Optimizing Distribution Channels: How Digital Marketing Communication Enhances Trust and Loyalty in Indonesian Banking

Abstract

Purpose: This study explored how Indonesian banks utilize digital marketing communication strategies to optimize their distribution channels, leading to enhanced customer trust and brand loyalty. It examined specific methods such as sponsorships, social media, institutional partnerships, and mobile banking application features as key components of this digital distribution strategy. Research Design, Data, and Methodology: This study employed mixed methods design to assess digital distribution impacts. It involved 385 Jakarta bank customers. The sample size was determined using the Lemeshow formula. Results: The findings indicate that effective digital distribution strategies, including sponsorships, social media engagement, and user-friendly mobile banking applications, significantly enhance customer trust and loyalty. However, overly complex features may negatively impact loyalty. Conclusion: Thisstudy demonstrates a clear connection between the strategic use of digital marketing channels, such as sponsorships, social media, institutional partnerships, and mobile banking features, and the development of customer trust and loyalty. The results provide valuable insights to Indonesian banks in designing digital distribution strategies that prioritize building trust and fostering integrated customer interactions. Tailored digital marketing approachesthat optimize distribution can significantly enhance both trust and loyalty among Indonesian bank customers.

1. Introduction

The Indonesian banking sector is undergoing a major shift due to the swift integration of digital technologies. As customers increasingly use online platforms for their banking needs, the industry is becoming more competitive, making trust and customer loyalty essential. In this fast-paced setting, strategic distribution methods are key to engaging target audiences and ensuring a smooth customer experience (El-Mouch & Alpek, 2022).

Communication is central to every marketing strategy and is increasingly facilitated by digital media and devices (Ailawadi et al., 2009; Shankar et al., 2022). Digital media are defined by data encoded in discrete digits, different from continuous analog data. The media allow easier manipulation, storage, and transmission through devices equipped with computer chips.

Digital Marketing Communication has evolved into a fundamental element of contemporary business marketing strategies. Utilizing digital channels to engage with target demographics, assessing the effectiveness of campaigns, and engaging directly with clients represent a pivotal stage towards attaining success in today's dynamic digital landscape. Moreover, the inclusion of distribution logistics in these strategies guarantees the efficient delivery of goods and services to pertinent markets, thereby augmenting trade potential and overall business efficacy. Through the fusion of digital marketing with resilient logistical structures, enterprises can optimize operations and fulfil customer needs with greater efficiency (Chaffey & Smith, 2022).

With a profound understanding of the concepts and best practices in Digital Marketing Communication, companies can optimize their marketing strategies to navigate the challenges and opportunities in the digital world effectively. Furthermore, incorporating elements of distribution logistics ensures that strategies are not only designed for customer engagement and conversion but also for efficient product delivery and trade facilitation. This integration is crucial for companies aiming to capitalize their digital presence while ensuring seamless supply chain operations, thereby enhancing overall business performance in both digital and physical market spaces(Chaffey & Smith, 2022).

Customer trust is one of crucial factors determining the success of a bank. Customers who have high trust in the bank will be more loyal and willing to use its products and services (Leninkumar, 2017).

In business, banks and society develop interconnected partnerships. In recent decades, the notion of 'trust' has garnered significant attention in marketing, emerging as a pivotal mediator within customer relationship management (Madjid, 2013).

The banking industry, known for its capital and labor-intensive nature, persists and thrives amid stiff competition, playing a vital role in economic growth locally and nationally. It gathers funds from society through various means such as deposits and clearing services, and redistributes them as loans, serving as a crucial intermediary in the economic system. The relationship between banks and society is symbiotic, with banks aiming for customer loyalty asthe desired outcome (Madjid, 2013).

Numerous incidents occurring within Indonesian banks may potentially impact trust in banks, such as cybercrime which includes skimming, carding, and breaches. Carding, a form of cybercrime, involves unauthorized and unnoticed use of another person's credit card information for online transactions. Perpetrators, often called carders, engage in this activity by inputting someone else's credit card details during online purchases, leading to charges being billed to the victim's account without their knowledge or consent (Madjid, 2013).

The banking sector is highly susceptible to corruption. According to the Association of Certified Fraud Examiners (ACFE) in their 2021 Report to the Nation, fraud is prevalent across various industries, with the banking and financial services industry having the highest number of cases. The report identifies three sectors with the most significant fraud reporting: (1) banking and financial services with 386 cases, (2) government services and public administration with 195 cases, and (3) manufacturing services with 195 cases. In the banking sector, fraud is committed through various schemes, with corruption accounting for 40% of cases. Other types of fraud include financial statement fraud, skimming, and both cash and non-cash larceny, each contributing 10%. At the national level, the ACFE Indonesia Chapter reported in their 2019 Indonesia Fraud Survey that the financial and banking industries are the most affected by fraud, experiencing 41.4% of the losses (Wibisono, 2023).

There was a case involving one of Indonesian Banks in which a customer lost a balance of IDR 14 million. This happened due to data breach (the skimming mode) (Nugraha & Bayunitri, 2020).

