Journal of Islamic Marketing

Emerald Article: Customer's criteria for selecting an Islamic bank: evidence from Pakistan Hayat M. Awan, Khuram Shahzad Bukhari

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To cite this document: Hayat M. Awan, Khuram Shahzad Bukhari, (2011),"Customer's criteria for selecting an Islamic bank: evidence from Pakistan", Journal of Islamic Marketing, Vol. 2 Iss: 1 pp. 14 - 27 Permanent link to this document: http://dx.doi.org/10.1108/17590831111115213 Downloaded on: 03-05-2012 References: This document contains references to 57 other documents To copy this document: permissions@emeraldinsight.com This document has been downloaded 1688 times.

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JIMA 2,1

Customers criteria for selecting an Islamic bank: evidence from Pakistan

Hayat M. Awan and Khuram Shahzad Bukhari
Institute of Management Sciences, Bahauddin Zakariya University, Multan, Pakistan
Abstract
Purpose Islamic banking is an emerging nancial 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 proles 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 inuential factor in selecting an Islamic bank. Findings suggest that there is a lack of awareness about basic conventions of Islamic nancing 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 nancial services. Originality/value The paper has practical signicance 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 nancial 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

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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 nancial 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 nancial 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-edged 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 nancing (SBP Islamic Banking Bulletin, October, 2009). Since 2003, the domestic Islamic banking industry has shown signicant 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 nancial 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 nancial 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 nal 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 eld is that cultural variations have a signicant 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 signicant 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 signicant differences, which may warrant differentiated marketing efforts. From the managerial perspective, a clear understanding of culture and the degree of inuence that cultural values have on consumer behavior is pre-requisite for designing effective strategies

Criteria for selecting an Islamic bank 15

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JIMA 2,1

Descriptions 366 5.6 283 5.9 226 4.5 6 13 649 12 515 12 289 12 150 9 70 9 48 276 4.9 202 4.8 186 4.4 6 206 4.0 147 3.8 138 3.5 6 119 2.8 84 2.6 73 2.3 4 72 2.0 50 1.8 48 1.7 2 44 1.5 30 1.3 30 1.3 2

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

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

Table I. Islamic banking in Pakistan (2003-2009) December-09 December-08 December-07 December-06 December-05 December-04 December-03 13 0.5 8 0.4 10 0.5 1 3 17

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 reect that shoppers personality and may be determined by such personal traits as sex, age, race and religion.

Criteria for selecting an Islamic bank 17

A religious group to which a person is afliated 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 signicant attention in recent years. Kaufman (1967) found that the most inuential 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 inuence 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 efciency 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 nancing were Muslims. These ndings 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 ndings 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 ndings, 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:

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[. . .] 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.

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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 signicant a effect of the consumers decisions (Al-Ajmi et al., 2009). One of these signicant bank selection criterions is the potential prots 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 signicant ones; bank customers are prot 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 nancial 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 nancial 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 efcient services, speed of transactions, staff friendliness and condentiality 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 nancial services, bank selection criterions also include the sense of security and protection against social, nancial 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), condentiality (Naser et al., 1999; Abbas et al., 2003), friends and family inuence (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 nancial 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 satised. 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 inuence on customers selection of an Islamic bank. RQ2. Extent to which important selection criteria for an Islamic bank selection differs signicantly among Islamic banking customers with different demographic and behavioral proles. These aspects are purposely selected for empirical investigation as they have signicant 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 eld 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 ofces in the selected cities. A survey questionnaire was used to collect data. Questionnaire used in this study was divided into two sections. The rst of the questionnaire, respondents were requested to indicate, on ve-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 proles. 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 rst 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 nancing 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 ll 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 sufcient response rate to ensure statistical reliability and generalisability (Stevens, 2002).

Criteria for selecting an Islamic bank 19

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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 signicant variation in response, because of different demographic proles of the respondents of the study. Research ndings Ranking of selection criteria Test statistics for Friedman test are summarized in Table II. The observed signicance level p 0.000 at 9 degree of freedom is lower than the 0.05 condence 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 signicant 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 nancing options and high protability potential. These ndings corresponds to Gerrard and Cunningham (1997) and Jalaluddin and Metwally (1999), who found that high rate of return and variety of nancing options were considered more important by customers as among their selection criteria of Islamic banks.
Mean rank Bank offers a variety of nancing options Protability (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 condentiality 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

Table II. Ranking of bank selection criteria

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 nding 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 efcient service, the banks reputation and image and condentiality which were found by Erol and El-Bdour (1989). Relatives and family friends also have signicant inuence on customer intentions about banking with Islamic banks, which is a nding 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. Factor analysis The factor analysis of data denes customer choice of selection criteria for Islamic banks in Pakistan. Most of the studies regarding bank selection preferences and customer patronage behavior in nancial 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 signicant levels) All three factors explain a cumulative variance of 64.838 percent. Factors 1 and 2 have four signicant loadings, while factor 3 has only two signicant 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 signicant 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
Product Service Customer Communality features quality subjective norms of each variable 0.627 0.706 0.537 0.702 0.792 0.796 0.536 0.817 0.825 0.699 0.717 0.555 0.552 0.520 0.742 0.645 0.510 0.695 0.712 0.643

Criteria for selecting an Islamic bank 21

Variables Protability (potential of high return) Low service charges Your privacy and condentiality Bank offers a variety of nancing 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 Protability (potential of high return)

Table III. Factor analysis for bank selection criteria

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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 signicantly 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 protability 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 condentiality, 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 nancing 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 signicant differences in responses as reported by regions. However, in case of age, responses differed signicantly 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 qualication of matriculation or below
Years of experience x2 Sig.

Variable Religious reasons only Protability Recommendations friends Easy access banking services Low service charges Customers privacy Variety of nancing options Expertise of banks consulting staff/advisor Good repute of bank Friendly attitude of banks staff

Region x2 Sig.

Age x 2 Sig.

Education x2 Sig.

Occupation x2 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

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 6.773 0.148 0.768 0.943 4.596 0.331 2.935 0.569 6.681 0.154 9.778 0.044 9.993 0.041 1.162 0.762 1.989 0.575 6.735 0.081 8.312 0.04 1.369 0.713 3.147 0.37 1.866 0.601

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 14.288 0.003 4.341 0.227 11.159 0.048 21.535 0.000 4.763 0.19 13.403 0.02 19.814 0.000 4.501 0.212 4.852 0.434 29.568 0.000 2.188 0.534 14.636 0.012

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

Note: Kruskil-Wallis test statistics

matriculation were more concerned with their privacy and condentiality whilst transacting with Islamic banks than compared with other education segments. Similarly, respondents having qualication below matriculation gave more weightage to the variety of nancing 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 protability and variety of nancial 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 nancial services offered by Islamic banks are not compatible with the competitive nancing 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 nancing 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 nancing 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 nancial 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 nancial 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

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Internal as well as external communication systems should be made compatible to the local conditions of a specic 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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Worthington, S. (2005), Entering the market for nancial services in transitional economies, Marketing, Vol. 23, pp. 381-96. Zaher, T.S. and Hassan, M.K. (2001), A comparative literature survey of Islamic nance and banking, Financial Markets, Institutions & Instruments, Vol. 10, pp. 155-99. Zainuddin, Y., Jahyd, N. and Ramayah, T. (2004), Perception of Islamic banking: does it differ among users and non users, Journal of Management & Business, Vol. 6, pp. 221-32. Further reading Boyd, W., Leonard, M. and White, C. (1994), Customer preferences for nancial 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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