International Journal of Advanced and Applied Sciences, 4(3) 2017, Pages: 117-121 Contents lists available at Science-Gate International Journal of Advanced and Applied Sciences Journal homepage: http://www.science-gate.com/IJAAS.html 117 Determinant of customers’ preference in selecting Islamic banks Irwan Shahrinaz, Jati Kasuma *, Abang Sulaiman Abang Naim, Emelia Abdul Rahim, Arrominy Arabi, Norlelawati Ismawi, Rosmiyati Rosli Faculty of Business Management, Universiti Teknologi MARA, 94300 Kota Samarahan, Sarawak, Malaysia ARTICLE INFO ABSTRACT Article history: Received 6 November 2016 Received in revised form 7 January 2017 Accepted 11 January 2017 The presence of conventional bank and Islamic bank in Malaysia has created a competition in capturing customer. Customer of Islamic bank maintained their account with the bank if they are satisfied with the product and services offered to them. Other research reveals that the reasons for Muslim to choose Islamic banking are mostly due to religious concern and motives. This study investigates the relationship between religions; influence by family and friend and finally service quality with customers’ behavior towards bank selection preferences. Data was collected from 380 customers using self- administered questionnaires from various Islamic banks in Miri. Results reveal that service quality and preference of choosing Islamic bank in Miri has a strong and positive relationship. Ultimately, friends and family has more impact towards preference in choosing Islamic bank. Recommendation for future study also discussed. Keywords: Islamic banking Customer preferences Religion Service quality Friends and family © 2017 The Authors. Published by IASE. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). 1. Introduction *Introduced near 1970s, the financial institution based on Islamic laws was pioneered by Egypt, Indonesia and Malaysia. The main purpose of Islamic banking is to reshape the existing banking principals of financial services and products within the mold of Islamic principals in order to satisfy the demands and requirements of customers, especially the religious conscious ones. Based on existing studies, most Muslims choose Islamic Banking based on their beliefs in Islamic principles concerning trade as compared to general people that are based on logical reasons to choose their desired financial institution. Aside from profit maximization and other conventional benefits, obeying Islamic principles are also the reason for them to choose Islamic Bank. Such can be said that their decisions to choose Islamic banking are based on their emotions and behaviors that are associated with their religion which can be considered as behavioral financing. Within the banking industry in Malaysia, the presence of conventional banks and Islamic banks creates competition in capturing customer. By offering quality in their products and services to replace interest based product, Islamic banking * Corresponding Author. Email Address: jati@sarawak.uitm.edu.my (J. Kasuma) https://doi.org/10.21833/ijaas.2017.03.018 2313-626X/© 2017 The Authors. Published by IASE. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/) manages to attract a large number of customer. Customer of Islamic bank maintained their account with the bank if they are satisfied with the product and services offered to them. Other research reveals that the reasons for Muslim to choose Islamic banking are mostly due to religious concerns and motives. The customer psychological state of mind is the main reason for them to act on a line satisfaction when choosing a bank. The research was carried out in Miri, Sarawak as a second largest city in Sarawak consisting of Malay, Chinese, Iban, Orang Ulu and other indigenous groups. Thorough our extensive literature analysis, it was found that, the study regarding Islamic banking has yet to be published for this area and this information manages to trigger the interest of carrying out this research. Presently, there are two local full fledge Islamic bank in Miri which are Bank Islam as well as Bank Muamalat. Also, there are other foreign bank like OCBC, HSBC and some other dual system which combines conventional as well as Islamic banking concept. The need to understand customer behavior towards Islamic banking is important as the competition between banking industry is becoming intense. The purpose of this study is to explore the preference of customer towards Islamic bank by using religion, influence of family and friends and service quality to find out which variables is powerful enough to influence customer choice towards Islamic bank in Miri, Sarawak, Malaysia. This will consequently lead to customer satisfaction which would reflect the future potential of Islamic