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preferences for Islamic banking
Abdelghani Echchabi and Oladokun Nafiu Olaniyi
International Islamic University Malaysia, Kuala Lumpur, Malaysia
Purpose – The purpose of this paper is to shed light on the preferences of Malaysian banks’
customers for Islamic banking attributes.
Design/methodology/approach – The paper uses mixed methodology. The quantitative approach
consists of the collection of primary data through a self-administered questionnaire distributed to
500 Islamic banks’ customers in Malaysia. The data gathered were analysed using factor analysis as
well as Friedman test. In parallel, qualitative approach was used, in forms of semi structured
interviews with ten Islamic banks’ customers. The results of both approaches were then reported
Findings – The quantitative approach reveals that the preference for Islamic banking attributes in
Malaysia is a combination of the quality of services offered by the Islamic banks, as well as the
convenience associated with it. On the other hand, the qualitative approach revealed that choosing
Islamic banks was mainly due to the religious motivation of the customers.
Originality/value – This paper is one of the few that has used a qualitative approach to study
consumer preferences for Islamic banking attributes. Furthermore, the paper employs this
methodology in the context of Malaysia, which enriches the studies done in this context and area.
Keywords Malaysia, Banking, Consumer behaviour, Islam, Customer preference, Islamic banks,
Selection criteria, Factor analysis, Interview
Paper type Research paper
In the context of the growing international and global challenges, the banking sector
as well as the other sectors of the economy resulted to intense competitive environment
in the banking sector. This therefore, necessitates some unique measures and
strategies by the financial institution in order to successfully attract more customers
and gain larger market share and more revenue.
In order to gain customers’ satisfaction and loyalty, it is important for the banks to
know the customers, their needs, their interests, their concerns, their styles, etc. As such,
it is important for the banks to know those major factors that attract the customers to
choose a given bank. The survival strategy therefore lies on finding consumers’
priorities devise and means of satisfying the consumers. In the specific case of Malaysia,
this is highly important due to the willingness of the country to become an Islamic
finance hub, which is more challenging because of the established dual banking system.
This new trend in the Islamic banking sector therefore attracted the interest of
researchers, practitioners and regulators to embark on extensive research in different
contexts with the resultant variation in their findings. Some of these findings are used
in the current study as a guide based on the fact that, same criteria appear in almost
all the previous studies with a slight degree of priorities and order difference.
International Journal of Social
Vol. 39 No. 11, 2012
q Emerald Group Publishing Limited
The current study is an attempt to answer mainly the following research questions:
RQ1. Is there any difference in the perception of the customers about Islamic
RQ2. What are the main attributes considered by the Islamic banks’ customers
when choosing a given Islamic bank?
The remaining of the paper is organized as followed: the second section will treat
literature review; the third section will discuss methodology, the fourth and fifth sections
will discuss the results and conclusion, respectively.
Brief overview on Islamic banking development in Malaysia
According to Mokhtar et al. (2008), the history of Islamic banking in Malaysia can
be traced back to the establishment of Tabung Haji in 1963. The idea was mooted out of
the necessity to develop a mechanism to encourage the Muslims to save for their
pilgrimage, as the Malaysian Muslims in the past had resorted to various traditional
means of saving and keeping their money for the sacred journey (Laldin, 2008, p. 3).
In this regard, Sufian (2007) argues that the establishment of Islamic banking
in Malaysia was mainly affected by its prior implementation in the Middle East.
Notably, in 1980, the Bumiputera Economic Congress requested the Malaysian
Government to allow the establishment of an Islamic bank in the country. Subsequently,
the National Steering Committee was set up in 1981 in order to study this proposal in
its different aspects. The conclusions of the study suggested that it will be viable to
establish an Islamic bank in Malaysia. In fact, this marked the establishment of the
first Islamic bank in the country, namely, Bank Islam Malaysia Berhad (BIMB) in 1983.
Laldin (2008) considers that the bank’s progress was very encouraging, with its
activity rapidly expanding throughout the country. This has prompted the government
to further develop the Islamic banking industry in Malaysia.
