Psychological determinants of customer loyalty: The interplay of satisfaction, trust, and financial security in Ukrainian banks

Type of the article: Research ArticleAbstractThis study seeks to clarify the psychological mechanism through which trust, perceived financial security, and satisfaction jointly shape customer loyalty in Ukraine’s banking sector under heightened uncertainty. Building on the concept of institutional confidence, we conceptualize customers’ assurance as a unified latent state in which trust (relational expectation of reliability and integrity) and perceived security (cognitive sense of protection of funds and data) function as tightly interconnected facets rather than independent predictors. Employing Structural Equation Modelling (SEM) on a survey dataset obtained through Computer-Assisted Web Interviewing (CAWI) (n = 251), we ascertain that institutional confidence has a direct impact on loyalty (β = 0.33, p < 0.001) and an indirect impact through satisfaction (β = 0.35, p < 0.001), resulting in a cumulative effect of β = 0.68. The model explains 59% of the variance in loyalty. These findings indicate that customer satisfaction functions as the mechanism through which institutional confidence is transformed into customer loyalty. Institutional confidence creates a favorable baseline for evaluating the bank, whereas satisfaction reflects customers’ accumulated experience with service delivery; together they explain why confidence results in stable loyalty and recommendation intentions. These findings enhance behavioral finance and relationship marketing views by empirically validating the sequential route “security/trust → satisfaction → loyalty” and by establishing institutional confidence as a higher-order psychological factor of customer loyalty. The results highlight the strategic significance of transparency, data ethics, and protective infrastructure as essential factors for customer retention in crisis-prone settings.