Abstract
BACKGROUND: The dynamic nature of consumer behavior and the complex design of banking services make digital banking interactions challenging. Automated systems/responses lack a personal touch and may lead to miscommunication creating further difficulty in retaining customers. Hence, a co-creating interaction and interactional value formation (IVF) becomes a necessity for banks to have meaningful and experiential customer interactions. This article adds to the limited body of banking literature by explaining the precursors that influence IVF in digital banking interactions. METHODS: 442 digitally active banking customers of private, public, and small finance banks were selected from the Karnataka region to assess the relationship of precursors with IVF. A quantitative approach was adopted through a survey questionnaire to gather the responses. The data gathered was analyzed using SmartPLS 4.0 software. FINDINGS: Knowledge has the most significant relationship with IVF. Customers perceive the seeking and sharing of information as the most critical for a co-creating interaction. Relationship quality moderately influences value formation in digital interactions; however, communication was not found to have a relationship with co-creation. CONCLUSIONS: The study will help bank managers and employees align their resources to develop knowledge and relationship aspects in their digital interactions to foster co-creation. Banks must move beyond frequent, generic updates or promotional messages that may overwhelm customers. Instead, they should adopt a more tailored approach, emphasizing relevance and value in their interactions to avoid perceptions of intrusion or inefficiency.