Investigating customer satisfaction in the digital banking age

Abstract

Purpose – The Maltese banking sector is continuously evolving and in retail banking we are seeing a shift from branch-based servicing, where customers need to visit a bank outlet to carry out transactions, to online-based servicing, where customers submit their instructions online and only visit an outlet when necessary. This is reducing customer walk-ins, so in reaction some banks are closing branches to reduce their operating costs. The products and services offered by banks have also evolved. In the past, banks used to attract depositors through the high interest rates they paid on saving accounts. Nowadays, people are choosing their banks on other criteria. This is creating a gap between the services and the products offered by the banks and those expected by their customers. Whilst some customers are fine with this evolution, others feel that the bank they joined years ago may no longer be the right one for them. Whilst many are satisfied with the fact that they can do most of their financial activities online, others feel that the bank they were loyal to for many years has abandoned them. The objective of this research project is to determine whether the strategy to make most of the banking services available online, whilst reducing branches, is indeed increasing convenience and customer satisfaction within the local scenario. It also tries to establish whether the products that banks are offering are indeed catering for the needs of customers. Methodology – The study is primarily based on an online survey with the main aim to measure customer satisfaction in an impartial way, whilst determining actions that local banks can take to improve. The survey was conducted amongst 404 adults living and banking in Malta and the outcome should adequately represent the Maltese adult population. Research Limitations – The questionnaire was distributed over Facebook so the research might not be representing the minority that does not have access to the Internet and to the social media platform. Moreover, online surveys are usually completed by those interested in the subject, possibly leading to a degree of bias. The survey focused on the perceived level of satisfaction of customers and less on the expectations. A separate survey intended to primarily establish the banking customer expectations will provide more foundation for comparison. Originality and Value – In today’s business environment, digitalisation has become an obligation rather than a choice for any organisation, and banks are no exception, especially with direct competition coming from financial technology (fintech) companies. This digital landscape has significantly reshaped the behaviour and the preferences of banking customers, and in reaction, over the past decades, banks have invested in digital innovation to provide their customers with a better level of service and more convenience, hopefully resulting in satisfied customers and more business. Nonetheless, even though the majority of customers adopted online banking and are possibly being served better, many are still not satisfied whilst others still show a preference for a brick and mortar experience. Results – The results shed light on how the Maltese adult population perceives the evolution of local banking and what their expectations are vis-à-vis the bank products and services. The survey uncovers whether the banking customers are comfortable carrying out their activities through online banking. Some might prefer visiting a branch and getting face-to-face advice. Others might not be confident using the online systems. Banks should continue to invest in digital innovation whilst keeping the more traditional customers as an equally important group within their business development strategy. Practical Implications – The results primarily serve the banking sector by giving the local banks an impartial insight on the country-wide customer satisfaction in relation to banking. The study also reveals certain customer preferences and struggles. This should help banks understand where they should focus their retail business to win back the loyalty of customers, whilst acquiring new ones and boosting sales.