Bank selection criteria and satisfaction of retail customers of Islamic banks in Bangladesh

The purpose of this paper is to argue that “being Islamic” is already embedded in the decision frame of the Muslim consumers when choosing their Islamic banks, and hence, the bank selection criteria of these Muslim consumers will be dominated by non-faith-based factors.

This study took the context of retail consumers of Islamic banks of Bangladesh—the fourth largest Muslim populated country in the world, having great potential of developing an Islamic ecosystem. The study employed survey method using structured questionnaire on 311 respondents from 35 branches of six Islamic banks in Dhaka—the capital city of Bangladesh. Exploratory factor analysis, followed by multivariate regression analysis, was conducted to identify the determinants of satisfaction among Muslim retail bank customers.

The study forwards three important findings. First, faith-based bank selection criterion (i.e. Islam) is not a stand-alone factor anymore; rather, the items of this factor are embedded into other non-faith-based factors. Second, among the non-faith-based factors, commitment of the bank, competence and compassion of the bank employees have topped the list of bank selection criteria. Third, competence, commitment and corporate image of the bank had relatively more influence on satisfaction when compared to compassion and convenience.

Since Shari’ah compliance is already embedded in Islamic banking system, Islamic bankers should now focus on strategic targeting of their customers based on non-faith-based operational determinants.

This study presents that non-faith-based selection criteria are more influential in Islamic bank selection decision.