DIGITAL TRANSFORMATION AND PRE-DIGITAL RELATIONSHIP QUALITY IN RURAL BANKS: INNOVATION AS A DOUBLE–EDGED SWORD EXPLAINED BY PARADOX THEORY
Keywords:
Digital Transformation, Innovation, Paradox Theory, Rural Bank, Relationship Quality
Abstract
Digital transformation in the banking industry, including Bank Perekonomian Rakyat (BPR) has become a strategic necessity to improve service efficiency and maintain customer loyalty amidst changing consumer behavior. However, digitalization also has the potential to reduce the quality of interpersonal relationship, which has long been a key strength of BPRs. Therefore this study examines how digital transformation and pre-digital relationship quality influence perceived usefulness, perceived interaction loss and customer loyalty. This research uses a quantitative approach with a survey of BPR customers who use digital services. Data are analyzed using SEM-PLS. The result show that digital transformation and pre-digital relationship quality influence perceived usefulness, perceived interaction loss and customer loyalty, although several relationship are not significant. The novelty of this study lies in the integration of digital transformation and relationship quality in the context of rural banks by positioning pred-digital relationship quality as an important factor in explaining the customer loyalty. This study expands the literature on digital transformation in relationship-based financial institutions. The finding suggest that BPR need to focus on increasing the benefits of digital services while maintaining the quality of personal relationships with customers. A hybrid service approach that combines digital technology and interpersonal interaction remains a relevant strategy for sustaining customer loyalty.Downloads
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References
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Jarvenpaa, S. L., & Välikangas, L. (2020). Advanced technology and end-time in organizations: A doomsday for collaborative creativity? Academy of Management Perspectives, 34(4), 566-584. doi:https://doi.org/10.5465/amp.2019.0040
Kaur, P., Dhir, A., Bodhi, R., Singh, T., & Almotairi, M. (2020). Why do people use and recommend m-wallets? Journal of Retailing and Consumer Services, 56, 102091. doi:https://doi.org/10.1016/j.jretconser.2020.102091
Keiningham, T., Aksoy, L., Bruce, H. L., Cadet, F., Clennell, N., Hodgkinson, I. R., & Kearney, T. (2020). Customer experience driven business model innovation. Journal of business research, 116, 431-440. doi:https://doi.org/10.1016/j.jbusres.2019.08.003
Klaus, P., & Zaichkowsky, J. (2020). AI voice bots: a services marketing research agenda. Journal of Services Marketing, 34(3), 389-398. doi:https://doi.org/10.1108/JSM-01-2019-0043
Larivière, B., Bowen, D., Andreassen, T. W., Kunz, W., Sirianni, N. J., Voss, C., . . . De Keyser, A. (2017). “Service Encounter 2.0”: An investigation into the roles of technology, employees and customers. Journal of business research, 79, 238-246. doi:https://doi.org/10.1016/j.jbusres.2017.03.008
Lemon, K. N., & Verhoef, P. C. (2016). Understanding customer experience throughout the customer journey. Journal of marketing, 80(6), 69-96. doi:https://doi.org/10.1509/jm.15.0420
Mahr, D., & Lievens, A. (2012). Virtual lead user communities: Drivers of knowledge creation for innovation. Research policy, 41(1), 167-177. doi:https://doi.org/10.1016/j.respol.2011.08.006
Marangunić, N., & Granić, A. (2015). Technology acceptance model: a literature review from 1986 to 2013. Universal access in the information society, 14(1), 81-95. doi:https://doi.org/10.1007/s10209-014-0348-1
McLean, G., & Osei-Frimpong, K. (2019). Hey Alexa… examine the variables influencing the use of artificial intelligent in-home voice assistants. Computers in human behavior, 99, 28-37. doi:https://doi.org/10.1016/j.chb.2019.05.009
Miron-Spektor, E., Ingram, A., Keller, J., Smith, W. K., & Lewis, M. W. (2018). Microfoundations of organizational paradox: The problem is how we think about the problem. Academy of management journal, 61(1), 26-45. doi:https://doi.org/10.5465/amj.2016.0594
Morgan, R. M., & Hunt, S. D. (1994). The commitment-trust theory of relationship marketing. Journal of marketing, 58(3), 20-38. doi:https://doi.org/10.1177/002224299405800302
Oliveira, T., Thomas, M., Baptista, G., & Campos, F. (2016). Mobile payment: Understanding the determinants of customer adoption and intention to recommend the technology. Computers in human behavior, 61, 404-414. doi:https://doi.org/10.1016/j.chb.2016.03.030
Oliver, R. L. (1999). Whence consumer loyalty? Journal of marketing, 63(4), 33-44. doi:https://doi.org/10.1177/00222429990634s105
Pagani, M., & Pardo, C. (2017). The impact of digital technology on relationships in a business network. Industrial Marketing Management, 67, 185-192. doi:https://doi.org/10.1016/j.indmarman.2017.08.009
Rahi, S., Ghani, M. A., & Ngah, A. H. (2019). Integration of unified theory of acceptance and use of technology in internet banking adoption setting: Evidence from Pakistan. Technology in society, 58, 101120. doi:https://doi.org/10.1016/j.techsoc.2019.03.003
Rather, R. A., Tehseen, S., Itoo, M. H., & Parrey, S. H. (2019). Customer brand identification, affective commitment, customer satisfaction, and brand trust as antecedents of customer behavioral intention of loyalty: An empirical study in the hospitality sector. Journal of Global Scholars of Marketing Science, 29(2), 196-217. doi:https://doi.org/10.1080/21639159.2019.1577694
Santoso, I. H., Nurcholis, L., & Kartika, E. (2020). Intention To Use Mobile Banking Application: Gender-Based. Jurnal Penelitian Ekonomi dan Bisnis, 5(2), 203-211. doi:https://doi.org/10.33633/jpeb.v5i2.3126
Sarstedt, M., Ringle, C. M., & Hair, J. F. (2021). Partial least squares structural equation modeling Handbook of market research (pp. 587-632): Springer.
