Abstract
Grounded in marketing theory, the current study aims to investigate the role of corporate image and service standardization on the intention to recommend to others, as well as the role of customer satisfaction as a mediator. Following a quantitative research design, the cross-sectional field survey was conducted on a sample of 200 customers of Islamic banks in Indonesia. The data were analyzed through SmartPLS and SPSS to test the proposed hypotheses, and the results revealed a positive significant impact of Sharia banking image and Sharia service standardization on people’s intention to recommend the service to others. Similarly, customer satisfaction also revealed a positive impact on the intention to make recommendations. Additionally, the mediation of customer satisfaction rendered significant support from study results as proposed in the theoretical model. The study is incremental in Islamic banking literature for integrating and testing a unique theoretical framework in an Indonesian context. Several theoretical and policy implications as well as future research directions are suggested.
Keywords: Sharia banking image, Sharia service standardization, Customer satisfaction, Intention to recommend to others, Islamic banking, Indonesia.
Received: 6 May 2022 / Revised: 22 June 2022 / Accepted: 8 July 2022/ Published: 4 August 2022
Contribution/ Originality
This study contributes to the body of knowledge regarding Sharia banks’ corporate image and standardization and their significant influence on generating word of mouth for Islamic banking services. Mediation of customer satisfaction was another major addition to the literature as no previous studies have addressed this research gap.
1. INTRODUCTION
The advent of the digital era has resulted in improved education and simple access to banking services, and now consumers have more authority than before. As a result, people expect more from the goods and services they need. Such expectations are equally applicable to Islamic banking as well as traditional banking services for a better banking image. As the Islamic banking system is growing at a rapid pace all over the world, standardization and banking image are becoming buzz words for this industry (Hoque, Rahman, Said, Begum, & Hossain, 2022). Sharia banking image refers to a banking system that implements an interest-free system in its operations, and therefore, the most common definition of a Sharia bank is one that operates in accordance with the principles of Islamic law by referring to the Qur’an and Hadith as a legal and operational basis (Hoque et al., 2022; Widyastuti, Kartini, Oesman, & Yunizar, 2019). Corporate image itself is an essential variable in customer satisfaction. An image is formed from the results of an overall evaluation of the company and its offerings, or even an image assessment projected by a particular product category (Panjaitan, 2019). Because of the importance of the corporate image factor, it is often suggested that corporate image needs to be included in the theoretical framework of a customer’s decision-making process (Julina & Fakhrurrozi, 2020). Thus, responding to this research gap, the current study focused on Sharia banking image as an antecedent for customer satisfaction and their intention to recommend it to others.
In addition to banking image, service standardization is also a factor that needs to be addressed by the Islamic banking industry. As a company with many branches, banks are required to standardize their products to reflect their uniqueness and provide specialist services (Marlizar, Lubis, Utami, & Chan, 2021). The application of this standardization is intended to serve customers and better satisfy their financial needs. Standardization itself is the process of setting uniformity across the goods and services offered by a company. Norms are used to make adjustments, regulate, anticipate, and prevent errors, as well as reduce employee variance (Hadid, Soon, & Amreeghah, 2020).
In addition, customer satisfaction could also influence customers to provide recommendations to others (Panjaitan, 2019). This benefits the company because, in this case, the promotion is based on the first-hand experiences of the consumers themselves. Customer satisfaction is defined as a customer's overall satisfaction or dissatisfaction over time (Hoque et al., 2022). According to Widyastuti et al. (2019), satisfaction is an overall customer experience. Several aspects can influence customer satisfaction, including brands, products, shops, and people's or institutions' services. In addition, there is still an imbalance between supply and demand related to human resources. The faster growth of Islamic banks has not been accompanied by the growth of human resources with sufficient Sharia competencies, as explained by Suhartanto, Gan, Sarah, & Setiawan (2019). This basis is the background of this research, using service standardization variables in terms of the study of human resource management. As stated by Wright (2020), employees who are treated well by a company tend to serve their customers better, leading to customer satisfaction. Previous studies have shown that customer dissatisfaction is primarily due to the poor quality of bank services as well as poor service from employees who deal directly with customers, which ultimately leads to the loss of their loyalty (Adirestuty, 2019; Haq, Ramay, Rehman, & Jam, 2010; Jam, Donia, Raja, & Ling, 2017; Kaakeh, Hassan, & Almazor, 2019; Suhartanto et al., 2019). This provides ample justification for customer satisfaction to be investigated for its mediated linkages between Sharia banking image, Sharia service standardization, and the intention of customers to recommend them to others. This is a new addition to existing literature on Sharia banking because such mediation has not been tested before in any theoretical framework.