In a different case, a victim of skimming experienced a sudden decrease in their saving balance after receiving an SMS from someone pretending to represent the bank. Consequently, he lost IDR 5,000,000. The victim believed there was no justification for the bank not to pursue this skimming case further, especially since he was not the only one affected by such a fraud (Nugraha & Bayunitri, 2020).

The trust in a banking service system significantly influences consumers' decisions to use it, leading to customer satisfaction with the available facilities. ATM skimming is a global issue in banking crime. This research suggests that understanding a bank's vulnerabilities can enhance and improve service quality, thereby attracting more new customers (Srisusilawati et al., 2020).

Unpleasant experiences as bank customers can erode trust. Mangala and Soni (2023) highlight the significant financial and non-financial impacts of global banking fraud, underscoring the need for robust fraud risk management systems (Mangala & Soni, 2023).

Brand loyalty, as defined by Mowen and Minor (2002), refers to the extent to which customers exhibit a positive attitude towards a brand, demonstrate commitment to a particular brand, and intend to continue purchasing it in the future.

Several prior studies have indicated that digital marketing communication strategies can influence customer trust and brand loyalty. Research conducted by Zephaniah et al. (2020) demonstrates that customers' perceptions of bank marketing communications have a significant positive impact on customer loyalty.

However, direct marketing does not exert a significant influence on customer loyalty. Research conducted by Garzaro et al. (2021) indicates that the level of customer engagement has a significant positive impact on customer experience, customer satisfaction, and customer loyalty.

This study examines how digital marketing communication affects customer trust and brand loyalty within the Indonesian banking sector, with a particular emphasis on optimizing distribution channels. It investigates how banks use diverse digital strategies—such as sponsorships, official social media accounts, partnerships with other institutions, and features within mobile banking apps—to convey their marketing messages and interact with customers.

2. Literature Review

2.1. Related Literature

In recent years, the banking sector has undergone significant changes due to digital marketing communications. Research conducted by Susilo (2023), Dauda (2024), and Rashiti and Sopi (2022) highlights the critical role of digital marketing communications in the banking sector. Susilo's research highlights the dual impact of digital marketing communications, emphasizing their role in both educating consumers and influencing their decisions. Despite the benefits, there is a paradox in communication strategies when banks promote products like student loans that can potentially increase debt, necessitating tighter regulation and increased consumer scrutiny.

Dauda's study specifically focuses on GT Bank in Nigeria, showcasing the effectiveness of digital marketing in improving banking services and reducing costs. Despite challenges in internet infrastructure, digital marketing remains crucial for efficient customer engagement. Rashiti and Sopi's research emphasizes the importance of digital marketing in reaching younger demographics, enhancing banking activities, and increasing customer satisfaction. These studies emphasize the need for proactive and advanced digital marketing strategies to leverage its potential in the banking sector, emphasizing its role in market segmentation, product development, and efficient information dissemination to customers.

2.2. Challenges in Digital Banking

In digital banking, cybersecurity is paramount due to rising threats like malware and phishing. Although robust measures are crucial, compliance and data breaches pose persistent challenges (Farooq & Martin, 2023). Moreover, the growth of digital channels increases the risk of data piracy, eroding trust and creating financial risks (Nurjannah, 2023). Additionally, the digital divide hampers financial inclusion, necessitating a multifaceted approach involving technology, regulation, and education to foster an inclusive and secure digital banking ecosystem (Farooq & Martin, 2023).

2.3. Distribution Channels

In the theoretical framework outlined in "Distribution Channels: Understanding and Managing Channels to Market", distribution channels are conceptualized as the pathways or intermediaries that facilitate the availability of products and services in the market. The framework addresses the entire process, including:

⦁ market and customer access and services

⦁ brand control

⦁ creation of differentiation

⦁ enhancement of business distribution models.

The framework essentially elucidates not only the routes productstake but also the management of relationships with the various parties involved. Understanding the business models of each intermediary is crucial for optimizing distribution channels and business relationships (Dent, 2011).

In the context of digital marketing communications, distribution channels extend beyond traditional brick-and-mortar outlets to encompass a diverse array of online platforms, social media channels, e-commerce marketplaces, and digital advertising networks. The integration of digital technologies enables businesses to reach a wider audience, engage with customers in real-time, and personalize marketing efforts to suit individual preferences (Karjaluoto et al., 2015).

By using digital marketing communications channels effectively, businesses can augment their distribution strategies, amplify brand visibility, and cultivate deeper connections with customers across various online touchpoints. This symbiotic relationship between distribution channels and digital communications underscores the transformative impact of technology on modern-day marketing and distribution practices (Karjaluoto et al., 2015).

In summary, the conceptual framework elucidates the multifaceted nature of distribution channels and their intrinsic relationship with digital communications. By delineating the functions, objectives, and strategic imperatives of distribution channels, businesses can navigate the complex landscape of product distribution, optimize channel performance, and capitalize on emerging opportunities in the digital era.

