Clustering the customers on the selection of Islamic banking in East Coast Malaysia

Islamic bank in Malaysia was established since 1983 and the development of Islamic bank is increasingly challenging with more conventional banks involved and offered banking products and services based on Islamic principles. Therefore, it is crucial for Islamic bank to better position themselves in order to undertake and respond enthusiastically to the robustness of the dual banking environment. This paper analyzed the factor considered important by academicians in public higher institution in selecting Islamic banking. The study revealed that religious value appears to be the most important factor. Other factors perceived to be important include trustworthiness, product variety, service facility and service efficiency. A cluster analysis indicates that customers can be divided into three clusters with distinctive demographic and factors for each cluster. Overall, members for all clusters tend to choose an Islamic banking because of religious value and trustworthiness factors. The results will benefit banking management because they provide information to the importance of the selection criteria.