Switching Behavior of Customers from Conventional Bank Services to Islamic Bank Services

Abstract

The development of Islamic banking has given a new alternative for customers who have long been using the services of conventional banks. The widespread of Islamic banks has also been found in areas which major population is non-Muslims. The purpose of this study was to determine the factors that encouraged the switching behavior of conventional bank customers to use the services of Islamic banks. This study used qualitative methods with a case study approach. Primary and secondary data were collected through interviews, observations, and documentation. The triangulation method was employed to test the validity of the data. The process in data analyses involved data collection, data reduction, data presentation, and conclusion. The results showed that several factors influenced the switching behavior of customers from conventional bank services to Islamic bank services. These included the priceas the strongest driving factor, sales promotions, new products, and quality (although quality did not strengthen the switching behavior of customers). Furthermore, there were both internal and external factors of customers influencing their switching behavior.