Introduction service quality and customer satisfaction in Islamic

Introduction

 

As Service
industry is booming all around the world, maintaining the quality becomes a
tough job. Performance of a firm largely depends on the quality of service rendered
(Caruana, Money, & Berthon, 2000; Cheruiyot & Maru, 2013; Haynes & Fryer,
2000). Service quality has high impact on customer satisfaction and also these
words are interchangeably used by the authors and practitioners (Angur,
Nataraajan, & Jahera Jr, 1999; Arasli, Katircioglu, & Mehtap-Smadi,
2005; Avkiran, 1994; Awan, Bukhari, & Iqbal, 2011; LeBlanc & Nguyen,
1988).

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Substantial
Number of studies has been done on service industry and suggests that service
quality is positively correlated to the customer satisfaction. Also
considerable work has been conducted to study customer satisfaction and service
quality in conventional banking sector (Raza, Jawaid, & Hassan, 2015;
Lewis, 1991; Pantouvakis, 2013; Zhu et al., 2002). As Islamic banking is just
two decade old in field of research so limited studies has been done on service
quality and customer satisfaction in Islamic banking (Muhammad & Raza,
2015; Selim, Rafikul & Mohammad 2017; Khaliq & Thaker 2016).

 

The service quality model
SERQUAL came into limelight after revolutionary work of Parasuraman, Zeithaml,
and Berry (1985). Though, this study first proposed ten dimensions of measuring
service quality which were reduced to five lately. There are number of
academicians and researchers who have used this model to assess the quality and
gaps in service industry. Angur, Nataraajan, & Jahera Jr, (1999) found SERQUAL more comprehensive and extensive
measurement model for diagnosing quality of banking industry.

The objective of this
research is to measure the service quality, customer satisfaction and quality
gap of selected Islamic banks operating in Malaysia. Islamic banking industry
in Malaysia has seen rapid growth over the years. Malaysia has most Islamic
banks operating in its economy. Thus experience of customers in Malaysia will
be helpful in assessing the service quality of Islamic banking and areas of
improvement for banks in other countries.

According to the report
published in Straits Times 2017, Islamic banking sector market share has
quadrupled from 7.1 per cent in 2010 to 28 per cent in 2016 in Malaysia and
contributed 4.7% to the GDP in 2016.  Baber
(2013) stated in his study about Islamic finance that it has four basic pillars
all of which are absorbed towards the well-being of the society and economy
rather than personal benefits and Profit making objective through interest
oriented banking. Baber (2017) demonstrated that Islamic banking and its each
product should be compline to the Shariah rules; only then well-being objective
can be achieved. So Compliance of Islamic banks with Shariah will increase customer’s
satisfaction. In this study Shariah compliance dimension has been added in
addition to the five constructs of SERQUAL.

This study investigates
gap between the customer expectations and perception of service quality
rendered by Islamic banks. Also will analyse the factors that affect customer
satisfaction and relationship between different dimensions of modified SERQUAL
used in this study and customer satisfaction in Islamic banks of Malaysia

 

Literature
Review

Customer
Satisfaction

Awan, Bukhari, &
Iqbal (2011) concluded that quality and non-quality dimensions can lead to
customer satisfaction. When Customer expectations are fulfilled, it leads to
customer satisfaction (Oliver, 1980). Tse and Walton (1988) defined customer
satisfaction as

The
Consumer’s response to the evaluation of the perceived discrepancy between
prior expectations (or some standard performance) and the actual performance of
the product as perceived after its consumption.

 Taylor & Baker (1994) found that customer
satisfaction turns customers loyal and these customers become word-of-mouth
advertising. As market is highly competitive in globalization era, every
business wants to satisfy their customers and wants them to spread this message
all across. An unsatisfied customer not only switches to next alternative but
also blow-out bad reviews about the service experience in this informative
world which any business cannot afford.

 

Service
quality

Service quality
has been so far the best measurement of customer satisfaction. The acclaimed
work of Parasuraman et al. (1985, 1988, 1991, 1994) added literature to the
service quality and proposed SERVQUAL instrument which is further used by many
researchers (Arasli et al., 2005). This instrument is extended to a 22-item
scale and many researchers have used this instrument to study service quality
in different research context (Avkiran, 1994; Babakus & Boller, 1992;
Buttle, 1996; Fick & Ritchie, 1991; Newman, 2001; Smith, 1995). SERQUAL is
based on the grounds that customer perception about quality can be measured by
the gap between customer’s expectation and what they actually receive. Past
literature about service quality suggests that good service quality increases
customer satisfaction and help to attract and retain customers. Most of the researchers
have found that quality is multi-dimensional and cannot be achieved by
focussing only on one dimension. The Multi-dimension in SERQUAL model is

Reliability

Assurance

Tangibility

Empathy

Responsiveness