Nexus and Perception of Customers Toward Conventional Banking Systems: Does the Islamic Banking System Exist as a Competitor?

This study analyses the perception of customer regarding conventional and Islamic banking system. This research has found the opinions of customers of conventional banks with comparison to Islamic banks, and standalone Islamic branches of conventional banks. However, the respondents belonged to different age groups, occupational backgrounds, and education, irrespective of gender. Furthermore, two branches of each type of bank were selected at random from Lahore city, where eighty (80) customers were selected from each type of bank. The result of this study revealed with these remarks that Islamic banks are competitors of conventional banks. The statistical package of social sciences (SPSS) software is used for data analysis. The result also indicates that (40%) of Islamic banks customers should not opt conventional bank for saving deposits due to interest. Moreover, another interesting result highlights the strength of conventional bank, as they do not need a specific shariah board committee, whereas 42% and 51% of Islamic and standalone banks, respectively, customers are not satisfied with the jurisprudence of these shariah board members. This objective of this is to highlight those areas, where conventional financial institutions are not performing well. Hence, it is found that there is a dire need to organize the both financial intermediaries, in such a manner that both institutions will grow, expand and provide excellent services to their customers.