The current study was established and grounded in marketing theory, which refers to the identification of the main drivers that impact important outcomes for businesses/banks, and a sound understanding of the causal relationships between these drivers and outcomes (Dandis et al., 2021; Junaidi, 2022). This study aims to determine and analyze the effect of Islamic banks’ image and Sharia service standardization constructs on customer satisfaction, which leads to word of mouth and the intention to recommend others to use Sharia banking services. According to marketing theory, if customers have a positive perceived image and service satisfaction due to standardization, they will be satisfied customers, and a satisfied customer is more likely to make positive recommendations to others. Thus, conceptualizing the theoretical basis for the current research framework is hypothesized and tested in a unique Indonesian context.
Indonesia is a country that uses a dual banking system as a framework for its banking architecture. Moreover, as long as the system is implemented, Islamic banking has proven to go hand in hand with conventional banks in financing multiple national economic sectors (Anonim, 2019). The development of Islamic banking in Indonesia can be seen in the increase of its total financing from year to year, starting in 2016 with a total of 178,043 billion rupiahs, then increasing in 2017 by 190,354 billion and in 2018 by 202,766 billion (Aslam, Ashraf, & Iqbal, 2022). Besides those developments, one of the essential aspects of an organization is the success of its marketing activities, especially in building the company’s image. Islamic banks need to re-establish their Sharia banking image as companies that implement purely Islamic banking processes. Along with the importance of corporate image, it was conceptualized that corporate image is the general perception of a company reflected in consumers’ experiences (Adirestuty, 2019). According to Kaakeh et al. (2019), image is the overall perception of a product or a company that is developed based on information obtained and processed. The Indonesian context is another major contribution made by this research to provide empirical evidence from a diverse culture in a Muslim majority country where Islamic and Sharia banking is rapidly growing. The study aims to investigate the effect of Sharia banking image on customer satisfaction by:
- Investigating the effect of Sharia banks’ service standardization on customer satisfaction.
- Investigating the effect of customer satisfaction on their intention to recommend Sharia banking to others.
- Investigating the effect of customer satisfaction as a mediating variable between Sharia banking image and Sharia banking service standardization and the intention to recommend it to others.
2. LITERATURE REVIEW
The current study was established on marketing theory and focuses on Sharia banking and Sharia service standardization on the intention of customers to recommend it to others and the mediating role of customer satisfaction. Marketing theory refers to definitions, classifications, data, and concepts that are lacking, non-comparable, or unreal from a marketing perspective. Moreover, as one attempts to integrate marketing terms, concepts, and practices into firms, institutions, and professions with their own traditions, customs, and practices that are foreign to conventional marketing (and much older), the linkage appears awkward and even improper (Dandis et al., 2021). Customer satisfaction is the key point in marketing (Wright, 2020). It is based on the essential dimensions of service quality as well as customer satisfaction and the marketing circumstances of the intention to recommend a service to others. Only a portion of a service company's integrated marketing role can be linked to marketing (Kaakeh et al., 2019). The relevant establishment and observational aims of the study questions are critical in combining several variables into a coherent framework connected to Sharia banking image and Sharia service standardization on the intention to recommend to others as well as the mediating role of customer satisfaction based on marketing theory. Sharia banking is rooted in marketing theory; customers who are satisfied with Sharia banking and Sharia service standardization are more likely to recommend others to use the financial services of Sharia banks.
2.1. Sharia Banking Image and Customer Satisfaction
Customer satisfaction exists because consumers receive a product or service that surpasses expectations. The image of a Sharia banking company, as well as the image of the Sharia bank itself, could be one of the determinants of whether a customer is satisfied or not. In general, an excellent corporate image will lead to higher customer satisfaction (Julina & Fakhrurrozi, 2020).
Sharia describes “the path that should be followed by Muslims” or “the totality of Allah’s commands, which regulate every aspect of life for all Muslims” (Panjaitan, 2019). When banks meet crucial conditions, such as following Sharia regulations and guidelines, customers interacting with Islamic banks are happy. Customers' understanding of the value of a variety of available Islamic items and how they differ from regular ones can influence their degree of happiness (Suhartanto et al., 2019). Customers engage with Islamic banks for a variety of reasons, including their religious belief in the “Holy Qur'an and the Sunnah”, as well as their feelings of social duty, all of which influence their choice of bank and their satisfaction (Julina & Fakhrurrozi, 2020; Panjaitan, 2019). In previous studies, Sharia banking was found to have a positive impact on customer satisfaction (Dandis et al., 2021; Jam. et al., 2014; Junita, Tahura, & Reza, 2022; Muliadi & Feriyanto, 2018; Panjaitan, 2019; Qazi et al., 2014; Razalli & Hasnan, 2017; Widyastuti et al., 2019).
