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

Abstract

The purpose of this paper is to propose a conceptua l design to study and investigate the factors influ encing the adoption of Islamic banking products and services a mong customers in Nigeria. The research employs the innovation diffusion theory developed by Rogers (20 03) to investigate the influence of the perceived a ttributes of innovation (relative advantage, compatibility, comp lexity and perceived risk) on customers’ usage of I slamic 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 inv olvement on the relationship between the perceived attributes - relative advantage, compatibility, com plexity and perceived risk and the adoption of Isla mic banking products and services. This is due to the fact that literatures on the Islamic banking usage have inve stigated the influence of the customer involvement. Islamic bank ing advocates profit and loss sharing in contrast t o interest dealing practiced by conventional banking system wh ich formed the major separation between the two ban king systems. Another important demarcation between the Islamic and conventional system of banking has been the way and manner they relate with their customers. Wh ereas creditor-debtor relation is prevalent in the conventional banking, Islamic banking treats its cu stomer in more than a creditor-debtor relationship but also as a partner in business and investment. This relation therefore made the customer involvement a potentia l factor and hence its influence on customers’ usage of Isla mic banking products and services would be investig ated. It is expected that the study will help to enhance our un derstanding on how customer involvement may influen ce the adoption of Islamic banking products and services a mong the customers in Nigeria. It is hopeful that u pon validating the framework, findings from the study w ill provide useful insight and especially firsthand information on the role of customer involvement. Th is would be useful to the providers in gaining and retaining the existing customer, and to the policy makers, re gulators and other relevant stakeholders to strateg ize in accordance with their respective roles towards deve lopment and sustainment of the industry. Keywords: Islamic banking Products, Perceived Attributes of I nnovation, Customer Involvement, Adoption, Nigeria