The rapid adoption of digital banking, driven by the widespread use of mobile devices as commercial tools, has transformed the financial services landscape. However, a critical challenge persists: many customers remain uncertain about their satisfaction with digital banking services and their subsequent retention decisions. Understanding how service quality influences customer satisfaction and retention is therefore essential for banks to maintain competitiveness in this evolving market. This study investigates the impact of six key service quality dimensions—ease of use, efficiency, privacy/security, responsiveness, reliability, and price—on customer satisfaction and retention intention among digital banking users in Malaysia. Data was collected through 200 questionnaires distributed via convenience sampling and analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). The measurement model demonstrated strong psychometric properties. Convergent validity was established, with all constructs explaining over 50% of the variance (AVE > 0.50) and showing significant intercorrelations. Composite reliability scores (0.88–0.952) confirmed excellent internal consistency, while discriminant validity tests HTMT ratio verified that all constructs were distinct and met the required thresholds. The structural model revealed three significant predictors of customer satisfaction: responsiveness (β = 2.566), reliability (β = 3.518), and price (β = 2.750). Notably, reliability emerged as the strongest determinant of satisfaction. In contrast, ease of use, efficiency, and privacy/security showed no statistically significant effects. These findings provide valuable insights for banks to prioritize specific service quality improvements that directly enhance customer satisfaction and retention in the digital banking sector.