Image is a function of salient company attributes that are compared to one another (Marlizar et al., 2021). According to this research, the image variable has a positive effect on customer satisfaction (Panjaitan, 2019; Suhartanto et al., 2019). An image is defined as “the net result of all the experiences, impressions, beliefs, feelings, and knowledge that people have about a company” (Wright, 2020). An image is a mental state that is influenced by a variety of product qualities. When consumers of Islamic banks hear the name of an institution, the image refers to the variety of connotations that spring to mind (Dandis et al., 2021). Sharia banking is concerned with concrete dimensions that can be easily quantified, whereas the customer dimension is concerned with personality phenomena expressed through individual perceptions and practices toward the institution (Sulashvili, Sulashvili, & Taruashvili, 2020; Widyastuti et al., 2019). Most academics agree that image is the consequence of a process; hence, corporate image is the result of an aggregate process in which clients make a comparison based on distinct firm qualities. Previous research found that brand image significantly affects customers’ satisfaction (Amin, Isa, & Fontaine, 2013; Hoque et al., 2022; Widyastuti et al., 2019). Hence, following the above theoretical and literary support, the following hypothesis is suggested:
H1: Sharia banking's image is positively related to customer satisfaction of Sharia banks.
2.2. Sharia Banking Service Standardization and Customers’ Satisfaction
Services are provided according to the standards set by an organization or industry. Standardization is applied to specific goods or services to assist management in controlling, predicting and minimizing errors, and reducing deviation among employees for standard service delivery to all customers (Al Thuwaini et al., 2022; Kasiri, Cheng, Sambasivan, & Sidin, 2017). Marketers always emphasize the implementation of service standards in organizations. The objective is to help marketers meet customers' specific needs precisely. When their needs are met, consumers will feel satisfied. Standardization could be used to increase customer satisfaction, or in other words, service standardization affects customer satisfaction (Fauzi, Saputra, & Ningrum, 2022). Standardization has been used to improve the accuracy, consistency, and authenticity of economic assessments, as well as to cut costs and boost production capacity.
The goal of Sharia banking standardization is to meet the demands and preferences of the general public (Julina & Fakhrurrozi, 2020). When crucial conditions are met, such as the banks following Sharia's regulations and guidelines, customers interacting with Islamic banks are happy. Conventional services design strategic alternatives and consider Sharia banking standardization to be appropriate for focusing on a large number of clients with little or no touch, and consumers are challenged to choose one offering. Many scholars think that it is not possible to standardize Sharia banking in order to improve service quality (Kasiri et al., 2017; Syah & Olivia, 2022; Waheed, Khan, & Ain, 2013).
Customer satisfaction depends on the customers’ objectives and meeting their needs. Assessment of customer experience and product performance and its characteristics are related to the use of a service or product (Julina & Fakhrurrozi, 2020). Customers and organizations, especially banks, are concerned about customer satisfaction. The degree of users' thoughts and attitudes about numerous factors that influence their use of products and services on offer is referred to as customer satisfaction (Panjaitan, 2019). Customer satisfaction is a complex concept that can be measured in several ways, but its definition has evolved from a range of viewpoints. Many researchers have looked into customer satisfaction with banking services, but very few have given evidence on the major elements that contribute to customer satisfaction. According to Hadid et al. (2020), customer satisfaction is not always guaranteed to be driven by management tactics, and a behavioral focus should be used to properly convince consumers to increase customer satisfaction in the case of standardized Sharia banking. Hence, the following hypothesis is suggested:
H2: Standardization of Sharia banking services is positively related to customer satisfaction.
2.3. Customer Satisfaction and Intention to Recommend to Others
A company or organization needs to keep its customers happy to stop them from switching to another brand or company. Customer satisfaction is an important variable to attract more customers and provide product recommendations or services to others (Liang, Choi, & Joppe, 2018). In addition, a company must also create more purchase intention among customers. Customers’ intention to make repeat purchases and recommend a product or service through positive word of mouth is the key to survival in a highly competitive market (Marlizar et al., 2021).
Previous studies that show the influence of customer satisfaction on making recommendations were conducted by Kaakeh et al. (2019); Liang et al. (2018). Satisfied customers share their experiences with others, and this increases interest in making repeat purchases and, at the same time, reduces customers’ interest in switching to other brands (Jan & Muhammad, 2020; Kasiri et al., 2017; Ziauddin, Khan, Jam, & Hijazi, 2010). Consumer satisfaction is based on an ideal standard in which expectations represent what customers believe organizations or services “should” offer. Satisfaction is reflected in expectations of what “would” happen during future transactions or “something that would happen”. Scholars should interpret the phrase “expectations” differently in satisfaction studies (Julina & Fakhrurrozi, 2020). Increased customer satisfaction has a positive effect, mainly in providing the intention of purchase recommendations to others (Han & Hyun, 2017; Su & Swanson, 2020; Su, Swanson, Chinchanachokchai, Hsu, & Chen, 2016; Zhu et al., 2016). Recommendations made by consumers to others is an efficient marketing activity that doesn’t cost a company anything. With reduced promotional costs, companies may be able to reduce expenses, which could ultimately decrease their selling prices, making them more competitive. Thus, the following hypothesis is suggested:
H3: Customer satisfaction is positively related to the intention to recommend a product or service to others.
