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JIMA
2,1

Customers criteria for selecting

an Islamic bank: evidence from
Pakistan

14

Hayat M. Awan and Khuram Shahzad Bukhari

Institute of Management Sciences, Bahauddin Zakariya University,
Multan, Pakistan
Abstract
Purpose Islamic banking is an emerging financial system in the contemporary world. Currently,
it is found mostly in Islamic countries or in countries where OPEC oil revenues have been invested.
Most of the research has therefore been oriented towards macro-environment issues, ignoring the
market-oriented problems. The purpose of this paper is to determine the conditions under which
Islamic banks can successfully compete with conventional banks by understanding customer attitudes
towards Islamic banking products.
Design/methodology/approach A sample of 250 respondents was taken from four cities of
Pakistan to examine customer awareness of key products/services being offered by Islamic banks,
usage of those services and customer satisfaction with the service delivery mechanism being used by
pure Islamic banks and conventional banks with Islamic bank branches (IBBs). Data for this study
were collected by using a structured questionnaire containing two sections, where section I contains
ten statements using Likert scale, for assessing customers preferred selection criteria for Islamic
banks. These statements are developed based on past literature. Section II deals with the questions
related to the social and demographic profiles of respondents.
Findings Analysis of data indicated that most of the customers value product features and quality of
service as major factors for making selection of Islamic banks, and give lesser importance to religious
belief as influential factor in selecting an Islamic bank. Findings suggest that there is a lack of awareness
about basic conventions of Islamic financing options among respondents and customers of both the pure
Islamic banks and conventional banks with IBBs do believe that the banks staff lacks ability to provide
credible information about religious compliance of Islamic banking financial services.
Originality/value The paper has practical significance for Islamic banking policy makers, for
understanding the key behavioral and demographical dimensions of their customers and using these
dimensions for effectively positioning Islamic banking financial instruments, developing policies; and
articulating procedures to maximize customer satisfaction and to ensure better exchange of value.
Keywords Islam, Banks, Customer services quality, Consumer behaviour, Customer satisfaction
Paper type Research paper

Journal of Islamic Marketing

Vol. 2 No. 1, 2011
pp. 14-27
q Emerald Group Publishing Limited
1759-0833
DOI 10.1108/17590831111115213

Introduction
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
particular sin sectors such as alcohol, pornography or gambling (Khan and 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). 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).
Islamic banking emerged as a fastest growing industry and has received recognition by

both Muslims and non-Muslims alike (Iqbal and Molyneux, 2005). The Islamic banking
industry is now worth almost an estimated US$1 trillion and is widely considered to be one
of the fastest growing sectors in the financial world. Even in the midst of a global economic
crisis, Islamic banks weathered the storm to a great effect, which was thanks to strict
regulations administered by Islamic law, or Sharia. The estimated size of the industry is
around US$700 billion that is expected to reach US$1.6 trillion by 2012 (Khan and Bhatti,
2008), with Islamic banking no longer considered as a business entity established only to
satisfy the religious obligations of the Muslim community. Instead Islamic banking is
rather as a business that essentially pursues maximizing customer value and satisfying
their financial security needs (Henry and Wilson, 2004). That is why Islamic banks put
more in the effort to position their salient features in line with customer needs, which
requires them to monitor customer preferences for their investments and borrowing
options closely so as to design appropriate business strategies (Chong and Liu, 2006).
Asset base of the Islamic banking institutions (IBIs) in Pakistan has grown by around
60 percent per annum since 2005; resulting in steady growth in the share of Islamic banking
that reached at about 5.5 percent in deposits, and 5.3 percent in assets in September 2009.
Currently, IBIs comprise six full-fledged Islamic banks and 13 conventional banks (having
dedicated IBBs) with a network of more than 550 branches. Islamic banks in Pakistan have
shown a commendable progress which is, in fact, better than the growth of Islamic banking
in some of the leading countries using Islamic modes of financing (SBP Islamic Banking
Bulletin, October, 2009). Since 2003, the domestic Islamic banking industry has shown
significant progress. Table I provides a snapshot of the progress made by the Islamic
banking industry in Pakistan from 2003 to 2009.
In this regard, the capacity of the Islamic banking industry to ascertain a substantial
market share in challenging financial environment (particularly in a dual-banking
system like Pakistan) is reliant on the manner in which IBIs can strongly position
themselves to sustain a competitive advantage and offer services and financial
instruments that maximize the value of their existing and potential customers.
The remainder of this paper proceeds with next section presenting a detailed
literature review. The second part of the study discusses the methodology of the study in
detail, with third section of the paper outlining results and discussions and the final
section acknowledging the limitations and drawing conclusion of this study.
Literature review
Research in social psychology has been valuable in providing key frameworks for
understanding the complex relationship between culture and human behavior. One of
the lessons learned from the field is that cultural variations have a significant impact on
the way individuals view the world, which ultimately affects their behavior (Shweder,
1991; Manstead, 1997). Culture is an all encompassing force which forms personality,
and in turn it acts as a key determinant of consumer behavior (de Mooji, 2004). Without
any significant differences, researches by Bristow and Asquith (1999), Gurhan-Canli and
Maheswaran (2000), Chudry and Pallister (2002) and de Mooji and Hofstede (2002)
suggest that consumers from different cultural background express some significant
differences, which may warrant differentiated marketing efforts. From the managerial
perspective, a clear understanding of culture and the degree of influence that cultural
values have on consumer behavior is pre-requisite for designing effective strategies

