An evaluation of customer-centric strategies in Islamic banking
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Background of the Study
Customer centric strategies are increasingly recognized as essential for achieving sustainable growth in the competitive banking sector. In Islamic banking, these strategies gain added significance because of the emphasis on trust, transparency, and ethical dealings inherent in Shariah principles (Rauf, 2023). By focusing on customer needs and preferences, Islamic banks can enhance satisfaction, foster loyalty, and differentiate themselves from conventional competitors. Recent trends in digital transformation and data analytics have enabled a more refined approach to customer relationship management, allowing institutions to personalize services and tailor products more effectively (Siddiqui, 2024).
Customer centricity in Islamic banking is not only about delivering superior customer service but also about integrating ethical values into every interaction. This approach involves the systematic collection and analysis of customer data, proactive engagement through multiple channels, and continuous feedback loops to refine service offerings (Imran, 2023). Moreover, the cultural and religious context in which these institutions operate necessitates a higher standard of transparency and accountability. By aligning their strategies with customer expectations and ethical imperatives, Islamic banks can build stronger, long lasting relationships that contribute to overall financial performance (Hussein, 2024).
Despite these benefits, implementing a truly customer centric strategy poses challenges. Many Islamic banks struggle to balance customer demands with the stringent regulatory and ethical frameworks they must adhere to. Operational constraints, legacy systems, and a lack of integrated data platforms further complicate efforts to deliver a seamless customer experience (Kareem, 2025). This study aims to evaluate the effectiveness of customer centric strategies in Islamic banking, assessing how these approaches influence customer loyalty, operational efficiency, and overall competitiveness.
Statement of the Problem
Although customer centric strategies are widely acknowledged as key to success in Islamic banking, many institutions face challenges in their practical implementation. One significant problem is the difficulty in reconciling customer demands for personalized services with the limitations imposed by existing technological infrastructures and regulatory requirements (Aziz, 2023). As Islamic banks endeavor to integrate digital solutions into their customer engagement processes, legacy systems and fragmented data repositories often hinder the creation of a unified customer experience.
Additionally, the lack of a standardized framework for measuring customer satisfaction and loyalty further complicates efforts to refine customer centric practices. Without clear metrics, banks find it challenging to gauge the effectiveness of their strategies and to identify areas for improvement (Rashid, 2024). Furthermore, the inherent tension between pursuing aggressive customer acquisition and maintaining the ethical integrity mandated by Shariah law creates operational dilemmas. This conflict may result in strategies that favor short term gains over long term relationship building, ultimately undermining customer trust and retention (Noman, 2025).
The study aims to address these issues by critically evaluating the current customer centric strategies deployed by Islamic banks. It will examine the barriers to effective customer engagement, assess the impact of digital transformation on service delivery, and propose actionable recommendations for enhancing customer satisfaction while ensuring compliance with ethical standards.
Objectives of the Study
• To assess the current customer centric strategies in Islamic banking.
• To identify key challenges and barriers in implementing these strategies.
• To recommend improvements for enhancing customer satisfaction and loyalty.
Research Questions
• What are the predominant customer centric strategies employed by Islamic banks?
• How do technological and regulatory factors affect customer engagement?
• What improvements can be made to optimize customer centric practices?
Research Hypotheses
• H1: Customer centric strategies significantly improve customer loyalty in Islamic banking.
• H2: The integration of digital tools enhances the effectiveness of customer engagement.
• H3: Standardized measurement frameworks positively influence the refinement of customer centric strategies.
Scope and Limitations of the Study
This study focuses on Islamic banks that have implemented customer-centric strategies between 2023 and 2025. Limitations include variations in digital adoption and regional cultural differences.
Definitions of Terms
• Customer-Centric Strategies: Business practices that prioritize the needs and preferences of customers.
• Islamic Banking: Banking activities conducted in accordance with Islamic law.
• Customer Loyalty: The likelihood of customers to continue using a bank’s services over time.
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