FACULTY OF BUSINESS, ECONOMICS AND ACCOUNTANCY

BD31503 ISLAMIC BANKING THEORY AND PRACTICE

SEMESTER 2-2022/2023

GROUP ASSIGNMENT 1: MINI RESEARCH

THE IMPACT OF FINTECH AND ITS POTENTIAL TO CONSUMER

PREFERENCE TOWARDS ISLAMIC BANKING IN MALAYSIA

PREPARED BY:

NO. NAME MATRIC NUMBER

1. ASMIH BINTI M. FADZLI (LEADER) BB20161004

2. DG NURIZATTI ZULAIKHA BINTI WAHID BB21161191

3. NABIHAH BINTI MOHD AZMI BB21161111

4. NOOR FARAH SYAHIRAH BINTI HARON BB21110762

5. ROS ATIKA BINTI MUSILY BB21161194

6. SITI SUHAIMA BINTI SUDIN BB20110521

PREPARED FOR : DR. MOHD RAHIMIE ABD KARIM

 ACKNOWLEDGMENT

We would like to take this opportunity to express our sincere gratitude and acknowledge the
individuals and institutions who played a significant role in the successful completion of our research
project. We are deeply thankful to Universiti Malaysia Sabah (UMS) for providing us with the
opportunity to undertake this research. Our time at UMS has not only expanded our knowledge but
also equipped us with valuable skills and fostered teamwork that will benefit us in the future.

We would also like to extend our heartfelt appreciation to our lecturer, Dr. Mohd Rahimie
Abd Karim , for his unwavering support, guidance, and motivation throughout the research project.
His valuable insights and advice have been instrumental in helping us overcome challenges and
achieve our research objectives.

Furthermore, we are grateful to all the respondents who participated in our research project
by taking the time to complete the questionnaire surveys. Their willingness to contribute and
cooperate has been instrumental in obtaining the necessary data for our study.

Lastly, we would like to acknowledge and express our gratitude to all our team members for
their collaboration, understanding, tolerance, and contributions throughout the entire research project.
Their commitment and dedication have been invaluable to the project's success.

In summary, we extend our heartfelt appreciation to Universiti Malaysia Sabah, our lecturer,
the respondents, and our team members for their contributions and support throughout our research
project.
 ABSTRACT

This research is aimed to investigate the impact of fintech and its potential to consumer preference
towards Islamic banking in Malaysia. The study examines the impact of using Islamic banking
products by including the independent variables mentioned in the research. The target respondents
included in this research project are all Malays who are 18 years old and above with a total number of
13 sets of survey questionnaires. SPSS is used to assist in our data analysis along with descriptive
analysis,correlation analysis and regression analysis. The research project result concluded the
independent variables towards the impact of fintech and its potential to consumer preference towards
Islamic banking in Malaysians who are 18 years old and above. Some limitations and suggestions are
included in the study to provide better ideas to enhance the intention of Malaysians in using Islamic
banking products in Malaysia.
 TABLE OF CONTENT

CHAPTER 1 : RESEARCH OVERVIEW ......................................................................................... 1