Criteria for
selecting an
Islamic bank
15

Table I.
Islamic banking in
Pakistan (2003-2009)
276
4.9
202
4.8
186
4.4
6
12
515

366
5.6
283
5.9
226
4.5
6
13
649

December-08

Source: SBP Islamic banking bulletin (October-December 2009)

Total assets
Percentage of banking industry
Deposits
Percentage of banking industry
Financing and investment
Percentage of banking industry
Full-fledged Islamic banks
Conventional banks with Islamic banking
branches
No. of branches

December-09

12
289

206
4.0
147
3.8
138
3.5
6

December-07

12
150

119
2.8
84
2.6
73
2.3
4

December-06

9
70

72
2.0
50
1.8
48
1.7
2

December-05

9
48

44
1.5
30
1.3
30
1.3
2

December-04

16

Descriptions

3
17

13
0.5
8
0.4
10
0.5
1

December-03

JIMA
2,1

in marketing to individuals with different nationality, religious values, geography and

customs (Cui, 1997). According to Sheth (1983, p. 23):
An individuals personal values and beliefs about what to look for when shopping various
products and services reflect that shoppers personality and may be determined by such
personal traits as sex, age, race and religion.

A religious group to which a person is affiliated can also serve as a frame of reference
making choices of personal consumption (Siguaw and Simpson, 1997).
Determinant factors of customers bank selection
In the context of banking industry, the determinant factors of a customers bank
selection have received significant attention in recent years. Kaufman (1967) found that
the most influential factors in customers selection of a bank were convenient location to
home or place of business, length of bank-customers relationships and quality of
services offered by the bank. Mason and Mayer (1974) suggested that among other
important selection criterions used by the customer, convenient location came on the top
the priority, followed by other important factors like friendly personnel, favorable loan
experience, advice of friends and influence of relatives opinion. Findings of various
studies reveal that consumer choice of bank depends on a multiple set of criterions
including bank location, availability of loans and the default salary account of a
particular bank (Martenson, 1985). Another study by Arora et al. (1985) found that
customer selection of banking services is mainly determined by dependability of
institutions, accessibility, easiness of processes for transactions, variety of services
offered and availability of loans at competitive interest rates. Laroche et al. (1986) found
that friendliness of staff plays the major role in the bank decision process, followed by
hours of operations, size of waiting lines, convenience of location and efficiency of
personnel.
Determinant factors of a customers selection of an Islamic Bank
Religious belief as a motive to choose to bank with Islamic banks was described by many
of the researchers in various contexts. Omer (1992) in a survey-based study of customers
Islamic banking services being offered by conventional banks in the UK, found that
the higher percentage of clients using Islamic modes of financing were Muslims.
These findings further validated by Hegazy (1995) who found that 98.8 percent of total
customers of Islamic banks in Egypt were Muslims. Metawa and Almossawi (1998) also
noted that the bank-selection decisions by bank customers are predominantly
religious-based decisions. Adherence to Islamic principles was found to be the most
important selection criterion. In a study conducted by Bashir (1999) in Kuwait, and
Naser et al. (1999) who study the preferences of Islamic banking customers in Jordan
endorsed previous findings that suggested religious belief as major motivation for
selecting an Islamic bank. A further review of various studies including Halim and
Nordin (2001), Ahmad and Haron (2002), Bley and Kuehn (2004), Zainuddin et al. (2004),
Worthington (2005), Okumu (2005), Dusuki and Abdullah (2007), Rashid and Hassan
(2009), Khan and Khanna (2010) also support the argument that religious believes serve
as main motivation to select an Islamic Bank for Muslim customers. Contradictory to
these findings, there is a point of view that religious beliefs are not the sole reason to
select an Islamic bank (Erol and El-Bdour, 1989; Gerrard and Cunningham, 1997;
Zaher and Hassan, 2001). Dusuki and Abdullah (2007) argued that:

