The role of service quality within Indonesian customers satisfaction and loyalty and its impact on Islamic banks

Abstract

Purpose Loyalty among customers is the baseline for services to use to grow and sustain their competitive advantage, particularly in the banking industry. There are two primary objectives of this research. First, this study aims to empirically test the Muslim Consumer Service Quality (MCSQ). Second, this study aims to test the mediating effect of Muslim Consumer Satisfaction (MCS) on the relationship between MCSQ and Muslim Consumer Loyalty (MCL) in Indonesian Islamic banks. Design/methodology/approach The proposed hypotheses were tested by collecting data from 280 Indonesian Islamic customers. The collected data were tested using PLS-Graph 3.0. Findings The findings indicate that MCSQ (consisting of Islamic values, Sharia compliance, honesty, modesty, humaneness and trustworthiness) positively influenced MCS and MCL significantly. Further, the results indicate that MCS partially mediates the influence of MCSQ on MCL. Research limitations/implications The data were mainly gathered in Indonesia and the model needs to be tested in other contexts. Furthermore, the questionnaire was distributed among the customers of Islamic banks, and future studies could compare it with the customers of conventional banks or dual account (Islamic and conventional bank) customers. Moreover, further studies should compare between the expectations and reality of the delivered services to understand the service quality gap, which this study did not measure. Practical implications The findings indicate that by measuring the service quality in the Islamic context of Islamic banks, such as MCSQ, the managers can design their services to specifically target their Muslim customers. Furthermore, customer satisfaction must be the focus for the bank’s managers when developing MCSQ to close the gap between the expectations and reality of the delivered services. Originality/value This study empirically tests the developed MCSQ in the context of Indonesian Islamic banks, which is expected to enrich the literature of service marketing. Furthermore, a partial mediation effect of MCS was identified on the influence of MCSQ on MCL, which few studies have discussed previously.