Ephrem Habtemichael Redda

Attaining customer satisfaction and loyalty is seen as a prerequisite for successful bank management. The purpose of the study is to identify and explain the mechanism through which e-banking quality is related to loyalty by including satisfaction as a mediating variable in South Africa. The study adopts a descriptive research design and a quantitative mediation analysis. The data collected through SurveyMonkey comprised a sample of 310 participants who used online banking. The results of the mediation analysis confirm that e-banking quality has a considerable and positive effect on customer satisfaction, which in turn has a significant and positive effect on loyalty in e-banking. The direct effect of e-banking quality on loyalty is also confirmed. Furthermore, the study’s findings show that the quality of e-banking has a significant and favorable indirect effect on loyalty, as mediated by customer satisfaction. Because the direct effect of e-banking quality on loyalty remained significant after the satisfaction intervention/mediation in the model, the mediation is regarded as partial. The findings of this study offer essential marketing guidance for banking professionals who design and implement e-banking solutions for their customers.

Literature suggests that achieving adequate customer loyalty is a significant determinant of growth and profitability. However, in South Africa, there is no evidence of a validated customer-loyalty-in-retail-banking scale. Thus, this study aimed to contribute to the literature by validating customer loyalty in retail banking as a six-factor structure comprising customer loyalty, service quality, customer commitment, trust, switching cost and customer satisfaction, which practitioners can use as a marketing guide to better understand customer loyalty. Data was collected from one sample only once, and the sample size was selected (N = 400). Descriptive and confirmatory factor analyses were undertaken to achieve the study’s objective. Confirmatory factor analysis results validated customer loyalty in retail banking as a six-factor structure that includes customer loyalty, service quality, customer commitment, trust, switching cost and customer satisfaction. The results show no serious multicollinearity between the latent factors and that acceptable internal-consistency reliability was returned for each factor. Moreover, the measurement model returned acceptable composite reliability together with construct, convergent and discriminant validity. Moreover, IFI, TLI, CFI, SRMR and RMSEA model fit index values suggest a good fitting model. Thus, the results concluded that this six-factor model is a reliable and valid instrument of customer loyalty in retail banking and is the first validated customer loyalty scale within the retail-banking context of South Africa. Retail banks are encouraged to use this instrument as a marketing guide in their quest to provide excellent banking services to their market segments, as well as build solid bank-customer relationships.

Customer loyalty and trust are key elements for the success of retail banking. For this reason, it is crucial to investigate the predictors of these elements. This study aims to model service quality, customer satisfaction, and commitment influencing customer loyalty and trust in South African retail banking. The target population is a growing banking customer segment – Generation Y. A sample of 271 Generation Y customers participated in the survey. Their responses were analyzed using AMOS, whereby a structural equation model was developed. Although the structural model suggests that service quality (β = 0.097; p = 0.175) is an insignificant predictor of customer loyalty in retail banking, the influence remains positive. Moreover, the model infers that customer satisfaction (β = 0.793; p = 0.001) predicts customer loyalty in retail banking and that customer satisfaction (β = 0.715; p = 0.001) and commitment (β = 0.257; p = 0.001) influence trust in retail banking. All the model fit indices (NFI = 0.95; RFI = 0.92; IFI = 0.97; TLI = 0.96; CFI = 0.97; RMSEA = 0.06; SRMR = 0.03) infer that the model is reliable, valid, and ultimately good fitting measurement tool of customer loyalty and trust in retail banking. The results provide insights into the most critical factors in building customer loyalty and trust among Generation Y customers in South African retail banking. Moreover, they can help to develop marketing and customer service strategies to improve these outcomes.