Criteria for
selecting an
Islamic bank
17

JIMA
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18

[. . .] despite the fact that Sharia compliant solutions are widely recognized by most of Muslim
customers, some empirical studies suggest that religion is not the sole reason for selecting an
Islamic banking service provider.

Apart from the fact that the satisfaction of religious responsibilities may or may not be
an important element in bank selection, other motives are reported to have significant a
effect of the consumers decisions (Al-Ajmi et al., 2009). One of these significant bank
selection criterions is the potential profits from investing in an Islamic bank. Erol and
El-Bdour (1989) suggested that in considering motives responsible for selecting Islamic
banks as depository institutions, religious motives did not stand out as being the only
significant ones; bank customers are profit motivated. (Haron et al., 1994) in a
comparative analysis of Muslim and non-Muslim customers of Islamic banks found that
Muslim customers believe that investing in an Islamic bank can give higher returns.
Al-Ajmi et al. (2009) found that:
[. . .] the motive financial strength and soundness is rated by clients of conventional banks
higher than the rank given by clients of Islamic banks and those who bank with both
conventional and Islamic banks.

There is a stream of research that advocates service quality (SQ) and related constructs
as major determinants of customers choice of a bank. There is an agreement among
several studies that service quality will remain a critical factor in determining customer
satisfaction with financial services offered by different banks (Taylor and Baker, 1994;
Levesque and McDougall, 1996; Jamal and Naser, 2002; Moutinho and Smith, 2000;
Al-Hawari and Ward, 2006). Haron et al. (1994) studied a sample of 301 Muslim and
non-Muslim bank customers in Malaysia for their preferred selection criteria used in a
dual banking environment. Results of this study show that Muslims and non-Muslims
almost equally value fast and efficient services, speed of transactions, staff friendliness
and confidentiality of bank. Avkiran (1999) concluded that the staff conduct, credibility,
communication and easy access to teller services were discriminating factors behind
selection of banking services.
In addition to the convenient availability of desired financial services, bank selection
criterions also include the sense of security and protection against social, financial
and psychological risk associated with bank transactions (Gerard and Cunningham,
2001). Ethnic background and social orientation are also important determinants of
bank selection (Devlin and Ennew, 2004). Kaynak and Harcar (2005) found that low
service charges are vital for customers selection of a particular bank. Other factors like
banks name and image (Ahmad and Haroon, 2002), confidentiality (Naser et al., 1999;
Abbas et al., 2003), friends and family influence (Metawa and Almossawi, 1998;
Abbas et al., 2003), provision of quality services (Ahmad and Haroon, 2002; Othman and
Owen, 2002; Ababs et al., 2003) and banking experience (Erol et al., 1990; Gerard and
Cunningham, 1997) are equally important for customers when making decision for
selecting Islamic bank for financial services.
Objective of the study
This study is designed to investigate customers criteria for selecting an Islamic bank
Pakistani context. Study was attempted to provide answers to questions like what are
the criterions customer prefers to use for selecting an Islamic bank in Pakistan and
what factors they mostly rely on, what makes them satisfied. Furthermore, this study