2.4. Customer Satisfaction as a Mediator
Customers who have an image of a particular product will try to experience the product or service first hand (Dandis et al., 2021). When customers experience the products or services of a particular company, they use this experience as the basis for assessing the company. When the result is a positive assessment, it will affect a better company image (Adirestuty, 2019; Yusfiarto, Nugraha, Pambekti, & Khoirunnisa, 2022), and this positive image encourages customers to make recommendations to others. In the Sharia banking business, the overall importance of service aspects is the most essential factor in achieving customer satisfaction (Kaakeh et al., 2019). When customers have a positive corporate image of Sharia banks, they are more likely to recommend to others because of their higher levels of satisfaction and happiness with the corporate image of the institution. Thus, it is logical that current research proposes that customer satisfaction is the mediating mechanism through which the Sharia banking image is linked with the intention to recommend to others.
Similarly, according to Kasiri et al. (2017), standardizing Sharia banking has a favorable association with the intention to recommend. Suhartanto et al. (2019) concluded that customer satisfaction and Sharia banking have a significant positive link with one another. As a result, customer satisfaction is an essential precondition for establishing long-term customer connections, and it is also likely to boost recommendations (Amin et al., 2013; Kaakeh et al., 2019; Wright, 2020). However, previous studies have not explained the process linkages through which standardization is related to the intention to make recommendations. Few studies point towards the research gap that satisfaction among Sharia banking customers may be related to the standardization of Sharia banking services (Kaakeh et al., 2019; Lynch & LeFort, 2016; Panjaitan, 2019). The current research picked up this idea and proposes that service standardization in Sharia banks is expected to result in increased customer satisfaction, which will ultimately boost their intention to recommend the service to others.
Marketing theory also explains the process that the image of a brand or company along with standardized services and products results in increased customer happiness, which ultimately increases the chances of positive word of mouth by existing customers. Hence, following hypotheses are suggested:
H4a: Customer satisfaction mediates the relationship between Sharia banking image and the intention to recommend to others.
H4b: Customer satisfaction mediates the relationship between Sharia banking service standardization and the intention to recommend to others.
2.5. Framework Development
The study framework was developed based on an extensive literature review and solid theoretical grounding as well as logical and pragmatic relationships between the study variables, such as Sharia banking image, service standardization and customer satisfaction.
3. METHODOLOGY
Based on a thorough assessment of the literature and marketing theory, the study's theoretical framework was established, and the hypotheses were proposed.
3.1. Sampling Method
This study uses the purposive sampling method to select customers who use Islamic banking services. Purposive sampling is a judgmental, selective, or subjective form of non-probability sampling through which researchers rely on their judgment when choosing members of the population to participate in their surveys (Cepeda-Carrion, Cegarra-Navarro, & Cillo, 2019). This type of research is categorized as causal-comparative and investigates causal relationships based on observations from the effects that have occurred. It also looks for causal factors through the data (Ghasemy, Teeroovengadum, Becker, & Ringle, 2020). This research is also classified as quantitative as it uses the survey method (Purwanto & Sudargini, 2021).
3.2. Participants and Data Collection Procedure
This research targets Sharia banking customers in Purwokerto, a city located in the South Central Java province of Indonesia, and its surrounding areas. To get formal permission from Sharia banks operating in the area, a letter explaining the study's aims was sent to the Sharia banking administrators and managers requesting their permission to participate in this study on a voluntary basis and to share contact information of their existing customers. The bank and its employees were assured that their identities would be kept confidential. They were also informed that only the average responses would be used for the study, and that neither the customer nor the participating bank would be able to be identified from the published data. It is guaranteed that no personally identifiable information will be used, publicized, or passed on to a third party. Three Sharia banking organizations gave their customer information for a total of 700 people. These people were contacted by email and sent a survey along with a message explaining the goals of the study and asking if they would be willing to participate voluntarily. The researchers got consent from 550 customers to participate in this study. A second email was sent to these 550 customers to ask about their level of understanding and their ability to respond to questions in English. Based on the replies, 50 more customers were excluded for their self-reported inefficiency in responding to the survey in English. The remaining 500 customers were sent a survey by email, and follow-up emails were also sent at two-week intervals. The data-gathering process began on March 1, 2022, and by May 5, 2022, 260 surveys had been received. Upon evaluation of the completed forms by the authors, it was observed that some of the forms were partially filled in or reported in an unengaged manner, so those responses were excluded from the final data set, which left a total of 200 completed surveys that could be used for analysis. Therefore, this study yielded an active response rate of 40%. Furthermore, this research is designed to offer a descriptive picture obtained from the resulting data and examines the relationship between the variables for each construct and the relationship between the constructs using SmartPLS 3.0 (Hair, Risher, Sarstedt, & Ringle, 2019).
