EFFECT OF SERVICE QUALITY ON CUSTOMER LOYALTY IN NIGERIAN BANKING SECTOR: EVIDENCE FROM WEMA BANK WITH CUSTOMER SATISFACTION AS A MEDIATOR

Abstract

The purpose of this study is to examine the influence of electronic banking service quality on customer loyalty in Nigeria's banking industry, with customer satisfaction as a mediating variable, with specific reference to Wema Bank. This research design was quantitative in nature, and 400 questionnaires were distributed to bank customers through a structured questionnaire from 10th January 2016 to 2nd March 2016. 373 returns were received and were suitable for the analysis. Path analysis structural equation modeling (PA-SEM) was used for the analysis of data. Results obtained in the direct path analysis showed that all the components of electronic banking service quality, namely: reliability, assurance, tangibility, empathy, and responsiveness, were all positively related and contributed significantly to customer loyalty. Reliability had the most direct influence on the variables, followed by assurance and tangibility, although empathy and responsiveness contributed significantly to customer loyalty. The indirect path analysis (mediation analysis) shows that customer satisfaction mediated significantly the relationship between service quality dimensions and customer loyalty. The most indirectly influential component is reliability, which is followed by assurance, tangibility, empathy, and responsiveness in sequence. The study concluded that customer satisfaction will enhance the relationship between service quality and customer loyalty significantly; therefore, the banks should ensure that they strengthen all aspects of service quality.