Forging loyalty in Indonesia’s Islamic banking: a comprehensive examination of service quality, switching costs and diverse causal factors

Abstract

Purpose This study aims to link service quality and switching costs to customer switching intention by involving corporate image, customer trust and customer loyalty as a liaison. Design/methodology/approach Respondents in this study were customers of Bank Muamalat Indonesia, which is one of the most prominent Islamic banks and is a pioneer of Islamic banking in Indonesia. Data were collected through questionnaires distributed online and offline which resulted in 267 responses and the final sample in this study was 213 customers, then analyzed using Partial Least Square (PLS). Findings The results of this study prove that corporate image and customers trust are able to mediate the effect of service quality and switching costs on customer switching intention, while customer loyalty is not able to mediate these effects. Practical implications This study enhances our understanding of how service quality and switching cost contribute to improving customer loyalty and reduce switching intention in Islamic banks. Managers need to pay attention to the service quality and switching costs of Islamic banks to be able to increase the corporate image and customer trust so as to reduce customer switching intention. Originality/value This paper answers the causes of customer switching behavior in Islamic banks. This study contributes in supporting the investigation of the antecedents of customer switching behavior with several mediating variables in it. This study also contributes to the measurement of service quality at Islamic banks that use compliance, because the quality of service at Islamic banks is different from conventional banks which do not require compliance with sharia principles.