3.3. Measurement Instrument
A 22-item questionnaire was devised in accordance with Sharia banking image and Sharia service standardization on the intention to recommend the services to others and the mediating role of customer satisfaction in Purwokerto, Indonesia. The type of data used is primary data, obtained from closed questions given to several respondents to obtain specific information, while the data collection method in this study uses a closed questionnaire. All the selected and adopted scales below reported good reliability of Cronbach’s Alpha (> 0.7) as per previous studies. The dimensions and questions of the survey are provided in Appendix 1 of this research.
- An eight-item scale for Sharia banking image (SBI) was adopted, as used by Amin et al. (2013). Items included in this scale are “Islamic bank staff have a reputation of being competent and efficient” and “Islamic banks image.” The responses were recorded on a five-point Likert scale ranging from 1 = strongly disagree to 5 = strongly agree.
- A six-item scale for Sharia banking service standardization (SBSS) was adopted, as used by Dandis et al. (2021). Items included in this scale are “Interest is neither paid nor taken on savings and loans in this bank” and “The bank runs on Islamic laws and principles”. The responses were collected using a five-point Likert scale ranging from 1 = strongly disagree to 5 = strongly agree.
- A five-item scale for Customer Satisfaction (CS) was adopted, as used by Amin et al. (2013). Items included in this scale are “I am satisfied with financial services advice” and “I am satisfied with employees’ responses and prompt services”. The responses were collected using a five-point Likert scale ranging from 1 = strongly disagree to 5 = strongly agree.
- A three-item scale of Intention to Recommend to Others was adopted, as used by Dandis et al. (2021). Items included in this scale are “I recommend this bank whenever anyone seeks my advice” and “I say positive things about this bank to other people”. The responses were collected using a five-point Likert scale ranging from 1 = strongly disagree to 5 = strongly agree.
4. RESULTS
4.1. Measurement Model
SmartPLS 3.0 uses two type of modeling – a measurement model and a structural model is presented accordingly.
4.1.1. Demographics
As Figure 1 illustrates, the theoretical framework is empirically investigated and analyzed in this research. According to the model assessment, participants' gender, age, occupation, income, and their duration of being a customer had a significant impact on their satisfaction; thus, all demographic variables were controlled throughout the analysis. The complete description of the respondents can be seen in Table 1.
| Description | Dimension | Freq. |
% |
| Gender | Male | 98 |
49.00 |
| Female | 102 |
51.00 |
|
| Total | 200 |
100.00 |
|
| Age | < 25 years | 67 |
33.50 |
| 25–45 years | 88 |
44.00 |
|
| > 45 years | 45 |
22.50 |
|
| Total | 200 |
100.00 |
|
| Occupation | Student | 25 |
12.50 |
| Entrepreneur | 35 |
17.50 |
|
| Private employee | 51 |
25.50 |
|
| Government official/Police/Army | 44 |
22.00 |
|
| Merchant | 35 |
17.50 |
|
| Other | 10 |
5.00 |
|
| Total | 200 |
100.00 |
|
| Income Per Month |
< Rp. 2,500,000 | 65 |
32.50 |
| Rp. 2,500,000–Rp. 5,000,000 | 93 |
46.50 |
|
| > Rp. 5,000,000 | 42 |
21.00 |
|
| Total | 200 |
100.00 |
|
| Duration of being a customer | < 3 years | 75 |
37.50 |
| 3–5 years | 99 |
49.50 |
|
| > 5 years | 26 |
13.00 |
|
| Total | 200 |
100.00 |
The results show that 51% of the customers in Islamic banking are female and 49% are male. In terms of age, most respondents are aged between 25–45 years (44%), and less those than 25 years make up 33.5%. Most customers are private employees (25.5%), followed by government officials including police and army officials at 22%, entrepreneurs and merchants each make up 17.5%, and others, such as housewives, make up 5%. Regarding income, 46.5% have a monthly income between Rp. 2,500,000–Rp. 5,000,000, and customers with 32.5% have an income less than Rp. 2,500,000. The majority of respondents (49.5%) have been Sharia banking customers for between 3–5 years.
