Customer Loyalty in the Islamic Banking Industry: Insights from a Case Study of BPRS Puduarta Insani's Marketing Strategy

This research draws empirically a clear and comprehensive picture of long term programme finance in the Islamic and traditional Arab banking industries: Islamic banking industry is examined through musharaka, mudaraba, murabaha and muzaraha and; traditional banking industry is examined through lending. It pioneers and lays out the foundation of the research in this area. A survey was conducted on long term finance programmes in both the Islamic and traditional banking industries. A total of 109 banks were surveyes, 34 of which were Islamic banks. One main obstacle encountered in the research investigation was collecting the required primary data from banks. The research investigates questions related to the differences between groups and subgroups of banks: a) Islamic banks and traditional banks; b) Islamic banks located in Islamic economies and Islamic banks located in non Islamic economies; c) commercial banks and specialised banks; d) younger banks and older banks and e) smaller banks and larger banks. The findings of the research investigation suggests that there is generally a lack of differences amongst groups and subgroups of banks in terms of size, growth, ownership and long term finance programme performance. The performance is determined in terms of proportion of resources, involvement, required rate of return and the degree of success in long term finance programmes. Apart from the basis of their operations, Islamic banks differ from traditional banks in their age, growth, involvement and the required rate of return on long term finance programmes. The research investigates the practice and the importance of four Islamic finance politics namely; musharaka, mudaraba, murabaha and muzaraha to long term finance in the Islamic banking industry. The findings suggest that musharaka, mudaraba and murabaha are equally important: muzaraha is the least used in the long term finance programmes in the Islamic banking industry. The analysis of 80 hypotheses lead to 18 being accepted and 62 being rejected. Although some hypotheses are more important than others the findings suggest that the literature of banking is in bad need for further empirical research investigations.

Keywords: Syariah banking, Corporate reputation, Customer trust, Customer identification, Customer commitment, Post-purchase intention, Knowledge. At the present day, Islamic banking and finance industry experience a massive growth in a lot of countries including Indonesia. In Indonesia, Islamic banking which commonly known as syariah bank still in the process of develops and promotes its system while the market in Indonesia is growing continuously. Considering the behavior of customer in developing marketing and operational strategy is very important in business. Therefore, this research investigates the relationship effect of corporate reputation on post purchase intention in syariah bank in Indonesia, considering the role of customer trust, customer identification, customer commitment, and knowledge as moderating variable. This study conducted in Indonesia, and collected 245 data. Nine hypotheses were developed during this study, and tested using structural equation model. The findings in this study found that customer commitment is the strongest factor influence post purchase intention. This research also indicates that religion is the strongest key factor that influences customer commitment. Therefore, this finding can be used as input for syariah bank in Indonesia to develop their marketing strategy.

This study aims to analyze the influence of brand image and brand trust on customer loyalty at the Jombang branch of the Indonesian Sharia Bank. The influence of brand image and brand trust on customer loyalty is an important topic in the Islamic banking industry, especially to understand the factors that can influence customers in choosing and remaining loyal to use certain bank services. The research method used was a survey with questionnaires distributed to 100 customer respondents of the Jombang branch of Bank Syariah Indonesia. The data obtained were analyzed using regression analysis to examine the relationship between brand image, brand trust, and customer loyalty variables. The results of the study show that brand image has a significant positive effect on customer loyalty at the Jombang branch of the Indonesian Sharia Bank. In other words, the customer's positive perception of the bank's brand image can influence the customer's tendency to continue using the bank's services. In addition, brand trustalso has a significant positive effect on customer loyalty. Customer trust in this bank in terms of reliability, sharia compliance and security can strengthen customer loyalty. This research makes an important contribution to the Jombang branch of Bank Syariah Indonesia in understanding the factors that can influence customer loyalty. In developing marketing and brand management strategies, banks need to pay attention to the importance of building a positive brand image and increasing customer trust through consistent reliability, sharia compliance and security. By strengthening brand image and brand trust, banks can increase customer loyalty levels and maintain a strong market share.

