Trust In Banking Relationships: Lessons For South African Banks On Bank Selection In Saudi Arabia

Abstract

This paper investigates the selection criteria that students in Saudi Arabia and South Africa respectively use when selecting a bank for the first time. The rationale for such a study stems from exploring the difference in selection criteria based on students' cultural and banking (Islamic vs conventional banking) backgrounds, so as to identify marketing opportunities for South African banks, given the relative infancy of the Islamic banking industry in South Africa. An exploratory factor analysis reveals that the two student groups place particular emphasis on the functional criteria relating to the provision of banking products and services, albeit it that the South African students appear to have a more generalised view on what function means to them. A cluster analysis further reveals that the Saudi students in general appear to be more indifferent with regards to the relative importance of the identified factors. However, the main finding of the paper is that the Saudi students place more implicit emphasis on trust-related criteria than the South African students. From a marketing point of view, South African banks must acknowledge that trust drives the relationship-based approach they adopt to Muslim students and specifically with regards to complying with Shari'a Law. Given that the South African students regard criteria related to the functional role of banks as relatively more important, there is a case to argue that the marketing campaigns for Muslim students need to be differentiated along the lines of drivers of trust in the relationship, as opposed to merely the functions performed by a bank.