Impact of Digital Transformation on Customer Experience: A Case Study of Metro Bank

Thesis Abstract

Digital transformation has redefined how financial services organizations engage customers, yet the actual impact on customer experience within retail banking remains contested. This study investigates how Metro Bank’s digital initiatives influence customer experience dimensions—perceived usefulness, reliability, responsiveness, and emotional engagement—and how these, in turn, affect customer satisfaction, loyalty, and advocacy. The aim is to delineate the mechanisms through which digital platforms (mobile app, online banking, AI-enabled chatbots, and branch-digital kiosks) alter customer journeys and service quality perceptions in a high-street banking context. Specific objectives are (1) to identify which digital touchpoints most strongly correlate with enhanced customer experience; (2) to examine the mediating roles of perceived service quality and trust in the relationship between digital transformation and customer satisfaction; (3) to assess differential effects across customer segments (age, digital literacy, and transaction type); and (4) to provide actionable implications for aligning digital strategy with experiential outcomes. A explanatory sequential mixed-methods design is employed. The population comprises Metro Bank customers who have used digital banking services in the past six months. A stratified random sample of 600 customers is surveyed to quantify relationships among digital touchpoints, service quality, trust, satisfaction, loyalty, and advocacy, using validated instruments adapted from SERVQUAL-based scales and digital experience measures. Structural equation modeling (SEM) will test hypothesized paths linking digital transformation to customer experience outcomes, with multi-group analysis to explore segment differences. Following the quantitative phase, 20 in-depth interviews with frontline staff and 15 with branch managers will be conducted to enrich understanding of operational practices, technological integration challenges, and customer feedback loops. Thematic analysis will examine qualitative data, guided by the Service-Ddominant logic and Expectation-Confirmation Theory to explicate value co-creation through digital channels. Key instruments include a 28-item Digital Banking Experience Scale, a 12-item Customer Satisfaction Scale, a 9-item Trust in Digital Banking Scale, and a 6-item Perceived Service Quality subscale, complemented by demographic and behavioral questions. Validity will be established through confirmatory factor analysis (CFA), while reliability will be assessed via Cronbach’s alpha and composite reliability. The SEM model will evaluate direct effects of digital touchpoints on customer experience constructs and indirect effects mediated by perceived service quality and trust, with model fit judged by CFI, TLI, RMSEA, and SRMR criteria. Qualitative data will be coded thematically, ensuring triangulation with quantitative findings to validate mechanisms of value realization. Expected findings indicate that mobile app usability, AI-driven assistance accuracy, and seamless omnichannel integration are the strongest predictors of enhanced perceived usefulness and reliability, which in turn elevate trust and overall customer satisfaction. It is anticipated that higher digital literacy moderates the positive effects of digital touchpoints, while younger cohorts exhibit greater responsiveness to mobile-first experiences. The study also expects that perceived service quality and trust will significantly mediate the digital experience–customer satisfaction linkage, with trust particularly vital for hedonic and long-term loyalty outcomes. The study contributes to knowledge by providing a context-rich, empirically grounded model linking retail banking digital transformation to customer experience outcomes, clarifying the mediating roles of service quality and trust, and identifying segment-specific dynamics. The findings offer strategic implications for Metro Bank in prioritizing digital investments, designing omnichannel interfaces, and enhancing employee capability to support digital services. Policy and managerial recommendations include enhancing data-driven personalization, investing in chatbot accuracy and response times, expanding branch-digital collaboration, and implementing continuous feedback mechanisms. Limitations include the single-organization focus and cross-sectional design; future research could replicate the model across multiple banks or longitudinally examine post-pandemic digital maturation effects.