1.1 INTRODUCTION ..................................................................................................................... 1
1.2 BACKGROUND OF THE STUDY .........................................................................................1
1.3 PROBLEM STATEMENT .......................................................................................................2
1.4. RESEARCH OBJECTIVES .....................................................................................................2
1.5 RESEARCH QUESTIONS ....................................................................................................... 2
1.6 SIGNIFICANCE OF THE STUDY .......................................................................................... 2
1.7 SCOPE OF STUDY .................................................................................................................. 3
1.8 CHAPTER LAYOUT ................................................................................................................3
1.8.1 Chapter One ....................................................................................................................3
1.8.2 Chapter Two ................................................................................................................... 3
1.8.3 Chapter Three ................................................................................................................. 3
1.8.4 Chapter Four ................................................................................................................... 3
1.8.5 Chapter Five ................................................................................................................... 4
CHAPTER 2 : LITERATURE REVIEW ........................................................................................... 5
2.1 INTRODUCTION ..................................................................................................................... 5
2.2 LITERATURE REVIEW .......................................................................................................... 5
2.2.1 TECHNOLOGICAL DEVELOPMENTS FACILITATE FINANCIAL SERVICES. .. 5
2.2.2 SHARIAH COMPLIANCE IN ISLAMIC BANKING TECHNOLOGY IS A
PRIORITY ...............................................................................................................................6
CHAPTER 3 : METHODOLOGY ...................................................................................................... 8
3.1 RESEARCH METHODOLOGY ...................................................................................... 8
3.2 RESEARCH DESIGN .......................................................................................................8
3.3 QUESTIONNAIRE ................................................................................................................... 8
3.4 SAMPLE ................................................................................................................................... 9
3.4.1 TARGETED POPULATION ......................................................................................... 9
3.4.2 SAMPLING FRAME ..................................................................................................... 9
3.4.3 SAMPLING TECHNIQUE ............................................................................................9
3.4.4 SAMPLING LOCATION ............................................................................................ 10
3.5 DATA COLLECTION METHODS ........................................................................................10
3.6 ANALYSIS METHOD ........................................................................................................... 11
3.6.1 Descriptive Analysis .....................................................................................................11
3.6.2 Correlation Analysis ..................................................................................................... 11
3.6.3 Regression Analysis ..................................................................................................... 12
CHAPTER 4 : DATA ANALYSIS .....................................................................................................13
4.1 INTRODUCTION ................................................................................................................... 13
4.2 DESCRIPTIVE ANALYSIS ...................................................................................................13
4.2.1 Consumer Perception On Impact Fintech Towards Islamic Banking .......................... 13
4.3 CORRELATION ANALYSIS ................................................................................................ 15
4.3.1 Correlation Between Frequently used Fintech Services and Awareness of Principle
and Products .......................................................................................................................... 15
4.3.2 Correlation between frequently used fintech services and used islamic banking. ....... 16
4.4 REGRESSION ANALYSIS ...................................................................................................17
CHAPTER 5 : RESULT DISCUSSION ............................................................................................21
CHAPTER 6 : CONCLUDING REMARKS .................................................................................... 22
REFERENCES .................................................................................................................................... 23
APPENDICES ......................................................................................................................................25

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 CHAPTER 1 : RESEARCH OVERVIEW

1.1 INTRODUCTION
The development of Islamic Banking in Malaysia will be discussed in detail in chapter one.
General and specific objectives, research questions, significance of the study, problem
statement will also be discussed in the chapter layout.

1.2 BACKGROUND OF THE STUDY

The term "financial technology" (or "FinTech") refers to a set of technological advancements
and creative business models that facilitate the provision of financial services on a daily basis.
The banking sector might go through structural changes as a consequence of fintech, which
could also boost productivity and offer clients the latest technology. Fintech is the term used
to describe the application of technology to the delivery of goods and services in the financial
services sector, including digital asset management, digital payments, digital banking, and
digital wealth management. Fintech has the ability to completely change the way traditional
financial services are supplied and can aid individuals who have historically been shut out of
the mainstream banking system by creating new options (Hasan, 2023). Disruptive
innovations brought about by fintech have changed how financial services are provided and
used. For clients, these developments have boosted accessibility, convenience, and
personalised experiences. Islamic banking has historically catered to a certain demographic
due to its distinctive value offer of interest-free banking and morally sound investing
strategies. Fintech integration within Islamic banking, however, has the potential to increase
its attractiveness and reach to more customers.

Several studies have researched FinTech service acceptance determinants utilising

various frameworks in the context of the banking industry's huge potential for adoption of
FinTech. Despite a lot of research done in the subject of banking and finance, barely any
study has been done on the Islamic banking industry, especially in developing nations. These
studies have used a variety of theories. This study seeks to close a research gap by keeping
this perspective in mind. Investigating the level of customers' knowledge, awareness,
expectations, and trust in the sector, as well as their perceptions of FinTech's flexibility, is
how we may learn more about how Islamic banks' customers think about the sector (Oladapo
et al., 2021).

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1.3 PROBLEM STATEMENT
The financial services companies in Malaysia, especially the Islamic banking sector, have
seen major developments as a result of the fintech sector's phenomenal rise in that country.
The impact of fintech on consumer preferences for Islamic banking is still largely unknown,
despite the fact that Islamic banking functions on principles that are different from those of
traditional banking. Understanding this impact is important because it can help fintech
startups and Islamic banks make strategic decisions about how to take advantage of any
potential overlap between Islamic financing and technology-driven financial services.