As a result of the government’s efforts, Malaysia has emerged as the first country to
implement a dual banking system where Islamic banking system operates side-by-side
with the conventional banking system. The Malaysian model has been recognised by many
Islamic countries as the model of the future and many countries have shown interest in
adopting the Malaysian system in their respective countries. In fact, delegates from various
countries, mainly Muslim countries, have come to Malaysia, particularly to the Central
Bank and BIMB, to study how the dual banking systems work (Mokhtar et al., 2008).
The Malaysian Islamic banking system is currently made up of 15 banking institutions
comprising nine domestic commercial banks, four foreign commercial banks and two
Islamic banks offering Islamic banking products and services under the Islamic Banking
Scheme. These Islamic banking institutions offer a comprehensive and broad range of
Islamic financial products and services ranging from savings, current and investment
deposit products to finance products such as property financing, working capital
financing, project financing, plant and machinery financing, etc. (Sufian, 2007).
The banking customers’ selection criteria have largely been studied in the previous
literature. For instance, Ta and Har (2000) investigated the undergraduates’ bank
selection decisions in Singapore. The study identified nine criteria for bank selection
decision involving five banks. Based on these findings, it is indicated that
undergraduates place high emphasis on the pricing and product dimensions of bank
services. Their findings are similar to those of Amin and Isa (2008), Kennington et al.
(1996), Gait and Worthington (2008), Abdjalil et al. (2010) and Becket et al. (2000).
In contrast, Haque et al. (2009) conducted a study in the Malaysian market regarding
the factors influencing the selection of Islamic banks. The analysis confirms the
significant positive relationship of quality of services, availability of services, social
perspective as well as confidence in bank with customers’ perception about Islamic
bank. This implies that, customer give high priority to factors such as quality of service
and reliability of the banks in their selection criteria. The same results were found
by Haron et al. (1994), Dusuki and Abdullah (2007), Frimpong (1999), Kaynak and
Whiteley (1999), Edris and Almahmeed (1997), Kaynak and Harcar (2004), Liang and
Wang (2007), Erol et al. (2007) and Gerrard and Cunningham (2001).
The other selection criteria include, the bank’s reputation and image,
recommendation from a third party, convenience, professional advice, profit on
deposits, interest rates, employees friendliness and competence, size of the bank,
efficiency of personnel, location, advertisement, reception, transaction fees, bank’s
network, and prestige (Devlin, 2002; Hassan et al., 2007; Metawa and Almossawi, 1998;
Edris and Almahmeed, 1997; Erol and El-Bdour, 1989; Khattak and Rehman, 2010;
Boyd et al., 1994; Aldlaigan and Buttle, 2005; Jamal and Naser, 2002; Hegazy, 1995;
Metwally, 1996). In addition, the religious factor was also found in the literature to be
one of the criteria of Islamic banks’ selection (Osman et al., 2009; Ahmad et al., 2010;
Al-Ajmi et al., 2009; Bley and Kuehn, 2004; Metawa and Almossawi, 1998; Hassan et al.,
2007; Gait and Worthington, 2008; Naser et al., 1999; Metwally, 1996; Hegazy, 1995;
Haque et al., 2009; Okumus, 2005; Ahmad and Haron, 2002; Karim and Affif, 2006).
One of the main differences between the conventional and Islamic banks is the
Islamic aspect. Thus, it is expected that the religious motif will be the main selection
criteria of Islamic banks. This claim was supported by the previous studies (Omer, 1992;
Metwally, 1996; Metawa and Almossawi, 1998; Naser et al., 1999; Okumus, 2005).
Nevertheless, this contradicts with some other studies which found that the religious
factor is not the main and only factor of selection criteria of Islamic banks, and is not even
part of the selection criteria in some instances (Erol and El-Bdour, 1989; Haron et al.,
1994; Ahmad and Haron, 2002).
Nevertheless, in the Malaysian context, studies on Islamic banking selection criteria
are still scarce. In this regards, Dusuki and Abdullah (2007) examined the reasons
motivating Malaysian customers to patronise Islamic banks. The authors used
a combination of Friedman test as well as factor analysis. Their findings suggest that the
selection of Islamic banks is a combination of Islamic and financial reputation, as well as
the quality of services offered by the bank. Nevertheless, it is noteworthy that the
authors used a limited number of variables, i.e. 12 variables, as compared to the current
study which is using 23 variables from the previous studies.
