EMPATHY AND CUSTOMER LOYALTY IN PUBLIC AND PRIVATE BANKS: EVIDENCE FROM BANKING CUSTOMERS
DOI:
https://doi.org/10.69980/mmttj851Keywords:
Banking sector, customer loyalty, empathy, private banks, public banks, SERVQUAL, service qualityAbstract
This study examines the effect of empathy-related service behaviours on customer loyalty in public and private banks. Empathy is seen as a service quality aspect in relations, which is manifested in personalized attention, knowing the customer's needs, caring communication, handling customer complaints with empathy, and listening and follow-up. The survey design was an empirical one and the data were collected from 220 respondents comprising 110 public banks and 110 private banks, of adult banking customers in India. This questionnaire was based on the SERVQUAL tradition and literature on customer loyalty was analysed using reliability analysis, Pearson correlation, multiple regression, ANOVA, model summary statistics, multicollinearity diagnostics and independent-samples comparisons. The results indicate that the bivariate level of all empathy dimensions is positively and significantly related to the customer loyalty. In the regression model, the dimensions of understanding customer needs, empathetic complaint handling, personalised attention, and caring communication still have a strong predictive power, which means that they are still significant factors in predicting the customer's reaction. This is because these dimensions of empathy are not completely explained by other dimensions, and they are independent from them. Listening and follow-up is not significant when the other empathy dimensions are included in the model, which means that it is not an independent predictor of the customer's reaction. Customers of private banks also show slightly higher loyalty scores than do customers of public banks accounting for their type, which also has a significant positive effect. The overall model accounts for 61.9% of the variation in customer loyalty. The research findings indicate that empathy is not just a soft interpersonal skill but a quantifiable service characteristic which boosts retention, recommendation and resistance to switching. In practice, banks should focus on customer understanding, recovering complaints, maintaining continuity of the relationship and providing human support in digital service systems, in order to meet customers' needs.
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