A Study on the Customer’s Acceptance Towards Islamic Banking Products Among Non-Muslim in Dual Banking System

Juwairiah Mohamad,Muhammad Fakhirin Che Majid

doi:10.32890/ijms.23.1.2016.10463

Juwairiah Mohamad, Muhammad Fakhirin Che Majid

Open Access

https://doi.org/10.32890/ijms.23.1.2016.10463

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Abstract

Islamic banking products (IBP) are offered not only to the Muslim community, but also to communities of other religions who are free to choose products depending on their convenience. According to a report, the percentage of non-Muslim communities choosing IBP in Malaysia has been steadily increasing and is expected to continue to increase in future. The Dual Banking System is one of the initiatives that has been created in conventional banks as an extra facility for the communities to engage with IBP easily without going to Islamic Banks. This paper aims to study the factors that drive non-Muslim customers to accept IBP. Specifically, this paper examines the relationship between four factors: knowledge, understanding, perception and the level of awareness among non-Muslim customers regarding their acceptance on IBP in the Dual Banking System. About 140 non-Muslim IBP customers of the Dual Banking System around Changlun, Jitra and Alor Setar were selected based on convenience and were randomly picked as respondents of this study. Some data were also collected through interviews with the bank personnel and the bank’s customers besides the self-administered questionnaire survey. Employing the SPSS approach, the hypotheses of the study were tested. The findings showed that there are significance relationships between customer’s knowledge, understanding, positive perception, and the level of awareness perceived among non-Muslim customers and their acceptance of IBP. Keywords: Islamic banking products; non-Muslim customers; acceptance.

Highlights

In Malaysia, customer’s positive perception of Islamic banking is far more crucial mainly due to the fact that Islamic banks have to compete with the long established conventional banks in the dual banking system (Dusuki, 2007)
This study aims to know the level of customers’ acceptance of Islamic banking products (IBP) that are offered by the Dual Banking system among the non-Muslims and the relationship between acceptance and the four other factors such as knowledge, understanding, perception and awareness
From the data analysed by SPSS, tool V.13 package, the findings showed that the customers were aware of the existence of the Islamic banking services and they preferred them because of the profitability and quality

Summary

Introduction

In Malaysia, customer’s positive perception of Islamic banking is far more crucial mainly due to the fact that Islamic banks have to compete with the long established conventional banks in the dual banking system (Dusuki, 2007). As supported by Doraisamy et al (2011) and Amin, Rahim, Laison & Magdalene (2011), profitability, quality of service, attitude of the consumers, and social influence are among the important factors to attract customers to accept the Islamic banking products. This situation shows that the management team of Islamic banks should realize and acknowledge that the banks can no longer depend on Muslims as their base source of depositors or as their fund users. The Islamic banks have to adapt new strategies to expand their customer base by including non-Muslims as potential customers

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