CUSTOMERS’ ACCEPTANCE ON FINANCIAL INSTITUTIONS’ PRODUCTS: ISLAMIC VERSUS CONVENTIONAL FINANCIAL INSTITUTIONS

GROUP NAME: NADIA PETROVA 1

OUTLINE

Objective

Introduction

Financial Institution Product

Islamic

Conventional

Benefits

Limitations

Discussion & Findings

Conclusion

2

OBJECTIVE

To compare the Islamic and conventional product

To identify the benefits and limitations of financial institutions product between Islamic and conventional financial institution

To analyze factors that influence customer decision

To measure customer acceptance on financial institution product

3

INTRODUCTION

Financial institution in Malaysia: Islamic and conventional

Islamic financial institution is based on Shariah (Islamic law)

Conventional financial institution is fully based on manmade principles

4

FINANCIAL INSTITUTION PRODUCTS

Islamic Conventional

Deposits (Al-Wadiah) Basic and current account

Investments (Al-Mudharabah) Saving deposit account

Housing financing

(Bai’ Bithaman Ajil)

Bank cards

Leasing/Vehicle financing

(Al-Ijarah)

Loans

Project financing (Al-Musyarakah) Insurance 5

BENEFITS Islamic Financial

Institution Product

Conventional Financial

Institution Product

Riba prohibit

(No interest on loan)

Interest charge to the customer

Shariah foundation Non-shariah compliant

Low risk product Low and higher risk of product

Rebates are give for early

settlement at the Bank's

discretion. 6

LIMITATIONS

Islamic Conventional

Shariah restriction Have competition in product and

services promotion

7

Growing of Islamic financial institution (IFI)

IFI strength position

IFI product grew from RM23.8B to RM434.6B

Customer began to accept Islamic product

However, IFI product still not fully accepted

Not fully understanding about IFI product

8

DISCUSSION & FINDINGS

CONCLUSION

Islamic financial product more prefer by the Malaysian customer since the Muslim population is higher by religious factor.

Educating customer about the IFI products

IFI & CFI can helped in boosting Malaysian economy

9

10

Q&A