Does Fintech Affect Consumer Retention in Islamic Banks? Empirical Evidence from OIC Countries

Safeer Ullah Khan; Eli Sumarliah

doi:10.30659/ijibe.9.2.%p

Does Fintech Affect Consumer Retention in Islamic Banks? Empirical Evidence from OIC Countries

Safeer Ullah Khan, Eli Sumarliah

Abstract

FinTech is a trendy topic that has increased rapidly in Organization of Islamic Cooperation (OIC) countries, where Muslim consumers desire to use banking services in a Sharia conforming way. Thus, the research seeks to examine the effect of FinTech applied by Islamic banks of OIC countries on consumer retention. The Islamic banking system in OIC nations has mainly been in the foreground in carrying FinTech to its operations at the initial phase. Although consumers typically do not select Islamic banks for technologies, the study tries to investigate the effect of FinTech in maintaining consumers. Data collection uses the strata sampling method; online questionnaires are spread and collected from 317 customers of chosen banks in OIC countries. SPSS 25.0 analyzes statistical data via numerous examinations such as regression analysis, factor analysis, sample adequacy, and reliability analysis. The results show that compliance, consulting services, and payments of FinTech affect consumer retention. However, financing services considered vital in conventional banks do not significantly influence consumer retention. The research tries to help Islamic banks satisfy their consumers by using FinTech applications and helping FinTech firms enhance their finance amenities.

Keywords

Financial technology; FinTech; consumer retention; OIC countries; Islamic banking; Islamic bank

Full Text:

Untitled PDF

References

Afroze, D., & Rista, F. I. (2022). Mobile financial services (MFS) and digital inclusion–a study on customers’ retention and perceptions. Qualitative Research in Financial Markets, 14(5), 768-785.

Aisyah, M. (2018). Islamic bank service quality and its impact on Indonesian customers’ satisfaction and loyalty. Al-Iqtishad Journal of Islamic Economics, 10 (2), 367–388.

Arner, D.W., Barberis, J., & Buckley, R.P. (2015). The evolution of FinTech: a new post-crisis paradigm. Geo. J. Int’l L., 47(1), 1271.

Bartlett, M.S. (1954) A note on the multiplying factors for various x2 approximations. Journal of the Royal Statistical Society. Series B (Methodological), 16(1), 296–298.

Caria. (2017). FinTech: An Explorative Study into the Characteristics of their Business Models, Working Paper, April, Vrije Universiteit Amsterdam.

Citigroup. (2016). Digital Disruption: How FinTech is Forcing Banking to a Tipping Point. Retrieved from http://www.disruptivefinance.co.uk/2016/04/01/how-fintech-is-forcing-banking-to-a-tippingpoint-citi-report/.

Coetzee, J. (2018). Strategic implications of FinTech on South African retail banks. South African Journal of Economic and Management Sciences, 21(1), 11.

Cronbach, L.J. (1951). Coefficient alpha and the internal structure of tests. Psychometrika, 16(3), 297–334.

Danesh, S.N., Nasab, S.A., & Ling, K.C. (2012). The study of customer satisfaction, customer trust, and switching barriers on customer retention in Malaysia hypermarkets. International Journal of Business and Management, 7(7), 141.

DinarStandard. (2020). State of the Global Islamic Economy 2019/20 Report. Retrieved 08 20, 2020, from Salaam Gateway: https://www.salaamgateway.com/specialcoverage/SGIE19-20#:~:text=The%202019%2F20%20State%20of,faith%2Dinspired%20ethical%20consumption%20needs

Dorfleitner, G., Hornuf, L., Schmitt, M., & Weber, M. (2017). Definition of FinTech and description of the FinTech industry. FinTech in Germany, 5–10, Springer, Cham.

Edward, M., & Sahadev, S. (2011). Role of switching costs in the service quality, perceived value, customer satisfaction, and customer retention linkage. Asia Pacific Journal of Marketing and Logistics, 23(3), 327–345. DOI:10.1108/13555851111143240.

Ghalaita, J.B. (2015). The rise of the Islamic economy. Retrieved from https://www.worldfinance.com/banking/the-rise-of-the-islamic-economy

Gimpel, H., Rau, D., & Röglinger, M. (2017). Understanding FinTech start-ups – a taxonomy of consumer-oriented service offerings. Electronic Markets, 28(1), 1–20.

