Key Factors Affecting Customer Retention in Digital Banking Applications in Indonesia

Digital banking has revolutionized traditional banking systems, replacing conventional methods with advanced digital options and a broader range of digital services. This transformation has significantly expanded the accessibility of banking services for customers, greatly enhancing convenience through intuitive mobile applications. Despite these advancements, some customers remain cautious about fully embracing digital banking due to their limited experience and lingering security concerns, exacerbated by the absence of physical bank branches. Adopting the modified Service Quality (SERVQUAL), this research analyzed the factors influencing customer retention through satisfaction in digital banking applications. Data collected from qualified 214 respondents who actively utilized digital banking in Indonesia were analyzed using Structural Equation Modelling (SEM) with SmartPLS 4. The result of this study indicates that customer retention in digital banking applications is significantly influenced by satisfaction. Furthermore, customer satisfaction is influenced by 4 key variables: responsiveness, tangibility, reliability, and security on privacy, with tangibility being the variables with the strongest effect.