Schad, J., Lewis, M. W., Raisch, S., & Smith, W. K. (2016). Paradox research in management science: Looking back to move forward. Academy of management annals, 10(1), 5-64. doi:https://doi.org/10.5465/19416520.2016.1162422
Sharma, S. K., & Sharma, M. (2019). Examining the role of trust and quality dimensions in the actual usage of mobile banking services: An empirical investigation. International journal of information management, 44, 65-75. doi:https://doi.org/10.1016/j.ijinfomgt.2018.09.013
Singh, S., & Srivastava, R. (2018). Predicting the intention to use mobile banking in India. International Journal of bank marketing, 36(2), 357-378. doi:https://doi.org/10.1108/IJBM-12-2016-0186
Tam, C., & Oliveira, T. (2019). Does culture influence m-banking use and individual performance? Information & Management, 56(3), 356-363. doi:https://doi.org/10.1016/j.im.2018.07.009
Thakur, R. (2018). Customer engagement and online reviews. Journal of Retailing and Consumer Services, 41, 48-59. doi:https://doi.org/10.1016/j.jretconser.2017.11.002
Verhoef, P. C., Broekhuizen, T., Bart, Y., Bhattacharya, A., Dong, J. Q., Fabian, N., & Haenlein, M. (2021). Digital transformation: A multidisciplinary reflection and research agenda. Journal of business research, 122, 889-901. doi:https://doi.org/10.1016/j.jbusres.2019.09.022
Vial, G. (2019). Understanding digital transformation: A review and a research agenda. The journal of strategic information systems, 28(2), 118-144. doi:https://doi.org/10.1016/j.jsis.2019.01.003
Voorhees, C. M., Fombelle, P. W., Gregoire, Y., Bone, S., Gustafsson, A., Sousa, R., & Walkowiak, T. (2017). Service encounters, experiences and the customer journey: Defining the field and a call to expand our lens. Journal of business research, 79, 269-280. doi:https://doi.org/10.1016/j.jbusres.2017.04.014
Wirtz, J., Patterson, P. G., Kunz, W. H., Gruber, T., Lu, V. N., Paluch, S., & Martins, A. (2018). Brave new world: service robots in the frontline. Journal of service management, 29(5), 907-931. doi:https://doi.org/10.1108/JOSM-04-2018-0119
Becker, L., & Jaakkola, E. (2020). Customer experience: fundamental premises and implications for research. Journal of the academy of marketing science, 48(4), 630-648. doi:https://doi.org/10.1007/s11747-019-00718-x
Blut, M., & Wang, C. (2020). Technology readiness: a meta-analysis of conceptualizations of the construct and its impact on technology usage. Journal of the academy of marketing science, 48(4), 649-669. doi:https://doi.org/10.1007/s11747-019-00680-8
Breidbach, C. F., & Maglio, P. P. (2016). Technology-enabled value co-creation: An empirical analysis of actors, resources, and practices. Industrial Marketing Management, 56, 73-85. doi:https://doi.org/10.1016/j.indmarman.2016.03.011
Davis, F. D. (1989). Perceived usefulness, perceived ease of use, and user acceptance of information technology. MIS quarterly, 13(3), 319-340. doi:https://doi.org/10.2307/249008
De Keyser, A., Verleye, K., Lemon, K. N., Keiningham, T. L., & Klaus, P. (2020). Moving the customer experience field forward: introducing the touchpoints, context, qualities (TCQ) nomenclature. Journal of Service Research, 23(4), 433-455. doi:https://doi.org/10.1177/1094670520928390
Fornell, C., & Larcker, D. F. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of marketing research, 18(1), 39-50. doi:https://doi.org/10.1177/002224378101800104
Giovanis, A., Athanasopoulou, P., Assimakopoulos, C., & Sarmaniotis, C. (2019). Adoption of mobile banking services: A comparative analysis of four competing theoretical models. International Journal of bank marketing, 37(5), 1165-1189. doi:https://doi.org/10.1108/IJBM-08-2018-0200
Gregory, R. W., Kaganer, E., Henfridsson, O., & Ruch, T. J. (2018). It Consumerization and the Transformation of IT Governance1. MIS quarterly, 42(4), 1225-1253. doi:https://doi.org/10.25300/MISQ/2018/13703
