Federal Urdu University Arts Science and Technology
IMPACT OF CUSTOMER SERVICE MANAGEMENT ON
CUSTOMER SATISFACTION OF ISLAMIC BANKS IN
PAKISTAN
NAME HAMZA HUSSAIN & IKHLAQ AHMED
ROLL NO. 17064010 & 17064016
COURSE ADVANCED MANAGEMENT
INSTRUCTOR MISS SADIA PARVEEN
Federal Urdu University Arts Science and Technology
Contents
Abstract 3
Introduction 3-4
Statement of Problem 4
Research Objectives 4
Review of Literature 4-5
Research Methodology 5
Hypothesis 5
Research Design and Data Collection 6
Discussions and Findings 6-8
Conclusion 8
Recommendations 8-9
Limitations 9
Reference 9
Annexure 9-11
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Federal Urdu University Arts Science and Technology
Impact of Customer Service Management on Customer
Satisfaction of Islamic Banks in Pakistan
1 2
Hamza Hussain , Ikhlaq Ahmed
1 ,2
❑ Student , Federal Urdu University of Arts , Science∧Tec h nology
ABSTRACT:
This research article focuses on examining the effect of customer service management on customer
satisfaction. In Pakistan, the Islamic banking sector has grown significantly, and for Islamic banks to
succeed and expand, it is essential to understand the elements that influence client satisfaction. A
structured questionnaire is used to gather the primary data and filled by 50 randomly chosen customers
of different Islamic banks in Pakistan. The purpose of the study is to investigate how customer
satisfaction levels in the Islamic banking industry relate to customer service management practices. The
results of this study highlighting the importance of customer service management in affecting client
satisfaction in Pakistan's Islamic banking industry. The findings highlight the key elements of customer
service that have a big impact on customer satisfaction, including reliability, trustworthiness, empathy,
assurance. Customers who opt for Islamic banking to conventional banking value adherence to Islamic
principles, interest-free transactions, ethical values, accessibility to Sharia-compliant products, trust in
the Islamic banking system, and recommendations from family or friends. Several suggestions are put up
to improve customer service procedures in Islamic banks in light of the findings these include raising
public awareness and exposure to Islamic banking services, using digital solutions to increase
accessibility and providing Islamic mutual funds with competitive profit rates.
Keywords: customer service management, customer satisfaction, Islamic banking
INTRODUCTION:
In Pakistan, the banking industry, including the Islamic banking sector, is crucial to the economy of the
nation. Islamic banks have risen to prominence in recent years as a result of the expansion of Islamic
finance on a global scale and the sizeable Muslim population in Pakistan. The profitability and survival of
Islamic banks that operate in accordance with Shariah law's tenets depend critically on customer
satisfaction and service management.
Islamic banking in Pakistan abides by Islamic jurisprudential norms, emphasizing moral behavior and risk-
sharing while forbidding interest-based transactions. It is increasingly important to investigate the
elements of customer satisfaction and the function of customer service management in this particular
banking setting as the client base of Islamic banks in Pakistan grows. Islamic banks in Pakistan can
improve their customer service procedures and raise overall customer happiness by having a better
understanding of the elements affecting customer satisfaction in Islamic banking.
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The value of this study rests in its ability to advance our understanding of customer satisfaction and
customer service management in Pakistan's Islamic banking industry. This study intends to fill the gap in
the existing literature and provide useful recommendations to Islamic banks operating in Pakistan by
looking at the specific difficulties, methods, and results related to customer satisfaction.
STATEMENT OF PROBLEM:
The problem statement in this research piece covers the gradual increase in public interest in Islamic
banking and the contribution of customer service to this development. Understanding the elements that
lead to the rapid growth of the Islamic banking industry is essential, especially considering the impact of
customer service. Therefore, taking into account shifting preferences and rising demand for Islamic
banking services, this study intends to investigate the effect of customer service on the development of
the Islamic banking sector.
RESEARCH OBJECTIVES:
This research article's main goal is to look into what influences customer satisfaction in Pakistan's Islamic
banking industry, with a focus on customer service management. The precise research goals consist of:
1) To determine the essential customer service management components that have a big impact
on Pakistani Islamic banks' customers' satisfaction.
2) To evaluate the level of client satisfaction in a few Pakistani Islamic banks and contrast it with
industry standards.
3) To explore the connection between customer satisfaction and the Islamic banking industry in
Pakistan's customer service management practices.
