INFLUENCE OF SERVICE AND SATISFACTION TOWARDS CUSTOMER’S LOYALTY: A STUDY IN STATE-OWNED ISLAMIC BANK IN MAKASSAR, INDONESIA

Abstract

Growth of banking industry and financial services has been significant for the last few years as the result of technological advances and deregulation. In the world of banking, Islamic banks is a relatively new type of service in banking industry that applies Syaria law in each of its activity. Due to tight competition in business that sells service, Islamic banks should understand the right strategy to win the competition. Islamic banking has massive potentials since 1.2 billion of the populations are Moslem and their GDP is more than 1.3 billion US dollars (Skha Consulting, 2001). The countries with the highest Moslem populations are Indonesia, India, Pakistan and Bangladesh respectively. Furthermore, Kuwait has quite successful penetration of Islamic banks; the market share of Islamic banks in the country is approximately 30%. The proportion of Islamic banks in Saudi Arabia is 12%, that in Brunei is 11%, in Malaysia is 5% while the national market share of Islamic bank is 1%. Customer loyalty is the end-goal of banking industry. Satisfied customers will not be hsesitant to give positive testimony about banking products they use. Such testimonies have high credibility as loyal customers do not receive anything by making recommendation about banking service or banks they use.