The Role of E-Service Quality and System Efficiency in influencing Customer Satisfaction and Customer Loyalty - A case of Islamic Banking

Abstract

The current paper is intended to explore the critical role of the two independent variables, e-service quality and system efficiency in customer satisfaction and subsequently, customer loyalty in the Islamic banks working in Pakistan. Since the digital banking has grown up quite rapidly during the past decades, more reliance has been placed on mobile banking apps and web portals by the Islamic banks for providing their services, and hence, become critical determinants of customer experiences in this regard. The current study proposes that customer satisfaction mediates the impact of two independent variables mentioned above. This research has used a quantitative approach to research methodology, and data were gathered from clients of Islamic banks. In this regard, respondents were selected from the clients of Islamic banks operating Pakistan, using non-probability convenience sampling method. In the present study, a structured survey was carried out on the basis of valid scales; however, a sample size of 301 responses were collected, which gave a response rate of 60%. The data obtained were then analyzed using the Partial Least Squares Structural Equation Modeling (PLS-SEM) in SmartPLS, which followed a two-step method including measurement model and structural model assessments. The findings of this study are expected to provide valuable insights for Islamic banks regarding how improvements in e-service quality and system efficiency can enhance customer satisfaction and, in turn, strengthen customer loyalty. The study also contributes to the growing body of literature on digital banking and customer behavior within the context of the Islamic banking sector in Pakistan.