Problems of Islamic Banks in Kuwait: client’s perspective: مشكلات البنوك الإسلامية الكويتية حسب مدركات العملاء

Abstract

This study aims to investigate the problems perceived by Islamic banks (IBs) clients, by applying on three banks. Using a questionnaire survey method, this study examines the perceptions of a sample of 110 IBs clients in Kuwait, measuring 34 problems classified under three broad categories: Managerial problems, communication and public relations problems, financial and credit problems. The paper presents descriptive statistics and analytical analyses. The most important managerial problems were: excessive administrative expenses, delays when visiting the branch, low investment opportunities offered that match clients’ needs and capabilities customers, lack of attention to the quality of services. Regarding the communication problems, the top problems were: distinguishing between clients based on their influence and banks interest, exaggerating the benefits of the services and not fully disclosing disadvantages and risks, weak communications between the bank and clients, unclear understanding of Islamic finance instruments such as Musharakah, Murabahah, and Mudarabah, week information disclosure regarding new investment opportunities. In terms of financial problems, the study revealed that top ones are: the rise in commissions and the profit margin of loans and other services, strict guarantees and credit requirements for financing, defaults in ATM machines or lack of available cash in them, and low financing opportunities for SMEs. Further, the study shows that there are no significate differences between different IBs as perceived by clients. The female and younger client groups were more expressing than male and older clients in terms of perceived problems compared to males and older sample groups. Based on the research findings, the paper provides several recommendations such as: providing qualified human resources that develop and innovate high quality products and services which meet clients’ needs and expectations. Moreover, IBs should take the advantage of the latest (FinTech) applications. Finally, applying corporate governance codes would help solving many raised problems and mitigate their impact. Besides, it would improve the efficiency of IBs management and business ethics practices.