4.1.2.Factor Loading, Composite Reliability, and AVE
Convergent validity indicates that the level of similar constructs strongly correlates theoretically with other constructs (convergent validity results from the factor loading, composite reliability, and AVE). The factor loading value is applied in the validity and reliability test results from the confirmatory analysis by correlating all the variables. Furthermore, the measurement model was used to calculate Cronbach's alpha (CA) and composite reliability (CR) to examine the coherence of the measurements. CA and CR values of more than 0.7 and an AVE greater than 0.05 were found in all study items, showing that they met the accuracy requirements (Ramayah, Cheah, Chuah, Ting, & Memon, 2018). Table 2 explains all factor loadings, Cronbach’s alpha, composite reliability and AVE results.
| Items | CA |
Rho-A |
CR |
AVE |
| Customer Satisfaction | 0.868 |
0.869 |
0.905 |
0.655 |
| Intention to Recommend to Others | 0.729 |
0.740 |
0.846 |
0.648 |
| Sharia Banking Image | 0.847 |
0.860 |
0.884 |
0.522 |
| Sharia Banking Service Standardization | 0.767 |
0.761 |
0.825 |
0.501 |
4.1.3. Discriminant Validity
A discriminant validity test is applied to measure one construct differently from another construct. Discriminant validity is the extent to which a particular latent variable differs from other latent variables (Hair et al., 2019). It is conducted by comparing the average variance (AVE) square root value with the correlation between composites (constructs) squared. The square root value of the AVE for each variable and the correlation value between the construct squared are presented in Table 3.
| Item | Sharia Banking Image |
Standardization of Sharia Banking Services |
Customer Satisfaction |
Intention to Recommend to Others |
| Sharia Banking Image | 0.809 |
|||
| Standardization of Sharia Banking Services | 0.566 |
0.805 |
||
| Customer Satisfaction | 0.568 |
0.333 |
0.723 |
|
| Intention to Recommend to Others | 0.241 |
0.391 |
0.203 |
0.708 |
4.2. Structural Model
“The relationship between the observed variables or indicators and the latent variables is known as the measurement model or outer model, while the relationship structure between the latent variables or concepts of the model is called the structural model or inner model” (Purwanto & Sudargini, 2021; Hair et al., 2019). The structural model results for this study are explained in Figure 2.
4.2.1. Direct Hypothesis Testing
The structural model in PLS looks at the direct relationship between the hypotheses and their t-values and regression coefficients. According to Hair et al. (2019), an indirect impact is the same as a standardized beta value in regression analysis, and t-values more than 1.64 are statistically significant and are then used to make conclusions regarding the suggested hypothesis. The structural model's main goals are to examine direct linkages and to verify projected interactions between components. Six hypotheses are investigated in this study. Table 4 lists the SmartPLS 3.0 output findings, including path coefficients, t-values, p-values, and standard errors (Cepeda-Carrion et al., 2019).
Path |
B-Value |
Sample Mean |
Standard Deviation |
T value |
P-value |
Result |
CS -> IRO |
0.566 |
0.568 |
0.051 |
0.566 |
0.000 |
Supported |
SBI -> CS |
0.541 |
0.539 |
0.058 |
0.541 |
0.000 |
Supported |
SBSS -> CS |
0.131 |
0.147 |
0.054 |
0.131 |
0.016 |
Supported |
Note: CS = Customer Satisfaction; IRO = Intention to Recommend to Others; SBI = Sharia Banking Image; SBSS = Sharia Banking Service Standardization. |
The values of the path coefficients from the structural model analysis are shown in Figure 2, and the total values of the path coefficients can be seen in Table 4. The estimated value of the path coefficient from the Sharia banking image variable on customer satisfaction based on the significance test has a p-value of 0.000, which is less than 0.05. Thus, the first hypothesis, which states that company image has a positive influence on customer satisfaction, is accepted. The estimated value from the path coefficient of the service standardization variable on customer satisfaction also has a p-value of 0.000. Therefore, the second hypothesis, which states that the standardization of services positively affects customer satisfaction, is also accepted. The estimated value from the path coefficient of the customer satisfaction variable on the intention to recommend to others has a p-value of 0.016, which is less than the critical value of 0.05; therefore, the third hypothesis, which states that customer satisfaction has a positive effect on the intention to recommend to others, is also accepted.