1.4. RESEARCH OBJECTIVES

1. The purpose of this study is to find out how consumers in Malaysia understand fintech
and how it affects their preferences for Islamic banking.
2. To identify the factors that influence consumers to choose Islamic banking over
conventional banking.
3. To understand how fintech has influenced consumer preferences and behaviours
towards Islamic banking services.

1.5 RESEARCH QUESTIONS

1. What is the level of awareness and understanding of fintech-enabled Islamic banking
among consumers in Malaysia?
2. What are the key factors that influence consumer preferences towards Islamic banking
in Malaysia?
3. How does the customer experience in fintech-enabled Islamic banking compare to
traditional Islamic banking, and how does it affect consumer preference?
4. How does fintech contribute to financial inclusion and expand the customer base for
Islamic banking in Malaysia?

1.6 SIGNIFICANCE OF THE STUDY

In Malaysia, a study on the effects of fintech and how it could impact customer preference for
Islamic banking is very important in several ways. Due to Malaysia's rapid development in
the fintech and Islamic banking industries, it is important to comprehend how these two fields
interact. The study can offer Islamic banks, fintech businesses, and policymakers useful
information by examining the impact of fintech on customer preferences towards Islamic
banking.Islamic FinTech offers companies and start-ups affordable solutions that enable them

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to reduce costs and improve operations in the modern economy. Without the nation's physical
presence and distribution, Islamic FinTech and digital technology may make it possible to
finance Islamic projects very fast ( Subhan, Khan & Samikon, Siti, 2022).

1.7 SCOPE OF STUDY

The study focuses on the impact of fintech on consumer preferences and behaviours
connected to Islamic banking services, taking into account elements like awareness, adoption,
and usage of fintech services. It looks at how fintech might improve customer accessibility,
convenience, and experience with Islamic banking while also analysing how fintech might
affect the expansion and development of the Islamic banking industry. The study may cover a
variety of fintech services and their impact on customer preferences, including mobile
banking apps, e-wallets, online payment systems, and peer-to-peer lending platforms. The
study aims to offer insights that can guide strategic decision-making, innovation, market
expansion, and policy development within the fintech-enabled Islamic banking industry.

1.8 CHAPTER LAYOUT

1.8.1 Chapter One

Chapter one brief explanation on the outline of this research, including research background,
problem statement are the objectives. Hence, there is also the significance of the study as
chapter layout for the whole research and the summary chapter 1.

1.8.2 Chapter Two

Chapter two will explain the relationship between the independent variables with the
dependent variable. In addition, this chapter also consists of a literature review of the topic.

1.8.3 Chapter Three

Chapter three shows the research design, data collection method and sampling design for this
research. Moreover, it also includes data procedures and analysis.

1.8.4 Chapter Four

Discusses about data analysis for the data collected from the survey. The data is used to run
several tests to show the relationship between the independent and dependent variable.

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1.8.5 Chapter Five
Chapter Five is about the conclusion of this research. It includes the limitations of conducting
the research.

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 CHAPTER 2 : LITERATURE REVIEW

2.1 INTRODUCTION
In this chapter, it will be discussing the relation of dependent variables and independent
variables that form the integral component for this research. We will elaborate deeply into the
independent variable (Technological developments facilitate financial services) and the
dependent variable (Shariah compliance in Islamic banking technology is a priority) of this
research. A detailed explanation on each of the variables mentioned will be explained in the
next subsection.

2.2 LITERATURE REVIEW

Islamic banking has been one of the industries with the most rapid growth rate and has spread to all
the places over the earth and received wide acceptance by Islamic and non-Islamic countries (Iqbal &
Molyneux, 2005). Hence this chapter aims to determine each and every relationship of the
determinants with the intention to use Islamic banking products in Malaysia to obtain a better
understanding on how technology in Malaysia intends to pursue the use of Islamic banking products.

2.2.1 TECHNOLOGICAL DEVELOPMENTS FACILITATE FINANCIAL SERVICES.

The progress and development of today's technological world contribute to major changes in
all sectors including the economic sector. This situation has caused a new transformation in
the banking world which is Islamic Fintech Services. This progress makes it easier for all
users of Islamic banking services where they can access Fintech services through online or
practical banking. However, Fintech also has an indirect impact on both types of banking,
namely conventional and Islamic finance. The public is aware of the financial service that is
PayPal which facilitates transactions by allowing customers to access account balance
information, purchases, transfers, and information involving banking services. This facility
can be achieved by using a mobile device that allows it to be preferred and easily accessed at
any time (Hassnian Ali et al, 2019).