Grewal, D., Hulland, J., Kopalle, P. K., & Karahanna, E. (2020). The future of technology and marketing: A multidisciplinary perspective. Journal of the academy of marketing science, 48(1), 1-8. doi:https://doi.org/10.1007/s11747-019-00711-4
Hennig-Thurau, T., Hofacker, C. F., & Bloching, B. (2018). Marketing the pinball way: Understanding how social media change the generation of value for consumers and companies. Journal of interactive marketing, 27(4), 237-241. doi:https://doi.org/10.1016/j.intmar.2013.09.005
Henseler, J., Ringle, C. M., & Sarstedt, M. (2015). A new criterion for assessing discriminant validity in variance-based structural equation modeling. Journal of the academy of marketing science, 43(1), 115-135. doi:https://doi.org/10.1007/s11747-014-0403-8
Hollebeek, L. D., Srivastava, R. K., & Chen, T. (2019). SD logic–informed customer engagement: integrative framework, revised fundamental propositions, and application to CRM. Journal of the academy of marketing science, 47(1), 161-185. doi:https://doi.org/10.1007/s11747-016-0494-5
Hoyer, W. D., Kroschke, M., Schmitt, B., Kraume, K., & Shankar, V. (2020). Transforming the customer experience through new technologies. Journal of interactive marketing, 51(1), 57-71. doi:https://doi.org/10.1016/j.intmar.2020.04.001
Huang, M.-H., & Rust, R. T. (2018). Artificial intelligence in service. Journal of Service Research, 21(2), 155-172. doi:https://doi.org/10.1177/1094670517752459
Jarvenpaa, S. L., & Välikangas, L. (2020). Advanced technology and end-time in organizations: A doomsday for collaborative creativity? Academy of Management Perspectives, 34(4), 566-584. doi:https://doi.org/10.5465/amp.2019.0040
Kaur, P., Dhir, A., Bodhi, R., Singh, T., & Almotairi, M. (2020). Why do people use and recommend m-wallets? Journal of Retailing and Consumer Services, 56, 102091. doi:https://doi.org/10.1016/j.jretconser.2020.102091
Keiningham, T., Aksoy, L., Bruce, H. L., Cadet, F., Clennell, N., Hodgkinson, I. R., & Kearney, T. (2020). Customer experience driven business model innovation. Journal of business research, 116, 431-440. doi:https://doi.org/10.1016/j.jbusres.2019.08.003
Klaus, P., & Zaichkowsky, J. (2020). AI voice bots: a services marketing research agenda. Journal of Services Marketing, 34(3), 389-398. doi:https://doi.org/10.1108/JSM-01-2019-0043
Larivière, B., Bowen, D., Andreassen, T. W., Kunz, W., Sirianni, N. J., Voss, C., . . . De Keyser, A. (2017). “Service Encounter 2.0”: An investigation into the roles of technology, employees and customers. Journal of business research, 79, 238-246. doi:https://doi.org/10.1016/j.jbusres.2017.03.008
Lemon, K. N., & Verhoef, P. C. (2016). Understanding customer experience throughout the customer journey. Journal of marketing, 80(6), 69-96. doi:https://doi.org/10.1509/jm.15.0420
Mahr, D., & Lievens, A. (2012). Virtual lead user communities: Drivers of knowledge creation for innovation. Research policy, 41(1), 167-177. doi:https://doi.org/10.1016/j.respol.2011.08.006
Marangunić, N., & Granić, A. (2015). Technology acceptance model: a literature review from 1986 to 2013. Universal access in the information society, 14(1), 81-95. doi:https://doi.org/10.1007/s10209-014-0348-1
McLean, G., & Osei-Frimpong, K. (2019). Hey Alexa… examine the variables influencing the use of artificial intelligent in-home voice assistants. Computers in human behavior, 99, 28-37. doi:https://doi.org/10.1016/j.chb.2019.05.009
Miron-Spektor, E., Ingram, A., Keller, J., Smith, W. K., & Lewis, M. W. (2018). Microfoundations of organizational paradox: The problem is how we think about the problem. Academy of management journal, 61(1), 26-45. doi:https://doi.org/10.5465/amj.2016.0594
