Methodological orientation of service quality: development of integrated framework of internal/external customer satisfaction for Islamic banking in Pakistan

This study investigates factors of internal and external customer satisfaction and explains the causal relationship between internal and external customer satisfaction in Islamic banking sector of Pakistan in comparative way between Islamic and conventional banks offering Islamic banking services. 560 usable responses were collected from internal and external customers by visiting 50 Islamic branches of both type of banks, conventional and Islamic, in three major cities of Pakistan (Karachi, Lahore and Multan). Principle component factor analysis and linear regression analysis were carried out to analyse responses. Internal customer satisfaction is explained by four factors (Islamic work ethics, salary, management commitment and workability), external customer satisfaction is explained by four factors (responsiveness, empathy, cost of products and services and tangibility). Regression analysis indicated that internal customer satisfaction has significant positive influence on external customer satisfaction in Islamic branches of full fledge Islamic banks and conventional banks. Both types of bank should satisfy internal customers (bank employees) to enhance market share and to satisfy external customers. Satisfied employees (internal customers) will be source of satisfactory level of service experience of external customers in both type of banks and more customers will be attracted toward Islamic banking services.