Financial Vulnerability, Customer Engagement and Satisfaction in South African Banks: A Structural Equation Model

This study investigates the impact of financial vulnerability on customer engagement and satisfaction within the South African banking sector under a persistent inflation and prolonged contractionary monetary policy environment.

The relationships examined were hypothesized based on the SABI model, which underpins the functional analysis of interactions provided by the interdependence theory. Utilizing a structural equation modeling approach, data were collected from 314 bank customers through the questionnaire method. The analysis reveals a significant and positive relationship between financial vulnerability and customer engagement (p < 0.05), indicating that customers with lower financial resilience engage more with their banks. Furthermore, a direct and significant link (p < 0.05) between financial vulnerability and customer satisfaction suggests that current financial hardships do not diminish overall satisfaction levels. However, a positive relationship between customer engagement and customer satisfaction is not statistically significant, suggesting that customer interactions were not a determining factor of their satisfaction level. These findings imply that monetary policymakers and banks should adapt their strategies to support financially vulnerable customers, promote customer engagement, and thus enhance bank-customer long-term relationships. However, the study is limited by the demographic scope of the sample, necessitating further research to validate these insights across diverse customer segments.