Consumer awareness and usage of islamic banking products in South Africa

Abstract

This paper investigates the level of consumer awareness and use of Islamic banking products in South Africa. A non-probability sampling method was used whereby a questionnaire was administered to 250 respondents and statistically analysed to determine the factors that are important in the choice between Islamic or conventional banks. It was found that Muslims are aware of Islamic banks, but their rate of use is low, as Muslim customers regard efficiency, lower bank charges, the availability of automatic teller machines and an extensive branch network as important factors when it comes to choosing a bank, rather than religious motivations for compliance with Islamic conventions. It was concluded that, if Islamic banks wanted to attract and retain customers and remain relevant in the South African context, they would have to develop relevant strategies designed to meet customers' needs. Religion as the sole motivation for choosing Islamic banks is inadequate.

Understanding Islamic Bank Selection of Customers: A Field Research from Turkish Participation Banks

“…Saini et al (2011) found for South Africa that Muslims are aware of IBs but comparing to their awareness the rate of use is not high. The factors Muslim customers consider important are efficiency, lower bank charges, the availability of ATMs and extensive branch network.…”

“…IBs should not overemphasize and rely on religious factor as a strategy for more customer attraction. (Haron, Ahmad, & Planisek, 1994;Saini, Bick, & Abdulla, 2011) Sharia approval is a prerequisite of IB for caring Muslim customers only while non-Muslims or some other Muslims might even not require it when they choose their banks. Those customers requiring Sharia approval in the activities of IB will probably be not satisfied with only Sharia approval and require some other qualities endogenous in their IB.…”

The Impact of Islamic Banking on Entrepreneurial Motivation, Firm Competitiveness and Performance in South African Small and Medium Enterprises

“…Previous studies that have sought to investigate Islamic banking issues focused mainly on developing the banking products for Islamic corporate clientele (Ackermann & Jacobs, 2008), consumer awareness and usage of Islamic banking products in South Africa ( Hafsa Orhan Åström, 2013;Saini, Bick & Abdulla 2011) and the legislative challenges (Suleman 2011). Rarely does one find studies that have followed up to report on the impact of these Islamic banking products on entrepreneurship motivation, firm competitiveness and SME performance.…”

The factors affecting customers’ decisions to adopt Islamic banking

“…However, this alternative banking method which complies with Islamic economic law (Vawda, 2013) is still considered an emerging market (Dusuki & Abdullah, 2007). It is not well known by many people in the country (Saini, Bick & Abdulla, 2011). A lack of awareness has led to misconceptions surrounding Islamic banking (Cheteni, 2014).…”