Understanding of The Customers' Perception on Islamic Banking and Financial Services in Malaysia

Abstract

The main objectives: The main objectives of this study are to delve customers’ knowledge and perception of Islamic banking financial products and services. Background Problem: The background problem is lack of awareness and understanding of the Islamic finance industry is a major challenge for clients, investors, and other stakeholders. Islamic Banking and Finance (IBF) is a booming sector in the financial industry. However, it is still at a developing stage in the economy. Clients awareness is a crucial step to attain its business and social-welfare objectives by abiding by Islamic commercial law. Research Methodology: The research methodology implemented was empirical/inductive. A survey via questionnaire was conducted on 135 banking clients via questionnaires; a comparison between Bank Islam Malaysia Berhad (BIMB) and non-BIMB clients was exemplified using mean and T-test statistics, on their level of knowledge and understanding of the different principles, products, and services of IBF. Results and Findings: Results and findings have inferred that there is not much significant difference in their level of knowledge and understanding. Then it was examined whether there was a significant relationship between the knowledge of the clients and their preference for IBF services. Research Contribution: The contribution of this study can help the Islamic banking industry gain insight into the current level of understanding of IBF products and services among the clients. Conclusion: The conclusion of the study indicates that there must be more attempts to educate clients and other stakeholders of the Islamic banking industry. Finally, it was also concluded that the clients have a better perception of the prospect of the IBF industry in Malaysia, despite it being at a developing stage.