Do product offering and service quality affect customer satisfaction in Islamic and conventional banks? Evidence from an oil-based economy

Abstract

Purpose: This paper aims to investigate the effect of product offering and other service quality (SQ) dimensions on the satisfaction of the customers of both Islamic and conventional banks, using evidence from an oil-based economy that is based on a prolonged SERVQUAL model with 11 dimensions and other statistical analysis methods. Design/methodology/approach: The data were collected from 461 Islamic and conventional bank customers in Qatar via a survey and several tests were used to test certain hypotheses. Component analysis, factor analysis and gap and ascendency analysis were used in this study. Afterward, a correlation analysis and regression model were used to examine the hypotheses and validate the instruments used. Findings: The results show that regardless of the type of bank, customers always have greater expectations of the services than they had perceived. A customer's expectation of the product on offer is the only dimension that is significantly different in relation to the two types of banks. However, reliability, competence, responsiveness, credibility and empathy dimensions are significantly different of the two types of banks in customers' perception of quality. In addition, the results suggest that both types of banks need to concentrate their efforts on the product offering, competence and courtesy dimensions. Research limitations/implications: The size of our sample of Islamic and conventional banks is unequally balanced. Future studies might therefore choose an equally balanced sample. Practical implications: Bank managers in both types of banks need to continue improving the quality of their service including product offering and to adopt advanced methods to enhance customer satisfaction (CS) and reduce the gaps in quality in the dimensions used. Furthermore, managers in both types of banks need to put more emphasis on product offering, competence, courtesy and communication if they wish to improve SQ. Moreover, Islamic banks must guarantee that they possess competent, highly trained personnel who are familiar with Islamic finance products, so as to enhance the quality of service and attract customers. Originality/value: To the best of the author's knowledge, this is the first study to investigate the effect of product offering and other dimensions of SQ on CS in both Islamic and conventional banks by using 11 dimensions of SQ. In addition, it provides evidence of gaps in SQ, at the dimensions level, for both types of banks in an oil-based economy. The results of this study are valuable in helping decision-makers and bank managers who wish to raise the level of SQ and improve CS and in validating the results from other countries with a dual financial system.