The effect of automated service quality on Australian banks' financial performance and the mediating role of customer satisfaction

Purpose – First, to investigate the relationship between customer perception of service quality and bank financial performance in the new context of the automated banking environment in Australia. Second, to test for the mediating role of customer satisfaction in that relationship. Design/methodology/approach – Reviews a very large literature and numerous previous empirical investigations of service quality. Defines automated service quality. Proposes a mediated model linking service quality to banks' financial performance through customer satisfaction in the context of the automated retail banking, and tests it by structural equation modelling (Amos 5). Findings – Customer satisfaction is confirmed as a mediator in the relationship between automated service quality and financial performance. Research limitations/implications – Further research is indicated, to validate the relevance of the findings across different countries. Practical implications – The proposed model can guide the formulation of marketing strategies, relating to the delivery of automated services, which have the potential to achieve high levels of customer satisfaction and financial performance. Originality/value – Contributes to the current body of knowledge by improving understanding of the main issues relating to the effect of service quality on bank profitability, and the mediating role of customer satisfaction in this new banking context.