Customer Perception and Awareness of Islamic Banking Products

Abstract

Through mixed methods research the study evaluates customer understanding of Islamic banking products by combining quantitative surveys of 600 customers with qualitative interviews of 20 participants. The study operationalizes Shariah Compliance Understanding together with Service Quality (Islamic SERVQUAL) and Perceived Risk and Product Innovation as latent constructs. The measurement reliability of the study was confirmed by Confirmatory Factor Analysis (CFA) through CFI = 0.968 and RMSEA = 0.045, followed by Structure Equation Modeling (SEM) which tested the proposed paths with χ²/df = 1.98 and SRMR = 0.038. The study reveals that Shariah Awareness (β=0.34, p<0.001) and Service Quality (β=0.29, p<0.001) and Product Innovation (β=0.27, p<0.001) have positive relationships with Adoption Intention and Perceived Risk (β=–0.22, p<0.01) demonstrates a significant negative influence. The research suggests two recommendations which involve integration of Automated Profit Equalization Mechanisms within products alongside education programs on Shariah compliance.