Exploring the Relationship between Customer Experience and Bank Profitability

The thesis empirically examines the relationship between customer experience and bank profitability in Central Europe. It combines customer experience and financial data on 50 banks in the Czech Republic, Austria, Germany, Slovakia, and Poland for the 2017-2020 time period. Panel data estimation methods (first differencing, fixed effects, and random effects) combined with pooled OLS estimation and other robustness checks were employed. Followingly, it was possible to identify a positive significant effect of customer experience in the form of the Six Pillars metrics on net interest margin. This finding is in contradiction with the ones of rather scarce literature on this topic, and thus offers a new understanding of the relationship. No evidence was found for associations between customer experience and return on equity or return on assets, a result supported by some researchers but negated by others. The conclusions of this study may be of interest to bank managers by guiding customer experience related investment optimalisation or prospective investors who consider using customer experience to evaluate a firm's profitability potential. JEL Classification C12, C33, G21, L25, M31 Keywords banks, profitability, customer experience, financial analysis, net interest margin, return on equity, return on..