Furthermore, the study by Ahmad and Haron (2002) focused on financial directors,
financial managers and general managers of finance in Malaysia, using descriptive
statistics. The study reveals that the economic and religious factors were the most
important factors for Islamic banks’ selection in the Malaysian context. These findings
though similar to Dusuki and Abdullah (2007) with regards to the Islamic aspect, they
are different regarding the economic aspect as well as the quality of services offered.
It is worth mentioning that the sample used in this study is relatively small compared
to the sample usually used in similar studies.
In addition, Haron et al. (1994) have studied the patronage behaviour of Muslim and
non-Muslim customers in Malaysia, using t-test and factor analysis. Their findings
indicate that the main factor of Islamic banks’ selection was fast and efficient service,
which was ranked second by non-Muslims. Moreover, friendliness of bank personnel
was considered as the most important factor by non-Muslims, and was ranked third by
Muslim customers. In this study the sample was relatively small considering the
As it can be inferred from the above studies, the Islamic aspect or the conformity of
Islamic banks with the shari’ah law is not the only factor that motivates customers to
adopt the Islamic banking services, and it may not be the main reason for them to choose
their banks. Hence, in order to provide a comprehensive framework of the attributes that
are most important for the customers when selecting a given bank, all of the above
mentioned attributes will be included in the study.
Having gone through the previous studies, it is noteworthy that none of them has
employed mixed methodology, by using both quantitative and qualitative approach to
confirm the results. This study is then an attempt to use mixed methodology in forms
of triangulation to study the consumers’ preferences of Islamic banks’ attributes
in Malaysia. Hence, the study makes the following hypothesis:
There is no significant difference in the ranking of Islamic banking attributes
as perceived by Islamic banks’ customers in Malaysia.
The current study is conducted in the case of Malaysia. The main reason for choosing
Malaysian Islamic banks and their customers as sample is due to two main reasons.
First, the aspiration of the Malaysian Government to become a key Islamic financial
hub in the region requires Islamic banks to intensify their market shares of financing
and deposits in the Malaysian financial industry and this inevitably necessitates them
to understand their customers’ perceptions and attitudes in terms of banking selection
criteria used to patronise banks. Second, the liberalisation of the Islamic banking sector
in Malaysia since 2004 signals opportunities for new entrants especially among foreign
banks to enter into this market. This would in turn require banks to have in-depth
comprehension about factors that may affect the demand for Islamic banking
in Malaysia (Dusuki and Abdullah, 2007, p. 148).
The survey questionnaire was self administered to collect information about
the importance of different factors while choosing a specific bank in the first
section. For measuring this information, Likert type scaling was used (1 – not important
and 5 – very important). In total, 23 different factors were listed in this section and most of
them were derived from the previous studies conducted in other countries as highlighted
above as well as from current banking literature with necessary adaptations made for the
Malaysian Islamic banking system. The second section of the questionnaire explored
information about respondent’s profile, i.e. gender, age, marital status, employment
status, etc. The questionnaire was made in English and distributed as such, since English
the second language in the country and most Malaysian people can speak English.
The 23 variables included in the study were derived from the above mentioned
studies. These variables are Islamic reputation, Quality of service, Islamic working
environment, Competent and knowledgeable personnel, Financial reputation and image,
Convenience, Credibility, Professional advice, Inspiring confidence in customers, Bank’s
network, Social responsibility, Friendly personnel, Products’ price, Variety of products
offered, Transaction fees, Profit on deposits, Credit availability, Location,
Advertisement, Reception, Prestige, Size of the bank, recommendation from a third party.
The data for the study was collected using self administered questionnaires.
The latter was randomly distributed to 500 Islamic banks’ customers, particularly
customers of BIMB as well as Bank Muamalat Malaysia Berhad. The survey covered the
four regions of the country, i.e. Kuala Lumpur, Kelantan, Penang and Johor. The data
collection was done on various working hours and various week days in order to avoid
the potential bias of customers’ concentration on a specific time or day in the week
(Dusuki and Abdullah, 2007; Metawa and Almossawi, 1998; Naser et al., 1999). A total of
500 questionnaires were administered out of which 473 were returned and properly filled
in. Thus, a response rate of over 94 per cent was achieved.