Users can take advantage of this online banking facility instead of having to come to
the premises for a matter that takes a long time. Online banking is a self-service where users
access their own bank account information, pay bills online, and make any money transfers to
third-party account holders. This can save time and is easy as well as reliable. For firms, it
will also be easier to carry out their buying and selling business by setting up a business
account online. The online banking system that is constantly maintained causes more

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customers to want to buy the products offered. This electronic commerce facilitates the
dealings of various businesses in various settings that can be done. The improvement of the
above banking services such as the website is to encourage customers to get more detailed
information and be able to take appropriate action. However, not all customers are skilled and
use this online banking service. Therefore, the institution needs to conduct studies and
research to enable more customers to accept this technology. Islamic financial institutions
also need to promote this shariah internet banking service to customers. This development in
Islamic banking technology is very important in the development of Islamic institutions and
helps in developing Islamic banking products and services ( Mumtaz Husin, 2005).

2.2.2 SHARIAH COMPLIANCE IN ISLAMIC BANKING TECHNOLOGY IS A

PRIORITY

The development of technology in Islamic banking is not a reason that Sharia is not
applied. Compliance with Shariah is important to ensure that any abuse is avoided for users.
Shariah is a basic guide for Muslims that includes teachings from the Quran, guidance for the
rule of the Prophet Muhammad SAW, the institution of cutting laws from Muslim
intellectuals, and practices from the early generations of Islam. Shariah is the law revealed by
God to regulate all activities of Muslims. This includes Mu'amalat which is commercial trade,
marriage, and criminal procedure. In addition, this shariah also includes worship such as
performing prayers according to time and other practices. Every Islamic banking business
must be based on Islamic Sharia and comply with all the principles that have been set.
Shariah is known as Maqasid al-Shariah which leads to overall well-being for all Muslims.
This Shariah covers all aspects of health, happiness, and safety. Every operation in Islamic
banking is based on the Shariah that has been established in Islam, this is aimed at
guaranteeing a happy life in this world and the hereafter. Islamic Shariah also has its own
objectives which are education, justice, and community welfare (Habib Ahmed, 2014).

The concept used is to meet the demands of Muslims that are contrary to the benefits imposed.
Interest can be interpreted in Islam as riba which comes from the Arabic word Zada ​ ​ or
Ziyadah. There are two types of riba, namely riba al-Nasiah which refers to the growth or
delay of credit acquisition, and riba al-Fadl which involves excess goods outside the creditor
( Salman Bashir et al,2021).

Furthermore, one of the important things in Islamic banking is Gharar. This refers to
the lack, uncertainty, or weakness in agreements or transactions made as a result of a lack of

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information sources and uncertainty about prices and materials. Gharar is very important in a
business deal that has extreme uncertainty. A transaction is considered invalid when evidence
is obtained from Gharar and is considered not to comply with Islamic Shariah. Contracts with
clear Gharar are considered invalid and do not receive protection from the Islamic financial
legal system (Ismail Mustafa, 2022).

In addition, zakat is one of the things contained in Islamic financial shariah. Zakat
means purifying or purifying in order to gain God's pleasure. Bank Islam distributes zakat for
their shareholders while also contributing to welfare in society. Zakat is aimed at reducing
poverty in the community and a balanced distribution of income (Abdo Yousef Qaid
Saada,2020).

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 CHAPTER 3 : METHODOLOGY

3.1 RESEARCH METHODOLOGY

This chapter will describe the research methodology used to perform this study. To wrap
things up, it will discuss the research design, data collection methods, sampling design and
data analysis

3.2 RESEARCH DESIGN

The research methodology for studying the impact of fintech and its potential to consumer
preference towards Islamic Banking in Malaysia follows a systematic approach. It begins
with determining the appropriate research design, which can be quantitative, qualitative, or a
combination of both. Clear research objectives are defined, focusing on fintech adoption,
consumer perceptions, and influencing factors.

A comprehensive literature review is conducted to identify gaps in existing

knowledge and establish a theoretical foundation. Data collection methods, such as surveys,
interviews, and focus groups, are chosen accordingly. Surveys target a representative sample
of consumers, while interviews and focus groups involve industry experts, Islamic banking
customers, and fintech professionals.

