Impact of AI-Based Chatbots and Digital Banking Services on Customer Satisfaction in Indian Private Sector Banks

With the help of chatbots, recommendations, fraud alerts, and automated processing, AI has seeped into the front office of Indian private banks, providing real-time customer support and customer service.AI has transcended into the front office of Indian private banks with chatbots, personalized recommendations, and real-time fraud detection and automated processing, ensuring swift customer support and customer service. The purpose of this study is to explore the impact of these AI-driven services on customer experience. The questionnaire assessed the overall customer experience using a five-point Likert scale and customer perceptions of four AI service dimensions (chatbots and virtual assistants, personalization, fraud detection and security, and process automation and speed) likewise. Data of 300 customers of four different private sector banks were analyzed through Cronbach's alpha, chi-square test of independence, one way ANOVA and multiple linear regression in MS-Excel. There was a significant association between age group and level of use of AI service, according to the chi-square test (χ² (6) = 49.41, p < 0.001, Cramér’s V = 0.29). The results of the One-way ANOVA indicated that there were significant differences among the low, moderate and high level of AI usage groups in customer experience (F (2, 297) = 42.16, p < 0.001, η² = 0.22). The regression model was significant and explained about 33% of the variance in customer experience (R² = 0.333, F (4, 295) = 36.83, p < 0.001); fraud detection and security (β = 0.38) and chatbots (β = 0.34) were the strongest predictors, followed by personalization (β = 0.19) and process automation (β = 0.15). The results indicate that banks need to emphasize security assurance and the quality of their conversation services and promote the use of AI in their interactions with their older customers.