Abstract
This paper evaluates the impact of service quality underlying the SERVQUAL model on customer loyalty, with customer satisfaction mediating these variables. This analytical study is mainly based on the primary data collected through a questionnaire that was personally administered to 422 individuals selected from five local banks in Riyadh, Saudi Arabia. The findings indicate that improving service quality can help to enhance customer loyalty. Empathy, assurance, and reliability are the service quality dimensions that play significant roles in this equation. The study’s findings indicate that while the respondents evaluate the banks positively overall, there is still room for improvement. Few studies have assessed customer loyalty in Saudi banking. Increased competition between banks means that service quality is increasingly important and bank managers should consider how they can improve customer satisfaction with respect to service quality in order to enhance customer loyalty.
Highlights
The Saudi banking sector is becoming increasingly competitive and consolidated, which means that local banks are facing shareholder pressure to focus on value rather than revenue growth
The present study offers insights that will improve the understanding of the impact that various factors related to e-commerce customer loyalty have in the context of Saudi Arabia, a major developing country in the Middle East
The present study examines the relationships between tangibles, reliability, responsiveness, assurance, empathy with customer satisfaction, and customer loyalty
Summary
The Saudi banking sector is becoming increasingly competitive and consolidated, which means that local banks are facing shareholder pressure to focus on value rather than revenue growth. The ease and convenience offered by technologies such as mobile phones and the internet have helped Saudi financial institutions serve the domestic economy and their customers. Banks are facing strong and intense competition [1]. Banks in Saudi Arabia are formulating various strategies to retain customers, the key to which is increasing service loyalty levels. Customer loyalty (that is, customer retention) generally has a strong link to the firm’s profitability and long-term growth [2]. In the context of banking services, small increases in customer retention rates can increase profits dramatically [3]. Saudi banks need a system to foster customer loyalty
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