Measuring Service Quality in Islamic Banking: Importance-Performance Analysis Approach

DOI 10.14707/ajbr.150008

Zainurin Dahari Prince Sultan University, Riyadh
Muhamad Abduh International Islamic University Malaysia
Kim-Shyan Fam Victoria University of Wellington

Abstract

Since the introduction of Islamic bank, the intense competition in the banking industry has been increased exponentially. Islamic banks are not only competing among other Islamic banks providers but also with conventional banks which have offered Islamic windows as an alternative to their customers. As many banks started to offer Islamic banking services/products to the customers, one of the important factor distinguishes those banks in maintaining the sustainability competitive advantage in the industry is service quality. Therefore, the objective of this study is to determine the key dimensions of service quality of Islamic banks by using ImportantPerformance Analysis. Structured self administered questionnaire were used and a total of 276 usable questionnaires were obtained. Factor analysis was carried out to uncover the key dimensions of Indonesian Islamic banking service quality while the Importance Performance Analysis (IPA) was employed to evaluate its level.

Factor analysis uncovers five key dimensions including reliability, bank-customer relationship, tangibles, shariah issues and rates and charges. The IPA has plotted reliability, rate and charges, and bank-customer relationship dimensions in possible overkill quadrant which reflects low importance but over-performed by the bank. The dimension of shariah and tangibles are placed at the critical quadrant and thus vital attention from the bank is required. This means that shariah and tangibles are perceived important by customers but very low in performance. Based on this finding, service quality of Islamic banks is still perceived unoptimal by their customers. This implies that Islamic banks should improve their service quality management, particularly on the dimensions of shariah and tangibility.

 

Keywords : Service Quality, Islamic Banking, Important-Performance Analysis

 

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