Measuring service quality of conventional and Islamic banks: a comparative analysis

Abstract

Purpose

Based upon an extended SERVQUAL model, this paper attempts to measure and compare the service quality between conventional and Islamic banks in Malaysia.

Design/methodology/approach

A new dimension, i.e. convenience was added to the existing SERVQUAL model of five dimensions. Data were collected from 287 bank customers residing in two major cities in Malaysia using self‐reporting questionnaires. Factor analysis is used to validate the instrument, after which the gap and dominance analyses techniques are employed.

Findings

The factor analysis extracted four dimensions of service quality, i.e. tangibility, reliability, competence, and convenience. The results reveal that there are large and significant differences between respondents' expectations and their perceptions. Specifically, the expectations on competence and convenience are significantly different between the conventional and Islamic banks, whereas the perceptions on tangibility and convenience are found to be significantly different between the two types of banks. The application of dominance analysis to predict the SERVQUAL gap indicates that the difference between the two types of banks lie in terms of degree but not pattern. Competence and convenience are found to be the relatively more dominant dimensions in both types of banks. These two dimensions, taken together, can help to reduce the overall service quality gap to an extent of 72 percent in the case of conventional banks and 85 percent in the case of Islamic banks.

Research limitations/implications

Although the outcomes lend support to the extended SERVQUAL model, the results are derived based on a relatively small sample size with an uneven distribution between the two types of banks. This limits the generalizability of the study results which calls for future research attention.

Practical implications

The Malaysian banking sector needs to take initiative to become more competent by being more responsive through fulfilling their assurance for customers and by providing banking facilities more conveniently.

Originality/value

This study is one of the first to examine and compare the service quality between conventional and Islamic banks using an extended SERVQUAL model. The results could be particularly useful to countries adopting dual banking systems.

Citation

Amat Taap, M., Choy Chong, S., Kumar, M. and Kee Fong, T. (2011), "Measuring service quality of conventional and Islamic banks: a comparative analysis", International Journal of Quality & Reliability Management, Vol. 28 No. 8, pp. 822-840. https://doi.org/10.1108/02656711111162505