2.4. Digital Marketing Communication

Digital marketing, especially via social and mobile media, is now integral to millions' daily routines, enhancing customer relationships and engagement. This trend is set to continue driving technological advancements. Social media has evolved into a vital tool for millions globally. Digital technology advancements are reshaping marketing communication, offering new research opportunities (Brodie & Juric, 2018; Guercini et al., 2018; Kim & Yang, 2018; Taylor et al., 2018; Zhang & Dholakia, 2018).

The importance of online marketing is growing, altering communication methods and customer engagement. Digital marketing enables consumers to access information anytime and anywhere, crucial in today's competitive business environment (Yasmin, Tasneem, & Fatema, 2015).

2.5. Customer Trust

Customer trust is a crucial connection between customers and brands, influencing deep engagement and loyalty (So et al., 2016; Wei et al., 2013; Veloutsou, 2015). Trust is central in marketing relationships, reflecting a willingness to rely on a party’s future reliability (Scheer & Stern, 1992). Trusted companies see customers return, recommend their services, pay premiums, and forgive mistakes(Hazra et al., 2009). While Chung and Shin (2010) confirm trust's positive effect on loyalty, other studies like Gil-Saura et al. (2009) and Jani and Heesup (2011) suggest that the impact may not be significant. This assesses the level of trust customers have in their bank and justify its inclusion by emphasizing the fundamental role of trust in banking relationships, especially in the context of digital transactions and personal financial information.

2.6. Brand Loyalty

Mowen and Minor (2002) define brand loyalty as customers' positive attitudes, commitment, and intention to continue purchasing a brand. Aaker's (2009) "Managing Brand Equity" characterizes brand loyalty by consistent purchasing and favorable attitudes, driven by satisfaction and unique benefits. Giddens and Hofmann view brand loyalty as a preference for a brand based on perceived features, image, or quality relative to price (2002). This measures the degree of attachment or loyalty customers feel towards a bank's brand and justify its inclusion by highlighting the importance of brand loyalty in fostering repeat business, positive word-of-mouth, and resistance to competitive offers.

2.7. Sponsorship

In "Understanding Sponsorship Effects" by Meenaghan (2001), the influence of sponsorship on consumer perceptions and its integration into marketing strategies are analyzed. Despite its importance, sponsorship research has lagged behind other marketing methods. Recent studies, as noted by Wakefield et al. (2020), have begun to bridge this gap, but comprehensive knowledge consolidation is still needed. To address this, Wakefield et al. (2020) propose a new definition of sponsorship and a three-step consumer-centric model that elucidates the preconditions, mediators, and outcomes of sponsorship effects, providing a foundation for future investigations. This refers to the sponsorship activities undertaken by Indonesian banks in digital marketing. Justify its inclusion by explaining how sponsorship can influence trust and loyalty through increased visibility, positive associations, or other mechanisms.

2.8. Social Media

Social media represents a shift from the broadcast era's centralized, delayed feedback model to an interactive era marked by direct and personalized communication. Historically, media messages were disseminated by singular entities to mass audiences. Today, social media platforms have evolved, each with unique features aimed at enhancing communication and information gathering across various societal segments (Manning, 2022; Kotler & Keller, 2016). This refers to the official social media presence of banks. Justify its inclusion by explaining the role of social media in modern marketing strategies and how it can foster trust and loyalty through engagement, customer service, and brand image building.

2.9. Institution

Powell and DiMaggio (1991) argue that institutional theory is essential for understanding the increased uniformity in organizational form and structure in modern society. They identify three main ways institutions shape organizational behavior:

1) Coercion: Organizations adhere to practices mandated by other institutions like government bodies or professional associations.

2) Mimetic Isomorphism: Organizations mimic others in their field to reduce uncertainty and gain legitimacy.

3) Normative Isomorphism: Organizations adopt practices perceived as legitimate and appropriate based on shared norms and values promoted by professional associations.

2.10. Mobile Banking Application Features

Mobile banking is a banking service that enables users to conduct financial transactions through mobile devices, such as smartphones or tablets. It allows various types of transactions, including money transfers, bill payments, and checking account balances (Foroughi et al., 2019).

Mobile banking offers several advantages to users, including:

1) Convenience: Users can utilize mobile banking anytime and anywhere, provided they have internet access.

2) Efficiency: Mobile banking saves users’ time and effort as they no longer need to visit bank branches to carry out financial transactions.

3) Cost-effectiveness: Generally, the cost of using mobile banking tends to be lower compared to using other banking services such as ATMs or bank teller services.

4) Security: Mobile banking employs advanced security technology to protect users' data and financial transactions (Shaikh dan Karjaluoto, 2015).

This refers to the features offered by mobile banking apps. Justify its inclusion by explaining how convenient and user-friendly app features can enhance trust and loyalty by improving customer experience and satisfaction.

3. Research Methods

3.1. Data Collection

This study employs mixed methods, combining quantitative surveys and qualitative interviews to comprehensively examine factors influencing the success of digital banking communication strategies. Creswell (2014) advocates for this approach, which combines the strengths of both research types for a deeper understanding.