This study aims to test the impact of digital marketing strategy as an antecedent on customer outcomes (customer satisfaction, customer engagement, and customer loyalty) and the impact of these three outcomes on organizational outcomes. Twenty-five items are used to measure research variables. These items are developed referring to previous related works: digital marketing strategy, customer satisfaction, customer engagement, customer loyalty, and organizational outcomes. According to the research budget and time constraints, a convenience sampling method was implemented in the data collection process. This study applied structural equation modeling (SEM) to test the research hypotheses through AMOS software.The authors conducted a questionnaire to collect data from a sample of marketing practitioners selected from 10 organizations with a total number of 200 respondents. The total number of returned questionnaires is 187 responses. Eleven questionnaires are excluded due to invalid responses. Thus, 176 questionnaires are used to carry out data analysis. The results underline the significant effects of customer satisfaction, engagement, and loyalty on organizational outcomes. The authors noted that customer satisfaction is the most affected outcome by digital marketing strategy, followed by customer engagement and customer loyalty. Additionally, customer loyalty has the greatest effect on organizational outcomes, followed by customer satisfaction and customer loyalty. The findings showed that enhancing organizational outcomes requires marketing managers consider customer outcomes such as customer satisfaction, customer engagement, and customer loyalty, which are affected by marketing strategies. Marketing managers are requested to pay great attention to their marketing strategy, considering its effects on customer satisfaction and other customer outcomes, like customer engagement and loyalty. Likewise, scholars are required to re-test the current model to identify the mediating role of the outcomes mentioned above in the effect of marketing strategy on organizational outcomes.

This study aims to highlight the bankruptcyBankruptcy-related challenges and the reasons behind bank failures for the global Islamic banking industry, and to understand the expected impact of Covid-19 on the financial health of the Islamic banking industryIslamic banking industry. Moreover, the study shows that going bankrupt is a costly process that affects all stakeholdersStakeholders.. Evidence shows that in the case of Islamic banking, a Shariah-based bankruptcy prediction model for apprehending the true bankruptcy prediction is over-sighted. It may further sour the existing uncertain situation for the Islamic banking industry with the additional unfavorable impact of Covid-19COVID-19. As the subjected pandemic has badly affected the flow of the financial system worldwide, Islamic banking is not isolated. Therefore, efficient bankruptcy prediction models equipped with the latest micro and macro-economic factors are compulsory for the sustainability of the Islamic banking industry.

The link between corporate social responsibility and customer loyalty: Empirical evidence from the Islamic banking industry

The global crisis in 2007 has revived interest in the Islamic banking and finance industry. The profit and loss sharing (mudaraba and musharaka) attributes of Islamic banking and finance have shielded Islamic banks from the impact of a crisis. In other words, the Islamic banking system is stable by virtue of the profit and loss sharing principle. The relative stability of the Islamic banking model can also be deduced from the fact that the Islamic banking and finance system is effectively under the control of the authority of the central bank, which is not easily influenced by non-policy factors. This study concludes that a case for the superiority of Islamic banking has been made for example in Tunisia and Iran, where separate Islamic or interest-free counters were opened in all branches of commercial banks along with traditional or westernised interest-based banks. The substitution of western interest-bearing deposits by profit and loss sharing deposits connotes to the stability of the Islamic finance and banking system. The Islamic profit and loss sharing system does have merit and deserves attention from academics and policy-makers alike, especially in view of the financial crises and rampant bank failures.

This study explores the impact of the marketing mix on customer loyalty at the Banda Aceh Branch of Bank Syariah Indonesia (BSI), with satisfaction acting as a mediating variable. In a highly competitive Islamic banking industry, an effective marketing strategy is essential for sustaining customer loyalty. This research employs a quantitative approach, using purposive sampling of 100 customers from five BSI branches in Banda Aceh. Data were collected through a Likert-scale questionnaire and analyzed using multiple linear regression and path analysis. The results indicate that while factors such as place, human resources, and physical evidence contributed to customer loyalty, ineffective promotion and slow service processes reduced it. Furthermore, customer satisfaction plays a mediating role, strengthening the link between the marketing mix and loyalty. These findings emphasize the need for BSI Banda Aceh Branch to improve their service efficiency, enhance human resource quality, and adopt more targeted promotional strategies to retain customers in the long term. Enhancing service efficiency and refining marketing strategies will allow BSI Banda Aceh to maintain a competitive edge in the evolving Islamic banking industry.

The emergence of Islamic banks in Indonesia today is increasingly mushrooming. This is inseparable from the role of the number of Muslim populations in Indonesia who want an Islamic economic and banking system that is far from usury. The Islamic banking system has been exemplified by the Prophet Muhammad and his companions in the past and this has become the basis or foundation for the establishment of Islamic banks. But in reality in Indonesia, the relevance of the Islamic banking system is less attractive. This research is a descriptive qualitative research, using library research method. The purpose of this study is to examine the practice of Islamic banking as exemplified at the time of the Prophet Muhammad SAW and to see the relevance and development of Islamic banking practices in Indonesia. The conclusion of this study is that the model of banking services, products and activities exemplified by the Prophet is still used in the Islamic banking system in Indonesia, but in fact there are many Islamic bank practices that deviate and are not in accordance with Sharia rules.

