Determinants Of Switching Bariers Among Oman's Retails Banking Customers

The banking sector is the backbone of any economy and Oman is of no exception. The growth of Islamic banking in Oman has raised many interests of the Omani people due to the Shariah-compliant nature that prohibits riba and gharar. However, based on recent data, the performances of the Islamic banks are not consistent with these growing interests, which trigger many burning questions. The main objective of this study is to investigate this inconsistency by studying the push and pull factors on the consumers’ decision to switch, i.e., from conventional to Islamic banking. The push factors are denoted by service quality, customer satisfaction, and trust, whilst pull factors are represented by perceived relative advantage of three dimensions consisting of price, religion, and social prestige. This study also examined the impact of mooring factors comprising of complexity, switching cost, locked-in, and apathy on the switching decision. Data was collected through a survey questionnaire from three cities (Muscat, Salalah, and Sohar) with a sample of 400 respondents. The participants were Omani nationals. The data was analyzed using Structural Equation Modelling (SEM) Analysis using SPSS and AMOS software. The data was tested for the normality, descriptive analysis, reliability, correlation, exploratory Factor Analysis (EFA), and Confirmatory Factor Analysis (CFA). The results indicate that service quality significantly influences switching decision. Similarly, interaction quality also indicates a strong association with switching decision, whereas physical environment and outcome quality remain unable to influence the switching decision. Out of the push factors, customer satisfaction and trust show a positive association with the switching decision. Perceived relative advantage also shows a positive correlation with the switching decision. From this dimension, religion indicates a significant influence on switching decision, while price and social prestige have no association with switching decision. The result of the mooring factors indicates that apathy fails to influence the direct relationship with switching decision. However, switching cost, complexity, and locked-in have a negative impact on the decision to switch that creates barriers among the customers while switching from conventional banking to Islamic banking system. The findings suggest that religion is a strong determinant of perceived relative advantage and has a positive effect on switching decision. Additionally, the people of Oman consider the quality of service, customer service, and trust prior to switching decision. The study concludes that the government, management, and Shariah board of the Islamic banks should focus on establishing a robust and dynamic Islamic banking, which caters for customers’ needs. Finally, Islamic banking products and service, along with financial and non-financial strategies should address the customers’ financial needs and provide comprehensive banking services.