Drivers of Customer Loyalty in India Post Payments Bank: The Mediating Role of Customer Experience

Phygital Banking; Customer Experience; Service Personalization; Perceived Security; Relationship Marketing.

The fast-paced digital transformation of the banking industry has caused a paradigm change in terms of prioritizing products over customer-centric service delivery, and customer trustworthiness is seen as a key success factor in banking competitiveness. In this context, India Post Payments Bank (IPPB) has conceived a unique phygital banking concept which combines digital financial services with the vast postal network of the country. Although it has gained popularity and more customer base, there is a deficiency of practical evidence of what factors in service ultimately used to improve customer loyalty through customer experience in this unique banking environment. The present study aims to fill this gap by investigating the effect of service quality, service innovation, personalization and perceived security on customer loyalty, with the mediation of customer experience. The research adopted a quantitative approach and the primary data was collected from the active IPPB customers in Bengaluru using a structured questionnaire. SEM technique was used to validate the proposed conceptual framework. Results show that service quality, service innovation, personalization and perceived security all have statistically significant positive impact on customer experience; the strongest of which is perceived security. Moreover, experience shows that customer experience (CE) has a significant positive impact on customer loyalty (CL) and plays a large mediation role in the relationship between the four antecedents and CL. The structural model provides moderate explanatory power, with evidence that customer experience proves to be an effective mechanism of relation in the service ecosystem of IPPB. The study adds to the customer experience literature and to the literature on digital banking by applying old concepts of relationship marketing to the case of government-supported phygital banking. Findings also offer practical implications to the decision makers and the policy makers in stressing the significance of secure, innovative, personalized and quality service delivery to boost the customer retention and sustainable customer loyalty.