The results show that out of the 473 respondents, around 53 per cent were female,
while 47 percent were male. In terms of age grouping, around 36 per cent are between
31 and 40 years old, 32 per cent are between 20 and 30 years, then 17 percent are between
41 and 50 years, 12 per cent are above 50 years old, and the remaining 3 per cent are
below 20. Overall, around 70 per cent are single while the remaining 30 per cent
Regarding the level of education, 37 per cent are holding a bachelors’ degree,
20 per cent are holding masters degree, 24 per cent are holding a certificate, 14 percent are
holding a professional degree and 5 percent are holding PhD. For the type of employment,
the respondents are approximately equally distributed between private sector, public
sector as well as self-employment, while the remaining 35 per cent are students.
In addition, the duration of customer-ship with the banks shows that around
27 per cent of the customers have been customers with the bank for less than one year.
Another 27 per cent have been customers with the bank for more than five years,
25 per cent of the customers have been with the bank for one to less than three
years, while the remaining 21 per cent have been with the bank for three to less than
In line with the objectives abovementioned, a qualitative research approach was also
applied. According to Merriam (2009, p. 5), qualitative research allows the researcher to
understand how people interpret their experiences, how they construct their worlds,
and what meaning they attribute to their experiences.
The choice of qualitative research methodology can be further explained by its ability
to generate comprehensive information to determine the perception of the customers
about the attributes preferences of their Islamic banks (Weischedel et al., 2005).
A total of ten interviewees were selected depending on some specific criteria.
Customers selected were well-educated and articulate individuals, with the ability to
understand and respond to detailed questions concerning attributes of Islamic banks in
Malaysia (McCluskey et al., 2010). Polit et al. (2001) recommend that not more than ten
interviewees should be included in the study, to allow an in-depth exploration in
phenomenological studies. Furthermore, the sample of ten respondents is considered
suitable since it has been used in similar studies (Tijani et al., 2009; Koenigstorfer and
To access participants’ experiences, in dept interviews were conducted, in forms
of semi structured interviews, using tape recorder. At the beginning of every interview,
the interviewees were given a guarantee of the confidentiality and were also assured that
their identities will not be revealed in any publication.
The interviewees have been customers of their respective Islamic bank for two
to eight years. The informants were basically eight males and two females that were
customers of Islamic banks for at least two years. In addition, six of the respondents are
holding a Masters’ degree, while four of them are holding a bachelors’ degree.
All the ten interviews were reviewed several times before been transcribed.
Subsequently, a phenomenological approach to analyse data was adopted, which involves
interpreting and reflecting on the data transcript so as to achieve a holistic understanding
of the meaning of the participants’ experiences (Alexis and Vydelingum, 2007).
Furthermore, the area of Islamic banks’ selection criteria and patronisation
behaviour on general has been severely researched using quantitative approaches.
Hence, this data analysis approach was chosen to allow the customers also to express
their opinion based on their own experiences, in order to be able to confirm the findings
of the quantitative approach.
Friedman test is a non-parametric alternative to the one-way repeated measures analysis
of variance. It is more appropriate when assessment of the variables is in an ordinal scale
and is obtained from the same person (Norusis, 2004). Although it is not as powerful
as a parametric test, enlarging the sample size can increase its power to that approaching
its parametric equivalents (Sekaran, 1992). The use of this specific test was also based
on Dusuki and Abdullah (2007), which is a similar study.
The x 2 value was found to be 1,651.442 which is greater than the tabulated value
of 33.92, for a confidence level of 0.05 and degree of freedom 22. Furthermore, the
significance level 0.000 is lower than 0.05. This suggests that there is a significant
difference in the ranking of the Islamic banking attributes in Malaysia, and
subsequently we can reject Ho.
The results in Table I indicate that the most important criterion is the Islamic
reputation of the bank. This was followed by the quality of services offered, the Islamic
working environment and appearance, as well as the competence and knowledge of the
personnel of the bank. In addition, financial reputation and image as well as convenience,
were also found to have priority for the customers with a lesser degree. This is in line
with the results of Okumus (2005), which has found similar results in the Turkish
Islamic banking context.