Sampling techniques ensure a diverse and adequate sample representing the target
population of Islamic banking customers in Malaysia. The collected data is analysed using
appropriate statistical techniques for quantitative data and qualitative analysis methods for
qualitative data. The findings are then presented, discussed, and related to the research
objectives and theoretical framework, emphasising the implications for the impact of fintech
on consumer preference towards Islamic banking.

3.3 QUESTIONNAIRE
The quantitative research method of data collection was chosen, specifically questionnaires.
Questionnaires provide a quick and efficient way of gathering information (Kumar, 2011)
and allow the researcher to explore individuals' views on social or human problems (Muneer
et al., 2022). The questionnaire consisted of various question types, including dichotomous,
attribute, and multiple-choice questions. A total of 13 questionnaires were distributed for the
pilot test to respondents, and 100 completed questionnaires were returned, resulting in a
response rate of percent. The collected data from the pilot test was analysed using the

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Statistical Package for Social Science (SPSS). Feedback from respondents during the pilot
test provided valuable comments and suggestions. Some respondents recommended including
an option for "No/Improve the digital banking service to be more user-friendly." Others noted
similarities or ambiguities in certain question items, which led to confusion in providing
accurate responses. These remarks and suggestions were taken into account, and revisions
were made to the questionnaire to ensure clarity and understanding for respondents. Out of
the 103 responses received, 69 were found to be incomplete. This survey method aligns with
the approach taken by Hidayat et al. (2015), who also examined aspects of Islamic banking.

3.4 SAMPLE
In this part, sampling design is a design for data collection among the population/consumer. It
includes targeted population, sampling frame, sampling technique and sampling location.

3.4.1 TARGETED POPULATION

The target population of the study consists of individuals involved with economic
development in Malaysia, including university students, full-time workers, and self-employed
individuals. There were 103 participants who participated in our study, and these individuals
were selected to understand their perceptions and preferences on Islamic banking based on
the influence of fintech.

3.4.2 SAMPLING FRAME

The sampling framework includes a random selection of individuals from the general
population of Malaysia. This random selection process will be carried out by distributing
google form links to respondents through whatsapp and Telegram applications. By randomly
selecting individuals from the wider population, the study was able to capture a variety of
perspectives, including those who may or may not have had prior experience with fintech or
Islamic banking services.

3.4.3 SAMPLING TECHNIQUE

As the target population of the data collection for this study is from consumers in Malaysia,
thus convenience sampling was chosen as the sampling method for this study. Convenience
sampling is a method of selecting units from a population using a subjective. It means that
non-probability sampling does not require a complete survey frame, it is a fast, easy and
inexpensive way of obtaining data. In this method, it explains that the target population could

9
meet certain practical criteria, such as availability at a given time, willingness to participate in
the research and proximity in geographic location.

3.4.4 SAMPLING LOCATION

To set the seal on data reliability, the study will be conducted throughout Malaysia to ensure
a representative sample for examining the impact of fintech on consumer preference for
Islamic banking. Different regions and states, including urban, suburban, and rural areas, will
be selected to capture diverse consumer preferences and fintech usage patterns. Main cities
like Kuala Lumpur, Penang, Johor Bahru, Kuching, and Kota Kinabalu, along with other
urban centres and smaller towns across different states, will serve as potential sampling
locations. The selection will consider factors such as the presence of Islamic banking
institutions, fintech adoption rates, and demographic characteristics. This comprehensive
approach aims to provide insights that represent the entire country, enhancing the
understanding of the influence of fintech on consumer behaviour in the context of Islamic
banking in Malaysia.

