Customers` preferences for Islamic financial institutions in Northeast Nigeria

Abstract

In 2010, the Central Bank of Nigeria (CBN) introduced a new banking model which among other types of banks permitted the establishment of Non-Interest banks on the basis of the Shari´ah. Following this development, one full-fledge bank (the Jaiz bank plc) and two Islamic bank windows were licensed which now compete to attract and retain customers. However studies on customers’ preferences for Islamic banks in Nigeria that can help the Islamic banks in their marketing strategies are scarce and the few ones conducted were limited in their coverage as none of these studies captured the preferences of the customers of the full-fledge Islamic and the Islamic bank windows. The current study surveyed both the customers of the two types of Islamic banks in Nigeria with the objectives of determining the customers’ most influential Islamic bank selection criteria, their preference for bank type, and satisfaction of the products and services of the Islamic banks in Northeast Nigeria. The study employed survey research method and both descriptive and inferential statistics were used to analyse responses of 74 respondents using the Statistical Package for Social Sciences. Results revealed that bank Islamic law compliance, recommendation from friends and relatives and bank reputation were the most significant selection criteria of the customers, hypothesis test indicated that Islamic bank type has influence on customers preference and 78% of the customers showed that they are satisfied with the products and services of the Islamic banks in the Northeast Nigeria. These findings are envisaged to be of importance for the management of the Islamic banks in Nigeria in designing their marketing strategies besides enriching the literature.