ROLE OF EMPLOYEE ETHICS AND REGULATORY COMPLIANCE IN STRENGTHENING CUSTOMER RELATIONSHIPS IN BANKS

Abstract

Abstract: The banking sector, relies heavily on regulatory compliance and ethical practices, being a corner stone of economic stability to build and sustain customer relationships. In the banking sector the combined impact of employee’s ethics and regulatory compliance on customer satisfaction and retention was studied. This study provides an integrated analysis to address the existing research gap while prior research has largely explored these variables independently.Using a structured questionnaire primary data were collected from 80 respondents based on 5-point Likert scale. To analyse the relationships among variables statistical tools including correlation, regression and ANOVA were employed. A significant positive association between customer outcomes such as trust, satisfaction and loyalty and ethical practices reveal under the study. Notably, regulatory compliance demonstrates a stronger and statistically significant influence on customer satisfaction (β = 0.285, p = 0.016) compared to individual employee ethics.The findings show that employee ethics function as baseline expectations for customers while they are essential such as honesty, confidentiality and fairness. A more critical role in shaping customer perceptions and enhancing trust played by institutional factors like adherence to regulatory guidelines. In the banking industry this highlights the growing importance of “Compliance Branding” as a strategic tool.To achieve long-term customer retention and competitive advantage in the banking sector the study concludes that banks should prioritize robust compliance mechanisms alongside fostering and ethical organizational culture. Through an integrated ethics-compliance framework these findings provide valuable insights for banking professionals and policymakers in strengthening customer relationships.Keywords: Banking Ethics, Regulatory Compliance, Customer Satisfaction, Customer Retention, Indian Banking Sector