The failure mode and effect analysis of Islamic banking product marketing in Indonesia

Abstract

Purpose

This study aims to use a risk management approach to analyze the factors influencing the marketing failure of Islamic banking products in Indonesia.

Design/methodology/approach

Data were collected from respondents to be involved in the risk assessment of failure based on the criteria of severity score, likelihood of occurrence and detection ability of employees. The dominant factors were grouped into the number of new customers and transaction value categories. The failure mode and effect analysis (FMEA) method was used to identify the highest risk dominant factors.

Findings

The study results show critical factors and prioritized for immediate improvement. The number of new customers can be identified based on the following factors: occupation of prospective customers; income level of prospective customers; the lifestyle of the prospective customer. Transaction value can be identified based on the following factors: total balance; the level of convenience in transactions; turnover of funds; profitability; and risk management.

Practical implications

The Islamic banking industry in Indonesia needs to consider the importance of suitability: target market with the products offered, considering the income level of customers with suitable products, the level of profit sharing expected by consumers, improving customer education about Islamic banking products, the capabilities of financing staff and staff capabilities on risk management in Islamic banking products and services.

Originality/value

To the best of the author’s knowledge, this research is the first to apply FMEA in analysing marketing failures of Islamic banking products and services.

Citation

Darmawan, D. (2024), "The failure mode and effect analysis of Islamic banking product marketing in Indonesia", Journal of Islamic Marketing, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JIMA-08-2023-0268