Conceptual Framework for Adoption of Islamic Banking in Nigeria: The Role of Customer Involvement

Abstract

The purpose of this paper is to propose a conceptual design to study and investigate the factors influencing the adoption of Islamic banking products and services among customers in Nigeria. The research employs the innovation diffusion theory developed by Rogers (2003) to investigate the influence of the perceived attributes of innovation (relative advantage, compatibility, complexity and perceived risk) on customers’ usage of Islamic banking products and services in Nigeria. The study also intends to integrate customer involvement in the Rogers Model and investigate its influence on the usage of Islamic banking products and service. Besides that, the study also examines the moderating effect of customer involvement on the relationship between the perceived attributes - relative advantage, compatibility, complexity and perceived risk and the adoption of Islamic banking products and services. This is due to the fact that literatures on the Islamic banking usage have investigated the influence of the customer involvement. Islamic banking advocates profit and loss sharing in contrast to interest dealing practiced by conventional banking system which formed the major separation between the two banking systems. Another important demarcation between the Islamic and conventional system of banking has been the way and manner they relate with their customers. Whereas creditor-debtor relation is prevalent in the conventional banking, Islamic banking treats its customer in more than a creditor-debtor relationship but also as a partner in business and investment. This relation therefore made the customer involvement a potential factor and hence its influence on customers’ usage of Islamic banking products and services would be investigated. It is expected that the study will help to enhance our understanding on how customer involvement may influence the adoption of Islamic banking products and services among the customers in Nigeria. It is hopeful that upon validating the framework, findings from the study will provide useful insight and especially firsthand information on the role of customer involvement. This would be useful to the providers in gaining and retaining the existing customer, and to the policy makers, regulators and other relevant stakeholders to strategize in accordance with their respective roles towards development and sustainment of the industry.

Keywords: Islamic banking Products, Perceived Attributes of Innovation, Customer Involvement, Adoption, Nigeria