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Purpose

This study aims to analyze how empathy contributes to value co-creation, value in use, and customer retention.

Design/methodology/approach

The article adopts a quantitative, descriptive, and cross-sectional research methodology. Data were collected through an online questionnaire involving 301 respondents. Partial least squares structural equation modeling is used to verify the predicted relationships for four hypotheses.

Findings

The study reveals that empathy has a significant positive impact on value co-creation and value in use in the banking sector, as it helps banks understand their customers’ needs better, which, in turn, enhances the perception of value during service interactions. The findings also demonstrate that value in use is a critical predictor of customer retention, emphasizing the role of empathetic customer service in fostering long-term relationships with clients.

Originality/value

This paper offers a novel contribution by empirically validating the role of empathy as an antecedent to value co-creation and value in use in the banking industry. Unlike previous studies that focused solely on service quality and satisfaction as drivers of customer retention, this research introduces empathy as a crucial factor in shaping customer perceptions and retention. This perspective provides new insights for banks aiming to enhance customer loyalty through empathetic service strategies.

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