These findings suggest that Islamic banks in Malaysia should strengthen their
Islamic and financial reputation and image, particularly in the current era, where
conventional banks are no more allowed to have Islamic windows in the country. To be
able to attract those customers that have had accounts with the Islamic windows as well
as potential customers, the Islamic banks should also enhance the quality of their
services, which is higher for the conventional banks, due to their long time practicing in
Quality of service
Islamic working environment
Competent and knowledgeable personnel
Financial reputation and image
Inspiring confidence in customers
Variety of products offered
Profit on deposits
Size of the bank
Recommendation from a third party
the Malaysia banking sector. Moreover, the Islamic banks should also enhance
the knowledge and competence of their personnel, which can be done through training
programmes offered by the bank or by external institutions (Seah and
Abdulrahman, 2007; Dusuki and Abdullah, 2007). Finally, the Islamic banks should
also offer more convenient services to the customers, to differentiate themselves from the
other existing banks.
On the contrary, prestige, size of the bank, as well as recommendation from third
party, were the factors that had least importance for the customers. This does not mean
that the customers are not interested in these variables; however, they consider them as
less important compared to the previously mentioned ones. In fact, by improving their
reputation and image, Islamic banks will have more a greater chance to be recommended
by their customers to the non-customers.
The other factors used in the current study include, credibility of the bank, the
professional advice given by the bank officers, the ability of the bank to inspire confidence
in the customers, the bank’s network, social responsibility, friendliness of the personnel,
the price of the services offered, variety of the products offered, transaction fees,
profit of deposits, credit availability, location of the bank, advertisements and reception.
In order to study the similarity of the variables in the study, and the probability
of their belonging and making up of the same factor, a factor analysis was subsequently
performed. The 23 variables were included in the study.
In this second part of the findings, the factor analysis results are reported to clearly
identify the selection criteria of Islamic banks in Malaysia. The use of factor analysis
Friedman test output
in the current study was inspired by the previous similar studies, such as Erol
and El-Bdour (1989), Erol et al. (2007), Haron et al. (1994), Hegazy (1995), Dusuki and
Abdullah (2007) and Al-Ajmi et al. (2009).
The findings indicate a Kaiser-Meyer-Olkin (KMO) value of 0.846. This is greater
than the threshold of 0.5 suggested by Hair et al. (2010). Furthermore, the Bartlett’s test of
sphericity reached a significant level of 0.000, which is lower than 0.05 suggesting that
the correlation matrix is an identity matrix (Field, 2000). Similarly, the Cronbach’s a
reliability measure was conducted and the results indicate that the overall Cronbach’s a
is 0.844 which is higher than the threshold of 0.6 suggested by Hair et al. (2010).
The results revealed the existence of five factors, including the 23 variables in the
analysis. The factor loadings are quite high ranging from 0.473 to 0.817. The eigenvalues
for the five factors are obviously above one. Factor 1 has seven significant loadings,
Factor 2 has six significant loadings, Factor 3 has five significant loadings, Factor 4
has three significant loadings, and Factor 5 has two significant loadings.
The communalities are ranging between 0.459 and 0.730 and hence are acceptable.
The reliability measures for the factors are shown in Table II, and all are above the
minimum of 0.6 suggested by Hair et al. (2010).
Table III shows that the variables under the first factor, namely, the quality of
services offered, convenience, personnel friendliness, personnel competence and
knowledge, professional advice given by the personnel, location, and finally reception,
explain the same thing. That is service quality and convenience. Thus, this factor can be
called service quality and convenience. It is worth mentioning that this factor has the
highest eigenvalue and variance, which means that it is the most important criterion in
Islamic bank selection in Malaysia.
Hence, the Islamic banking selection criteria appears to be a combination of the
quality of services offered by the Islamic banks as well as the convenience associated
with it. These findings are similar to those of Dusuki and Abdullah (2007), Erol et al.
(2007) and Haron et al. (1994) and Okumus (2005). These studies found that quality of
services, including the friendliness and competence of the personnel as well as the
convenience are the main factors determining the selection of Islamic banks.
