The Impact of the Awareness, Understanding and Usage of Islamic Banking Products and Services on Customer Satisfaction with Islamic Banking in Pakistan


Arooj Naz
Sadia Farooq
Rab Nawaz Lodhi
Fouzia Hadi Ali
Syeda Zeenat Maryam


The Islamic banking sectors in Pakistan are experiencing a challenging phase of progress due to intense competition with conventional banks. The primary purpose of this study is to articulate the literature of Islamic banking in Pakistan by investigating the influence of the level of awareness, understanding and usage of Islamic banking products and services on the satisfaction level of its account holders. For achieving this objective, a sample of 400 respondents is chosen through purposive sampling technique from the target population from Islamic banks in Pakistan. The calculated results of PLS-SEM Bootstrapping and SPSS revealed a significant and positive influence of the awareness and understanding level of account holders of Islamic banks on their satisfaction levels. However, the Islamic bank usage by account holders has no impact on their satisfaction level due to the provision of less innovative products and services as compared to conventional banks. This study thus enhances the literature regarding the aforementioned aspects of customer satisfaction. It simultaneously draws an attention to the area that is suitable for the prosperity and progress of the Islamic banking system of Pakistan. The results of this study also give valuable information and helpful guidelines for Islamic banks to formulate innovative strategies of products and promotional policies to retain and attract potential customers. Though this study is broadening the scope of Islamic banking literature, it is not considering the scenario of conventional banks. Islamic banks can manage and enjoy the competitive edge if similar information about conventional banking is available for comparison purposes, which provides the scope of study in future research.


How to Cite
Naz , A., Farooq , S., Lodhi, R. N., Ali, F. H., & Maryam, S. Z. (2020). The Impact of the Awareness, Understanding and Usage of Islamic Banking Products and Services on Customer Satisfaction with Islamic Banking in Pakistan. Islamic Banking and Finance Review, 7, 19-37.


