Understanding trust & commitment of individual saving customers in Islamic banking

Abstract

Purpose – This paper aims to examine the relationship among trust, commitment and ego involvement and their impacts on word-of-mouth communication (WOM) for individual saving customers in Islamic banking. Design/methodology/approach – The conceptual model and the hypotheses are formulated based on trust and commitment theory, organizational commitment theory, social judgment theory and the results of previous empirical studies on buyer–seller marketing relationship in business-to-customer (B2C) markets. Quantitative research methodology was performed to examine the model and the hypotheses. The data were collected using survey with questionnaire. The respondents of the survey are 100 Islamic banking individual saving customers. Multiple regression analysis was used to test the proposed model and the hypotheses. Findings – The research results show that affective commitment has a positive and significant impact on WOM, while normative commitment and calculative commitment have no significant impact on WOM. Ego involvement has a positive and significant impact on trust, normative commitment, calculative commitment and affective commitment. However, trust does not have a significant impact on calculative commitment, normative commitment and affective commitment. Research limitations/implications – This research was only conducted in one Islamic bank in Indonesia. The data collection using the convenience sampling method as well as the use of a small sample size caused the limitation of the research results in representing across the retail customer of the bank. This study can be replicated with a larger sample size and by involving more Islamic banks to examine the stability of the findings. Practical implications – The research results indicate that ego involvement has an important role in shaping trust and commitment of Islamic banking individual saving customers. Given this, the managements of Islamic banks need to ensure that the banks they have managed are relevant, important and appropriate with the values espoused by their individual customers. Originality/value – This study is important because of the limited literature which discusses relationship marketing in the context of Islamic banking. Furthermore, this research has a novelty on the inclusion of ego involvement in explaining trust and commitment. The use of commitment as a multi-attribute construct also enriches the literature on buyer–seller marketing relationship in B2C markets due to the limited literature that addresses commitment as a multi-attribute construct.

Examining the Determinant Factors on Consumer Switching Intention Toward Islamic Bank in Central Java, Indonesia

“…This means that consumer confidence in Islamic banks can form positive consumer attitudes towards Islamic banks, and the magnitude of the effect of consumer trust on attitudes toward Islamic banks is 0.322 or 32.2%. This result is in line with several previous studies conducted by (Sumaedi et al, 2015;Ghoochani et al, 2018;Tabrani et al, 2018). While testing the second hypothesis (H2) was declared rejected, consumer trust was not proven to affect the consumer switching intention.…”

“…Ethics and obedience are the main foundations that can shape consumer trust because trust in Islam is a personality trait that must be possessed by Muslims (Nora, 2019). Trust is reflected in the activities of Islamic banks which prohibit the practice of usury in all of their business activities, this is what can build the perspective of trust and attitudes of Muslim consumers in sharia banking practices (Sumaedi et al, 2015).…”

Effects of customer perceptions in multichannel retail banking

“…In academic literature, most research has focused either on the offline or the online contexts in isolation. Specifically, the relationship between trust and commitment in online contexts has been confirmed (Mukherjee and Nah, 2003;Sanchez-Franco, 2009;Kingshotta et al, 2018), as has as the effect of these factors on bank loyalty (Phan and Ghantous, 2013;Sumaedi et al, 2015). Empirical evidence also suggests that customers' experience with existing bank channels influences the adoption of self-service technology innovations (van Birgelen et al, 2006;Lee et al, 2007;Yap et al, 2010;Estrella-Ramon et al, 2016) and that electronic experiences influence general feelings of trust and commitment (Boateng and Narteh, 2016;Kingshott et al, 2018).…”

Hurdle Rate and Adverse Selection on Escalation of Commitment

“…Self-justification theory has been a relevant theory to explain the escalation of commitment at the level of individual decision makers (Brockner, 1992;Cheng, et al, 2003). Individual behaviors who seek to rationalize their previous behavior tend to defend themselves against adverse consequences (Festinger, 1957;Sumaedi, Juniarti, & Bakti, 2015;Hensel & Visser, 2018) demonstrates that a person is highly committed when a program is chosen by them and they are personally responsible for the negative consequences. Self-justification theory has been generated from cognitive dissonance theory (Festinger, 1957) and psychological commitment theory (Kiesler, 1971) which explains the motivations underlying the escalation of manager's commitment (Cheng, et al, 2003).…”