Page 160 - rise 2017

Relationship between Service Quality Perception and Customer Satisfaction towards Malaysian
Islamic Banking at Bandar Enstek

Nur Farahin Afiqah Daud & Norsalwati Mohd Razalli

Politeknik Nilai, Negeri Sembilan

farafiqa89@gmail.com

Abstract
The aim of this study is to examine the relationship between the service quality and customer satisfaction
towards Malaysian Islamic banking which focused on Shariah compliance. This model starts with
SERVQUAL measurement scales consisting of six dimensional structures: assurance, empathy,
reliability, responsiveness, and tangibles together with the Shariah compliance dimensions to measure
Malaysian Islamic banking service quality. The scope of this study is mainly observed at Bandar Enstek,
Nilai which the respondents are the customers (Muslims and non-Muslims) who visit the bank counter.
They must have an account with one of the full-fledged Islamic banking and dual-banking systems. The
results showed that Muslim consumers have positive perceptions toward Malaysian Islamic banking. The
majority of the Islamic banking consumers were satisfied with the overall service quality provided by
their banks. The findings suggest that Malaysian Islamic banking service providers is encouraged to
introduce new and innovative service offerings in accordance with Islamic rules and regulation. The
relationship between service quality and customer satisfaction was important.
Keywords: Customer services quality, Customer satisfaction, Banking, Islam, Malaysia

Introduction
Islamic finance is a dynamic industry that is widely regarded as a competitive alternative to conventional
financing solutions. Furthermore, Islamic Banking with Shariah compliance is becoming more preferable
in Muslim countries worldwide including Malaysia because the Islamic banking refers to a system of
banking that complies with Islamic law. At its core, Islamic banking is a prohibition-based industry
emerging from Shariah (Islamic law) restrictions on riba (interest), gharar (transactions involving
uncertainty or speculation such as derivative trading and insurance) and businesses associated with
particulars in sectors such as alcohol, pornography or gambling (Khanand Khanna,2010). The main
prohibitions on interest-based banking are because general belief that it is unjust to earn income without
assuming risk (Siddiqui, 2001). The underlying principles that govern Islamic banking are mutual risk
and profit sharing between parties, the assurance of fairness for all and that transactions are based on an
underlying business activity or asset.
Historically, the growth of Islamic banking can be attributed to the desire and interest of retail
banking customers to invest their money in accordance with their personal and religious belief (Devlin,
2002). Over the last three decades Islamic banking and finance has developed into a full- fledged system
and discipline reportedly growing at the rate of 15 percent per year. Today, Islamic financial institutions,
in one form or the other, are working in about 100 countries of the world. Islamic banking and finance
has satisfied the Muslim community needs, to a multibillion dollar industry upholding Islamic principles
since it undergone rapid transformation and growth from an industry striving. Islamic banking is now a
well-known term and has emerged as one of the most important industries worldwide.
The first Islamic bank in Malaysia was established in 1983. Currently, there are 12 full-fledged
Islamic banks and eight dual-window banks operating in Malaysia alongside the local full-fledged
Islamic banks, local and foreign dual-window banks (Bank Negara Malaysia, 2010). In Malaysia,
conventional banks are allowed to offer Islamic banking products and services under the dual-window
concept. In implementing a dual-window banking system, the Islamic banking system operates in parallel
with the conventional banking system (Bank Negara Malaysia, 2007). A dual-window bank is a bank
with two windows under the same roof, one for conventional banking operations and the other for Islamic
banking. Although there is a difference between Islamic banks and conventional banks, there are some
similarities between the two in terms of offering complementary products and services (El-Din and
Abdullah, 2007). For example, Islamic banks offer facilities, such as saving accounts, current accounts,
credit cards, and other products and services (Naser, 1999).