Customer Experience Quality and Loyalty in Complex Banking Ecosystems: Asymmetric Roles of Satisfaction and Trust

Customer experience quality; customer satisfaction; customer trust; customer loyalty; Indian retail banking; PLS–SEM; emerging markets

Purpose

 Retail banks in India invest heavily in customer experience quality (CEQ), yet loyalty outcomes remain modest, creating a strategic "conversion puzzle" in a competitive, digitally evolving market. This study examines why CEQ fails to convert efficiently into loyalty by comparing the roles of customer satisfaction and customer trust as transmission mechanisms in Indian retail banking.

Design/methodology/approach

Survey data from 550 retail banking customers in Delhi NCR were analysed using partial least squares structural equation modelling (PLS–SEM). CEQ was specified as a reflective–reflective higher-order construct capturing cognitive clarity, emotional reassurance, relational warmth, digital–physical interface quality and process–touchpoint integration. A disjoint two-stage approach was used, and bootstrapped mediation assessed differential pathway efficiency.

Findings

CEQ strongly activates both satisfaction and trust, but in an asymmetric pattern: CEQ’s effect on trust is larger than on satisfaction, yet satisfaction converts into loyalty more efficiently than trust. CEQ also retains a substantial direct effect on loyalty, suggesting the presence of autonomous experiential capital beyond satisfaction and trust.

Practical implications

Indian banks should adopt dual-horizon customer experience strategies: fast-yield investments that enhance satisfaction (friction reduction, clarity, process coherence) and long-horizon programs that build trust (transparent communication, reliable recovery, benevolent conduct), rather than treating all experience initiatives as equivalent loyalty drivers.

Originality/value

The study reconceptualises CEQ as an integrated customer experience system, introduces the evaluative–relational paradox and conversion friction as mechanism-level contributions, and offers an India-specific framework for allocating customer experience investments based on pathway efficiency.