Abstract
Customer satisfaction is critically important for banks to stay competitive as the customer is the ultimate source of income for any organization. Islamic banking system and conventional banking system are considered as rival systems working in the same banking industry. In order for Islamic banks to compete successfully with conventional banks, Islamic banks must give extremely high consideration to their primary customers. Whenever either Islamic banks or conventional banks offer any product or service, its success depends upon the customer satisfaction towards that product or service. This study examines the level of customer satisfaction on Islamic banks as well as conventional banks in Malaysia. It also investigates the relationship between different demographic variables and the satisfaction of customers. A sample of 1,153 respondents from various cities representing different states in Malaysia was selected. The results in this study suggest that customers are mostly satisfied with the quality of services which include competency, friendliness, and efficiency of the staff of the Islamic and conventional banks.
Highlights
The existence of Islamic banking operation in Malaysia can be traced back to 1963 when Tabung Haji or the Pilgrims Management and Fund Board was established by the government
The first stage is from 1983-1992, which is known as the familiarization process whereby Bank Islam Malaysia Berhad (BIMB) was established and works in accordance with Syariah principles
Islamic banking system and conventional banking system are considered as rival systems working in the same banking industry
Summary
The existence of Islamic banking operation in Malaysia can be traced back to 1963 when Tabung Haji or the Pilgrims Management and Fund Board was established by the government. The first stage is from 1983-1992, which is known as the familiarization process whereby Bank Islam Malaysia Berhad (BIMB) was established and works in accordance with Syariah principles. Under this roof, Islamic Banking Act (IBA) was officially enacted. The third stage is known as the period of financial liberalization (BNM, 2004) which commenced from 2004 until present This is the right time to create awareness among the public especially Muslims, of the benefits of Islamic banking. Under this phase, conventional banks are allowed to offer Islamic banking services by setting up “Islamic windows” or known as “Islamic banking scheme”. By July 2008, Bank Negara Malaysia reported that there are 22 commercial banks in the banking industry, 13 Islamic banks, 15 investment banks and 2 financial institutions (http:www.bnm.gov.my/index.php?ch=13&cat=banking)
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