When does expectation fail? The consequences of negative customer experience in the banking industry

Purpose This study aims to address the underexplored area of negative customer experience (CX) in the banking industry by investigating the antecedents and consequences of negative CX, specifically focusing on the under-examined role of price and competitors’ advertisements in driving negative CX and how this, in turn, affects customer behaviors such as negative word-of-mouth (WOM) communication and switching intentions. Unlike prior research that primarily focuses on firm-controlled factors, this study offers a novel perspective by examining the impact of external competitive forces on CX. Design/methodology/approach Utilizing a quantitative approach, the study collected data from 460 bank customers in China. The research employed SmartPLS for data analysis, examining the relationships between price, competitors’ advertisements, negative CX, negative WOM and switching intentions through the lenses of expectation-confirmation theory, cognitive dissonance theory and social exchange theory. This parsimonious model allows for the simultaneous examination of multiple drivers and outcomes of negative CX, providing a holistic view of the customer journey. Findings The findings reveal that higher prices and effective competitors’ advertisements significantly contribute to and exacerbate negative CX. Furthermore, negative CX is shown to lead to increased negative WOM engagement and higher switching intentions among customers. The study also identifies that negative WOM acts as a mediator between negative CX and switching intentions, highlighting the complex interplay between customer experience and behavioral outcomes. These findings underscore the importance of considering competitive forces and pricing strategies in managing customer perceptions and behaviors. Research limitations/implications The study is limited to the bank sector in China, which may restrict the generalizability of the findings to other industries or geographical contexts. Future research could explore the impact of negative CX across different sectors and cultures to enhance the understanding of customer behavior. Originality/value This research contributes to the existing literature by addressing the underexplored area of negative CX in financial services. It provides valuable insights for practitioners on how pricing strategies and competitors’ marketing efforts can influence customer experiences and behaviors, and by providing empirical support for the use of cognitive dissonance theory and social exchange theory in explaining those influences, ultimately informing strategies for customer retention and management. The study offers a unique perspective on the drivers of negative CX and their consequences, contributing to a more comprehensive understanding of customer behavior in a competitive market.