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Title: A Conceptual Research Model: Challenging Factors Towards the Adoption of Online Islamic Finance Platforms Especially from Muslim Customers' Perspective in Pakistan
Authors: Masoomi Hifazat Ali Shah, Nasrullah Dharejo, Fatima Dayo
Journal: Al-Kashaf
Publisher: GCLT (Global Center for Legal Thought)
Country: Pakistan
Year: 2023
Volume: 3
Issue: 1
Language: English
Keywords: Islamic FinancePakistanMuslim CustomerChallenging Factors
Islamic banking has embraced technology to enhance its operational services efficiency and reach a broader customer to avail banking services opportunities at their doorstep. Islamic finance institutions face both opportunities and challenges according to the past Islamic finance literature revealed. The Muslim community needs to be educated on the concepts and benefits of Islamic finance principles and integrating technological factors ensures security, efficiency, and reliability in online transactions, which is the priority of customers' preferences and concerns. Therefore, the research will examine the significant impact of these challenging factors can vary depending on cultural, regional, and economic contexts. Moreover, this research will contribute to the strong status of Islamic financing services such as awareness sessions, operational efficiency, customer satisfaction, and competitiveness in the dynamic financial landscape. this research implemented the amended TAM model by adding external variables to examine the significant impact of the individual intention for adoption of online Islamic banking platforms as it provides a structured framework along with hypotheses relationship for addressing and understanding factors influencing individuals' perceptions and concerns. There were twenty-nine customers recorded their initial feedback for the reliability analysis. In a way to assess the reliability of the data collection instrument, Cronbach's Alpha test was applied using SPSS software. The coefficient of Cronbach's alpha is greater than or equal to (α ≥ 0.7) since it has the coefficient alpha (α) significance values are IDM(0.921), ATT(0.902), PEOU(0.918), PU(0.914), CAS(0.837), SOT(0.869), UFP(0.857). The initial findings of the pretest-conclusion indicate that the data collection instrument and quality of data are supportive for future research.
To examine the challenging factors that impact the adoption and acceptance of online Islamic banking platforms in Pakistan and to develop a research model for determining Islamic finance practices that prioritize individual and business-centric approaches for driving progress and growth in Pakistan's finance industry.
Quantitative method survey approach. Data collection instrument based on a seven-point Likert scale. SPSS software used for data interpretation and analysis, including reliability and validity tests. Pre-test conducted with 29 customers for reliability analysis.
graph TD;
A["Define Research Objectives and Questions"] --> B["Literature Review"];
B --> C["Develop Conceptual Model and Hypotheses"];
C --> D["Design Data Collection Instrument"];
D --> E["Conduct Pre-test and Reliability Analysis"];
E --> F["Data Quality Sufficient?"];
F -- Yes --> G["Collect Main Survey Data"];
F -- No --> D;
G --> H["Analyze Data using SPSS"];
H --> I["Interpret Findings"];
I --> J["Draw Conclusions and Implications"];
The research aims to address the challenges faced by Islamic finance services in implementing advanced security features and developing user-friendly platforms. It also highlights the need for educational resources to explain Islamic finance concepts. The study implements an amended Technology Acceptance Model (TAM) by adding external variables to understand factors influencing adoption.
The pre-test findings indicate that the data collection instrument and the quality of data are supportive for future research. Cronbach's Alpha test results for various constructs (IDM, ATT, PEOU, PU, CAS, SOT, UFP) are all greater than or equal to 0.7, indicating good reliability.
Islamic finance institutions can offer digital banking services to cater to customer convenience and industry trends. However, they face challenges related to customer education on Islamic finance principles and integrating technological factors for security and reliability. The amended TAM model is used to predict attitudes and intentions towards adopting online Islamic finance platforms.
1. Islamic banking assets in Pakistan reached USD 648.00 billion in 2020 compared to USD 551.44 billion in 2023, indicating a demand gap with an average rate of 18% to 20%. (Note: The text presents a contradiction here, stating a decrease from 2020 to 2023 while also mentioning a demand gap and growth rate. This requires clarification.)
2. The research utilized a pre-test with twenty-nine customers for reliability analysis.
3. Cronbach's Alpha coefficients for the constructs are reported as: IDM (0.921), ATT (0.902), PEOU (0.918), PU (0.914), CAS (0.837), SOT (0.869), UFP (0.857).
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