The Transformation of Conventional Banking and the Impact of Fintech on Customer Loyalty

Abstract

Conventional banking in Indonesia remains a fundamental pillar of the national financial system despite facing rapid disruption from financial technology (fintech). Digitalization, increasing smartphone penetration, and the growing demand for financial inclusion have accelerated the transformation of the banking industry landscape. The presence of fintech provides faster and more convenient access to financial services, yet at the same time poses significant challenges for conventional banks in retaining customer loyalty. This study examines the relationship between fintech development, the competitiveness of conventional banking, and customer loyalty using the Systematic Literature Review (SLR) method on publications. The findings reveal that customer loyalty continues to be influenced by service quality, trust, and the additional value delivered by banks, even though fintech offers innovative alternatives. Therefore, conventional banks must transform through digitalization, collaboration with fintech, and service innovation to maintain customer loyalty amid competition. These findings provide strategic insights for the national banking industry in managing change and ensuring sustainable operations.