Abdullah, A. A., Sidek, R., & Adnan, A. A. (2012). Perception of non-Muslims customers towards Islamic banks in Malaysia. International Journal of Business and Social Science, 3(11).
Ahmad, S. A., & Al-Aidaros, A.-H. (2017). Customer Awareness And Satisfaction Of Local Islamic Banks In Malaysia. International Journal of Islamic Banking, 2(2), 37.
Amin, M., & Isa, Z. (2008). An examination of the relationship between service quality perception and customer satisfaction: A SEM approach towards Malaysian Islamic banking. International Journal of Islamic and Middle Eastern Finance and Management, 1(3), 191–209.
Awan, G. A., & Azhar, M. (2014). Consumer behavior towards Islamic banking in Pakistan. European Journal of Accounting Auditing and Finance Research, 2(9), 42–65.
Bley, J., & Kuehn, K. (2004). Conventional versus Islamic finance: student knowledge and perception in the United Arab Emirates. International Journal of Islamic Financial Services, 5(4), 17–30.
Bodibe, S., Chiliya, N., & Chikandiwa, C. T. (2016). The factors affecting customers' decisions to adopt Islamic banking. Banks and Bank Systems, 11(4), 144–151.
Bouheni, F. B., & Ammi, C. (2015). Banking governance: what's special about Islamic banks? Journal of Applied Business Research, 31(4), 1621.
Fornell, C., & Larcker, D. F. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research, 18(1), 39-50.
Cronbach, L. J. (1951). Coefficient alpha and the internal structure of tests. Psychometrika, 16(3), 297–334.
George, A., & Kumar, G. G. (2014). Impact of service quality dimensions in internet banking on customer satisfaction. Decision, 41(1), 73–85.
Groth, M. (2005). Customers as good soldiers: Examining citizenship behaviors in internet service deliveries. Journal of Management, 31(1), 7–27.
Gupta, P. K., & Kinange, U. M. (2016). A Study of Financial Literacy and its Impact on Customer Satisfaction with Special Reference to Banks of Bagalkot District. Journal of Management, 7(6), 43–50.
Hamid, M. A., & Othman, M. S. (2009). A study on the level of knowledge and understanding among Muslims towards the concepts, Arabic and Shariah terms in Islamic Insurance (takaful). European Journal of Social Sciences, 10(3), 468–478.
Hair, J. F., Hult, G. T. M., Ringle, C., & Sarstedt, M. (2013). A primer on partial least squares structural equation modeling (PLS-SEM) (Second ed.): Sage Publications.
Hair Jr, J. F., Hult, G. T. M., Ringle, C., & Sarstedt, M. (2016). A primer on partial least squares structural equation modeling (PLS-SEM). Sage publications.
Hair, J. F., Hult, G. T. M., Ringle, C., & Sarstedt, M. (2017). A Primer on Partial Least Squares Structural Equation Modeling (PLS-SEM) (2nd ed.). Thousand Oakes, CA: Sage.
Henseler, J., Ringle, C. M., & Sarstedt, M. (2015). A new criterion for assessing discriminant validity in variance-based structural equation modeling. Journal of the Academy of Marketing Science, 43(1), 115-135.
Hooper, D., Coughlan, J., & Mullen, M. (2008). Structural equation modeling: Guidelines for determining model fit. Electronic Journal of Business Research Methods, 6(1), 53-60.
Hulley, S. B., Steven R, C., Browner, W. S., Grady, D. G., & Newman, T. B. (2001). Designing Clinical Research (Second ed.): Lippincott Williams and Wilkins.
Iqbal, M., Molyneux, P., & Conermann, S. (2006). Thirty years of Islamic banking. History, Performance and Prospects. Bankhistorisches Archiv, 32(2), 155–158.
Islam, J. U., & Rahman, Z. (2017). Awareness and willingness towards Islamic banking among Muslims: An Indian perspective. International Journal of Islamic and Middle Eastern Finance and Management, 10(1), 92–101.
Kant, R., & Jaiswal, D. (2017). The impact of perceived service quality dimensions on customer satisfaction: An empirical study on public sector banks in India. International Journal of Bank Marketing, 35(3), 411–430.
Karim, A. A., & Affif, A. Z. (2005). Islamic banking consumer behaviour in Indonesia: a qualitative approach. International Journal of Islamic Finance, 5(1), 1–18.
Khattak, N. A. (2010). Customer satisfaction and awareness of Islamic banking system in Pakistan. African Journal of Business Management, 4(5), 662–671.
Lavidge, R. J., & Steiner, G. A. (1961). A model for predictive measurements of advertising effectiveness. The Journal of Marketing, 25(6), 59-62.
Lee, E.-J. (2016). How Perceive D Cognitive Needs Fulfi Llment Affect Consumer Attitudes Towards The Customized Product: Moderation Role Of Knowledge. Computers In Human Behavior, 152-162.
Ling, K. L., Ling, K. M., Pey, L. S., & Hui, W. Z. (2012). Awareness of Islamic banking products and services among Non-Muslims in Malaysia. Universiti Tunku Abdul Rahman
Masood, S., Sheikh, M. R., & Abbasi, M. N. (2017). Bankers' Awareness, Product Marketing, and Performance of Islamic Banks: The Case of Pakistan. Pakistan Journal of Islamic Research, 18(1).
Maryam, S. Z., Mehmood, M. S., & Khaliq, C. A. (2019). Factors influencing the community behavioral intention for adoption of Islamic banking. International Journal of Islamic and Middle Eastern Finance and Management.
Mehmood, M. S., Mehmood, A., & Siddique, M. (2017). Personality Traits Nexus Employee's Performance: An Application of Big Five Personality Dimensions Model. Abasyn Journal of Social Sciences – Special Issue: AIC 2016, 101-119.
Murad, M., Gill, S. A., & Ali, A. F. (2016). From Adoption of Products and Services regarding Islamic Banking to Customer awareness in Pakistan. Studies, 5(4).
Martilla, J. A., & James, J. C. (1977). Importance-performance analysis. Journal of Marketing, 41(1), 77-79.
Naser, K., Jamal, A., & Al-Khatib, K. (1999). Islamic banking: a study of customer satisfaction and preferences in Jordan. International Journal of Bank Marketing, 17(3), 135-151.
Okumus, H. S., & Genc, E. G. (2013). Interest-free banking in Turkey: a study of customer satisfaction and bank selection. European Scientific Journal, ESJ, 9(16).
Paul, J., Mittal, A., & Srivastav, G. (2016). Impact of service quality on customer satisfaction in private and public sector banks. International Journal of Bank Marketing, 34(5), 606–622.
Rammal, H. G., & Zurbruegg, R. (2016). Awareness of Islamic banking products among Muslims: The case of Australia. In Islamic Finance (pp. 141–156). Springer.
Saini, Y., Bick, G., & Abdulla, L. (2011). Consumer awareness and usage of Islamic banking products in South Africa. South African Journal of Economic Management Sciences, 14(3), 298-313.
Shaukat, M., & Raisi, A. A. (2017). Risk Sharing Equity-Based Islamic Finance, Macroeconomic Resilience and Significance to Oman as a New Entrant. Journal of Finance, Accounting & Management, 8(1).
Shelby, L. B. (2011). Beyond Cronbach's alpha: Considering confirmatory factor analysis and segmentation. Human Dimensions of Wildlife, 16(2), 142–148.
Shimp, T. A. (2010). Integrated Marketing Communication in Advertising and Promotion/por Terence A Shimp.
Selim, M. (2019). The effectiveness of Qard-al-Hasan (interest-free loan) as a tool of monetary policy. International Journal of Islamic and Middle Eastern Finance and Management, 12(1), 130-151.
Tavakol, M., & Dennick, R. (2011). Making sense of Cronbach's alpha. International journal of medical education, 2, 53-55.
Titko, J., & Lace, N. (2010). Performance measures for a business unit in Latvian retail banking. In 6th International Scientific Conference "Business and Management (pp. 13–14).
Wahyuni, S. (2012). Moslem community behavior in the conduct of Islamic bank: The moderation role of knowledge and pricing. Procedia-Social and Behavioral Sciences, 57, 290–298.
Wahyuni, S.S. & Arifin, T. (2013), "Knowledge as an antecedent variable of intention to use Islamic banking products ASEAN/Asian Academic Society International ConferenceProceedingSerie
Yaseen, Z., & Naqvi, S. R. (2018). Factors affecting investment decision in banking sector of Pakistan: Analysis of Islamic and conventional banks. Journal of Islamic Financial Studies, 4(01), 57–74.