Customer Loyalty for Islamic Banks


The operation of Islamic banks is highly aligned with the Islamic principles and sharia that differentiate them from conventional banks. Customer satisfaction is the key to success in the banking sector. It is therefore imperative that Islamic banks should match or exceed their customers’ expectation by providing high quality services and products. The Islamic banking sector faces stiff competition from conventional banks and must think of how to achieve customer satisfaction which could be used as a competitive edge in the banking markets. The main purpose of this study is to measure the degree of customer loyalty, satisfaction and image towards an Islamic bank sector. The results will show how willing the customers are to pay for the use of sharia compliant instruments.

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Customer Satisfaction and Service Quality

In Islamic banking, the law prohibits charging of interest on money exchange. The law is against making of money from money unlike in the conventional banks where interest is charged on money. There is prohibition on trade or transaction on products that are considered unethical or illegal by sharia law. An Islamic bank in the provision of its services must ensure that it operations are in conformity with sharia’s principles. As the banks develop ways to improve on their service delivery to customers, they have the obligation to ensure that none of their activities deviates from the sharia requirements because this has a big potential of affecting negatively the level of customer satisfaction. The employees in the Islamic banking sector must therefore familiarize themselves with the basic information on the principles that guide transactions in Islamic banks in order to be able to provide services that are of high quality to the customers (Saleh 2005). Banks that offer training to their employees on sharia principles are most likely to deliver high quality products and services to their customers. The availability of employees who have adequate knowledge in Islamic financial institution requirements boosts employees’ confidence and satisfaction levels in their banking experience and offers an opportunity in continuous purchase of the services offered.

Customer satisfaction is a key factor for the existence of a business enterprise. It reflects buying and consumption trends of a service or a product and also the customers’ attitude and brand loyalty development. Customer satisfaction is an emotional response that focuses on the product or services offered as concern their expectations (Siddiqi 2010).

Customer satisfaction arises from the comparison of customer anticipations and the services they are actually offered. It is dependent on the quality of services offered by the bank. The level of customer satisfaction is highly related with behavior of the customers based on their attitudes, experiences and consumption. High level of customer satisfaction guarantees a repeat of purchase or consumption of a service. In the banking sector, customers choose banks which they perceive as suitable for them on the basis of customer relation management, credit availability, premium charged or paid and conformity of the bank’s principles to the Islamic ethics/ sharia (Ho, Hamali & Roslee 2011).

Customer Loyalty

Customer loyalty can be referred to as the positive state of a customer’s mind on a product or service rendered to him/her. Loyalty is a key factor in information sharing. Customers who are loyal will always share information with their service providers with the notion that their information will be acted upon by the service provider to serve their interest. In banking sector, loyalty is developed from good personal relationship of the bank with its customers.

Service quality is the pillar of customer satisfaction. Customer satisfaction is dependent on the relationship of the bank with its customers which is the determinant of how the customers will perceive the services rendered to them by the bank. Good relationship between the bank employees and the customers will result in high level of customer satisfaction and vice versa. Customer loyalty is a product of customer satisfaction. Satisfied customers tend to be loyal to their service providers and will always spread positive information about the bank (Hoq & Amin 2010).

Customer satisfaction and loyalty in the banking sector can be determined through enthusiasm. Customer loyalty takes many forms and is highly linked to customer behavior. Customers in the banking sector have different expectations on the quality of services that are offered by Islamic banks. As such, the banks are faced with constant problems of developing services that will generally meet every customer’s quality anticipations. Any bank that has operations not conforming to the law of sharia is likely to be shunned by customers because it will not be meeting the expectations of many individuals. Majority of the population in Islamic countries have staunch religious backgrounds and thus the banks are expected to design their products and services in a manner not likely to infringe or oppose the Islamic principles.

It is therefore very important for banks to observe sharia principles in order to retain their customers through high service quality, and customer loyalty. Loyal customers form a very important profit base for the bank, thus proper execution of customer loyalty program would be a prolific step in the Islamic banking sector.




Ho, VB., Hamali, J H. & Roslee, I 2011, “Exploring the determinants of Islamic banking service quality in Malaysia,” Viewed 1st December, 2011 <>

Hoq, MZ & Amin, M 2010, “The role of customer satisfaction to enhance customer loyalty,” African Journal of Business Management, vol. 4, no.12, pp. 2385-2392. Viewed 1st December, 2011 < and Amin.pdf>

Saleh, K A 2005, “Quality in Islamic Banking Sectors Model and Framework Case: Kuwait Finance House–Bahrain,” viewed 1st December, 2011 <>

Siddiqi, K O 2010, “Interrelations between service quality attributes, customer satisfaction and customer loyalty in the retail banking sector In Bangladesh,” International Trade & Academic Research Conference (ITARC), London.


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