The above results suggest that Islamic banks should provide high quality services. In
fact, this is a part and parcel of the Islamic teachings that Islamic banks should follow,
being financial institutions practicing the spirit of the Islamic religion.
The second factor is a combination of advertisement, size of the bank,
recommendation of a third party, prestige, banks’ network and financial reputation
of the bank. All these factors delineate the image and reputation of the bank. For
instance, customers see the image and reputation of the bank through advertisements
done by the bank, its size and network, recommendation from third parties, etc.
subsequently, customers will be willing to deal with an Islamic bank with good image
and reputation to achieve the prestige need or desire. Thus, this factor can be called
image and reputation of the bank, and it is the second most important factor. This is
similar to the findings of Erol and El-Bdour (1989) and Erol et al. (2007).
The third factor is comprised of transaction fees, profit of deposits, products’ prices,
and credit availability as well as the variety of products offered. These variables
are two attributes of the services rendered by the bank, namely, the cost factor as
well as the availability of services. Thus, this factor can be named availability and
price of services.
The variables under the fourth variables include the ability of the bank to inspire
confidence in customers, the credibility of the bank, as well as social responsibility.
These three variables explain the confidence in the bank that is derived from the social
responsibility of the Islamic bank as well as its perceived credibility. Thus, the suitable
name for this factor can be credibility and social responsibility of the bank.
Finally, Factor 5 comprises of Islamic reputation as well as Islamic working
environment. These two factors indicate the Islamic religious motivation of the
customers. Thus, this factor can be called Islamic motivation.
In summary, the selection of Islamic banks is mainly a depending on the service
quality of the Islamic banking services, and the convenience associated with it. In other
words, it is a combination of the quality of services offered, convenience, personnel
friendliness, personnel competence and knowledge, professional advice given by the
personnel, location, and finally reception. Thus, Islamic banks in Malaysia have interest
in enhancing the quality of their services, including the knowledge, competency
and friendliness of their personnel. In addition, the Islamic banks should take
into account the location consideration that should be near homes and work, i.e. in the
strategic locations, so that it will be easier for the customers to perform their banking
transactions. Another dimension that was not sufficiently highlighted in the previous
studies is the reception, which does not consist only in the staff welcoming and greeting,
but also in the physical amenities and overall facilities provided by the bank.
Consequently, the Islamic banks in Malaysia can enhance and strengthen their
image and reputation, which was found to be the second most important selection
factor for Islamic banks’ customers in Malaysia. Subsequently, this will help Islamic
banks in Malaysia to attract more potential customers and also make the
exiting customers more loyal to them.
The interview evidence appears to confirm the findings of Haque et al. (2009), Gait and
Worthington (2008), Al-Ajmi et al. (2009), Amin and Isa (2008), Metawa and Almossawi
(1998), Naser Jamal and Al-Khatib (1999) and Karim and Affif (2006), stating that the
religious factor is the main factor for the customers to patronise Islamic banks. In this
regards, interviewee D expressed that:
Actually the religious factor is the number 1. Because having being aware of the issue of
interest, and we know most of the banks practice interest based banking. So now, there have
being an alternative for Islamic banking that gives us a rest of mind so that at least, we can
get somewhere to save our money without necessarily thinking of interest. That is why I’ve
chosen Islamic banks, if not I would have chosen another bank that is much stronger and
more available in different places in Malaysia. But because of the Islamic factor, I chose an
In the same context, interviewee J emphasised the main issue about conventional
banking system, which was mentioned is several verses of the Quran and which makes
Islamic banking different than the conventional one, namely, that of riba. He noted that:
We know that riba is totally haram, so in our life it should be excluded at any cost, that is why
at my top priority I preferred to put my money into an Islamic bank.
However, the other portion of the interviewees chose to open an account in Islamic
banks because of the lack of choices, which shows not only lack of choices for these
customers, but also the possibility to shift to other banks depending on other criteria,
and this is conform to the findings of Naser et al. (1999), as noted by interviewee H:
In our area, there are only two or three banks. Previously there were two banks, Bank Islam
and Bank Muamalat. For my opinion, in terms of efficiency, Bank Islam was faster than bank
Muamalat that is why I preferred to have bank Islam. But if the bank in terms of the size and
service that it is willing to provide, if it is missing efficiency and all these things, the religion
factor will not be the determinant factor, for me.