To determine the sample size, the study employed the Lemeshow Formula. This formula is commonly utilized when the population size is unknown or unlimited. The Lemeshow Formula is as follows:

\(\begin{align}n=\frac{Z^{2}P(1-P)}{d^2}\end{align}\)

Information:

n = number of samples

z = The z-score at 95% confidence level = 1.96

p = maximum estimate = 0,5

d = sampling error = 5%

\(\begin{align}n=\frac{Z^{2}P(1-P)}{d^2}\end{align}\)

\(\begin{align}n=\frac{1,96^{2}.0,5(1-0,5)}{0,5^2}\end{align}\)

\(\begin{align}n=\frac{3,8416.0,25}{0,0025}\end{align}\)

n = 384,16 = 385

By employing the Lemeshow formula, the obtained sample value (n) was 384.16, then rounded to 385 individuals.

The study involved 385 Jakarta bank customers, with the sample size determined using the Lemeshow formula for unknown or unlimited population sizes. This formula, which incorporated a 95% confidence level (z = 1.96), a maximum estimate (p = 0.5), and a sampling error (d = 5%), yielded a sample size of 385 individuals.

This transparent approach to participant selection enhances the credibility of the research. Furthermore, the questionnaire data processing and statistical analysis employ Structural Equation Modelling (SEM).

This analysis included assessing sample characteristics, confirming question reliability. The author conducted a survey of bank customers with 36 questions and examined the effects of sponsorship, official social media, institution, mobile banking application features, customer trust, and brand loyalty.

The survey aims to investigate how digital marketing strategies impact trust and brand loyalty, while also gathering demographic data. It examined six variables—sponsorship, official social media, institutional ties, mobile banking features, customer trust, and brand loyalty—using SmartPLS 4. Measurement scales were adapted from prior research, and responses were gathered using a Likert scale ranging from "Strongly Disagree" to "Strongly Agree”.

Figure 1: Research Framework

3.2. Hypotheses Development

Based on the above framework, considering the identified variables: X1 (Sponsorship), X2 (Social Media Official), X3 (Institution), X4 (Mobile Banking Application Features), Y1 (Brand Loyalty), and Z1 (Customer Trust), hypothesis testing is crucial to explore potential connections between independent and dependent variables.

3.2.1. Sponsorship and Customer Trust

Sponsorship as a marketing tool can increase customer trust because it can create positive associations between the brand and the sponsored event. When a brand supports an event that customers value, the customers tend to perceive the brand as more trustworthy and the brand’s values as aligning with theirs. For example, brands that sponsor social or sporting events are often perceived as brands that care about the community and have a long-term commitment to societal well-being (Khuong & Chau, 2017).

H1: Sponsorship has a positive effect on customer trust.

3.2.2. Sponsorship and Brand Loyalty

Sponsorship can influence brand loyalty through two main mechanisms. First, involvement in sponsored events can increase customer affection for the brand due to positive associations with the event. Second, the perceived match between the event and the brand can strengthen trust in the sponsorship, which then has an impact on brand loyalty. The effect of sponsorship is mediated by brand affect, which means that positive feelings towards the brand play an important role in directing customer loyalty (Mazodier & Merunka, 2012).

H2: Sponsorship has a positive effect on brand loyalty.

3.2.3. Social Media Official and Customer Trust

In the digital era, transparency and direct communication via social media have become essential. Consumers today demand transparency and authenticity from the brands they support. Authentic and transparent interactions through social media can strengthen relationships between businesses and customers, as well as expand the consumer base by creating an environment that customers trust (Connoly, 2020).

H3: Social media official has a positive effect on customer trust.

3.2.4. Social Media Official and Brand Loyalty

Social media marketing (SMM) not only strengthens branding objectives such as trust and loyalty, but also facilitates higher consumer engagement. Factors such as interactivity, personalization, and transparency in SMM can increase customer trust and loyalty by deepening their emotional connection with the brand.

H4: Social media official has a positive effect on brand loyalty.

3.2.5. Institution and Customer Trust

Trust is the foundation of the banking industry, earned through close relationships with customers. Banks that successfully build strong and personal relationships with their customers can increase levels of trust, which in turn drives loyalty and repeat transactions (Hidayat & Idrus, 2023).

H5: Institution has a positive effect on customer trust.

3.2.6. Institution and Brand Loyalty

Institutions that require the use of certain banking products for their employees, for example for salary payments, can affect brand loyalty. Collaboration between certain institutions and banks strengthens brand values and organizational culture, which then influences loyalty to the brand (Mróz-Gorgoń et al., 2018).

H6: Institution has a positive effect on brand loyalty.

3.2.7. Mobile Banking Application Features and Customer Trust

Features in mobile banking applications such as system quality, information quality, and structural assurance can increase customer trust by ensuring that the services provided are safe, accurate, and reliable. This trust influences customer perceptions of the capability and integrity of mobile banking services (Geebren & Jabbar, 2021).

