Service failure and negative Word-of-Mouth in Chinese retail banking: a moderated-mediation approach

Purpose As opposed to conventional promotional methods, Word-of-Mouth (WOM) communication, especially when negative, significantly shapes customers’ repurchase decisions and preferences. Therefore, this study aims to examine the interplay between negative WOM and bank service failures, with a focus on the mediating role of customer switching intentions and the moderating role of switching costs in this relationship. Design/methodology/approach Using an online semi-structured questionnaire survey, a dataset comprising 411 responses was gathered from retail bank customers in China. This dataset was subsequently analyzed using SPSS PROCESS. Findings Consistent with the social exchange theory, our study revealed a significant relationship between service failure and both bank customers’ intention to switch and negative WOM communication. Additionally, we observed that switching intentions significantly influence negative WOM communications, acting as a mediator between service failures and negative WOM. Furthermore, our findings indicated that switching costs moderate the direct effect of service failures on negative WOM and moderate the indirect effect of service failures on negative WOM through switching intentions. Research limitations/implications This study provides significant policy implications aimed at minimizing bank service failures and subsequent negative WOM communications among bank customers. Originality/value This study empirically investigates the role of service failures in promoting negative WOM communication, demonstrating a partial mediation effect of switching intentions in this relationship. Moreover, the study highlights that switching costs moderate service failures’ impact on customers’ switching intentions.