The Role of Sustainability in Building Customer Loyalty and Satisfaction: Examining the Mediating Impact of Trust in the Banking Sector

Abstract

In today’s world, where environmental concerns are on the rise, sustainability has become a critical issue for businesses to address. In the banking sector, the adoption of sustainable practices can not only help mitigate environmental impacts but also lead to improved customer loyalty. This study seeks to determine how sustainability affects customer satisfaction and loyalty in the banking industry while also examining the mediating effects of trust. The study utilised a quantitative research approach, where data was collected from 380 customers of various banks using Google form with an online survey. Structural Equation Modeling (SEM) was employed to analyse the data using Smart Pls 4. The SEM results indicated that sustainability significantly impacts customer loyalty and satisfaction in the banking sector. Furthermore, the findings demonstrated that the relationship between satisfaction and loyalty as well as between sustainability and customer loyalty is mediated by trust. Specifically, the results showed that trust fully mediates the connection between sustainability and consumer loyalty. The results of this research suggest that banks should prioritise incorporating sustainable practices into their operations as a way to enhance customer loyalty. The study also highlights the importance of building trust and satisfaction with customers as they play a crucial role in the success of sustainability initiatives. Overall, the study contributes to the existing literature on trust, customer loyalty, sustainability and satisfaction, in the banking industry, providing valuable insights for policymakers and bank managers.

DOI: https://doi.org/10.21863/jcar/2024.13.2.002

Keywords: Sustainability, Customer Loyalty, Satisfaction, Trust, CSR

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