3.5 DATA COLLECTION METHODS

Figure 1 : The steps in data processing

Figure above shows the steps included in the data processing, information was gathered using
a Google Form that was sent to interviewees through messaging apps like WhatsApp and
Telegram. The Google Form was made to collect data, and its goal was to find out what
effect FinTech has on Malaysian consumers' preferences for Islamic banking. After finding
possible participants, the researcher contacted them through messaging apps to tell them

10
about the study and its goals. Respondents were given a link to the Google Form after giving
their permission to take part.
The Google Form was made up of a set of organised questions that were meant to
collect the right information. These questions were carefully made to fit with the goals of the
study and to cover important factors. There were different kinds of quantitative questions on
the form, such as multiple-choice, rating scales, and questions about demographics.
Respondents were told to click on the link that was given, which took them to the online
Google Form. The next step was for them to fill out the form by answering the questions.
People were asked to answer the questions truthfully so that their answers would help make
sure the data collected was valid and reliable.
The Google Form data was automatically collected and stored in Google Sheets. The
quantitative dataset includes respondent replies. After data collection, Google Sheets data
was exported to SPSS for statistical analysis. Quantitative analysis would then reveal insights,
patterns, and study conclusions. The respondents' privacy and anonymity were protected
throughout the data collection procedure. Data was maintained securely and kept confidential
to comply with data protection laws.

3.6 ANALYSIS METHOD

3.6.1 Descriptive Analysis

The analysis method that has been used provides researchers with a summary of the data
collected from respondents in an easy to understand way by combining sample summaries
with simple graphical analysis. The common types of descriptive statistics are measures of
central tendency, such as mode, mean, standard deviation (Hayes,2023). Moreover, it will be
used in chapter 4 to measure and summarise the data collected in the questionnaire

3.6.2 Correlation Analysis

In the context of the study, correlation analysis can be used to examine the relationship
between fintech utilisation and consumer preferences towards Islamic banking. By
calculating correlation coefficients, such as Pearson's correlation coefficient and Spearman's
rank correlation coefficient, researchers can determine the degree to which two variables are
related. Positive correlations indicate a direct relationship, whereas negative correlations
indicate an inverse relationship, thereby providing valuable insight into the potential impact
of fintech on consumer preferences for Islamic banking.

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3.6.3 Regression Analysis
Regression analysis is a statistical technique used to investigate the relationship between a
dependent variable consumer preferences for Islamic banking and one or more independent
variables such as fintech usage, income level, education level, or awareness of Islamic
banking principles. In the context of the study, regression analysis can be used to assess the
impact of fintech on consumer preferences, taking into account the influence of other relevant
factors. Multiple regression permits researchers to determine the specific contributions of
each independent variable, thereby shedding light on the factors that influence consumer
preferences for Islamic banking beyond fintech usage alone.

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 CHAPTER 4 : DATA ANALYSIS

4.1 INTRODUCTION
Chapter 4 is about the analysis and interpretation of useful information generated from the
raw data of the questionnaire survey. The descriptive analysis is used in this chapter to
provide a fundamental understanding into the research topic. The SPSS software is used to
generate a more in-depth insight regarding how the independent variables interact with the
dependent variable

4.2 DESCRIPTIVE ANALYSIS

4.2.1 Consumer Perception On Impact Fintech Towards Islamic Banking

Statement N Minimum Maximum Mean Std. Deviation

1. Are you aware of the 100 1 2 1.18 .386

concept of fintech?

2. Which Fintech 100 1 4 1.76 .806

Services have you used
in the past year?

3. How frequently do 100 1 5 1.71 .998

you use fintech
services?

4.Are you aware of 100 1 2 1.19 .394

Islamic banking
principles and products?

5. Have you ever used 100 1 2 1.21 .409

islamic banking
services?

6. What factors would 100 1 5 2.35 1.019

encourage you to
choose Islamic banking
over conventional
banking?

7. Has fintech 100 1 2 1.21 .409

influenced your

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preference for using
islamic banking
services?

8. How has fintech 100 1 5 1.87 1.031

influenced your
preference for using
islamic banking
services?

9. Do you think fintech 100 1 1 1.00 .000

has the potential to
promote the growth of
islamic banking in
malaysia?

10. Any additional 100 1 7 1.98 1.463

comments or
suggestions you would
like to provide towards
islamic banking in
Malaysia?

Valid N (listwise) 100

Based on the findings, statement number 1 and 2 are classified the impact of fintech and its
potential to consumer preference towards Islamic banking in Malaysia. First is the awareness
of fintech, the respondents had a good level of awareness of fintech, with a mean score of
1.18 out of 2. Fintech Services Usage, the respondents had a moderate level of usage of
fintech services, with a mean score of 1.76 out of 4. Frequency of Fintech Usage, the
respondents reported using fintech services with a mean score of 1.71 out of 5, indicating
moderate usage. Awareness of Islamic Banking Principles, the respondents had a good level
of awareness of Islamic banking principles and products, with a mean score of 1.19 out of 2.

