Mobile Banking Service Quality, Customer Perceived Value and Customer Retention in the Kenyan Banking Industry

Abstract

Covid-19 brought unprecedented global business disruptions and the business operational landscape has shifted drastically in recent months. This era is also characterized by high levels of competition and assertive customers who make stay or switch decisions guided by their quality and value perceptions. Evidence on effects of mobile banking service quality, customer perceived value and customer retention constructs in a single framework is limited. The study fills the gap. Specifically, this study examines the effect of mobile banking service quality and customer-perceived value on customer retention. It examines the mediating effect of customer perceived value on the relationship between mobile banking service quality and customer retention. The study is guided by the ‘leaky bucket theory’ of marketing and the MS- QUAL model. An explanatory research design was adopted, employing multistage sampling technique in collecting data from a sample of 400 consumers of mobile banking services drawn from universities in Nairobi County using a self- administered questionnaire. Data was analyzed and hypotheses tested using hierarchical and multiple regression models using Hayes Process macro. The study established that: mobile banking service quality (β= 0.565, p = 0. 000), perceived customer value (β= 0.363, p = 0.000), significantly affect customer retention. Additionally, the results show that customer perceived value mediates the relationship between mobile banking service quality and customer retention (β =. 193, CI = .127, .266). This study concludes that, customers will remain committed to patronize a bank whose services are of high quality and with a high value. The study contributes to knowledge by revealing customer perceived value mediates the relationship between mobile banking service quality and customer retention. Policy makers should proactively respond to sudden disruptions by developing quality assurance policies and devising value-centered strategies that enhances customer retention rates