Impact of AI-Based Financial Services on Customer Loyalty: Mediating Role of Customer Trust
DOI:
https://doi.org/10.55737/trt/v-vi.319Keywords:
Artificial Intelligence (AI), AI-based Financial Services, Customer Loyalty, Customer Trust, Digital BankingAbstract
The growing trend of using Artificial Intelligence (AI) in the Pakistani banking and financial services (BFS) industry has transformed customer experience by making financial transactions quicker, more personalized, and secure. AI-powered technologies, including intelligent chatbots, fraud detection systems, automated customer support, and personalized financial recommendations, have improved service quality and operational efficiency. This exploratory study examines the role of AI in financial services on customer loyalty, with customer trust as the intervening variable in the Pakistani context. A quantitative research design was employed, and data were collected through a structured questionnaire using a 5-point Likert scale from 350 customers of public and private banks in Pakistan. The data were analyzed using the Statistical Package for the Social Sciences (SPSS) to assess reliability, correlation, regression, and mediation relationships. The findings indicate that the impact of AI on customer loyalty is positive and significant in the financial services sector. Customer trust emerged as a crucial aspect of this relationship. When AI-assisted financial services are perceived as safe, reliable, transparent, and secure in protecting personal and financial information, the likelihood of customer loyalty increases. Thus, customer trust serves as a gateway through which AI-driven financial services enhance long-term customer relationships. Key findings emphasize the importance of trust, robust cybersecurity measures, and effective communication in the successful deployment of AI. The study addresses AI adoption in emerging markets, particularly in Pakistan, and offers actionable insights for regulators, banks, and fintech. It emphasizes the importance of trust-based AI solutions and customer-centric strategies to boost trust, satisfaction, and loyalty among customers in a changing financial environment.
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