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.
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