Path |
B-Value |
Sample Mean |
Standard Deviation |
T-value |
P-value |
Result |
SBSS -> CS -> IRO |
0.074 |
0.084 |
0.033 |
0.074 |
0.026 |
Supported |
SBI -> CS -> IRO |
0.306 |
0.306 |
0.045 |
0.306 |
0.000 |
Supported |
Note: CS = Customer Satisfaction; IRO = Intention to Recommend to Others; SBI = Sharia Banking Image; SBSS = Sharia Banking Service Standardization. |
4.2.2. Mediating Hypothesis Testing
Mediating hypothesis testing is conducted using structural modelling analysis, as posted in Figure 2 where the values of the path coefficients are shown. The total values of the path coefficients can be seen in Table 5. The estimated value of the path coefficient for the Sharia banking image variable and customer satisfaction, which impacts the intention to recommend to others based on the significance test, has a p-value of 0.000, which is less than 0.05. Thus, hypothesis 4a is accepted. The estimated value of the path coefficient for Sharia banking service standardization and customer satisfaction, which impacts the intention to recommend to others based on the significance test, has a p-value of 0.000, which is less than 0.05. Thus, hypothesis 4b is also accepted.
4.2.3. Assessment of R-squared
The coefficient of determination represents the variance in endogenous constructs caused by external constructions (Hair et al., 2019). R2 is a number that spans from 0 to 1. Furthermore, according to Purwanto & Sudargini (2021), an R2 of 0.13 is deemed weak, 0.33 is intermediate, and 0.67 is strong. Table 6 shows the coefficients of determination for the endogenous constructs.
| Item | R2 |
| Customer satisfaction | 0.339 |
| Intention to recommend to others | 0.320 |
5. DISCUSSION
The current study focuses on Sharia banking image and Sharia service standardization on customers’ intention to recommend the service to others and the mediating the role of customer satisfaction grounded in marketing theory. The results of the first hypothesis show that the image of Islamic banking companies according to customers’ perceptions is positive. For a long time, Islamic banking has been trusted by customers and has a good reputation among Muslims.
The results of the SmartPLS analysis indicate a positive and significant influence between company image and customer satisfaction, which means that the better a company’s image, the higher the satisfaction among customers. This is consistent with the research which shows that image has a positive effect on customer satisfaction (Dandis et al., 2021; Fauzi et al., 2022; Han & Hyun, 2017). Other studies have also shown that brand image significantly affects customer satisfaction (Mohammed & Rashid, 2018; Sharma et al., 2018; Yusfiarto et al., 2022).
The results of the second hypothesis show that the standardization of Islamic banking services according to the customers in this study is in the suitable category. The company sets service standardization in operating hours according to applicable procedures, standardizes proper tools, facilitates all types of transactions at the bank, and provides fast service standards and reliable transactions free from errors. Service standardization is included in the overall service that should meet customer expectations.
This study shows that service standardization significantly affects customer satisfaction; this means the better standard of service, the higher the satisfaction. Standardization could be used to increase customer satisfaction, or in other words, there is an effect of service standardization on customer satisfaction consistent with the findings of previous studies (Al Thuwaini et al., 2022; Julina & Fakhrurrozi, 2020).
The results of the third hypothesis show that customer satisfaction in Islamic banking companies is in the high category. The current study shows that satisfaction significantly influences customers’ intention to recommend to others. It shows that the higher satisfaction of a customer, the higher their desire to invite others to use Islamic banking services. This is in line with studies that have shown that customer satisfaction is an essential variable in attracting other consumers and providing recommendations to others (Fauzi et al., 2022; Liang et al., 2018; Syah & Olivia, 2022).
Acceptance of the fourth hypothesis indicates a positive and significant effect on customer satisfaction toward the intention to recommend to others. It also proves that the indicators of customers satisfaction (service that meets customer expectations, additional services that complement the primary services, costs which are aligned with the quality of service, and overall satisfactory service quality) have a positive and significant effect on the intention to recommend Islamic banking to other parties (Yusfiarto et al., 2022). The data shows that a company's image regarding Islamic banking is an essential marketing strategy, and this will affect customers’ intention to recommend the services to others, hence proving the mediation of customer satisfaction between study variables.
5.1. Theoretical Implications
The purpose of this research is to produce some theoretical advancements in the sphere of knowledge. This research offers one of the first efforts to use customer satisfaction to explain the Sharia banking image and standardization impact on the intention to recommend to others. The theoretical implications of this study reinforce the results from previous research conducted by Al Thuwaini et al. (2022); Julina & Fakhrurrozi (2020); Mohammed & Rashid (2018); Panjaitan (2019); and Suhartanto et al. (2019). Second, this study aims to bridge the conceptualization gap in Sharia banking, marketing, and service-related constructs to bring them together in a unique theoretical framework which has never been tested before. The mediated link of customer satisfaction and providing empirical evidence from a diverse cultural context is a useful addition to existing literature related to Sharia banking image, service standardization and word of mouth generation for Sharia banking customers. The third major contribution of this research is the integration of marketing theory and marketing constructs to explain theoretical linkages between the study variables. Such explorations are scarce in the literature related to Sharia banking. The final contribution of this research is the opening of new theoretical avenues linking marketing and service theories in the banking sector in general, and Sharia banking in particular, to advance the field of research.