H7: Mobile Banking Application Features have a positive effect on customer trust

3.2.8. Mobile Banking Application Features and Brand Loyalty

Efficient and responsive features in mobile banking applications can increase customer loyalty by offering real advantages over traditional banking methods. When customers experience the convenience and efficiency of mobile banking, they tend to be more loyal to the bank that provides this service.

H8: Mobile Banking Application Features have a positive effect on brand loyalty

3.2.9. Customer Trust and Brand Loyalty

Customer trust plays an important role in building brand loyalty. Although customer satisfaction does not directly create brand loyalty, the trust formed from that satisfaction can serve as the basis for loyalty. In other words, when customers feel satisfied and trust the brand, they tend to become more loyal (Baig et al., 2015).

H9: Customer trust has a positive effect on brand loyalty.

3.3. Measures

The selection of variables in this study is based on several key considerations. Sponsorship, as a marketing strategy, was chosen for its potential to elevate the visibility of banks, foster positive associations, and fortify brand image, thus contributing to increased levels of customer trust and loyalty. Additionally, the official presence of banks on social media platforms enables direct engagement with customers, efficient delivery of customer service, and the cultivation of a robust brand image, all of which are anticipated to increase trust and loyalty.

The institutional image of banks, including reputation, stability, and service quality, significantly influences customer trust and loyalty. Mobile banking features play a crucial role in enhancing customer satisfaction and attachment to the bank, thereby impacting levels of trust and loyalty. Customer loyalty reflects satisfaction and attachment, directly affecting retention and advocacy. Trust is fundamental in building a strong customer-bank relationship and is pivotal in influencing loyalty. This study aims to examine the relationships among these variables, deepening the understanding of how digital marketing communication can enhance trust and loyalty in the Indonesian banking sector.

The research hypotheses outline expected relationships between various factors. Hypothesis 1 (H1) suggests that Sponsorship positively influences Customer Trust. Hypothesis 2 (H2) proposes that official Social Media impacts Customer Trust positively. Hypothesis 3 (H3) posits that Institutions have a positive effect on Customer Trust. Hypothesis 4 (H4) proposes that Mobile Banking Application Features positively affect Customer Trust. Hypothesis 5 (H5) suggests a positive link between Customer Trust and Brand Loyalty. Hypotheses 6-9 (H6, H7, H8, H9) propose that Sponsorship, Mobile Banking Application Features, Social Media Official, and Institutions positively impact Brand Loyalty. These hypotheses provide a framework for examining the interplay of the variables (Esmaeili et al., 2021).

4. Result

4.1. Respondent Charateristics

From a pool of 385 respondents, the researchers obtained diverse demographic characteristics.

Table 1: Demographic Charateristics

4.2. Reliability and Validity Assessment

This research included 36 elements: 7 for Sponsorship (X1), 6 for Social Media Official (X2), 3 for Institution (X3), 8 for Mobile Banking Application Features (X4), 6 for Brand Loyalty (Y1), and 6 for Customer Trust (Z1). Model evaluation involved loading factors, Cronbach’s alpha, composite reliability, and average variance extracted (AVE). All loading factors, except X4.4, exceeded 0.5, indicating strong relationships. AVE, composite reliability, and Cronbach’s alpha values met the criteria, confirming validity according to Chin and Newsted (1999).

Table 2: Variable Validity Test Result

4.3. Structured Model Analysis

In this research, the Partial Least Squares (PLS) method was utilized. The subsequent image illustrates the calculation outcomes of the initial model, which were analyzed using the SmartPLS 4.0 application. It was found that the loading factor value for X4.4 did not meet the validity threshold; therefore, it will be excluded from the model presented below.

From the structural model equation displayed in Figure 4.1, it is evident that sponsorship has a path coefficient of 0.039 to brand loyalty and 0.129 to customer trust, indicating a quite strong and positive relationship between sales promotion and brand loyalty. This suggests that higher levels of sales promotion lead to increased brand loyalty. Official social media influences customer trust with a path coefficient of 0.101, also in a positive direction, and 0.184 to brand loyalty, also in a positive direction.

Figure 2: Structural Model

Institution significantly influences customer trust and brand loyalty with path coefficients of 0.219 and 0.042, respectively, indicating a positive correlation. Conversely, mobile banking features negatively impact brand loyalty (path coefficient: -0.361) but positively affect customer satisfaction (path coefficient: 0.653). The evaluation transitions from the outer model to the inner model, assessing relationships among latent variables according to substantive theory. R-square values, indicating the coefficient of determination for endogenous constructs, determine model strength, with 0.75 indicating a strong model, 0.50 moderate, and 0.25 weak.

Table 3: R-Square Value Evaluation

The analysis demonstrates that sponsorship, official social media, institutions, and mobile banking features contribute significantly to brand loyalty, directly and indirectly via trust. Institution exhibits the most significant direct influence. Adjusted R-squares for loyalty and trust are 0.723 and 0.656, respectively.

Although the R-square does not directly measure this indirect influence, the path coefficients provide a more comprehensive depiction (refer to Table 4).

