According to Ipsos’ latest research on the sector, the percentage of those who deal with Islamic banks has increased over the past few years, which has led to a growth in the number of customers dealing with these banks during that period, in addition to a solid growth in market share of Islamic banking products in general. Interestingly, this surge is mainly attributed to male customers, who regard such banks as being more in tune with their lifestyles, beliefs and needs than their female counterparts. The trend, however, shows no such prejudice when considering the age of customers, where the uptake of accounts with Islamic banks has been similar across all age groups. Yet those who deal with Islamic banks seem more likely to come from the lower income groups of the banking population.
Looking at their attitudes and behavior towards banking, customers of Islamic banks are less likely to adopt the relatively more progressive banking services such as phone, internet and SMS banking, especially when compared to customers of non-Islamic banks. While usage of these services is lower than anticipated, even on the overall market level, the relatively lower income characteristics related to customers of Islamic banks may explain the variance in usage.
On the service front, satisfaction levels with Islamic banks also fall below Ipsos’ Satisfaction Index for Jordan’s service sector. The satisfaction scores are also lower when compared to those of their counterpart customers of non-Islamic banks, and, interestingly, their own satisfaction levels in previous years. Yet this has not stopped customers from dealing with them, most likely because of their “Sharia” compliant orientation. However, while being Islamic may provide some cushioning against churn in the short term, the future is set to paint quite a different picture for Islamic bank customers and Jordanian banks in general. While they may still be perceived to be more traditional, customers of such banks now place less emphasis on their banks being solely “Sharia compliant” than they did previously. Now, factors such as “customer service” are clearly becoming more important, which indicates the inevitable emergence of a new set of priorities for Islamic bank customers. This priority shift may, in part, be driven by the influx of new Islamic banking institutions into the Jordanian market, in addition to the increased competitiveness of the banking sector in general, as evidenced in recent years. Regardless of its origins, what this implies is that we may start witnessing a wear-out of the “cushioning effect” of the “Islamic” factor.
Furthermore, the importance of other factors is expected to be heightened once the Islamic banking trend further establishes itself amongst the affluent groups of customers, something that is likely to happen given the current market’s direction. In that case, an unprecedented growth of Islamic banks may result in their ability to attract even the unlikeliest of customers, possibly becoming a mainstream form of banking in Jordan, thus deeming any predispositions that may, perhaps, be currently held towards the banks in this category, irrelevant.
The banking sector in Jordan is constantly being challenged, even with all the fragmentation and market domination that exists. For Islamic banks, what this means is ultimately a re-adjustment of marketing objectives. Now, more than ever, it becomes more important for Islamic banks in Jordan to connect with their customers. For what remains to be clear is that these customers now come with a new set of expectations that are set to change the paradigms governing the Islamic banking market and banking in Jordan as we know it.
Ipsos is a global survey-based research company and is present in 84+ countries. Ipsos, which currently ranks as the 2nd largest survey-based research company worldwide, has been operating in Jordan since 1998.