The Effects of Customers’ Awareness, Perception on Financial Performance of Islamic Banking in Nigeria

Abstract

The structure of financial intermediation globally has witnessed a radical shift over the last few decades. The monopoly status enjoyed by the conventional banking and finance system changed with the emergence of the Islamic banking and finance system, which is mainly based on the principles of shari’ah and Islamic laws. This research assessed the customers’ awareness and perception of Islamic banking in Nigeria. Primary data were obtained from the survey administered to the selected banking customers. The population of the study comprised banking customers. This study involves the use of primary data, which was collected using a survey method to determine the opinion of financially included members of the public who are customers of the banks on the comparative services provided by both the conventional and Islamic banks in Nigeria.  The results of the survey show that a large number of respondents are not aware of Islamic banking in Nigeria. The network gap is wide within the Islamic banking system in Nigeria. A high-profit gap and high technology gap exist in Islamic banking in Nigeria. Almost all respondents agree that Islamic banks can perform better if they reduce their product gap. In conclusion, it is evident that the supply gap has resulted in the lower financial performance of Islamic banks in Nigeria than conventional banks. In view of the findings, it is recommended that Islamic banks need to engage in more enlightenment to raise awareness of the public on the performance of Islamic banks. It is also recommended that Islamic banks should upscale their technology and introduce more products and services to match the conventional banks.