Table 4: Path Coefficients

The structural equation modeling (SEM) analysis provides detailed insights into the relationships among variables, using T statistics and p-values to evaluate significance. The association between sponsorship (X1) and brand loyalty (Y1) is not significant, with a p-value of 0.604 and a T statistic of 0.519, suggesting that the correlation may be due to chances. Similarly, the link between sponsorship (X1) and customer trust (Z1) is also not significant, with a p-value of 0.054 and a T statistic of 1.924.

The correlation between Social Media Official (X2) and customer trust (Z1) is also not significant, with a p-value of 0.198 and a T statistic of 1.288. Conversely, the relationship between Social Media Official (X2) and brand loyalty (Y1) is significant, with a p-value of 0.024 and a T statistic of 2.257.

The institution (X3) shows a strong, significant relationship with brand loyalty (Y1) with a p-value of 0 and a T statistic of 4.252, but not with customer trust (Z1), indicated by a p-value of 0.450 and a T statistic of 0.756.

The Mobile Banking Application Feature (X4) has a strong correlation with both customer trust (Z1) and brand loyalty (Y1), with p-values of 0 and T statistics of 7.623 and 3.886, respectively. Additionally, the significant relationship between customer trust (Z1) and brand loyalty (Y1) is supported by a minimal p-value of 0 and a T statistic of 8.671.

To sum up, the p-values and T statistics offer a thorough understanding of the significance and intensity of the relationships among variables within the structural equation model, aiding in the clarification of the fundamental mechanisms driving the observed connections.

Next, the F-Square value was examined to assess predictors' impact on latent variables. Minor (0.02), moderate (0.15), and substantial (0.35) ratings were derived from SmartPLS testing results:

Table 5 indicates that sponsorship has a minimal impact on brand loyalty but a moderate influence on customer trust. Conversely, social media and institution moderately impact brand loyalty but less on trust. Mobile banking features moderately impact loyalty but strongly influence trust, which in turn drives loyalty.

Table 5: F-square Value Evaluation

The next stage was evaluating the construct model's predictive relevance using Q-square analysis. A Q-square value above zero indicates predictive relevance, while a value below zero suggests otherwise (Aniq & Indra, 2022). This value is derived from the R2 value in the table above, leading to the following results:

Table 6: Q-square Value Evaluation

The analysis revealed a Q-square value above zero, indicating the model's effectiveness in predicting relationships among variables. It explains 90.7% of the variability in the observed measurements of endogenous latent variables, leaving 9.3% due to model error or unexplained factors, demonstrating strong, yet improvable, predictive power.

4.4. Qualitative Data Results

The qualitative data analysis in this study was performed on data gathered from interviews with the heads of the marketing communication division of a bank in Indonesia. This data was used to support the findings of the quantitative research, serving as primary data. Additionally, the qualitative data provided validation from the corporate side, complementing the quantitative data collected from customers. From the collected data, the following insights were identified:

4.4.1. Digital Marketing Communication Strategies

In line with what is found in quantitative data, it's evident that the strategy adopted by the bank is customer-oriented, prioritizing brand awareness enhancement and building customer trust.

“Our bank's marketing strategy focuses on brand awareness, trust building, and acquiring new customers to lead Indonesia's retail banking.” (RS)

The strategy employed is consistent with what has been researched in the quantitative section, which is that banks in Indonesia utilize digital media.

“We utilize various digital marketing communication channels to reach our target audience. Through social media platforms such as Facebook, Instagram, X, and YouTube, our bank engages with customers, builds communities, and promotes bank products and services.” (RS)

Banks in Indonesia enhance brand awareness and build customer trust through a customer-oriented marketing strategy that prioritizes digital media. This approach, which includes social media interactions and product promotions, effectively boosts brand loyalty by fostering closer community relationships.

4.4.2. Sponsorship Strategies

The quantitative data results indicate that sponsorship has a positive impact on both customer trust and brand loyalty. This is also validated by Indonesian banks, indicating that in utilizing sponsorship as a communication strategy, banks in Indonesia employ various methods.

“We employ sponsorship as a digital marketing communication strategy to enhance brand loyalty in various ways. Firstly, we select sponsorship events and activities that align with our target audience and our bank's brand values. Secondly, we create engaging and useful sponsorship content for our target audience. Thirdly, our bank activates sponsorships effectively through social media, websites, and email marketing. Finally, we measure the effectiveness of sponsorships using various metrics such as reach, engagement, and ROI.” (RS)

One of the sponsorships that significantly impacts customer trust and brand loyalty is the Indonesian banks' ongoing major sponsorship of the Indonesian football league.

“An example of a successful sponsorship campaign implemented by our bank is our sponsorship of the Indonesian football league, Liga 1. We have been the main sponsor of Liga 1 since 2021. This sponsorship campaign has aided us in increasing brand awareness, building brand loyalty, customer trust, and enhancing the bank's reputation as a brand closely connected with the Indonesian community. It also fulfils our responsibility in disseminating social and economic value to society.” (RS)

Banks in Indonesia use sponsorship effectively as part of their marketing strategy to increase brand loyalty and customer trust. By sponsoring targeted events like Liga 1 Indonesian football, they enhance brand awareness and reputation while also promoting social and economic values to the community.