PurposeThe main objective of this paper is to highlight the unprecedented growth of Islamic banking and finance in the contemporary finance world. It captures the advancements of Islamic banking and finance industry across the tools, systems, sectors, markets and over 75 countries from Africa, Asia, Europe and North America.Design/methodology/approachThe paper deals with the paradigm of Islamic banking and finance. It constitutes a general review that bears special features, facts and figures over the recent developments of Islamic banking and finance across the globe. It takes stock of the growing institutional and infrastructure support for the Islamic banking and finance system in Muslim countries and Western financial markets.FindingsThe findings of the paper hold that Islamic banking and finance industry has been making breakthrough improvements to become a truly viable and competitive alternative to conventional systems at the global level. Islamic banking and finance institutions have acquired booming grounds in the Middle East, South East and South East Asia. These growing Islamic hubs have been acting as a launching pad to promote Islamic banking in Western business and financial markets. There are some core factors contributing to the recent success of Islamic banking and finance, such as spiraling oil prices worldwide, prolonged boom in the Middle Eastern economies, product innovation and sophistication, increasingly receptive attitude of conventional regulators and information technology advancements that have been acting as a catalyst for the Islamic banking and finance industry to go global. Given all growth patterns, Islamic banking may be able to win over the majority of customers from the Muslim world that constitutes almost 24 per cent of the world's population (over 1.3 billion), and other ethical groups across the globe in times ahead.Research limitations/implicationsThe paper takes stock of on‐going developments in Islamic banking and finance industry worldwide. It deals with latest information, facts and figures, which however do not amount to a substantive volume to allow statistical testing and analysis to figure out the main factors and their actual contributions in making Islamic banking and finance emerge as the fastest growing industry of the global finance. This paper mostly bears a subjective outlook.Originality/valueThe paper aims to attract the global attention towards the fastest growing industry of the contemporary world of finance. It presents the case of the Islamic banking and finance industry in the most powerful, comprehensive and logical fashions to remove all misgivings about it in some circles, and let it be seen as an industry adding more ethical, competitive, flexible and diversified tools and systems to global financial markets. The paper highlights the increasing moral and material support that Islamic banking has been enjoying from Muslim governments and the public, and Western market players and regulators. It draws attention towards the growing number of products, systems, infrastructures and supporting institutions of Islamic banking over the recent years. The current trends of Islamic banking industry worldwide captured in this paper can tell all about its strength and weakness, future prospects and ambitions to become a truly innovative, competitive and integrated part of contemporary global finance.

Islamic Finance grows in international finance across the globe. The aim of this study is to introduce the importance and specificities of the rapidly expanding Islamic banking system worldwide, as well as its expansion process. After a summary of the economic principles of the Islamic banking systems, with special emphasis on the principle of profit and risk sharing, - which essentially distinguishes Islamic and traditional interest-based banking systems - special highlight will be on the countercyclical feature of Islamic banks, which is also a fundamental difference from the procyclical feature of the traditional banking systems. The spread of the Islamic banking system is investigated, also stated, that the growth of it can be only partly explained by the expansion of the Muslim population. It can be stated, the Islamic banking system will become a decisive factor that will gain more portion of the financial market, mostly in some specific regions, but also worldwide – especially considering only the distribution of non-speculative transactions is concluded.

This study conducted a research on consumers who had consumed Fami soft serve ice cream, a Taiwan FamilyMart’s private-label product. This study explored how customer satisfaction and customer loyalty were correlated and influenced by food quality, perceived value, and brand image, and would provide suggestions for companies to formulate marketing strategies. A questionnaire survey using convenience sampling was conducted on consumers who had consumed Fami soft serve ice cream. The questionnaires were distributed through online channels and hard copies. The distribution period was May 31, 2014 to June 21, 2014, and a total of 715 copies of questionnaires were distributed. The number of valid questionnaire amounted to 622 copies after eliminating invalid ones, with a valid rate of 87%. SPSS was used to conduct quantitative analyses including sample analysis, descriptive statistics analysis, factor analysis, reliability analysis, Pearson correlation analysis, regression analysis, t-test, and analysis of variance. The analysis results indicated that food quality was correlated to and had a positively significant influence on customer satisfaction, and food quality was correlated to and had a partially positively significant influence on customer loyalty. Perceived value and brand image were correlated to and had a positively significant influence on customer satisfaction and loyalty. Customer satisfaction was correlated to and had a positively significant influence on customer loyalty. Moreover, food quality had a greater influence on customer satisfaction and customer loyalty than the other two factors. Subjects with demographical variables including female, married, a highest educational qualification of high school and vocational schools, 25–44 years of age, and a monthly salary of income of 30001–40000 dollars showed the highest identification with Fami soft serve ice cream. Additionally, in hope of improving customer satisfaction and loyalty, this study conducted qualitative interviews based on the quantitative analysis results and proposed the conclusion and nine marketing strategic suggestions.