concludes with setting up important implications for existing and potential players
of Islamic banking industry and provides guidelines to the management about how
different customer groups [s] can be targeted and what type of marketing strategies
Islamic banks can use to increase their coverage and maximize value for their customers.
Research questions
This study, an attempt was made to investigate the following research questions:
RQ1. In order to understand determinants of choice criteria for customer selection of an
Islamic bank, this study aims to assess the effect of religious motivation, bank
reputation and image, low or competitive service charges, location, quality of
services, friends and family influence on customers selection of an Islamic bank.
RQ2. Extent to which important selection criteria for an Islamic bank selection differs
significantly among Islamic banking customers with different demographic and
behavioral profiles.
These aspects are purposely selected for empirical investigation as they have
significant prevalence in literature, with their use to describe reasons for customers
choice of particular banking service institution.
Research methodology
This study is based on a field survey among customers of banks offering Islamic
banking services in Pakistan. The sample size of 250 respondents covers four major
cities of Pakistan including Karachi (commercial hub of the country), Lahore (provincial
capital), Faisalabad (major industrial hub) and Multan (Southern Punjab; known as city
of saints). Almost all the major Islamic banks have their branch offices in the selected
cities. A survey questionnaire was used to collect data. Questionnaire used in this
study was divided into two sections. The first of the questionnaire, respondents were
requested to indicate, on five-point Likert scale, ranging from strongly agree
to strongly disagree, a statement explaining the degree of their perceived importance
of a factor when selecting an Islamic bank, whilst second section deals with the collection
of information about the respondents personal, demographic and economic profiles.
Most of the factors used in questionnaire were adapted from previous studies on bank
selection criteria like (Gerard and Cunningham, 1997; Ahmad and Haroon, 2002;
Othman and Owen, 2002; Ababs et al., 2003; Dusuki and Abdullah, 2006). The
questionnaire was first developed in English and then translated into Urdu by using a
backward-translation method with the assistance of experts in both languages, to
minimize translation bias or error. A non-probability sampling technique was used for
this study, with respondents randomly selected from Islamic banking customers of both
full service IBIs and conventional banks offering Islamic financing services and
instruments. A total of 250 customers of Islamic banking were approached in each of the
four selected cities and after seeking their consent for participation, respondents were
requested to fill in the questionnaire. From a total of 250 questionnaire distributed and
collected, 223 questionnaires were found as valid and complete, thus yielding a response
rate of 89 percent which was sufficient response rate to ensure statistical reliability and
generalisability (Stevens, 2002).

Criteria for
selecting an
Islamic bank
19

JIMA
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20

Analysis
The data collected for the study was analyzed by using SPSS in order to ascertain which
of the banking choice criteria were preferred by the customers of Islamic banking in
Pakistan. All ten factors ranked according to their importance by performing Friedman
test, which is an alternative non-parametric to one-way analysis of variance (ANOVA).
Friedman test was used for ANOVA when data were scaled on ordinal scale and
provided by the same respondent (Norrusis, 2008). Factor analysis was performed to
reduce the variables which may be contributing to less variance of data. In order to
examine the relationship between proffered selection criteria of Islamic bank and
demographic variables (region, age, education and years of experience in Islamic
banking and occupation), the Kruskil-Wallis test was used. This test was used to
measure the significant variation in response, because of different demographic profiles
of the respondents of the study.
Research findings
Ranking of selection criteria
Test statistics for Friedman test are summarized in Table II. The observed significance
level p 0.000 at 9 degree of freedom is lower than the 0.05 confidence level, which
indicates that variation among ten selection variables are likely to hold in the population.
Based on this analysis, we can make the inferences that preferred choice of selection
variables is statistically significant and therefore, it can be safely concluded that the
customers of both the pure Islamic banks and conventional banks with Islamic banking
branches demonstrate similar preferences for selecting an Islamic banking services.
Results given in Table II indicate that highest ranked selection criteria for bank
selection for customers included availability of various financing options and high
profitability potential. These findings corresponds to Gerrard and Cunningham (1997)
and Jalaluddin and Metwally (1999), who found that high rate of return and variety of
financing options were considered more important by customers as among their
selection criteria of Islamic banks.
Mean rank

Table II.
Ranking of bank
selection criteria

Bank offers a variety of financing options

Profitability (potential of high returns)
Low service charges
Ease of accessing banking services
Good repute among commercial banks
Recommendations from friends/family
Expertise and professional competence of banks
consulting staff/advisor
Your privacy and confidentiality
Friendly and responsive attitude of bank staff
Religious motives (shria compliance)
N
x2
Degrees of freedom
Asym. Sig.
Note: Friedman test

6.67
6.63
6.10
5.86
5.57
5.52
5.30
4.94
4.57
3.81

Important rank
1
2
3
4
5
6
7
8
9
10
223
222.073
9
0.000

On the moderate level, customers value service quality factors with an equal emphasis
on low service charges and bank reputation. Religion whereas was perceived to be least
important criteria for customers dealing with Islamic banks. This finding is supported
by Erol and El-Bdour (1989) who suggest that the religion is not the primary motivation
for Islamic banking customers. Other important factors were fast and efficient service,
the banks reputation and image and confidentiality which were found by Erol and
El-Bdour (1989). Relatives and family friends also have significant influence on
customer intentions about banking with Islamic banks, which is a finding that is
supported by Erol et al. (1990).
After analyzing the customer priorities of Islamic bank selection criteria, a factor
analysis was carried out with varimax rotation and presented in Table III.