4.4.3. Social Media Official Strategies

As one of the strategies that has a positive relationship with customer trust and brand loyalty, banks in Indonesia employ various methods.

“We use social media for customer interaction and loyalty. We address inquiries promptly, offer product education, host contests, and build online communities.” (RS)

To maintain customer trust and brand loyalty, banks in Indonesia undertake several measures.

“Some best practices for creating effective social media content for banks include using informative, engaging, and beneficial content, incorporating visually appealing elements such as photos and videos, using language that is easily understood by the target audience, leveraging relevant hashtags to expan reach, and actively engaging with followers.” (RS)

Indonesian banks leverage social media for trust and loyalty. Swift responses, education, contests, and community building are key strategies. Engaging content, visuals, clear language, hashtags, and interaction enhance effectiveness.

4.4.4. Institution Strategies

Institutionally, banks in Indonesia collaborate with other companies or institutions with regard to payments, such as for payroll.

“We engage in many strategic collaborations in this regard. As simple as it is, even our own bank employees surely have their payroll processed through our bank accounts. Additionally, we have many collaborations with other institutions because they inevitably need a bank to process salary payments to their employees, and that's where we come in. So, it's almost as if the employees in the institutions we collaborate with are required to have our bank accounts in order to receive their salaries.” (RS)

In addition to handling payroll, banks in Indonesia also collaborate with educational institutions for payments. Collaborating with these institutions can create high brand loyalty because indirectly, they are obliged to open bank accounts.

“We also collaborate with educational institutions such as universities. For instance, if students are required to pay tuition fees or institutional development fees (UKT), they must use our bank, and even the university employees' payroll is processed through our bank. This can be considered quite binding, as they are loyal to our bank since without it, they cannot make or receive transactions.” (RS)

Indonesian banks strengthen customer trust and brand loyalty by developing strategic alliances with diverse institutions, such as payroll companies and educational entities for tuition payments. These partnerships strengthen brand loyalty as employees and students are required to utilize the banks' services for transactions.

4.4.5. Mobile Banking Application Feature Strategies

The mobile banking of banks in Indonesia relies on features intended to meet the needs of Indonesian society, particularly their customers.

“We utilize mobile banking features to enhance customer satisfaction and brand loyalty by enabling customers to perform various banking transactions online easily and conveniently. We provide easily accessible customer service through the application, offer a range of features designed to enhance customer experience such as topping up mobile credit, e-wallet services, virtual debit cards, deposits, investments, bill payments, and money transfers, as well as sending notifications and special offers to customers through the application.” (RS)

To strengthen customer trust and brand loyalty through mobile banking, banks in Indonesia ensure the safety of their mobile banking services.

“We prioritize security and ease in our mobile banking. Robust measures like encryption and two-factor authentication ensure safety. Additionally, user-friendly design and accessible customer service support.” (RS)

Indonesian banks increase customer trust and brand loyalty by providing mobile banking features tailored to customer preferences. These include accessible online banking, in-app support, and robust security measures like data encryption. Additionally, features such as top-up, e-wallet, and bill payments enhance the overall customer experience.

5. Discussion

Based on the results of the analysis, the hypotheses supported by the data are as follows:

⦁ H1: Sponsorship (X1) has a positive relationship with Customer Trust (Z1) (path coefficient = 0.129, p-value = 0.054).

⦁ H2: Social Media Official (X2) has a positive relationship with Customer Trust (Z1) (path coefficient = 0.101, p-value = 0.0604).

⦁ H3: Social Media Official (X2) has a positive relationship with Brand Loyalty (Y1) (path coefficient = 0.184, p-value = 0.024).

⦁ H4: Institution (X3) has a positive relationship with Customer Trust (Z1) (path coefficient = 0.042, p-value = 0.1450).

⦁ H5: Institution (X3) has a positive relationship with Brand Loyalty (Y1) (path coefficient = 0.219, p-value = 0.000).

⦁ H6: Mobile Banking Application Feature (MBAF) (X4) has a positive relationship with Customer Trust (Z1) (path coefficient = 0.653, p-value = 0.000).

⦁ H8: Customer Trust (Z1) has a positive relationship with Brand Loyalty (Y1) (path coefficient = 0.851, p-value = 0.000).

Hypotheses that are not supported by the data are as follows:

⦁ H7: Mobile Banking Application Feature (MBAF) (X4) has a negative relationship with Brand Loyalty (Y1) (path coefficient = -0.361, p-value = 0.000).

The results of the analysis reveal that sponsorship, official social media, institutions, and mobile banking application features have a positive relationship with customer trust. This shows that these factors can increase customer trust in banks. High customer trust will then encourage brand loyalty.

Mobile banking application features have a negative relationship with brand loyalty. This shows that mobile banking application features that are complex and not easy to use can reduce brand loyalty. The negative relationship between Mobile Banking Application Features (MBAF) and Brand Loyalty (Y1) underscores the intricate dynamics at play within the realm of digital banking. This phenomenon could stem from various factors, including the overwhelming options available to users, which might lead to confusion and frustration rather than empowerment.

