THE MEDIATING ROLE OF CUSTOMER SATISFACTION ON THE RELATIONSHIP BE-TWEEN DIGITAL SERVICE QUAL-ITY AND CUSTOMER LOYALTY

Abstract

The prevalent rapid changes in the banking service environment are highly competitive and are compelling these banks to focus on digitization to improve their services and product delivery to satisfy the customer's new needs and expectations. Hence, in alignment with these new needs and expectations, this study has been done to investigate the effect of customer satisfaction on the relationship between digital banking service quality and customer loyalty in commercial banking sector in Malaysia. To ad-dress the objective of this study, the following five hypotheses were raised and tested at 0.05 level of significance. A non-experimental correlational survey design was adopted as a plan data collection and analysis using a sample of 384 customers of 5 branches major commercial banks in Malaysia. The in-strument for data collection was a developed and validated that are Digital Banking Service Quality, Customer Satisfaction and Customer Loyalty Banks (DBSQ, CS, CL)’. The developed and validated instrument was administered to the sample and retrieved directly by the investigator. Using a sample of 384 customers. The data collected were analysed using Partial Least Square Structural Equation Modeling Technique (PLS-SEM). Findings revealed that, customer satisfaction significantly mediates the relation-ship between reliability, tangibility, empathy, responsiveness, assurance and customer loyalty (β=-0.030; β=0.079; β=0.188; β=-0.047 and β=-0.043, t=3.203; p < 0.05). Based on the data analysis and interpretation, the study concluded that, customer satisfaction mediates the relationship between digital banking services and customer loyalty in commercial banking sector in Malaysia. The study, therefore recommended that, banks should provide customers with superior services as compared to other services.