Measuring Customers Loyalty of Islamic Banking in Bahawalpur Region

Abstract

Purpose: The basic purpose of measuring the customer's loyalty in Islamic banking in Bahawalpur region is their long term commitment. Design/methodology/approach: This research has been conducted utilizing the actual data with the help of a questionnaire based on the literature extensively written on Islamic banking services, to develop a viable model to explore the attributes which lead towards the customer loyalty in utilizing the financial services of Islamic banks in Bahawalpur region. A new dimension is added by conducting research on customer's loyalty in Islamic banking in Bahawalpur region, taking sample of 125 respondents from 20 banks operating in Islamic banking services of this region. Findings: Factors abstracted from the customers loyalty are, customers satisfaction, switching cost, customers perception, success philosophy and trust and commitment. It is found that these factors significantly affect the customer's loyalty in Islamic banking and are greatly associated with the customer's loyalty. Research limitations/ implication: Only available material is studied in spite of all the material and research is implicated in Bahawalpur region only. The sample size is small to only 125 respondents but the results are implicated on overall customer's loyalty in Islamic banking. Practical implications: Pakistani banks are needed to take initiative in creating awareness about Islamic banking and providing more effective services. Introduction:Islamic banking is widely accepted in the globe now. In Pakistan there are mainly two types of banking system, conventional banking and Islamic banking. The system of Islamic banking is expanding now days. A customer's commitment with dealing in Islamic banking is measured by customer's loyalty towards this type of banking. Customer's loyalty has many dimensions regarding Islamic banking, i.e. customer's satisfaction, switching cost, customer's perception, success philosophy and trust and commitment. These factors have great association with the long term commitment of customers with Islamic banks. As every bank wants to increase the profit and growth, it should be considered compulsory to study the customer's loyalty and its long term commitment. This research helps to measure the loyalty of customers. This research is conducted to investigate the empirical findings regarding the research problem. Main determinants of customer's loyalty are discussed in theoretical frame model. A well designed and validated questionnaire is developed and asked from target respondents. Then results are analyzed using statistical techniques and results are interpreted. Moreover recommendations are also given for further research.

Determinants of Loyalty Among Customers of Non-Interest Banking Services in Kaduna Metropolis, Nigeria: The Case of Jaiz Bank

“…Though customers differ in their expectations from products or services they consume, they always care for quality, uniqueness, accessibility, good value, room for expression, promptness, taking of responsibility, empathy, conducive atmosphere and technological advancement (https://www.nbrii.com). Switching Cost; it is the cost which customers bear to switch from one bank to another (Hassan, et al, 2012). Klemperer(1987) identified three types of switching costs: transaction, learning and contractual.…”

“…Trust usually leads to commitment which involves a long-term desire to maintain a valued relationship with a bank (Morgan and Hunt, 1994). Trust and commitment are positively related with customer loyalty (Hassan et al, 2012) Customer Perception: it is a process by which a customer selects, organizes, and interprets information/stimuli inputs to create a meaningful picture of a product service (http://www.mbaskool.com). It is a three stage process that involves customers' exposure to information/stimuli, paying attention to it and finally interpret it as positive or negative.…”

“…This kind of information may include the unque selling points of NIB such as non-charging of interest, profit and loss sharing, compliance to religiuos beliefs etc Success Philosophy: NIB banks provide alternatives of interest based banking services. NIB banks in many countries like Pakistan are capturing the market share with a growth rate of 114% per annum (Hassan et al, 2012). This is a success for NIB banks.…”

An Understanding of the Islamic Banking Industry from Customers’ Perspective

“…Khan & Fasih (2014) states that service quality and all its dimensions such as tangibles, reliability, assurance and empathy have significant and positive association with satisfaction and loyalty of customers towards their respective financial service providing organizations. Hassan et al (2012) assures the enormous significant relationship between customer's loyalty and customer's perception, which is based on the religious and interestfree factor of Islamic banks. They also find out that switching cost and trust and commitment of customers have a greater impact on the consumer's loyalty.…”

The Impact of Customer Relationship Management on Long-term Customers’ Loyalty in the Palestinian Banking Industry

“…The results also implied that service quality perceptions by the customer entailed the most significant determinant of customer loyalty, particularly in long-term relationships. Hassan et al (2012) empirically measured customer loyalty among clients of Islamic banking, with the aim of determining their long-term commitment. Using data from questionnaire surveys administered to 125 customers from 20 Islamic banking financial institutions, the authors found that switching costs, customer satisfaction, customer perception, trust, and success philosophy had the significant influence on Islamic banking-customer loyalty.…”