Customers Loyalty in Malaysian Retail Bank Sector from the Perspective of Equity Theory and Expectation-Confirmation Model: A PLS-SEM and NCA Approach

Purpose: The retail banking market has witnessed substantial changes over the years due to new technological advancements, increased regulations, and the rise of digital channels. Meeting customer expectations stands out as a key challenge for sustainable growth of the industry. This examines the impact of service quality, customer knowledge management, and confirmation on customer satisfaction within the domestic retail banking sector. Furthermore, it seeks to explore the association between customer satisfaction and customer loyalty in retail banking.Design/Methodology/Approach: Self-administered questionnaires were distributed to retail banking customers in the Klang Valley using convenience and purposive sampling techniques. A total of 268 samples were obtained for data analysis with the Structural Equation Modelling (SEM) and Necessary Condition Analysis (NCA).Findings: The study’s results validated the strong connection between service quality, customer knowledge management, and confirmation with customer satisfaction in Malaysian retail banks. Additionally, customer satisfaction has significant impact on customer loyalty. The NCA outcomes further substantiate these findings, highlighting the significant role of customer knowledge management, service quality, and confirmation as significant factors affecting customer satisfaction in Malaysian retail banks.Implications/Originality/Value: This study offers valuable insights for academia to better understand this area as well as allows sector stakeholders to improve and sharpen their competitive edge in the market.