Criteria for
selecting an
Islamic bank
21

Factor analysis
The factor analysis of data defines customer choice of selection criteria for Islamic banks
in Pakistan. Most of the studies regarding bank selection preferences and customer
patronage behavior in financial services use factor analysis with varimax rotation and
Kaiser normalization (Hegazy, 1995; Jalaluddin and Metwally, 1999; Al-Sultan, 1999;
Gerrard and Cunningham, 1997). The results in Table III suggest that there are three
factors with all ten items of customer choice of bank selection criteria, providing a large
factor loading (above 0.5 significant levels) All three factors explain a cumulative
variance of 64.838 percent. Factors 1 and 2 have four significant loadings, while factor 3
has only two significant loadings. These results suggest that the selection of Islamic
bank would be a combination of F1 (product features), F2 (service quality) and F3
(subjective norms that includes compliance with religious guidelines and
recommendation by friends and family).
Customer selection criteria and demographics
Different groups of customers with diverse demographic backgrounds were involved in
this survey on the selection of Islamic baking services. To measure any significant
differences in their responses or to assess whether the average perceptions about the
variables studied were identical for all participating groups, with the Kruskil-Wallis test
was used along with computation of x 2 (Naser et al., 1999). The results of the relationship
between the determinants of Islamic bank selection and different demographic variables

Variables
Profitability (potential of high return)
Low service charges
Your privacy and confidentiality
Bank offers a variety of financing options
Ease of accessing banking services
Expertise and professional competence of
banks consulting staff/advisor
Good repute among commercial banks
Friendly and responsive attitude of bank staff
Religious reasons only
Profitability (potential of high return)

Product Service
Customer
Communality
features quality subjective norms of each variable
0.627
0.706
0.537
0.702

0.717
0.555
0.552
0.520
0.742

0.792
0.796
0.536
0.817
0.825
0.699

0.645
0.510
0.695
0.712
0.643

Table III.
Factor analysis for bank
selection criteria

JIMA
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22

associated with respondents (i.e. region, age, education, occupation and years of
experience in availing Islamic banking services) have been reported in Table IV.
The results provide evidence that responses collected from different regions differ
significantly as far as in the selection of Islamic banking services is concerned.
Respondents from Karachi (the capital city of Sindh and city with the largest population
in Pakistan) emphasized heavily religion as the basic reason for selecting Islamic
banking services, whilst respondents from Lahore (the capital city of Punjab) were
relatively least concerned about considering religion as the main motive in this regard.
Karachi is characterized with having a majority of people having a high association with
religious groups/political parties, so this result is as per the expectation. For profitability
and low service charges, respondents from Lahore show the highest concern, compared
with Multan whose respondents had relatively the least concern about these two
variables. The understandable reason for this is the industrial nature of customers
in Lahore and the majority of respondents with agricultural background were in Multan.
Moreover, respondents from Karachi gave relatively high weightage to customers
privacy and confidentiality, expertise and professional competence of banks consulting
staff and friendly and responsive attitude of banks staff. Knowing Karachi is the trade
and industrial hub of Pakistan, which has relatively more sophisticated and has a higher
educated market, the results are as per the expectation. However, customers from Lahore
showed a relatively higher concern for variety of financing options offered by banks, and
good repute of Islamic banks with other commercial banks.
Other demographic variables of age, education, occupation and years of experience in
using Islamic banking services did not report as much significant differences in responses
as reported by regions. However, in case of age, responses differed significantly for
considering religious reason only as a determinant of Islamic bank selection. People
from higher age group (above 50 years) was more associated with religion, and exhibited
a higher tendency to opt for Islamic banking based on religious motives. For education
as a demographic variable, respondents having qualification of matriculation or below

Variable

Table IV.
Relationship between
determinants of Islamic
bank selection and
demographic variables

Religious reasons only

Profitability
Recommendations friends
Easy access banking
services
Low service charges
Customers privacy
Variety of financing
options
Expertise of banks
consulting staff/advisor
Good repute of bank
Friendly attitude of banks
staff

Region
x2
Sig.

