Abstract
This paper investigates the level of consumer awareness and use of Islamic banking products in South Africa. A non-probability sampling method was used whereby a questionnaire was administered to 250 respondents and statistically analysed to determine the factors that are important in the choice between Islamic or conventional banks. It was found that Muslims are aware of Islamic banks, but their rate of use is low, as Muslim customers regard efficiency, lower bank charges, the availability of automatic teller machines and an extensive branch network as important factors when it comes to choosing a bank, rather than religious motivations for compliance with Islamic conventions. It was concluded that, if Islamic banks wanted to attract and retain customers and remain relevant in the South African context, they would have to develop relevant strategies designed to meet customers’ needs. Religion as the sole motivation for choosing Islamic banks is inadequate.
Highlights
The value of the Islamic banking and finance market was estimated to be between US$200 billion to US$500 billion worldwide in 2006 (Ibrahim & Seoweng, 2006)
Despite the popular claim that Islamic banks are true reflections of Muslim lifestyles and practices, and that clients respect and believe in their principles, studies indicate that religious motivation is not the sole criterion for the selection of Islamic banking institutions or services (Dusuki & Abdullah, 2007)
In order to understand Islamic banking practices and target markets, this study focused on South Africa, which has a fully-fledged conventional banking sector and the presence of Islamic banks
Summary
The value of the Islamic banking and finance market was estimated to be between US$200 billion to US$500 billion worldwide in 2006 (Ibrahim & Seoweng, 2006). Researchers are seeking to assess both the extent to which customers use Islamic banking products and services (Naser & Al-Khatib, 1999) and the behaviour, attitudes and perceptions of the target markets (Metawa, 1998). If Islamic banks are to achieve their mission and objectives, they will have to understand their customers’ perceptions (Metawa, 1998; Dusuki & Abdullah, 2007). Studies have identified other factors, such as costs, benefits, service delivery (fast and efficient), the size and reputation of the bank, convenience (location and ample parking) and the friendliness of bank personnel as important criteria for selecting particular Islamic banks (Dusuki & Abdullah, 2007). If Islamic banking is to be accepted and used by the target market, the banks will have to understand their customers and make their services and products available
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