Investigating service innovation, bank reputation and customer trust: evidence from Indian retail banking

Abstract

Purpose Global proliferation had a noteworthy impact on the Indian retail banking industry and mushrooming banks have entailed to emphasize on customer satisfaction (CS) quotient to remain competitive. This study aims to illuminate determinants of CS and customer trust (CT) and their denouement in Indian retail banking. Design/methodology/approach The top six Indian private sector banks were selected hinged on market capitalization. A total of 460 responses from retail bank customers were gathered using a structured questionnaire. Direct and indirect relationships were analyzed with mediation and moderation by using structural equation modeling. Findings The study identifies determinants of CS and CT. The results manifest that perceived service innovation (PSI) and bank reputation (BR) considerably aggrandize CS and CT. Furthermore, CS strikingly magnifies customer loyalty (CL). The study also posits that CT partially mediates between the nexus of PSI and BR on the one side and CS on the other. Moreover, perceived risk moderates the association between CS and loyalty. Research limitations/implications The study demonstrates indispensable drivers of CS, CT and CL which may encourage bank professionals to hold on to their customers and enhance profitability. Originality/value Here is a dearth of literature on PSI and BR in the Indian banking industry. Thus, the study supplements literature by assimilating these constructs through a compendious conceptual model. The study is distinct as it evaluates mediating effects of CT in unfurling complexities of relationships among the underlying constructs.