An Exploratory Study on Customers’ Selection in Choosing Islamic Banking

Abstract

Islamic banking industry is growing very rapidly by offering high quality schemes where free interest and better customer services are provided. Strong Islamic banking movements is forcing the industry to come up with new strategy to compete the market. The purpose of this study is to determine and identify the factors that influence the consumers to choose Islamic bank products or services. Data is collected using non probability simple random sampling around Selangor area. The analysis shows that bank reputation, religious and cost benefit factors are significant which influence customers' selection on Islamic banking. Bank reputation and cost benefit has positive relationship on choosing Islamic banking. Convenient is not significant factor of influence customers' selection on choosing Islamic banking. As a conclusion, the study prove that religion shows negative relationship on choosing Islamic banking. This shows that religion is not the main factor but the risk of selecting a bank is important.

Determinants of the decision to adopt Islamic finance: evidence from Oman

“…According to Ibrahim et al (2017), religiosity is the most influential factor in selecting Islamic financing. In another Malaysian study, Selvanathan et al (2018) identify religion, bank reputation and cost–benefit factors as factors that influence Malaysian customers’ selection of Islamic banking products and services, while convenience is not seen to be a significant factor. Pakistan : Using the theory of reasoned action (TRA) model, Ali et al (2017) investigate factors affecting intentions to select Islamic credit cards and find that attitude and subjective norms are positive and significant factors in choosing an Islamic credit card, while perceived financial cost has a negative effect. In addition, Akhtar et al (2016) find that religion, awareness regarding Islam’s teachings on finance, awareness of Islamic banking products and services, advertising and networking are the most important factors which affect customer perception regarding Islamic banking. Indonesia : Usman et al (2017) state that religious norms play an important role in the relationship between religiosity and choosing of Islamic banks.…”

“…According to Ibrahim et al (2017), religiosity is the most influential factor in selecting Islamic financing. In another Malaysian study, Selvanathan et al (2018) identify religion, bank reputation and cost-benefit factors as factors that influence Malaysian customers' selection of Islamic banking products and services, while convenience is not seen to be a significant factor. (2) Pakistan: Using the theory of reasoned action (TRA) model, Ali et al 2017investigate factors affecting intentions to select Islamic credit cards and find that attitude and subjective norms are positive and significant factors in choosing an Islamic credit card, while perceived financial cost has a negative effect.…”

Drivers of loyalty among non-Muslims towards Islamic banking in Malaysia

“…Selvanathan et al (2018) argue that the status of religion is not a matter for the customer to choose Islamic banks in the Selangor state. However, other factors such as Islamic bank reputation, convenient and cost benefits are the most significant factor in determining whether customers will choose Islamic or vice versa.…”

Knowledge and Awareness of Islamic Financial in Europe And America Countries

“…This indicates that knowledge and awareness, especially scientific awareness of Islamic finance will be more actively carried out in Muslim-majority countries. Research findings of Usman (2015), Kaawaase & Nalukwago (2017), and Selvanathan, et al (2018) show that religiosity has an influence on the development of Islamic banking. On the other hand, in a predominantly Muslim country, there has been a better ecosystem in supporting research, education, seminar, and conference activities.…”