Use of digital Islamic banking services is not increasing in Indonesia, despite the country’s sizable Islamic population. This non-adoption might have resulted from consumer resistance brought on by attempts to divert them, or it might have been a direct consequence of the diverting effect. This study aims to examine the direct relationship between the diverting effects and the decision to not adopt digital Islamic banking, as well as the mediating role of consumer resistance.
The partial least squares-based structural equation modelling (PLS-SEM) technique is used to analyse relationships among diverting effects, consumer resistance and non-adoption decisions. A total of 517 middle- and upper-class Indonesian consumers were involved as a sample, with several criteria such as being a conventional bank customer for at least 5 years and using digital services with a minimum of 5 transactions per month but not yet being an Islamic bank customer.
It is found that the direct relationship between the diverting effects and the non-adoption decisions is not statistically significant (β = 0.045, p = 0.15). However, it is found that the diverting effects trigger consumer resistance in a statistically significant manner (β = 0.192, p < 0.1). This consumer resistance is found to be influencing non-adoption decisions directly (β = 0.694, p < 0.1), as well as a mediating factor between diverting effects and the non-adoption decisions (β = 0.133, p < 0.1).
The paper deals with an emerging industry and offers actionable insights for its growth. In practice, this study suggests several possible strategies for the Islamic banking industry to grow under circumstances where digital banking is considered sine-qua-non of modern banking. Several related theories are also evaluated in this study.
