Service quality and customer satisfaction in the banking sector: A comparative study of conventional and Islamic banks in Pakistan

Abstract

Purpose

The purpose of this paper is to investigate the service quality and its relationship to customer satisfaction among the customers of conventional banks and Islamic banks. A modified SERVQUAL scale is utilized to ascertain the functional dimensions of service quality specific to the industry and service context under study. In addition, the study examines the differences in service quality satisfaction and its impact on the behavioral intentions of customers.

Design/methodology/approach

A field survey carried out with the help of a questionnaire constructed by using a modified SERVQUAL scale. Data were collected from 200 walk‐in customers conveniently drawn from three major conventional banks and three Islamic banks located in urban areas of Pakistan. Data were analyzed using the analytical hierarchy process to identify service quality and customer satisfaction‐related factors for Islamic and conventional banks.

Findings

By using factor analysis, 52 measurement items with a factor loading greater than (0.5) were identified to form five service quality dimensions namely empathy, service architecture, convenience service encounter, employee service criteria, customer focus and five customer satisfaction dimensions: responsiveness, competency, safe transaction, competitive services, knowledge for the overall banking industry explained 56 percent of the variance. Results from regression analysis of the relationship between multidimensional service quality dimensions and unidimensional customer satisfaction factors also validated the importance of service quality aspects for behavioral intentions (satisfaction, feelings) for customers from conventional banks and Islamic banks.

Originality/value

This study has practical significance for conventional and Islamic banking policy makers for understanding the behavioral intentions of their customers and using them for effectively positioning the service quality of their banks.

Citation

Muhammad Awan, H., Shahzad Bukhari, K. and Iqbal, A. (2011), "Service quality and customer satisfaction in the banking sector: A comparative study of conventional and Islamic banks in Pakistan", Journal of Islamic Marketing, Vol. 2 No. 3, pp. 203-224. https://doi.org/10.1108/17590831111164750