Factors influencing customer switching behavior in Islamic banks: evidence from Kuwait

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sherif Ghamry ◽  
Hamed M. Shamma
Keyword(s):  
Cost Effective ◽  
Switching Behavior ◽  
Service Reliability ◽  
Islamic Banks ◽  
Content Type ◽  
Islamic Bank ◽  
Factors Influencing ◽  
Customer Switching ◽  
Bank Managers ◽  
Significant Factors

Purpose With increasing competition, Islamic banks in Kuwait are currently facing difficulties in retaining their customers as customers now have the option to switch from one bank to another. As the banking industry offers almost identical products and services, customers are more likely to change their bank when they get a better offer from another bank, especially if the customer is dissatisfied with the current bank. Thus, this study aims at identifying the most significant factors that make Islamic bank customers switch their bank. Design/methodology/approach The data for this study was collected through a survey with a response rate of 25.5%. Logistic regression was used to analyze the collected data and examine the effect of each factor on the customer switching behavior. Findings The results of empirical analysis reveal that the service convenience, service reliability, level of technology and Sharia compliance are the most significant factors influencing the customer switching behavior in Kuwaiti Islamic banks. Thus, Islamic bank managers should focus on these factors when building their strategies to increase their customer’s satisfaction and loyalty. Loyal customers are more profitable than new customers as they are more likely to use more services, spread a positive word of mouth and, more importantly, they are more likely to resist competitors’ offers. Practical implications Identifying and understanding these factors will enable Islamic bank managers to direct their efforts and resources to the most cost-effective ways that help them to retain their customers, and accordingly, increase bank profits. Originality/value To the best of the authors’ knowledge, this is the first study to examine the customer switching behavior in Kuwait, and one of the few to present a model that explains the stages through which customers pass until they reach the switching decision.

Loyalty towards Islamic banking: service quality, emotional or religious driven?

2019 ◽  
Vol 11 (1) ◽  
pp. 66-80 ◽  
Author(s):  
Dwi Suhartanto ◽  
Christopher Gan ◽  
Ira Siti Sarah ◽  
Setiawan Setiawan
Keyword(s):  
Service Quality ◽  
Customer Loyalty ◽  
Structural Equation ◽  
Islamic Banking ◽  
Emotional Attachment ◽  
Islamic Banks ◽  
Content Type ◽  
Perceived Service Quality ◽  
Islamic Bank ◽  
Bank Managers

Purpose This paper aims to integrate and examine three loyalty routes (i.e. service quality, emotional attachment and religiosity) in developing customer loyalty towards Islamic banking. Design/methodology/approach Data were collected from 412 Islamic bank customers from Indonesia. Variance-based structural equation modelling was applied to evaluate the association between service quality, emotional attachment, religiosity and customer loyalty. Findings This study reveals that customer loyalty is more driven by emotional attachment and religiosity rather than by perceived service quality. Although not directly affecting customer loyalty, service quality strengthens customer satisfaction towards Islamic banks. Practical implications This study provides an opportunity for Islamic bank managers to increase their customer loyalty through the development of emotional attachment and religiosity. To improve customer loyalty, this study suggests that Islamic banks have to provide prompt, accurate and non-personal service. It is also important for Islamic bank managers to keep the bank operation compliant with the Sharia law. Originality/value This study is the first attempt to assess the three loyalty routes simultaneously in influencing customer loyalty.

scholarly journals Non-Muslim Customer Switching Behavior In Islamic Bank In Indonesia

2022 ◽  
Vol 18 ◽  
pp. 136-143
Author(s):  
Hermanita Hermanita ◽  
Suci Hayati
Keyword(s):  
Switching Behavior ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Banking Services ◽  
Anova Test ◽  
Islamic Bank ◽  
Qualitative Approaches ◽  
Customer Switching ◽  
Conventional Banks ◽  
Post Hoc

The growth of Islamic banking in Indonesia has occurred significantly, one of which is in the Metro City area, Lampung Province, Indonesia. Many consumers have moved from conventional banks to Islamic banks, even this has happened to non-Muslim consumers. This study aims to describe the factors that influence the behavior of non-Muslim consumers in Metro City, Lampung Province, Indonesia, when choosing Islamic banking services over conventional banks. This is because the understanding of non-Muslim customer switching behavior is very important, especially for Islamic banking, where the application of religious principles is contained therein. This research was conducted using a mixed method with quantitative and qualitative approaches. Data collection was carried out by filling out questionnaires and interviewing 40 non-Muslim customers who became customers at Islamic Bank. Furthermore, the data were analyzed statistically using ANOVA test and Post Hoc Test to see the influence of the factors that gave the most significant influence. The results of this study indicate that the factors of price, reputation, service quality, promotion, product, location, profit, coercion, and recommendations from other customers have a significant effect on non-Muslim customers to switch to services to Islamic banks with a significance value of 0.000 at ANOVA test. Of the nine factors, recommendation factors from other customers (whether friends, relatives, or family), price, and profit are the most influencing factors.

