Generational Differences in Islamic Banking Adoption Intentions: Evidence from Indonesia

Abstract

The persistent market share gap between Islamic and conventional banking in Indonesia, reflected in the substantially lower number of Islamic bank customers, underscores the critical role of public attitudes in shaping adoption behavior. This study examines the influence of Islamic financial literacy, bank reputation, perceived usefulness, and community influence on customer attitudes toward Islamic banking, with age as a moderating variable. Employing a quantitative approach, primary data were collected from 352 Islamic bank customers in the Jabodetabek region using convenience sampling, and analyzed through structural equation modeling with a multigroup analysis approach via SmartPLS 4.0. The findings reveal that Islamic financial literacy, bank reputation, perceived usefulness, and community influence collectively exert a significant simultaneous effect on customer attitudes, accounting for 60.7% of the variance in the endogenous variable. However, partial effects vary considerably across generational cohorts: among Generation X, none of the exogenous variables significantly influence attitudes, suggesting that religiosity-driven motivations outweigh functional or social considerations. Conversely, all exogenous variables significantly shape attitudes among Generations Y and Z, indicating a stronger reliance on literacy, reputation, and peer influence. These findings highlight the necessity of generation-specific strategies in promoting Islamic banking adoption and contribute to the theoretical understanding of behavioral heterogeneity across demographic cohorts within Islamic finance literature.