With the growing recognition of the customer’s role in service creation and delivery, there is an increased impetus on building customer-centric organizations. Digital technologies play a key role in such organizations. Prior research studying digital business strategies has largely focused on building production-side competencies and there has been little focus on customer-side digital business strategies to leverage these technologies. We propose a theory to understand the effectiveness of a customer-side digital business strategy focused on localized dynamics—here, a firm’s customer service units (CSUs). Specifically, we use a capabilities perspective to propose digital design as an antecedent to two customer service capabilities—namely, customer orientation capability and customer response capability—across a firm’s CSUs. These two capabilities will help a firm to locally sense and respond to customer needs, respectively. Information quality from the digital design of the CSU is proposed as the antecedent to the two capabilities. Proposed capability-building dynamics are tested using data collected from multiple respondents across 170 branches of a large bank. Findings suggest that the impacts of information quality in capability-building are contingent on the local process characteristics. We offer implications for a firm’s customer-side digital business strategy and present new areas for future examination of such strategies.