SUSTAINABLE BANKING PRACTICES AND CUSTOMER SATISFACTION: THE MEDIATING ROLE OF SERVICE QUALITY, TRUST, AND PRIVACY

Abstract

The increasing focus on environmental sustainability has pressured banks to adopt green banking initiatives as a strategic measure against environmental issues and changing customer demands. Green banking has received worldwide attention, but there is a paucity of empirical studies on the impact of green banking on customer satisfaction through service-related and relational mechanisms in the context of emerging markets. This paper explores the influence of green banking on customer satisfaction in the Pakistani banking industry, focusing on the mediating effect of service quality, trust, and privacy. Data were collected with a structured questionnaire from 100 bank customers adopting the quantitative, cross-sectional research design. The hypothesized relationships were examined by PLS-SEM. The results show that digital banking, green loans, and green services have a significant positive effect on the satisfaction of customers, and green infrastructure does not have a direct significant impact. Furthermore, service quality and trust partially mediate the links between main green banking practices and customer satisfaction, demonstrating that effective provision of service and relational legitimacy play a significant role in sustainability-based banking strategies. Notably, the findings also indicate that privacy acts as an important moderating effect, especially in digital banking, green loans, green services, etc., by building trust over data security and information protection. The results indicate that customers’ satisfaction with green banking practices is primarily influenced by perceived service superiority, trust, and privacy protection. The study adds to the body of green banking and service marketing research by providing an integrative mediation model showing how sustainability-based banking initiatives lead to customer satisfaction within a developing country context. Practically, service quality and trust should be treated as the bases of customers’ digital green banking operations to develop customer-facing green banking strategies that focus on building trust, disseminating trustworthy information, and creating adequate privacy protection when endorsing sustainable financial services both in environmental and developmental contexts.

Keywords: Green banking practices; Customer satisfaction; Service quality; Trust; Privacy; Banking sector.