The Impact of Digital Transformation and Artificial Intelligence on Community Banking Performance and Customer Experience

This study took an in-depth look at how digital transformation and artificial intelligence may impact the results and customer experience of community banks in Iowa, Minnesota, and Wisconsin. A quantitative, cross-sectional survey design was used, yielding 663 valid responses from both community bank employees (224) and customers (439). Partial least-squares structural equation modelling (PLS-SEM), mediation, moderation, multigroup analysis, importance–performance analysis, measurement invariance analysis, and out-of-sample predictive analysis were used to analyse the data. Digital transformation was highly associated with bank performance (β=0.558, p<0.001) and customer experience (β=0.468, p<0.001), and the same applied to the factor AI capability and the two variables: bank performance (β=0.376, p<0.001) and experience (β=0.312, p<0.001). The quality of service is in the middle of the digital transformation experience. Service quality is in the middle of Artificial Intelligence – experience. Experience was a significant predictor of satisfaction (β = 0.721) that in turn positively affected loyalty (β = 0.684). There was a positive influence of technology outcomes due to organisational readiness, and a negative influence due to privacy concerns, which supported the technology outcomes in the context of their influence on trust and experience. The relationships remained consistent across the three states, but there appeared to be a higher experiential value attached to artificial intelligence in rural markets than in urban markets. The results of the study not only corroborate Dynamic Capabilities Theory, the Technology–Organisation–Environment framework, and the Information Systems Success Model, but also show that investment in technology generates sustainable results due to organisational readiness, service quality, trust, experience, and satisfaction.