The Impact of Shariah Bank Service Quality on Customer Satisfaction and Loyalty

Abstract

This study examines the effect of a modified version of service quality, tailored to the principles of Shariah banking and the current digital industry landscape, on customer satisfaction and loyalty in Shariah banks. The research aims to enable Shariah banking institutions to compete more effectively with conventional banks in the current era of digitization. This analysis is crucial considering that the market share of Shariah banks has not reached its optimal growth, despite the merger of state-owned Shariah banks. The study's findings are expected to provide valuable insights for Shariah banks in formulating policies and strategies to address customer needs in the digital era. The population of this research consists of Shariah bank customers, utilizing purposive sampling as the sampling technique. Respondent data will be collected through an online survey questionnaire. The collected data will be processed and analyzed using Structural Equation Modeling (SEM). The results reveal that out of the nine service quality dimensions proposed for Shariah banks, three factors, namely adherence to Shariah principles, reliability, and empathy, do not exhibit significant effects, while the remaining factors demonstrate significant influence. User-friendliness of applications and responsiveness emerge as the most crucial factors affecting customer satisfaction. Additionally, the study establishes a strong correlation between customer satisfaction and loyalty.