Besides the efficiency, size of the banks and the quality of service mentioned by
interviewee H, the availability of the ATM machines as well as recommendations from a
third party, were also selection criteria mentioned by interviewee E. And this is similar
to the findings by Boyd et al. (1994):
Actually I chose my Islamic bank in 2004 that time I was not really aware about the other
banks, so my friend suggested me to open account in Bank Islam. Because he said that Bank
Islam compared to Bank Muamalat is better in terms of service and the availability of the
ATM even though I was not aware at that time about his suggestion.
On the other hand, a different stance was taken by one of the interviewees who seems to
favour long term rather than short term satisfaction about the Islamic banks’ services,
by virtue of supporting the activity of Islamic banks. Interviewee B expressed that:
For me, it is a part of our responsibility as Muslims to promote our own financial sector.
Though it cannot be such perfect as conventional banks that have existed long ago, but I
believe it is a part of our responsibilities, though it might not be fully shari’ah compliant but it
will reach that level with time.
In summary, while choosing Islamic banks was mainly due to the religious motivation
of the customers, there are few customers that have chosen Islamic banks because they
thought about the long term satisfaction tough they recognise that it is still not up to
that level. Per contra, the remaining portion of the customers has chosen Islamic banks
just because of the lack of other alternatives in their respective circumstances. The
other criteria emphasised by the customers include the availability of ATM machines,
efficiency, and size of the bank as well as recommendation from a third party.
The main aim of this study was to detect the selection criteria of Islamic banks in
Malaysia, as well as the priority and importance of these criteria for the customers. It was
found that the main criterion of customers’ selection was the service quality and
convenience. This is a combination of the quality of services offered, convenience,
personnel friendliness, personnel competence and knowledge, professional advice given
by the personnel, location, and finally reception.
The quantitative findings suggest that Islamic banks should not depend on the
religiosity of the Malaysian customers to market their Islamic banking services, as the
religious motivation is not the main factor of selection and patronisation of Islamic
banks in Malaysian. Rather, Islamic banks should enhance the quality of their services.
This passes through training and updating the personnel on the latest innovations in
terms of Islamic banking service. Furthermore, Islamic banks in Malaysia should
position their branches where there is concentration of habitat as well as working areas,
such as commercial complex and so on.
The Islamic banks should also provide appealing and updated facilities and
amenities in their branches, since this is complementary of the good reception criteria of
the customers. These items will subsequently strengthen the image and reputation of the
Islamic banks in Malaysia, especially in the current period.
In contrast, the qualitative findings revealed that majority of the customers have
chosen Islamic banks because of their religious motivation, and their duty vis-a`-vis the
achievement of full shari’ah compliance of Islamic banks in the future. This was
subsequently proven by the customers’ perceived importance of shari’ah compliance of
Islamic banks, unanimously expressed by the interviewees.
Beside the practical implications above mentioned, the findings have significant
implications also for the policymakers and regulators, whom should align their policies
and regulations with the preferences of the Islamic banking customers as outlined
above. Finally, the findings of the current study have great implications for the body of
knowledge as well, in the sense that they provide a ground for the future studies to
establish a comprehensive model for Islamic financial services adoption that will
consider both the conventional dimensions as well as the dimensions that are specific to
the Islamic banking practice. This is due to the fact that the previous studies have proven
that religious based motives are not the only factors influencing the patronisation
decisions of Islamic banks’ customers.
Limitations and implications for future research
Though the current study is based on a large sample size, i.e. 500 respondents, which
provides a great indication on the patronisation behaviour of Islamic banks’ customers
in Malaysia, the sample was taken only from two Islamic banks. Thus, the findings
cannot be generalised to customers of the other Islamic banks in the country.
Consequently, the future researchers are recommended to select a more comprehensive
and representative sample of the setting to be studied.
The future researchers are also recommended to find the interactions between these
above mentioned attributes and establish a comprehensive model illustrating the way
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(The Appendix follows overleaf.)
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