Digitalization of the Banking Sector

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Customer Loyalty

Customer loyalty is the desired end-state which is developed and maintained through several contributory factors. Hence, customer loyalty can be seen as a result of the following set of factors (Beerli et al., 2004): customer satisfaction, customer trust, customer perceived value, service quality and customization.


Anderson, Fornell and Rust (1997) define customization as a form of differentiation, meaning that firms tailor their offerings to meet heterogeneous needs of their customers. This is following Black, Childers and Vincent (2014), who claim that customized services are designed to meet specific needs of consumers. Rust and Chung (2006) suggest an alternative view of customization. They assert that, when services involve human interactions, the service provider can adjust to the needs of the individual customer and as such customize the offering. Moreover, Rust and Chung (2006) emphasize the importance and growth potential of service customization in areas where new technologies are prevalent.
Customization has the potential to enhance the customer experience and in turn, contribute to higher service quality. However, the customization of service offers can lead to higher costs, lower productivity and lower efficiency, although, these problems will be mitigated by new, more efficient technologies (Rust & Chung 2006). In addition, Beerli et al. (2004) argue that, because banks offer quite homogenous services, they need to differentiate its offers in accordance with customer needs to obtain a competitive edge.

Service Quality

Ganguli and Roy (2011) define service quality as an overall assessment by the customers of the service offered. Ismail et al. (2006) found that service providers’ main objective is to develop services that satisfy the needs and expectations of the customers. In other words, service providers should aim to close the gap between expectations and perceptions held by the customers, with the use of the service provided. Also, Ganguli and Roy (2011) maintain that service quality is achieved once the expectation and the outcome of the service coincide.
Wang, Lo and Hui (2003) claim that it is imperative to offer a high level of service quality to customers to survive and achieve success in the banking sector. Digitalization has reduced the importance of geographical proximity, leading to an increased emphasis on convenience and time flexibility (Yang, Jun, & Peterson, 2004). According to Yang, Jun and Peterson (2004), the importance of service quality has, amongst other things, risen because of reduced switching costs, easier access and tougher competition. As a result, differentiation in service quality to attract and retain customers has become increasingly important. Anderson et al. (1997) argue that the more time that is dedicated to each customer, the lower the productivity. However, each customer will be given a more in-depth service experience, which has the potential to increase service quality.

Customer Perceived Value

Vandermerwe (2003) claims that value is defined by the customers and refers to the customers’ satisfaction of the total experience. Furthermore, Payne and Holt (2001) claim that the foundation of value is constructed upon benefits and sacrifices. Mosavi et al. (2018) further elaborate on this by stating that perceived value is the customers’ evaluation of the trade-offs between the realized sacrifices and benefits when selecting and using a specific service from the available alternatives on the market. Hence, customer value is the perception of the customers and not something that is decided by the service provider (Hu, Kandampully & Juwaheer, 2009). In addition, Sweeney and Soutar (2001) stress that customer perceived value can sometimes be mixed up with customer satisfaction since both are value assessments. However, customer satisfaction occurs after a customer has used a service, whereas customer perceived value happens continuously.
Because of the fiercer competition in the banking sector, the customer realizes little differences in services (Samad, 2007). The author further argues that the ability to create and enhance customer value is of high importance in the banking sector. Barnes and Howlett (1998) claim that banks can differentiate themselves from competitors by understanding what creates and enhances customer perceived value. Traditionally, Skudiene, Evenhart, Slepikaire and Reardon (2013), argues that the front-line employees have been the major providers of customer perceived value since they interact directly with the customers.

1. Introduction
1.1. Background
1.2. Problem Discussion
1.3. Purpose
1.4. Delimitations
1.5. Research Question
2. Literature Review 
2.1. Customer Loyalty
2.2. Digitalization of the Banking Sector
2.3. Artificial Intelligence
3. Theoretical Framework
3.1. Choice of Theories
3.2. Revision of Framework
3.4. Modified Theoretical Framework .
3.5. Application of Framework
4. Methodology & Method
4.1 Methodology
4.2 Method
5. Empirical Results
5.1. Findings Bank Representatives
5.2. Findings Bank Customers
6. Analysis
6.1. Customization
6.2. Service Quality
6.3. Customer Satisfaction
6.4. Customer Perceived Value
6.5. Customer Trust
6.6. Customer Loyalty
7. Conclusion
8. Discussion

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