Customer Adoption of Islamic Banking Services: Empirical Evidence from Indonesia

This paper aims to examine the main factors that influence the adoption of Islamic banking services in Indonesia. This research collects primary data by distributing questionnaires to 550 respondents in 29 provinces in Indonesia. A total of 550 questionnaires were returned comprising 34.2 percent male respondents and 65.8 percent female respondents. Most of the respondents were in the age group of 21-30 years with the highest level of education being high school. Most of the respondents were working in private firms, with a monthly expenditure of IDR 2,500,000. The independent variables in this study are bank reputation, perceived complexity, perceived compatibility, perceived risk, relative advantage, religiosity, and social influence. Meanwhile, the dependent variable is customer interest in adopting Islamic banking services. The result of this study indicates that awareness and perceived compatibility have a positive effect on customer intention to adopt Islamic banking services. Likewise, religiosity and social influence also have a significant and positive effect on customer intention to adopt Islamic banking services. Meanwhile, bank reputation and perceived complexity have no effect on customer intention to adopt Islamic banking services. Lastly, perceived risk has a negative and significant effect on customer intention of adopting Islamic banking services in Indonesia.