Digital adoption and customer retention in the South African retail banking sector

Abstract

This study examines the moderating role of digital service quality in the relationship between digital adoption and retention within South Africa's retail banking sector. Grounded in an adapted Unified Theory of Acceptance and Use of Technology (UTAUT) framework, the research investigates how digital trust mediates relationships between service quality and retention behaviours across diverse digital literacy segments. A quantitative, cross-sectional design was employed and structured questionnaires were administered to 166 banking customers using MS Forms and social media platforms, across three major Metropolitan areas in South Africa. Data was analysed using covariance-based structural equation modelling (CB-SEM). Findings reveal moderate digital adoption (M=3.27) characterised by superficial engagement, below-neutral service quality perceptions (M=2.52), and critically low retention intentions (M=1.95) despite reasonable competence trust. Unexpectedly, digital trust negatively correlated with retention intentions (r=–0.322, p<0.01), challenging conventional loyalty theories. The study demonstrates that technical excellence alone proves insufficient for retention without addressing integrity trust deficits, privacy concerns, and emotional engagement mechanisms in the emerging market context.