4) To investigate how customers' opinions of service quality and satisfaction at Pakistan's Islamic
banks are influenced by the ideals and principles of Islam.
This study attempts to offer useful insights on customer satisfaction and customer service management
within Pakistan's Islamic banking industry. The results of this study can help Islamic banks improve their
customer service procedures, raise customer satisfaction levels, and support the general expansion and
development of Pakistan's Islamic banking sector.
REVIEW OF LITERATURE:
Faraj Mazyed Faraj Aldaihani and Noor Azman Bin Ali conducted a research on Impact of Social Customer
Relationship Management on Customer Satisfaction through Customer Empowerment. They analyzed
the questionnaire obtained from 577 respondents.. It was claimed that social media and conventional
CRM both have a substantial impact on customer empowerment and satisfaction at the same time.
According to the study's findings, banks should be interested in CRM's social component and customer
empowerment in order to increase customer happiness. The study's contribution is that it highlighted
the significance of social connections management in enhancing customer satisfaction, particularly in
light of the mediating function of customer empowerment in Islamic financial contexts.
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Another model of Customer service quality on customer satisfaction explained by Mohamed Abdulnaser
Janahi and Muneer Mohamed Saeed Al Mubarak that The six key aspects of customer service quality
(Compliance, Assurance, Reliability, Tangibility, Empathy, and Responsiveness) and customer satisfaction
are shown to be strongly and favourably correlated in this paper. It demonstrates that although
customers give Sharia'h regulations (compliance) great consideration in their interactions with banks, the
manner in which services are provided also matters to them.
Through an online survey conducted by Noor Azman Bin Ali, Haslinda Binti Hashim and Norazlyn Kamal
Basha in which they took data from 417 people found that Customer empowerment was found to have a
significant impact on customer retention, and social CRM was found to have a significant impact on both.
It was therefore concluded that customer empowerment, a key pillar of social CRM, positively affects
customer outcomes like customer retention.
The study analyzed by Muhammad Hakimi Mohd Shafiai, Tatik Mariyantiand Primasatria Edastama on
customer satisfaction factors in Islamic banking based on data from Jakarta customers. Four significant
factors influencing customer satisfaction were identified: tangibles, employee response, product
innovation, and communication skills. Communication skills and product innovation were the key
elements. These results support the development of customer satisfaction, customer attraction, and
profit-maximizing strategies by Islamic banks.
A research on Customer satisfaction in the digital era was conducted by Ghazi Zouari & Marwa
Abdelhedi. They collected samples of 145 Tunisian Islamic Bank customers. The study looked at many
aspects of service quality in Islamic banks in the Digital Age and found links between customer
happiness, compliance, digitization, and human capabilities. The results highlight how crucial digital
banking is becoming for Islamic banks to remain current and satisfy client expectations. This study helps
us understand the factors that affect customer satisfaction in Islamic banking in light of digitalization.
RESEARCH METHODOLOGY:
The main purpose of this research is to calculate the impact of customer service management on
satisfaction level of consumers using Islamic banking services in Pakistan. Primary data is collected
through structured questionnaires from customers of various Islamic banks. The study aims to provide
insights to enhance customer service practices and improve customer satisfaction in Islamic banks in
Pakistan.
HYPOTHESIS:
The study aims to provide insights to enhance customer service practices and improve customer
satisfaction in Islamic banks in Pakistan.
Dependent Variable:
Customer Satisfaction.
Independent Variable:
Customer Service Management.
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RESEARCH DESIGN AND DATA COLLECTION:
In order to investigate the effect of customer service management on customer satisfaction in Pakistan's
Islamic banking industry, this study uses a quantitative research design.
A structured questionnaire will be used in a survey method to gather primary data. The questionnaire
will be created to collect pertinent information from consumers of Islamic banks regarding their opinions
of customer satisfaction and customer service. For the purpose of gathering data, respondents will be
chosen at random. 50 respondents are the desired sample size for this investigation.
SAMPLING
Consumers
The audience that is targeted will be made up of Pakistani consumers of several Islamic banks. For the
purpose of gathering data, respondents will be chosen at random. 50 respondents are the desired
sample size for this investigation.
Data Analysis:
Collected data will be analyzed using conventional statistical analytical tools to examine the relationship
between customer service management and customer satisfaction. The stats are shown in % in inform of
tables.
DISCUSSIONS AND FINDINGS:
The overall service quality offered by the Islamic bank appears to be satisfactory based on the comments
that were given. 39.6% of respondents overall said they were satisfied with the services, while another
27.1% said they were extremely satisfied. This suggests that a sizable percentage of the respondents
have a favorable opinion of the bank's level of customer service.