Predicting behavioural intention toward Islamic bank: a multi-group analysis approach

2019 ◽  
Vol 10 (4) ◽  
pp. 1091-1103 ◽  
Author(s):  
Dwi Suhartanto
Keyword(s):  
Group Analysis ◽  
Partial Least Square ◽  
Least Square ◽  
Behavioural Intention ◽  
Islamic Banks ◽  
Content Type ◽  
Islamic Bank ◽  
Bank Managers ◽  
The Impact ◽  
Practical Implications

PurposeThis study aims to examine behavioural intention towards Islamic bank including three determinants: religiosity, trust and image across customers and non-customers.Design/methodology/approachThis study uses 400 samples, consisting of customers and non-customers of Islamic banks collected from Bandung, Indonesia. Partial least square was applied to evaluate the association between religiosity, trust, image and behavioural intention.FindingsThis study reveals a direct effect of religiosity on behavioural intention and indirect effect through trust and image for both customers and non-customers of Islamic banks. Although the impact of religiosity on trust, image and behavioural intention is significant in both the customer and non-customer sample, the effect of religiosity on the customer is higher compared to that of non-customer.Practical implicationsThis study provides an opportunity for Islamic bank managers to increase the behavioural intention among the customer, as well as non-customer. To increase behavioural intention amongst customers and non-customers, Islamic bank managers need to keep the bank operation compliant with theSharialaw, maintain a good image and gain trust from both customers and non-customers.Originality/valueThis study is the first attempt to evaluate the behavioural intention towards Islamic bank across customers and non-customers.

Measuring halal brand association (HalBA) for Islamic banks

2016 ◽  
Vol 7 (3) ◽  
pp. 331-354 ◽  
Author(s):  
Suharni Maulan ◽  
Nor Asiah Omar ◽  
Maisarah Ahmad
Keyword(s):  
Factor Analysis ◽  
Three Dimensions ◽  
Islamic Banks ◽  
Content Type ◽  
Islamic Bank ◽  
Brand Association ◽  
Bank Managers ◽  
Confirmatory Factor ◽  
Banking Institutions ◽  
Corporate Social

Purpose The main purpose of this paper is to develop a reliable and valid scale for measuring halal brand association (HalBA) for Islamic banks. Brand association is a core dimension of brand equity that Islamic bank managers need to develop to maintain competitiveness. Using the process proposed by Churchill for developing measures of marketing constructs, an instrument to assess HalBA for Islamic bank is formulated. Design/methodology/approach The methodology consists of developing the scale based on a literature review and qualitative method. The proposed scale is then purified and validated through exploratory factor analysis (EFA) and confirmatory factor analysis (CFA). Findings Based on the EFA and CFA, the result reveals that HalBA for Islamic banks contains 15 attributes which can be categorized into three dimensions: Shari’ah-compliant association, God-consciousness association and corporate social responsibility association. Practical implications The scale developed could assist practitioners in further understanding the dimensions and measurement of halal bank association, particularly in Islamic banking institutions. Knowledge of the dimensions of HalBA that customers seek from an Islamic bank can help managers and marketers to design branding strategies that better meet the needs of consumers, thereby increasing their satisfaction and loyalty. Originality/value The concept of brand association has been explored primarily from a conventional marketing perspective. This study offers a new dimension of HalBA in the context of Islamic banks.

Migration (Hijra) to Islamic bank based on push–pull–mooring theory: a services marketing mix perspective

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sri Rahayu Hijrah Hati ◽  
Gita Gayatri ◽  
Kenny Devita Indraswari
Keyword(s):  
Online Survey ◽  
Interactive Effect ◽  
Services Marketing ◽  
Marketing Mix ◽  
Switching Behavior ◽  
Equation Modeling ◽  
Islamic Banks ◽  
Bank Account ◽  
Content Type ◽  
Islamic Bank

