Students’ Preferences in Banking Selection – Islamic Perspective Luna S. AlYafi AlZuhri King Saud University College of Business Administration Marketing Department

Introduction The idea of Islamic banking system Definition of Islamic Banking Saudi Arabia Culture Banks of Kingdom of Saudi Arabia (KSA)

Problem Statement The aim of this research is to identify factors that student customers may consider when selecting a bank, and the relative importance they place on these factors.

Importance of the Study Size of the global Islamic banking industry Islamic banking in the Middle East The Islamic banking growth story continues to be positive, growing 50% faster than the overall banking sector “More than 75 countries and 430 Islamic institutes provide Islamic products” Selection criteria of Islamic banking among college students.

Literature Review Why Islamic banking. “Islamic banking is a form of modern banking based on Islamic legal concepts” Aim of Islamic Banking Based on According to Rational Choice Theory Schiffman & Kanuk (2009), identified four models of how and why the individual behave in a specific way The economic view The passive view The cognitive view The emotional view

Literature Review (Cont.) Factors customers may consider in selecting bank and their relative importance in different parts of the world Countries Factors North AmericaEuropeMiddle East & Far East More important factors Convenient location Reputation Quick and efficient Service quality Efficiency of service delivery Perceived confidentiality Number of ATM Convenient location of ATM Efficient service Speed of transactions Moderately important factor Length of bank Customer relation Service quality Service charge Promotional activities Reputation Friendliness of personnel Confidentiality Bank’s reputation and image Less important factors Interest offered on deposits Favorable experience Promotional activities Recommendation of friends Availability of parking spaces Lower service charge Convenient location Recommendation of friends / relatives Opportunity of online banking Source: Jahiruddin & Haque (2009)

Theoretical Framework Criteria in banking selection Criteria Literature Religious factors Cost / benefit (e.g. return on deposits, investments, etc.) Service delivery (provision of fast & efficient service ) Size & Reputation Staff factors (competenc e & courtesy of bank staff) Convenience (location, ample parking space, interior comfort) Confident iality Friends’ & relatives’ Influence Mass media advertising Erol and El-Bdour (1969) Erol et al. (1990) Haron et al. (1994) Kader (1993) +-++n/a+ ++ Kader (1995) +-++n/a+ ++ Gerrard & Cunningham (1997) ± Metawa & Almossawi (1998) ++n/a + + Naser et al (1999) n/a Othman & Owen (2001) -n/a - Othman & Owen (2002) ++++n/a++ + Ahmad and Haron (2002) n/a Omer (1992) ++n/a + Abbas et al. (2003) ±++n/a++++ Note: + indicates a positive and important result, ± indicates an equivocal result, - indicates negative or no significant result and n/a indicates variable was not investigated / examined in the study Source: Marimuthu, Wai Jing, Phei Gie, Pey Mun, & Yew Ping, (2010)

Theoretical Framework (Cont.) Theory of Buyer Behavior Consumer and risk reduction Evaluation of brands Personality Factors:  Market Maven  Other Factors Personality Factors:  Market Maven  Other Factors Criteria of Islamic Bank Selection Social Factors:  Family  Social groups  Reference groups  Word of mouth  Religiosity Social Factors:  Family  Social groups  Reference groups  Word of mouth  Religiosity

Theoretical Framework (Cont.) Social Factors Influences of society, family and reference group. Family, Social groups, Reference groups, Word of mouth Religiosity Personality Factors Market Mavens: "Consumers who collect information about the market, concerning products, places to shop, etc.., and in turn influence others” Other personal factors influences are the consumer internal preferences whether to engage; or not; in the relationship with the banks

Research Questions Is there a relationship between customers’ personality and Islamic bank selection? Do social factors influence the relationship between personality and Islamic bank selection?

Research Methodology Definition and Operationalization of Variables Personality Factors Social Factors Data Collection Method Sampling Data Collection Instrument Statistical Analysis Techniques

Research Methodology (Cont.) Data Collection Method Survey, for both gender Sampling KSU, CBA students Data Collection Instrument Survey is divided into two parts Five-points Likert scales is used Statistical Analysis Techniques Statistical Package for the Social Sciences version 19.0 (SPSS 19) Pilot study (n=66): Internal consistency was tested using the Cronbach’s alpha coefficient Cronbach's alpha was measured for all items Cronbach’s alpha = 0.93.

Limitations of the Study Surveying KSU, CBA students Students may change their answers, influenced by other students “Life is not what it's supposed to be. It's what it is”