CUSTOMER PERCEPTION AND ADOPTION OF ISLAMIC BANKING SERVICES IN PAKISTAN

Abstract

Background

The rise in the demand of Shariah-Compliant financial services and the growing regulatory support have led to the growth of Islamic banking in Pakistan. Learning the customer perception, awareness and adoption levels of the sector is the key to improving competitiveness of the industry and its ratability in the long term.

Purpose

This research will set out to investigate the most important factors that affect customer acquisition of Islamic banking services in Pakistan based on the attributes of awareness, Shariah-compliance, trust, quality services, and the demographic differences.

Methodology

The research design was a descriptive quantitative study design using a structured questionnaire to be administered on 345 respondents who belong to various demographic groups. The descriptive statistics, correlation analysis, multiple regression and ANOVA were used to examine the relationship and differences among the study variables using data. The reliability test revealed good internal consistency among the constructs.

Results

The results found high levels of customer confidence in Shariah compliance which indicated the highest relationship with trust and adoption intentions. The most important predictors of adoption were trust, then Shariah compliance and service quality. The influence of awareness was positive but relatively weak. There were also substantial demographic variations with urban and more educated respondents reporting higher levels of awareness and higher levels of adoption.

Conclusion

The findings suggest that adoption of Islamic banking in Pakistan is influenced by the interplay of religious commitment, institutional trust, and quality of services that are facilitated by customer awareness and demographics. The optimal way to increase sector-wide adoption is to enhance operational excellence and increase outreach to underserved populations.