Intention to adopt Islamic banking services among public university students in Malaysia

Islamic banking has experienced significant development in Malaysia, which is evident from the increase in total assets and financing approvals over the years. However, despite this progress, Islamic banking still lags behind conventional banking in terms of market share and total assets, indicating the need for further expansion and adoption. One of the main challenges is the perception that Islamic banking only caters to Muslim customers, which may limit its reach among non-Muslims. In addition, the factors that influence students' adoption of Islamic banking services remain under-researched, especially in the context of public universities in Malaysia. This study examines the factors that influence students intention to adopt Islamic banking services in Malaysian public universities. The study analyzed the role of attitude, subjective norms, perceived behavioral control, knowledge, and price. It also identifies the most significant factors for Muslim and non-Muslim students. A quantitative approach was applied to analyse the differences in adoption intention between the two groups coming from public universities in Malaysia, as well as for data analysis using PLS-SEM. This study involved 400 respondents from public universities student, categorized from muslim and non-muslim students. The findings showed that attitude had a significant influence on Muslim students, but no impact on non-Muslim students. Subjective norms and perceived behavioral control are important for both groups, while knowledge only affects Muslim students. In contrast, price has a more significant role for non-Muslims, reflecting their preference for financial benefits. The research also shows that attitude is the strongest determinant for Muslim students, while price is the most influential factor for non-Muslims. These results confirm the importance for Islamic banking institutions to implement appropriate marketing strategies, emphasizing Shariah compliance and ethical values for Muslim customers, while keeping in mind competitive pricing and financial benefits for non-Muslims.