The present study aimed to explore and describe the lived experiences of employees and customers regarding customer-oriented empowerment in Bank Mellat of Iran and to identify the fundamental structure underlying this phenomenon. This qualitative study was conducted using a descriptive phenomenological approach. The participants consisted of 22 stakeholders of Bank Mellat, including 14 employees and 8 customers, who were selected through purposive sampling with maximum variation. Data were collected through in-depth semi-structured interviews and analyzed using Colaizzi’s seven-step phenomenological method. To ensure trustworthiness, member checking, peer review, detailed contextual description, and comprehensive documentation of the research process were employed. Data analysis resulted in the extraction of 421 significant statements, 18 subthemes, and 6 major themes: the current status of professional development, employee competency needs, empowerment barriers, empowerment components, empowerment outcomes, and contextual factors. The findings revealed a substantial gap between employees’ theoretical understanding of customer orientation and their practical ability to implement it. The most influential barriers included hierarchical organizational structures, lack of delegated authority, insufficient emotional-situational skills, and weaknesses in situated learning processes. Furthermore, structural and psychological empowerment were associated with higher customer satisfaction, stronger customer loyalty, and enhanced employee motivation. The essential structure of the participants’ lived experience was identified as a conflict between theoretical knowledge of customer orientation and practical inability to enact it. The results indicate that customer-oriented empowerment in Bank Mellat is shaped by structural, cultural, educational, and competency-related factors, and that theoretical knowledge alone is insufficient for achieving customer-oriented behaviors. Reducing bureaucracy, delegating meaningful authority, strengthening soft skills, and redesigning training systems through simulation-based and situated learning approaches may help bridge the knowledge–action gap and improve service quality.