Purpose This study aims to examine the interactive effect of the push factor from the conventional bank, the pull factor from the Islamic bank and the internal mooring factor of the customers in influencing the switching behavior of two types of customer account holders, the conventional only and the mixed (conventional and Islamic bank) account holders, from the services marketing mix perspective. Design/methodology/approach This study applied an explanatory research design. The data were collected via an online survey from 1,171 Muslim participants; participants consisted of conventional only account holders, Islamic bank only account holders and mixed (conventional and Islamic bank) account holders. The data were mainly analyzed using structural equation modeling. Findings Based on the account, the results showed that the three types of customers differ significantly in terms of the effect of the push, pull and mooring factors. The study also showed that the mooring factor, which is internal to the customer, is the most significant factor that inhibits customers from migrating to Islamic banks. The effect was observed for both conventional customers and those who hold mixed accounts. Research limitations/implications The study was conducted via an online survey, which reduces the representativeness of the sample. In addition, most respondents were urban dwellers and well educated, which might not represent the banking behaviour of Indonesian Muslim customers in general. Practical implications The study implies that to attract the conventional only account holder, Islamic banks should first weaken the mooring factors (the internal characteristics of the customers) that inhibit customers from switching to an Islamic bank. Originality/value The main contribution of the study is that it simultaneously identifies the push, pull and mooring factors that have the most significant impacts on Muslim customers' switching behavior from a conventional to an Islamic bank.

scholarly journals AN EXPLORATION OF CUSTOMERS’ SWITCHING BEHAVIOR IN ISLAMIC BANKING INDUSTRY

2017 ◽  
Vol 2 (2) ◽  
pp. 251-286
Author(s):  
Ali Rama
Keyword(s):  
Customer Satisfaction ◽  
Service Quality ◽  
Banking Industry ◽  
Service Failure ◽  
Switching Behavior ◽  
Survey Method ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Islamic Bank ◽  
Customer Switching

The existence of the switching behavior among Islamic bank customers may affect to the survival of the Islamic banks of the country. Switching behavior is mostly as an outcome of the negative service experience that may be related to several factors. The purpose of the study is to provide an insight of the drivers that lead to a bank customer switching behavior from one Islamic bank to another bank. The study employed survey method through questionnaire instrument and distributed to Islamic banking customers in several areas of Banten Province, Indonesia. The result of statistical analysis shows that customer satisfaction, service quality, shariah compliance, prices and involuntary switching have their significant effect on customers’ switching behavior in the Islamic banks. However, service failure and advertisement are not statistically significant in driving bank switching. Therefore, the Islamic bank manager should shape their business model around customers’ needs and focuses operational improvements on customers’ most valued interactions.  Keywords: Switching behavior, Customer satisfaction, Service quality, Shariah compliance, PricesJEL Classification: G14, G20, G21, M30, D10

Islamic religiosity and ethical intentions of Islamic bank managers: rethinking theory of planned behaviour

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sarminah Samad ◽  
Muhammad Kashif ◽  
Shanika Wijeneyake ◽  
Michela Mingione
Keyword(s):  
Design Methodology ◽  
Theory Of Planned Behaviour ◽  
Customer Relationship ◽  
Islamic Banks ◽  
Cross Sectional ◽  
Content Type ◽  
Ethical Attitude ◽  
Ethical Intentions ◽  
Islamic Bank ◽  
Bank Managers

Purpose The primary aim of this study is to investigate how Islamic religiosity shapes the ethical attitude of customer relationship managers while predicting their behaviours. Design/methodology/approach A survey-based, cross-sectional data is collected from 257 customer relationship managers working in leading Islamic Banks in Pakistan. Findings Results demonstrate that religiosity positively influences the attitude of managers. Furthermore, the effect of subjective norms to predict ethical intentions is found insignificant which opens a new debate for the scholarly community. Originality/value A key contribution of this study is the investigation of Islamic religiosity as a predictor of managerial attitude. Furthermore, the context of Islamic bank managers is a new context of this investigation.

scholarly journals The antecedents of Muslim customers’ intention to invest in an Islamic bank’s term deposits: evidence from a Muslim majority country

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sri Rahayu Hijrah Hati ◽  
Sigit Sulistiyo Wibowo ◽  
Anya Safira
Keyword(s):  
Perceived Risk ◽  
Online Survey ◽  
Perceived Value ◽  
Perceived Quality ◽  
Equation Modeling ◽  
Product Knowledge ◽  
Islamic Banks ◽  
Content Type ◽  
Islamic Bank

