The aim of this article is to identify the influence of service quality on customer loyalty in the Greek banking sector. Service quality was measured using the SERVQUAL model, including importance weights. Repurchase intention and positive word-of-mouth were used as behavioral components to measure customer loyalty. However, it should be noted that customers stated repurchase intention does not always ensure their actual repurchase behavior. Data were collected through a survey research and 120 customers of Greek banks were personally interviewed. The findings showed that there are relationships between service quality, customers stated repurchase intention and their recommendations to third parties in the Greek banking sector. The SERVQUAL model proved to be a reliable measure for service quality. Consideration was limited to the identified factors, but also several other variables influencing customer loyalty exist. Thus, the intermediate steps between formulating a service quality level and influencing customers to remain loyal need sturdier theoretical underpinning and significant empirical support.

In Greece, there are three major banks. Of them, the National Bank of Greece (NBG) is the biggest. It was established in 1841, has a network of 571 branches and 1,413 ATMs, and covers all over the country. In addition, the bank has 983 branches worldwide. The bank services include mobile and Internet banking, deposits, cards for automatic transfer, and loans (NBG, 2008). The other two major banks are: Alpha Bank and Marfin Egnatia Bank (Hellenic Financial and Business Directory, 2008). Alpha Bank was established in 1879 and is one of the biggest banks in Greece. It has 374 branches in Greece and another 300 worldwide (Alpha Bank, 2008). Marfin Egnatia Bank, was established by merging three banks – Egnatia, Laiki and Marfin. The bank has a network of 150 branches and 180 ATMs.

According to the literature, customer loyalty is important to banks and to all the companies with an established customer base like banks. As Zeithaml et al. (1996) stated, the net return on investments in mature markets can be much higher for retention strategies than for strategies to attract new customers. There are claims that it is more expensive to win a new customer than to retain an existing one. Loyalty initiates a series of economic effects and the net return on investment for the companies could be much higher for retention strategies than for strategies to attract new customers.

This study aims to identify whether service quality is influencing customer retention in the banking sector in Greece. Two proxies are used for customer loyalty, repurchase intention and positive word-of-mouth. However, as Rust and Zahorik (1995) mentioned, customers' stated repurchase intention may not reflect the true probability of repurchase and the intention to repurchase is not the same thing as actual repurchase.

Customer loyalty, as Jones and Sasser (1995) stated, is the feeling of attachment to or affection for a company's people, products or services.

Customer loyalty has been defined as an attitude and as behavioral loyalty. Behavioral loyalty is customers intention to repurchase the product/service (Hallowell, 1996). Thus, as a behavior, customer loyalty has been measured as the customers' repeat purchase probability (Rajshekhar and Moberg, 1997).

Bank Management Journal, Customer Retention, Greek Banking Industry, SERVQUAL Model, Internet Banking, Customer Loyalty, Banking Sector, Global Assessments, Banking Services, Demographic Variables, Customers Perceptions, Greek Banking Sector, Medical Care Services.