European Journal of Molecular & Clinical Medicine

Abstract

Customer satisfaction and loyalty are more challenging to obtain in today increasingly competitive market. Banking sector which offered relatively similar product is no exception. Earlier study has proven that service innovation is an inevitable necessity for firm’s survival and is critical to influence the customer satisfaction and loyalty in banking industry. Moreover, a well-developed conceptual model of satisfaction and loyalty in service industry has been established, considering service quality as the antecedent. This study is aimed to develop and validate a new conceptual model of customer satisfaction and loyalty in Indonesia banking industry with service innovation and service quality concept as the antecedent, with also employed service quality dimensions. In order to validate the proposed conceptual model, online survey was conducted and data from 274 sampled customers of retail bank in Indonesia was used. The data analysis employed Structural Equation Modeling (SEM) using Lisrel 8.51. Results from the analysis reveal that the service quality dimensions were compatible. SEM results also show that service innovation has positive effect to customer satisfaction and loyalty while service quality has positive impact on customer satisfaction, and customer satisfaction has positive impact on customer loyalty. However, the effect of service quality to customer loyalty was not supported. This study enriches existing study which focus on customer satisfaction and loyalty in banking especially in emerging country context. This study also provides additional knowledge with incorporating service innovation and service quality as antecedent of customer satisfaction and loyalty in banking industry.