Age
x 2 Sig.

13.888 0.003 6.691 0.082

10.285 0.016 7.736 0.052
1.432 0.698 2.416 0.491

Education
x2
Sig.

Occupation
x2
Sig.

Years of
experience
x2
Sig.

5.279 0.383 2.745 0.601 2.51 0.474

3.539 0.617 18.778 0.001 10.793 0.013
2.955 0.707 7.981 0.092 2.958 0.398

2.441 0.486 3.945 0.267 6.927 0.226

13.341 0.004 2.431 0.488 2.376 0.795
9.782 0.021 4.388 0.222 12.708 0.026

6.773 0.148
0.768 0.943
4.596 0.331

1.162 0.762
1.989 0.575
6.735 0.081

14.288 0.003 4.341 0.227 11.159 0.048

2.935 0.569

8.312 0.04

21.535 0.000 4.763 0.19 13.403 0.02

19.814 0.000 4.501 0.212 4.852 0.434

6.681 0.154
9.778 0.044

1.369 0.713
3.147 0.37

29.568 0.000 2.188 0.534 14.636 0.012

9.993 0.041

1.866 0.601

Note: Kruskil-Wallis test statistics

matriculation were more concerned with their privacy and confidentiality whilst
transacting with Islamic banks than compared with other education segments. Similarly,
respondents having qualification below matriculation gave more weightage to the variety
of financing options being offered by banks, expertise and professional competence of
banks consulting staff/advisor, and friendly and responsive attitude of banks staff.
In occupation, public servants took more care of good repute of bank among commercial
banks and friendly and responsive attitude of banks staff. Moreover, people who had
recently joined Islamic banking and had spent only three to six months in dealing with
Islamic banks were more desirous of profitability and variety of financial services offered
by banks.
Conclusions and implications
The analysis of the items constituting different aspects of customer selection criteria
show that there are two over-riding dimensions, i.e. the product features and service
quality of Islamic bank, which are highly regarded by the customers of both Pure Islamic
banks and customers of conventional banks with Islamic banking branches. This study
also found support for the arguments by Erol and El-Bdour (1989), Gerrard and
Cunningham (1997) and Zaher and Hassan (2001) suggesting that religious beliefs are
not the sole reason to select an Islamic bank.
Results of this study indicate that the customers of Islamic banks rank Sharia
compliance features of Islamic banking services last among other selection criterion they
use for selecting an Islamic bank. Core aspects of financial services offered by Islamic
banks are not compatible with the competitive financing options being offered by
conventional banks. Despite of the fact that Islamic banking instruments are
predominantly long-term investment oriented, most of the Islamic banks are not
considering to offer financing options of long-term nature like pension funds and saving
schemes, especially to a large segment of public sectors employees. Similarly, corporate
ventures can also be offered with services like long-term financing and mortgages. This
would be off assistance in diversifying products and facilities offered by the Islamic
banks in Pakistan. This study also found that employees are not well equipped with
religious principles associated with different financial instruments being offered by
Islamic banks. It implies that banks staff should not only be courteous, attentive and
willing to help customers but also capable of demonstrating Sharia principles that can
create association between customers religious motives and investment decision
criterion. This is also felt that there is also need for creating public awareness about the
competitive features of Islamic banking solutions and importance of Sharia compliance
for making investment choices. This will later help in developing a unique positioning
base to distinguish Islamic banking offerings from different financial solutions available
with conventional interest-based banking.
Managerial implications
The management of Islamic banks must acknowledge that competition with commercial
banking demonstrates a need to consider product features and service quality as equally
important to Sharia compliance in designing the positioning strategy of Islamic
banking services. Islamic banking services should be augmented with value-added
services like online banking facilities, convenient and accessible customer support
services and an interactive communication system to facilitate their customers needs.

Criteria for
selecting an
Islamic bank
23

JIMA
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24

Internal as well as external communication systems should be made compatible to the

local conditions of a specific context. Banking terms and conditions, interpretation of
Sharia principles related with the investment and documentation should be made
understandable to the customers of Islamic banks as well.
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Further reading
Boyd, W., Leonard, M. and White, C. (1994), Customer preferences for financial services:
an analysis, International Journal of Bank Marketing, Vol. 12 No. 1, pp. 9-15.
Corresponding author
Khuram Shahzad Bukhari can be contacted at: khurambukhari@bzu.edu.pk

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