M-Banking Adoption: Does Sharia law influence Customer Loyalty?

Abstract

Islamic banks are institutions that offer products and services that are in accordance with Islamic law. Islamic banks operate based on the principles of sharia or Islamic law. These principles include the prohibition of usury (interest), the prohibition of investing in businesses that are forbidden in Islam (such as alcoholic beverages and gambling), as well as various Islamic ethical rules in business. Islamic Banks need to provide the feasibility of these innovative channels in gaining customer satisfaction and loyalty, where non-cash transactions via mobile phones can improve bank efficiency and user quality of life. This study investigates the influence of Sharia compliance on customer loyalty in the context of mobile banking (m-banking) adoption. Employing a qualitative phenomenological approach, data were collected through in-depth interviews with selected users of Islamic m-banking services in Surabaya, Indonesia. The research explores five key factors influencing customer loyalty: perceived usefulness, service quality, Sharia compliance, trust, and user satisfaction. Findings reveal that perceived usefulness and service quality significantly contribute to user satisfaction. Sharia compliance emerges as a critical determinant that not only enhances trust but also reinforces long-term customer commitment through alignment with users’ ethical and spiritual values. These findings demonstrate that Sharia adherence is not merely a regulatory requirement but a strategic advantage that strengthens trust and fosters customer loyalty in Islamic digital banking