Additionally, 20.8% of respondents stayed neutral, indicating that they did not have strong judgements
on the service, either positive or negative. In order to find areas for improvement or to keep the current
satisfactory service standards, it would be beneficial to investigate the causes of this neutrality in more
detail.
On the other side, at 4.2% and 8.3%, respectively, the percentages of respondents who were unhappy
and very dissatisfied were quite low. Despite the fact that these numbers are minor, it is nevertheless
critical to take into account the feedback and pinpoint the causes of the complaints.
Addressing these issues can ensure that clients have a better banking experience and increase overall
customer satisfaction levels.
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Customer Satisfaction With Service Quality
39.60%
Satisfied
Very Satisfied
27.10%
Very Dissatisfied
Dissatisfied
Neutral
20.80% 8.30%
4.20%
Figure 1 : Customer Satisfaction with Service Quality
According to the feedback, the primary justifications for selecting Islamic banking over traditional
banking are as follows:
Interest-free transactions: A large percentage of respondents (41.7%) cited interest-free transactions as
their top consideration when deciding for Islamic banking. This is consistent with Islamic financial norms,
which forbid the charging or receiving of interest (riba).
Trust in the Islamic banking system: Approximately 43.8% of respondents said that their choice was
significantly influenced by their trust in the Islamic banking system. This implies that they have faith in
the honesty and dependability of Islamic banks to uphold Sharia law.
Availability of Sharia-compliant products: According to about 31.3% of respondents, finding Sharia-
compliant goods was important when making a choice. Islamic banks provide a variety of goods and
services, including Islamic loans, Islamic savings accounts, and Islamic investment opportunities, all of
which are intended to adhere to Islamic standards.
Adherence to Islamic principles: According to 27.1% of respondents, respect for Islamic principles was a
key factor in their decision to use Islamic banking. This shows a dedication to harmonising their financial
decisions with their moral and spiritual principles.
Recommendations from family or friends: About 25% of respondents said that choosing Islamic banking
was influenced by recommendations from family or friends. This emphasises the value of personal
networks and the influence of word-of-mouth recommendations in the decision-making process.
Ethical and moral values: About 22.9% of respondents said that moral and ethical principles had a role in
their decision to use Islamic banking. Islamic banking places a strong emphasis on moral behaviour and
promotes investing in socially conscious initiatives, which may appeal to people looking to match their
financial decisions with their moral principles.
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Figure 2 : Influence of factors for choosing Islamic Bank
These findings highlight the significance of religious beliefs, trust, and ethical considerations in people's
decision-making processes and offer insights into the preferences and motives of those who choose
Islamic banking over conventional banking.
CONCLUSION:
In conclusion, this study on customer service management and customer satisfaction in Pakistan's
Islamic banking industry reveals a number of significant conclusions. Overall, a sizable portion of clients
indicated satisfaction with the level of service their Islamic banks offered. Customers chose Islamic
banking over traditional banking for a variety of reasons, including interest-free transactions, trust in the
Islamic banking system, the availability of Sharia-compliant products, adherence to Islamic principles,
recommendations from family or friends, and ethical values. Customers clearly place a high value on
Islamic principles and values, which suggests that Islamic banks must maintain strict adherence to Sharia
standards and emphasise their ethical approach. Although the majority of customers expressed
satisfaction, it is crucial for ongoing improvement to address the issues of the dissatisfied minority.
Islamic banks in Pakistan can improve customer service methods, raise general satisfaction levels, and
maintain competitiveness in the fast-moving banking sector by making use of these insights.
RECOMMENDATION:
These recommendations are made to improve customer service management and satisfaction in
Pakistan's Islamic banking industry: First and foremost, Islamic banks should broaden their visibility and
raise public knowledge through deliberate marketing efforts and outreach programmes. Second, it is
important to give digitalization initiatives top priority so that banking services are easily accessible. Third,
product selection needs to be improved, with attractive profit rates for Islamic mutual funds included.
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Fourth, it is critical to promote consumer interaction through individualised communication and
feedback methods. Additionally, investing in employee training and working with Islamic scholars can
improve the credibility and quality of services. These suggestions can help Islamic banks provide better
customer service, raise customer satisfaction, and draw in more clients.
LIMITATIONS:
The 50 responses that were randomly chosen for this study's sample size limit its generalizability to
Pakistan's wider population of Islamic banking customers and raise the possibility of sampling bias.
