural region such as Limpopo Province, South Africa. This study therefore, contributes to an improved understanding of e-banking as an antecedent of switching behaviour within the surveyed population. It is with this in mind that this study was conducted, particularly to establish the impact of e-banking on the switching behaviour of retail banking clients of commercial banks within the Polokwane City locale, which is the provincial capital of Limpopo Province, South Africa.