Purpose The purpose of this study is to examine the impacts of product knowledge, perceived quality, perceived risk and perceived value on customers’ intention to invest in Islamic Banks. This study specifically examines an Islamic bank’s term deposits. Design/methodology/approach Structural equation modeling was used to analyze the data collected from 217 customers of an Islamic bank in Indonesia using an online survey. Findings This study highlights the central and dual roles of perceived risk as both the independent and the intervening variable that mediates the relationship between product knowledge and Muslim customer intention to invest in an Islamic bank’s term deposits. Research limitations/implications This study only investigates term deposits as one type of investment in Islamic banks. This study contributes to the literature by examining the role of product knowledge, perceived quality, perceived risk and perceived value on Muslim customer intention to invest in Islamic term deposits. Practical implications The results of this study highlight the requirement for Islamic banks to educate customers to improve the depositors’ product knowledge because Muslim customers’ risk and value perception and intention are strongly influenced by product knowledge. Originality/value The investigation of perceived risk is particularly relevant for Islamic financial products because of the inherent nature of risk sharing in Islamic finance. This study investigates the role of product knowledge in influencing the Muslim customers’ perception of risk, quality, value and their intention to invest in Islamic bank term deposits. Ideally, the profit loss sharing concept (PLS) should be applied; however, in this context, revenue sharing is applied because of Indonesia’s central bank regulation.

Is Islamic bank profitability driven by same forces as conventional banks?

2016 ◽  
Vol 9 (1) ◽  
pp. 46-66 ◽  
Author(s):  
Hajer Zarrouk ◽  
Khoutem Ben Jedidia ◽  
Mouna Moualhi
Keyword(s):  
Dynamic Panel Data ◽  
Islamic Banking ◽  
Subprime Crisis ◽  
Islamic Banks ◽  
Mena Region ◽  
Bank Profitability ◽  
Content Type ◽  
Large Sample ◽  
Islamic Bank ◽  
Conventional Banks

Purpose The purpose of this paper is to ascertain whether Islamic bank profitability is driven by same forces as those driving conventional banking in the Middle East and North Africa (MENA) region. Distinguished by its principles in conformity with sharia, Islamic banking is different from conventional banking, which is likely to affect profitability. Design/methodology/approach The paper builds on a dynamic panel data model to identify the banks’ specific determinants and the macroeconomic factors influencing the profitability of a large sample of 51 Islamic banks operating in the MENA region from 1994 to 2012. The system-generalized method of moment estimators are applied. Findings The findings reveal that profitability is positively affected by banks’ cost-effectiveness, asset quality and level of capitalization. The results also indicate that non-financing activities allow Islamic banks to earn higher profits. Islamic banks perform better in environments where the gross domestic product and investment are high. There is evidence of several elements of similarities between determinants of the profitability for Islamic and conventional banks. The inflation rate, however, is negatively associated with Islamic bank profitability. Practical Implications The authors conclude that profitability determinants did not differ significantly between Islamic and conventional banks. Many factors are deemed the same in explaining the profitability of conventional as well as Islamic banks. The findings reported in the current paper might be of interest for policy makers. It is recommended to better implement non-financing activities to improve Islamic bank profitability. Originality/value Unlike the previous empirical research, this empirical investigation assesses the issue whether Islamic banks profitability is influenced by same factors as conventional model. It enriches the literature in this regard by considering the specificities of Islamic banking to identify the determinants of profitability. Moreover, this study considers a large sample (51 Islamic banks) through a different selection of countries/banks than previous studies. In addition, the period of study considers the subprime crisis insofar it ranges from 1994 to 2012. Hence, this broader study allows the authors to draw more consistent conclusions.

Integration of Islamic bank specific risks and their impact on the portfolios of Islamic Banks

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Syed Alamdar Ali Shah ◽  
Raditya Sukmana ◽  
Bayu Arie Fianto
Keyword(s):  
Risk Management ◽  
Portfolio Diversification ◽  
Islamic Banks ◽  
Content Type ◽  
Management Framework ◽  
Risk Return ◽  
Islamic Bank ◽  
Risk Management Framework ◽  
Impact Risk ◽  
Conventional Banks

Purpose This study aims to propose a risk management framework for Islamic banks to address specific risks that are unique to Islamic bank settings. Design/methodology/approach A unique methodology has been developed first by exploring the dynamics and behaviors of various risks unique to Islamic banks. Second, it integrates them through a series of diagrams that show how they behave, integrate and impact risk, returns and portfolios. Findings This study proposes a unique risk-return relationship framework encompassing specific risks faced by Islamic banks under the ambit of portfolio theory showing how Islamic banks establish a steeper risk-return path under Shariah compliance. By doing so, this study identifies a unique “Islamic risk-return” nexus in Islamic settings as an explanation for the concern of contemporary researchers that Islamic banks are more risky than conventional banks. Originality/value The originality of this study is that it extends the scope of risk management in Islamic banks from individual contract-based to an integrated whole, identifying a unique transmission path of how risks affect portfolio diversification in Islamic banks.

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