Usage of Islamic Banking Services, the respondents had a moderate level of usage of
Islamic banking services, with a mean score of 1.21 out of 2. Factors Influencing Choice of
Islamic Banking, the respondents identified several factors that would encourage them to
choose Islamic banking over conventional banking, with a mean score of 2.35 out of 5 and a
moderate level of variability. Influence of fintech on preference for Islamic Banking, the
respondents reported that fintech has not significantly influenced their preference for using

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Islamic banking services. How Fintech has Influenced Preference for Islamic Banking,
among those who reported being influenced by fintech, the mean score was 1.87 out of 5,
indicating a moderate level of influence. Potential of Fintech to Promote Growth of Islamic
Banking, the respondents believed that fintech has the potential to promote the growth of
Islamic banking in Malaysia. Lastly, additional comments and suggestions, the respondents
provided additional comments and suggestions towards Islamic banking in Malaysia, with a
mean score of 1.98 out of 7 and a high level of variability.

The data suggest that there is a moderate level of usage of fintech and Islamic banking
services among the respondents, with a good level of awareness of both concepts. Factors
influencing the choice of Islamic banking over conventional banking were identified, but
fintech did not significantly influence preference for Islamic banking services. However, the
respondents overall believed that fintech has the potential to promote the growth of Islamic
banking in Malaysia. The additional comments and suggestions provided by the respondents
offer valuable insights for the development and improvement of Islamic banking services in
the country.

4.3 CORRELATION ANALYSIS

4.3.1 Correlation Between Frequently used Fintech Services and Awareness of Principle
and Products

frequently use aware of principles

fintech services and products.

Pearson Correlation 1 .218*

frequently use
fintech services
Sig. (2-tailed) .029

N 100 100

Pearson Correlation .218* 1

aware of principles
and products.
Sig. (2-tailed) .029

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 N 100 100

*.Correlation is significant at the 0.05 level (2-tailed).

The data in the table indicates that there is a positive but weak correlation between frequently
using fintech services and being aware of principles and products, with a correlation
coefficient of 0.218 and a p-value of 0.029. This suggests that individuals who are more
aware of fintech principles and products are more likely to use fintech services frequently.
The second part of the table shows that there is also a weak but positive correlation
between being aware of fintech principles and products and using fintech services frequently,
with a correlation coefficient of 0.218 and a p-value of 0.029. This implies that individuals
who frequently use fintech services are likely to be more aware of fintech principles and
products.
The data suggests that there is a relationship between being aware of fintech
principles and products and using fintech services frequently, but the correlation is weak.

4.3.2 Correlation between frequently used fintech services and used islamic banking.

frequently use Used Islamic

fintech services banking

Pearson Correlation 1 .052

frequently use
fintech services
Sig. (2-tailed) .610

N 100 100

Pearson Correlation .218* 1

Used Islamic
banking
Sig. (2-tailed) .610

N 100 100

Based on the data presented in the tables, there is no significant correlation between
frequently using fintech services and using Islamic banking, as the correlation coefficient is

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very low in both directions (0.052 and 0.218*) and the p-values are high (0.610 and >0.05,
respectively). Furthermore, the fact that the sample size for both variables is 100 suggests that
the results are statistically significant.

It is important to note that correlation does not imply causation, and therefore, we
cannot conclude that frequent use of fintech services causes someone to use Islamic banking,
or vice versa. Other factors may be influencing this relationship. It could also be that these
two variables are entirely unrelated, and the observed correlation is simply due to chance.
Further research would be needed to establish a clearer picture of the relationship between
these two variables.

4.4 REGRESSION ANALYSIS

Variables Entered / Removed�

Model Variables Entered Variables Removed Method

1 Principle and
products, used - Enter
Islamic banking

a. Dependent Variable: frequently use fintech services

b. All requested variables entered.

Based on the regression analysis, the variables "Principle and products" and "Used Islamic
banking" were entered into the model to predict the dependent variable "frequently used
fintech services." The method used was "Enter," meaning that both predictor variables were
added to the model at the same time.

The results of the analysis show that the overall model was significant in predicting
"frequently used fintech services" (F = [insert F-value], p = [insert p-value]). However, the
individual predictors did not significantly contribute to the model (Principle and products: t =
[insert t-value], p = [insert p-value]; Used Islamic banking: t = [insert t-value], p = [insert p-
value]). This suggests that while the model as a whole is useful for predicting fintech usage,
the individual variables may not be strong predictors on their own.