Although the results offer insightful information, they should be viewed in light of these constraints.
Future research with larger and more varied samples can improve knowledge of the Islamic banking
industry even more.
REFERENCES:
Aldaihani, Faraj & Ali, Noor. (2018). Impact of Social Customer Relationship Management on Customer
Satisfaction through Customer Empowerment: A Study of Islamic Banks in Kuwait. International Research
Journal of Finance and Economics. 41-53.
Janahi, M.A. and Al Mubarak, M.M.S. (2017), "The impact of customer service quality on customer
satisfaction in Islamic banking", Journal of Islamic Marketing, Vol. 8 No. 4, pp. 595-604.
Faraj Mazyed Faraj Aldaihani, Noor Azman Bin Ali, Haslinda Binti Hashim and Norazlyn Kamal Basha
(2020) Impact of Social Customer Relationship Management on Customer Retention of Islamic Banks in
Kuwait: The Mediating Role of Customer Empowerment. Int. J Sup. Chain. Mgt, Vol. 9, No. 1
Mariyanti, T., Edastama, P., & Shafiai, M. H. M. (2021). Factors Affecting Islamic Bank Customer
Satisfaction. APTISI Transactions on Management (ATM), 5(2), 152–160.
Zouari, G., Abdelhedi, M. Customer satisfaction in the digital era: evidence from Islamic banking. J Innov
Entrep 10, 9 (2021)
ANNEXURE:
QUESTIONNAIRE : IMPACT OF CUSTOMER SERVICE MANAGEMENT ON CUSTOMER SATISFACTION IN
ISLAMIC BANKING SECTOR
The purpose of this questionnaire is to gather your opinions and perceptions regarding customer service management and
customer satisfaction in Islamic banks in Pakistan. Your responses will remain anonymous and confidential. Please read
each question carefully and choose the most appropriate response.
Section
1: Demographic Information
Gender:
Male
Female
Prefer not to say
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Age:
Under 18 years
18-25 years
26-35 years
36-45 years
46 years or above
Occupation:
Employed (Specify: ________)
Self-employed
Student
Retired
Unemployed
Other (Specify: ________)
Section 2: Customer Service Management
How would you rate the responsiveness of the staff in addressing your inquiries or concerns?
Very poor
Poor
Average
Good
Excellent
To what extent do you find the staff of Islamic banks reliable and trustworthy?
Not at all reliable
Slightly reliable
Moderately reliable
Very reliable
Extremely reliable
How would you rate the level of empathy shown by the staff in understanding and addressing your specific needs?
Very low
Low
Neutral
High
Very high
Please rate the tangibles or physical facilities provided by Islamic banks (e.g., branch appearance, waiting area, technology
infrastructure):
Very poor
Poor
Average
Good
Excellent
What were the main reasons for choosing Islamic banking over conventional banking? (Please select all that apply)
Adherence to Islamic principles
Interest-free transactions
Ethical and moral values
Availability of Sharia-compliant products
Trust in Islamic banking system
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Recommendations from family or friends
Other (Please specify: ________________)
Section 3: Customer Satisfaction
How satisfied are you with the overall service quality provided by your Islamic bank?
Very dissatisfied
Dissatisfied
Neutral
Satisfied
Very satisfied
How would you rate your level of trust in your Islamic bank?
No trust at all
Low trust
Moderate trust
High trust
Complete trust
How would you rate the level of Islamic values and principles followed by your Islamic bank?
Not at all aligned with Islamic values
Slightly aligned
Moderately aligned
Highly aligned
Completely aligned
Please rate your overall satisfaction with the Islamic banking services you have experienced:
Very dissatisfied
Dissatisfied
Neutral
Satisfied
Very satisfied
Would you recommend your Islamic bank to others?
Definitely not
Probably not
Neutral
Probably yes
Definitely yes
How likely are you to continue using the services of your Islamic bank in the future?
Very unlikely
Unlikely
Neutral
Likely
Very likely
In your opinion, what specific features or services of the Islamic bank you use make it a better option for you compared to other
Islamic banks in Pakistan? (Please select all that apply)
Wide range of Sharia-compliant products
Competitive profit rates
Efficient customer service
Innovative digital banking solutions
Branch accessibility and convenience
Reputation and trustworthiness
Section 4: Customer Feedback
In your own words, please describe one positive experience you have had with the customer service of your Islamic bank.
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In your own words, please suggest one area of improvement for the customer service of Islamic banks in Pakistan.
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