Henseler, J., Ringle, C.M., & Sarstedt, M. (2015). A new criterion for assessing discriminant validity in variance-based structural equation modeling. Journal of the Academy of Marketing Science, 43(1), 115–135.

Innovate Finance (2015) Innovate Finance Manifesto: U.K. 2020. Retrieved from https://appgfintech.org.uk/news/innovate-finance-manifesto-uk-2020/.

Kaiser, H.F. (1974). An index of factorial simplicity. Psychometrika, 39(1), 31–36.

KPMG (2017) The Pulse of FinTech Q4 2016: Global Analysis of Investment in FinTech. Retrieved from https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2017/02/pulse-of-fintech-q4-2016.pdf.

Leech, N., Barrett, K., & Morgan, G.A. (2013). SPSS for Intermediate Statistics: Use and Interpretation. Routledge, Taylor & Francis Group, New York.

Leong, K., & Sung, A. (2018). FinTech (financial technology): what is it and how to use technologies to create business value in FinTech way?. International Journal of Innovation, Management, and Technology, 9(2), 74–78.

Li, M., Green, R.D., Farazmand, F.A., & Grodzki, E. (2012). Customer loyalty: influences on three types of retail stores’ shoppers. International Journal of Management and Marketing Research, 5(1), 1–19.

Mok, A., & Saha, R. (2017). Strategic risk management in banking. Deloitte Inside Magazine. Retrieved from https://www2.deloitte.com/content/dam/Deloitte/lu/Documents/financial-services/Banking/lu_inside_issue14_ strategic_risk_management.pdf (accessed 2 October 2018).

Negassa, G. J., & Japee, G. P. (2023). The effect of bonding, responsiveness and communication on customer retention: the mediating role of customer satisfaction. Journal of Relationship Marketing, 22(2), 115-131.

Ozili, P. K., Mhlanga, D., Ammar, R., & Fersi, M. (2024). Information effect of fintech and digital finance on financial inclusion during the COVID-19 pandemic: Global evidence. FinTech, 3(1), 66-82.

Ramakrishnan, K. (2006). Customer Retention: The Key to Business Performance. Retrieved from http://www.estrategicmarketing.com/smNov-Dec2/art11.html (accessed 20 June 2018).

Sumarliah, E., Khan, S. Z., & Khan, R. U. (2022b). Modest wear e-commerce: examining online purchase intent in Indonesia. Research Journal of Textile and Apparel, 26(1), 90-108.

Sumarliah, E., Khan, S. U., & Khan, I. U. (2021). Online hijab purchase intention: the influence of the Coronavirus outbreak. Journal of Islamic Marketing, 12(3), 598-621.

Sumarliah, E., Li, T., & Wang, B. (2020). Hijab fashion supply chain: a theoretical framework traversing consumers’ knowledge and purchase intention. MATEC Web of Conferences, 308, 04004. DOI:10.1051/matecconf/202030804004

Sumarliah, E., Usmanova, K., Mousa, K., & Indriya, I. (2022a). E-commerce in the fashion business: the roles of the COVID-19 situational factors, hedonic and utilitarian motives on consumers’ intention to purchase online. International Journal of Fashion Design, Technology and Education, 15(2), 167-177.

Vakulenko, Y., Arsenovic, J., Hellström, D., & Shams, P. (2022). Does delivery service differentiation matter? Comparing rural to urban e-consumer satisfaction and retention. Journal of Business Research, 142, 476-484.

Vizury (2023). Top 5 Customer Retention Challenges and their Solutions. Retrieved from https://vizury.com/blog/customer-retention-challenges

DOI: http://dx.doi.org/10.30659/ijibe.9.2.%25p

Refbacks

There are currently no refbacks.

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

IJIBE (International Journal of Islamic Business Ethics) has been Indexed by

	IJIBE (nternational Journal of Islamic Business Ethics)

	Published by Economic Faculty, Unversitas Islam Sultan Agung	IJIBE is licensed under Creative Commons Attribution-ShareAlike 4.0 International License
	Jalan Kaligawe Raya KM.4, Terboyo Kulon, Genuk,
	Semarang, Central Java, Indonesia, 50112

Username
Password
Remember me