Customer satisfaction and loyalty in the United Arab Emirates banking industry

The purpose of this paper is to identify the determinants of consumer loyalty in Islamic and conventional banks in the United Arab Emirates (UAE). The study has relevance and importance in a country with a dual banking system. Since the products and services offered by the banks are largely homogenous, customer loyalty is mostly associated with the quality of certain tangible and intangible dimensions of service. It is important for the banks to understand the factors that lead to higher satisfaction and subsequent loyalty among consumers in the context of the UAE.

More than 300 respondents were surveyed to understand the factors that lead to continuing a relationship with Islamic and conventional banks. The data were analyzed using ANOVA and stepwise regression.

The findings of the study indicate that Islamic banks’ customers are satisfied with the Shariah Advisory Board, convenience-related factors such as number of branches, and efficiency-related factors like handling issues on the phone. However, an inverse relationship is found between advice by the personnel and length of association with the bank. On the other hand, the importance of reputation and efficient handling of issues on the phone is highlighted with respect to conventional banks.

The study focusses only on consumers that bank either with Islamic or conventional banks and excludes those who deal with both Islamic and conventional banks simultaneously.

The research has several managerial implications, as the findings of the study not only highlight the factors that banking consumers value the most in the UAE banking sector, but also provide insight into the factors which need immediate attention. These decisions have strategic and resource-related implications for banks. This knowledge will allow banks to align services with their long-term objectives and invest into resources and capabilities that will provide them competitive advantage.

The study allows identification of factors that are valued the most by banking consumers in a culturally and religiously diverse country with a dual banking system.