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ABSTRACT
This study was designed to evaluate the service quality of Malaysian Islamic banking from the customer's perspective. The primary data was collected by administering survey questions in Klang Valley (Selangor and Kuala Lumpur), and the analysis was conducted using importance-performance analysis (IP A). The results revealed that service quality attributes such as Shariah requirements, reliability, assurance, responsiveness, website efficiency, and tangibility play an important role in determining customer satisfaction with Malaysian Islamic banks. These findings should assist market players, particularly the Malaysian Islamic banking industry, and policy makers in understanding and enhancing customer satisfaction regarding the quality of service offered by the Islamic banking industry in Malaysia. The research findings could also be used as part of the blueprints for market players to draft the necessary policies with regard to service quality of the banking industry.
Keywords: Service quality, importance-performance analysis, Islamic banking, Malaysia
1.INTRODUCTION
The rapid growth of Islamic financial institutions, specifically Islamicoriented banks, in Malaysia is aligned with the local government's aspiration. This is to create a wise banking environment that retains the aspired ethical banking and usury-free values that instill professionalism in each banker, hence producing a prudent Islamic banking hub for the region. This step is taken with the aim of reaching the status of a developed nation by the year 2020. At present, there are 16 Islamic banks under the governance of the Central Bank of Malaysia (BNM), inclusive of six that are holding foreign ownership in Malaysia [Bank Negara, Malaysia, 2009].
In an era of globalization and increased competitiveness, depositors or bank customers tend to look for a versatile bank that is able to meet their financial needs at the optimal level. Financial organizations, on the other hand, must maintain their best level of performance in order to satisfy customers for the sake of improving profitability and market share and in order to survive the competition. If Islamic banks now operating in Malaysia are not aligned with the appropriate level of service quality, this situation could contribute to a serious financing problem in the country. This statement is in line with the finding of Abdelghani and Oladokun [2012], whose study proved that the quality of services offered by Islamic banks significantly contributes to the preference made...