Morgan, R. M., & Hunt, S. D. (1994). The commitment-trust theory of relationship marketing. Journal of marketing, 58(3), 20-38. doi:https://doi.org/10.1177/002224299405800302
Oliveira, T., Thomas, M., Baptista, G., & Campos, F. (2016). Mobile payment: Understanding the determinants of customer adoption and intention to recommend the technology. Computers in human behavior, 61, 404-414. doi:https://doi.org/10.1016/j.chb.2016.03.030
Oliver, R. L. (1999). Whence consumer loyalty? Journal of marketing, 63(4), 33-44. doi:https://doi.org/10.1177/00222429990634s105
Pagani, M., & Pardo, C. (2017). The impact of digital technology on relationships in a business network. Industrial Marketing Management, 67, 185-192. doi:https://doi.org/10.1016/j.indmarman.2017.08.009
Rahi, S., Ghani, M. A., & Ngah, A. H. (2019). Integration of unified theory of acceptance and use of technology in internet banking adoption setting: Evidence from Pakistan. Technology in society, 58, 101120. doi:https://doi.org/10.1016/j.techsoc.2019.03.003
Rather, R. A., Tehseen, S., Itoo, M. H., & Parrey, S. H. (2019). Customer brand identification, affective commitment, customer satisfaction, and brand trust as antecedents of customer behavioral intention of loyalty: An empirical study in the hospitality sector. Journal of Global Scholars of Marketing Science, 29(2), 196-217. doi:https://doi.org/10.1080/21639159.2019.1577694
Santoso, I. H., Nurcholis, L., & Kartika, E. (2020). Intention To Use Mobile Banking Application: Gender-Based. Jurnal Penelitian Ekonomi dan Bisnis, 5(2), 203-211. doi:https://doi.org/10.33633/jpeb.v5i2.3126
Sarstedt, M., Ringle, C. M., & Hair, J. F. (2021). Partial least squares structural equation modeling Handbook of market research (pp. 587-632): Springer.
Schad, J., Lewis, M. W., Raisch, S., & Smith, W. K. (2016). Paradox research in management science: Looking back to move forward. Academy of management annals, 10(1), 5-64. doi:https://doi.org/10.5465/19416520.2016.1162422
Sharma, S. K., & Sharma, M. (2019). Examining the role of trust and quality dimensions in the actual usage of mobile banking services: An empirical investigation. International journal of information management, 44, 65-75. doi:https://doi.org/10.1016/j.ijinfomgt.2018.09.013
Singh, S., & Srivastava, R. (2018). Predicting the intention to use mobile banking in India. International Journal of bank marketing, 36(2), 357-378. doi:https://doi.org/10.1108/IJBM-12-2016-0186
Tam, C., & Oliveira, T. (2019). Does culture influence m-banking use and individual performance? Information & Management, 56(3), 356-363. doi:https://doi.org/10.1016/j.im.2018.07.009
Thakur, R. (2018). Customer engagement and online reviews. Journal of Retailing and Consumer Services, 41, 48-59. doi:https://doi.org/10.1016/j.jretconser.2017.11.002
Verhoef, P. C., Broekhuizen, T., Bart, Y., Bhattacharya, A., Dong, J. Q., Fabian, N., & Haenlein, M. (2021). Digital transformation: A multidisciplinary reflection and research agenda. Journal of business research, 122, 889-901. doi:https://doi.org/10.1016/j.jbusres.2019.09.022
Vial, G. (2019). Understanding digital transformation: A review and a research agenda. The journal of strategic information systems, 28(2), 118-144. doi:https://doi.org/10.1016/j.jsis.2019.01.003
Voorhees, C. M., Fombelle, P. W., Gregoire, Y., Bone, S., Gustafsson, A., Sousa, R., & Walkowiak, T. (2017). Service encounters, experiences and the customer journey: Defining the field and a call to expand our lens. Journal of business research, 79, 269-280. doi:https://doi.org/10.1016/j.jbusres.2017.04.014
Wirtz, J., Patterson, P. G., Kunz, W. H., Gruber, T., Lu, V. N., Paluch, S., & Martins, A. (2018). Brave new world: service robots in the frontline. Journal of service management, 29(5), 907-931. doi:https://doi.org/10.1108/JOSM-04-2018-0119
Published
2026-09-10
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