Point System in Digital Bank: Is It the Key to Successful Customer Engagement and Loyalty?

Abstract

This study investigates the transformative impact of digitalization, with a particular focus on emerging digital banking in Indonesia. Amidst a landscape populated by digital banking brands such as Allobank, Blu, Jenius, Neobank, and TMRW, this research reveals distinct differences in their strategies for effectively attracting and retaining customers. Notably, two of the leading digital banks use a spectrum of gamification elements such as badges, levels, challenges, quests, social graphs, and virtual goods. However, a noteworthy aspect, the point system, remains unexplored. Through a quantitative approach involving an online questionnaire distributed to XYZ digital bank users and analyzed with SEM-PLS, this study explores the effect of hedonic, utilitarian, and social aspects of point system gamification on customer engagement and loyalty. The findings indicate a weak but significant positive relationship between the hedonic and social value of XYZ digital bank point system and customer engagement, while the utilitarian value shows a weak and insignificant negative relationship. Most importantly, customer engagement emerged as a powerful and positively significant driver of customer loyalty. Thus, XYZ digital bank is advised to prioritize enhancing the hedonic value, followed by the social value, in their customer engagement strategies, considering alternative avenues beyond the point system gamification to fortify customer loyalty.