Purpose − This research aims to analyze the effects of interactive marketing and relationship quality on customer satisfaction and loyalty in Islamic banking.Methodology − A quantitative research approach was employed, and data was collected through a survey questionnaire administered to customers of Islamic banks in Parepare. The data analysis method used in this study is Partial Least Squares-Structural Equation Modeling (PLS-SEM).Findings − The study findings indicate that, indirectly, interactive marketing and relationship quality do not have a direct significant influence on customer loyalty in Islamic banks. However, it is observed that interactive marketing and relationship quality can affect customer loyalty through satisfaction. These findings suggest that the process of maintaining and enhancing customer loyalty in Islamic banks requires careful attention to multiple factors and stages.Implications − This research emphasizes the significance of integrating interactive marketing strategies, fostering relationship quality, and prioritizing customer satisfaction in the context of Islamic banks. These factors are essential for maintaining and strengthening customer loyalty, ultimately contributing to the long-term success and competitiveness of Islamic banks in Kota Parepare.Originality − The originality of this research lies in its contextual focus and integration of variables. Firstly, the study specifically examines the impact of interactive marketing and relationship quality on customer satisfaction and loyalty within the context of Islamic banks in Kota Parepare. Secondly, the study integrates multiple variables, including interactive marketing, relationship quality, customer satisfaction, and customer loyalty, providing a comprehensive understanding of the factors that contribute to customer loyalty in the context of Islamic banks.

The aim of this study was to empirically examine the influential factors of brand reputation-based consumer loyalty on the basis of a variety of theoretical foundations and related factors of relationship marketing. Study subjects were 619 users of 10 commercial sport facilities in Seoul and the capital area and they were sampled with the stratified cluster random sampling method. Data were processed with the Amos 5.0 Program and the structural equation model was carried out. Study findings are as follows: First, commercial sport facilities must actively utilize the strategic factors of relationship marketing which have to do with customer loyalty. Second, in order to enhance commercial sport facility users` customer loyalty, it is necessary to establish a strategy which increases economic and noneconomic satisfaction, induces positive emotion, and gives deep impression. Third, in order enhance commercial sport facility users` customer loyalty, a strategy which systematically forms and constructs customer trust and maintains high switching costs must be established. Fourth, commercial sport facilities must discriminately manage the factors of service price according to brand reputation. In particular, for the group of which brand reputation is high, consumers` economic and noneconomic satisfaction must be enhanced through a flexible price strategy, whereas for the group of which brand reputation is low, customer value must be created by properly providing consumers with price factors. Fifth, in the commercial sport facilities of which brand reputation is high, such a marketing strategy which could target for the enhancement of customer`s emotional trust must be established intensively. Sixth, in the commercial sport facilities of which brand reputation is low, such a marketing strategy which could increase consumers` repetitive purchase must be established positively. Seventh, by systematically examining a variety of factors which could provide consumers with noneconomic satisfaction regardless of brand reputation, customer loyalty must be enhanced. Finally, relationship marketing must be discriminated in accordance with brand reputation, thus establishing a strategic plan which could enhance customer trust and loyalty.

Purpose- This paper aims to compare Malaysia and Indonesia in terms of current circumstances in the Islamic banking industry. This is very interesting because of several factors. Firstly these two countries are neighbors. Secondly, both countries have expressed their aspiration to be the center for the Islamic banking industry not only in the region but also in the world. Thirdly, both countries have significant differences in demographics and economic conditions. It is therefore very interesting to see which country is in a better position than other in the Islamic banking industry at present. This will help researchers to predict which country will achieve the target first if it occurs. Methodology- The comparison will focus on five selected items in Islamic banking institutions ie legal framework, court jurisdiction, capital growth, products offered and shariah governance. For legal frameworks, court jurisdiction and shariah governance analysis will be made on the basis of provisions in legislations and statutes in both countries. Comparison of the products offered will be analyzed based on the list of products and the amount involved. However, since profit sharing activities are regarded as a key feature of an Islamic banking system as argued by many authoritative scholars in this area, the involvement of Islamic banking institutions in profit sharing based products in both countries will be the main focus in the analysis. Capital growth is chosen because according to Sula (2011) the development of a bank, should be seen from the market share because the market share reflects the portion from the sale of industrial goods or services carried out by an industry. Prior to that, Shaffer (1993) reported that market share is important, because it reflects the performance associated with bank's competitive position in the banking industry. Findings- T he study shows that although both countries are making good progress in the Islamic banking industry, no country is far ahead of another. While Malaysia is ahead of Indonesia in some items, Indonesia is ahead of Malaysia in some other items. Conclusion- This paper concludes that both countries have advantages and disadvantages of others in the Islamic banking industry. Hence both should overcome their weaknesses and continue to build from their strengths to make their aspirations a hub in the Islamic banking industry as a reality