Complex features or technical glitches in mobile banking apps can harm user experience, leading to trust and loyalty issues. Concerns over data security also deter some customers, especially if they perceive inadequate security measures. Failing to meet user expectations or promised functionalities can further damage brand loyalty. Banks should prioritize user experience by focusing on quality over quantity in app features, ensuring seamless performance, and implementing robust security measures. Continuous improvement based on user feedback and technological advancements is vital for building trust, satisfaction, and long-term brand loyalty in the competitive digital banking sector.

Customer trust has a positive relationship with brand loyalty. This shows that customer trust is an important factor in building brand loyalty.

Overall, the results of the analysis show that sponsorship, official social media, institutions, mobile banking application features, and customer trust have an important role in building brand loyalty. Banks need to pay attention to these factors in their marketing and product development strategies.

This mixed-methods study examined the intricate relationship between marketing strategies, customer trust, and brand loyalty in the Indonesian banking. The quantitative findings provided a robust statistical foundation, while the qualitative data enriched the understanding with real-world practices and customer perspectives.

The positive relationships between sponsorship, social media official, institutional, and mobile banking features with customer trust, as revealed by the quantitative analysis (H1, H2, H3, H5, H6), resonate with the qualitative data. The focus on customer-centric communication, strategic sponsorships, informative social media content, and user-friendly mobile banking features aligns with the quantitative findings, highlighting the importance of these strategies in building trust. Furthermore, the qualitative data suggests that effective digital marketing communication fosters brand loyalty by building a closer relationship with customers. This aligns with the quantitative finding that customer trust has a strong positive relationship with brand loyalty (H8).

An interesting finding emerged regarding mobile banking apps. The quantitative analysis showed a positive link with customer trust but surprisingly a negative association with brand loyalty. Qualitative data suggest that user-friendly design and accessibility are crucial. Complex features can harm trust and loyalty, emphasizing the importance of balancing advanced features with user experience.

This study establishes a basis for understanding the interaction among sponsorship, social media official, institution, mobile banking application feature, customer trust and brand loyalty. Subsequent research could further be explored by:

1) Data segmentation: Examining the impacts across various customer segments to customize marketing approaches for distinct groups.

2) Incorporating supplementary variables: Investigating the impact of additional factors such as brand image, customer experience, and engagement on social media.

3) Utilizing longitudinal data: Examining the evolution of these relationships over time to acquire a more thorough comprehension of the development of customer loyalty.

6. Conclusion

The analysis of path coefficients reveals intricate relationships among various distribution channels, shedding light on their intertwined impacts on customer trust and brand loyalty. From a business standpoint, understanding these dynamics is pivotal for banks in refining their digital marketing strategies, particularly in the realms of logistics and trade. Sponsorship, social media presence, institutional partnerships, and mobile banking features emerge as key players in shaping customer perceptions and behaviors, highlighting the importance of strategic alignment in distribution channels.

The positive associations between sponsorship, official social media engagement, institutional credibility, and mobile banking application features with customer trust underscore their importance in fostering trust within the banking sector. These findings emphasize the need for banks to invest in strategic marketing initiatives and user-friendly technological solutions to enhance customer trust.

However, the unexpected negative relationship between mobile banking application features and brand loyalty highlights the complexity of digital banking dynamics. It indicates that while advanced features may increase trust, they could also hinder brand loyalty if not designed with user-friendliness in mind. This underscores the importance of striking a balance between innovation and user experience in digital banking platforms.

The quantitative analysis reveals a strong correlation between sponsorship, social media presence, institutional ties, mobile banking features, customer trust, and brand loyalty. These channels are vital for building lasting customer relationships amidst competition. However, the qualitative findings suggest a nuanced view, particularly regarding mobile banking features. While quantitatively these features increase trust, qualitatively, overly complex functionalities may harm brand loyalty. This underscores the need for banks to balance innovation with usability, emphasizing user experience to optimize distribution channels effectively.

Moving forward, it is imperative for banks to prioritize user-centric strategies, focusing on enhancing customer experience and ensuring robust security measures. Continuous improvement based on user feedback and technological advancements will be crucial in building sustainable brand loyalty amidst the competitive landscape of digital banking.

This study provides valuable insights into the intricate relationship between marketing strategies, customer trust, and brand loyalty in the Indonesian banking sector. Future research could focus on data segmentation, incorporating additional variables, and longitudinal studies to further enrich our understanding of customer behavior and loyalty in the evolving banking landscape.

In conclusion, this research underscores the imperative for banks to tailor their digital marketing distribution strategies with a keen eye on logistics and trade dynamics. Prioritizing customer-centric approaches across both digital and traditional channels remains paramount, necessitating a nuanced understanding of how various distribution channels intersect to influence customer trust and brand loyalty. By employing insights from this study, banks can navigate the intricacies of distribution channels more effectively, ultimately enhancing their competitiveness in the market.