5.2. Practical Implications
Furthermore, this research provides policymakers, practitioners, and managers with relevant information in a variety of ways. First, the practical implication of this research is that the increased satisfaction of customers and the intention to recommend to others can be managed by improving the Sharia banking image of Islamic banking institutions. There could be several strategies for image building, such as awareness campaigns in the media, through religious scholars, and through reputed religious institutions. These campaigns can be targeted to share knowledge with existing and potential customers about how a specific Sharia banking company is following the principals of Islam in all their financial products and services. Creating awareness about such authentic processes may result in an enhanced Sharia banking image in the community. Ultimately, it will help to increase customer satisfaction and will lead to existing customers recommending the service to others, resulting in a better market share in a competitive environment.
Another significant implication of this research is that managers, marketers, and policymakers can collaborate to ensure standardized practices in Sharia banking industry for Sharia compliance in order to develop and earn customers’ trust. According to the findings of this research, standardization will result in enhanced levels of customer satisfaction, and through this mediated link, customer word of mouth can be achieved by companies.
Sharia banking policymakers should remain in continuous contact with stakeholders to develop better policies on image building and to achieve better standardized services across the industry. To understand the challenges, they should be closely connected with the actual practice and implementation of banking services by workers or professionals. Managers should research the market, evaluate customer information, collect client feedback regularly, and implement improvements based on this feedback. Such initiatives may enable them to provide stronger, more creative, and affordable services suited to the needs and desires of particular parts of the population.
Last, in a contextual scenario, this study is an early attempt to explore such concepts and their impact on the Sharia banking industry in Indonesia. As Indonesia is the most rapidly growing market for Sharia banking, companies can benefit from the findings of this research by building a better image among local Indonesian customers and providing standardized services to achieve better market response and customer satisfaction.
5.3. Limitations and Future Direction
Although this study contributes to crucial themes in the marketing and Sharia banking literature, it does have some limitations. The fact that the research was conducted only in Purwokerto, Central Java, Indonesia, and concentrated on a limited sample is a disadvantage. Future studies should include banks in areas from all over Indonesia for better generalizability and replicate this research in other cultural settings given that clients from various regions do not always use the same method, even though bank operating techniques are usually consistent across settings and cultures. The data were collected in a cross-sectional way. This means that researchers in the future may use a longitudinal research method to find a link between the study’s constructs more precisely. Also, the current study only uses mediating effects. In the future, researchers can use a moderating variable to check for accuracy regarding the prediction of the intention to make recommendations. Last, the only variables used as factors that affect customer satisfaction and their intention to recommend to others are company image and service standardization. For this reason, further research could add more variables that may affect satisfaction and the intention to recommend to others, which could include trust and quality perceptions about the services of specific Sharia banking companies.
The current study only obtained responses from customers regarding banking image and standardization, which may have some biases, so future studies could also include employees and potential customers for comparative differences in perceptions. This study used a survey method, so future research may use mix methods or triangulation approaches to include focus group discussions as well as interviews with management and customers for better policy insights in the Sharia banking industry.
6. CONCLUSION
This study aimed to investigate the unexplored mediating link of customer satisfaction between Sharia banking image, Sharia service standardization constructs, and the intention to recommend to others. According to the findings, corporate image and service standards have a favorable impact on customer satisfaction. Customer satisfaction was found to mediate the relationship between company image and service standardization toward recommending to others. These results indicate that customers of Sharia banks in Indonesia are concerned about the image aspect when determining the service or product they will adopt. This is also in line with the explanation that an attractive company obtains various benefits, mainly from economic, social, and legal aspects. The research lays a solid foundation for policy development and the creation of customer satisfaction for several theoretical and practical insights into the Islamic banking industry worldwide, and specifically in the Indonesian Islamic banking market. This study also opens new avenues for future research on the Sharia banking industry to help in achieving further growth in market share and to obtain a better customer satisfaction rating for image building and standardization of services compared to the traditional banking industry.
Funding: This study received no specific financial support. |
Competing Interests: The authors declare that they have no competing interests. |
Authors’ Contributions: All authors contributed equally to the conception and design of the study. |
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| Variable | Questions | Sources |
| Sharia Banking Image (SBI) |
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| Sharia Banking Service Standardization (SBSS) |
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| Customer Satisfaction (CS) |
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| Intention to Recommend to Others (IRO) |
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