FACTORS INFLUENCING INTENTION TO SWITCH FROM ISLAMIC BANKING IN INDONESIA’S MUSLIM COMMUNITY

Abstract

Purpose — The purpose of this study is to explore the effects of satisfaction, perceived herd behaviour, perceived security, perceived price, switching cost, and social presence on customers’ intention to switch from Islamic banks to conventional banks in the aftermath of a security breach at an Islamic bank in Indonesia. Design/Methodology/Approach — The study was conducted with 211 respondents from the Muslim community in Indonesia, specifically targeting customers of Islamic banks. The data were analysed using the SmartPLS software with the Structural Equation Model (SEM) method. Findings — The findings indicate that perceived security and customer satisfaction play crucial roles in customers’ intention to switch from Islamic banks to conventional banks. Conversely, perceived herd behaviour, perceived price, social presence, and switching cost have less significant impacts. Originality/Value — This study uniquely integrates the concepts of perceived herd behaviour, social presence, and satisfaction to provide a comprehensive understanding of customers’ switching intention in the context of Islamic banks in Indonesia, particularly in the aftermath of a security breach. It contributes to the literature by exploring the interplay between social influence and security concerns, which have been less examined in the context of Islamic banking in Indonesia. In doing so, it offers new insights for developing customer retention strategies. Research Limitations/Implications — The study’s limitations include a limited sample size and a focus on a specific community, which reduces the generalisability of the findings. Practical Implications — Islamic banks should prioritise enhancing perceived security and customer satisfaction through robust cybersecurity measures and high-quality services. Social Implications — The study’s findings emphasise the importance of customer satisfaction and security in maintaining customer loyalty in the Islamic banking industry in Indonesia.