Impact of digital loyalty program on customer satisfaction in Sri Lankan retail banks

Abstract

The banking industry is becoming competitive and dynamic with increased number of players in the market including Sri Lanka. As a result, the banks are forced to introduce differentiated products and services to achieve competitive advantage. With the digital revolution, banking customers are seeking products and services with online presence to ease banking operations. As customers are the key to success in the banking industry, it is essential to offer products and services that satisfy customers and establish long-term customer relationships. Therefore, the banks are introducing digital loyalty programs which is a proven strategic tool to enhance customer satisfaction and retain customers. The purpose of the research is to assess the impact of digital loyalty program on customer satisfaction in Sri Lankan Retail Banks to propose an IT intervention. The research was conducted using quantitative analysis method. The sample was defined using Andrew Fisher’s Formula. The primary data was collected from 392 respondents and the Statistical Package for Social Science (SPSS) was used for data analysis. Multilinear Regression Analysis was conducted to analyze the data. The findings reveal that digital loyalty program has an impact on customer satisfaction in Sri Lankan Retail Banks. It is also evident that independent variables such as point accumulation, reward redemption, usability, and security of digital loyalty program impact customer satisfaction. However, the digital loyalty program adoption rate is low in Sri Lanka as it is implemented only in five retail banks in the country. Further, the findings also revealed that there is a technological gap in the existing digital loyalty programs and the banks need to take necessary steps to improve the system based on the recommendations provided by the researcher.