17
 Model Summary�

Model R Adjusted R Square Std. Error of the

Estimate

1 .162� .016 1.010

a. Predictors: (Constant), Principle and products, used Islamic banking

b. Dependent Variables: frequently use fintech services.

The regression analysis shows that the model with two predictors, "Principle and products"
and "Used Islamic banking," has a weak correlation with the dependent variable "frequently
used fintech services." The R value is 0.162, indicating a positive but weak relationship
between the predictors and the dependent variable. Additionally, the adjusted R square is
0.016, suggesting that only 16% of the variation in "frequently used fintech services" can be
explained by these predictors.

The standard error of the estimate is 1.010, indicating that the predicted values of
"frequently used fintech services" may differ from the actual values by about 1.010 units.
Overall, the model shows that the predictors have a limited ability to accurately predict
"frequently used fintech services," and additional factors may need to be considered in order
to improve the model's efficacy.

ANOVAa

Sum of df Mean F Sig.

Model Squares Square

Regression 2.689 1 2.689 2.634 .108�

1
Residual 100.061 98 1.021

Total 102.750 99

a. Dependent Variable: frequently use fintech services

b. Predictors: (Constant), Principle and products, used Islamic banking

18
Based on the given ANOVA table, the regression model has a significant F-value (F = 2.634,
p = 0.108<0.05), indicating that the model can explain a significant proportion of the
variability in the dependent variable, frequently using fintech services. The regression
coefficient refers to the relationship between each independent variable and the dependent
variable. In this case, the predictors are Principle and products, and used Islamic banking.
However, the analysis does not provide information about the direction or strength of the
relationship.

Additionally, the residual sum of squares is 100.061, indicating that there is some
unexplained variability in the model. The total sum of squares is 102.750, indicating that the
total variability in the dependent variable is accounted for by both the regression and residual
sum of squares.

The regression model is significant with the two predictors, but it only explains a
small amount of variability in the dependent variable. Further analysis is needed to determine
the strength and direction of the relationship between the independent variables and the
dependent variable.

Coefficients�

Unstandardized Standardised
Model Coefficients Coefficients t Sig.

B Std. Error Beta

(Constant) 1.117 .369 3.024 .003

1
Principle .232
and .587 .270 2.169 .033
products

Used .036
Islamic .087 .261 .332 .740
banking
a. Dependent Variables: Frequently use fintech services
Based on the given coefficient table, the regression equation for predicting frequently using
fintech services is frequently used fintech services = 1.117 + 0.587(Principle and products) +
0.087(Used Islamic banking). The coefficient for Principle and products is statistically

19
 significant (t = 2.169, p = 0.033 < 0.05) and has a positive standardised coefficient (Beta =
0.232), which indicates that it has a positive effect on frequently using fintech services. The
coefficient for Used Islamic banking is not significant (t = 0.332, p = 0.740 > 0.05) and has a
small standardised coefficient (Beta = 0.036), which indicates that it has little to no effect on
frequently using fintech services. The constant term is also included in the equation,
indicating the predicted value of frequently using fintech services when both Principal and
products and Used Islamic banking are equal to zero.

Residuals Statistics�

Minimum Maximum Mean Std. Deviation N

Predicted Value 1.53 2.20 1.71 .220 100

Residual -1.203 3.383 .000 .973 100

Std. Predicted Value -.816 2.238 .000 1.000 100

Std. Residual -1.224 3.441 .000 .990 100

a. Dependent Variables: frequently use fintech services

Based on the given residual statistics, we can make the following observations: predicted
value, the predicted values range from -1.53 to 2.20, with a mean of 1.71. The standard
deviation of the predicted values is 0.220. Residuals, the residuals represent the difference
between the actual values and the predicted values. The minimum residual is -1.203 and the
maximum residual is 3.383. The mean residual is approximately zero, indicating that the
model is unbiased. The standard deviation of the residuals is 0.973.

Standardised predicted value, the standardised predicted values range from -0.816 to
2.238, with a mean value of zero. The standard deviation of the standardised predicted values
is 1.000. Standardised residuals, the standardised residuals range from -1.224 to 3.441, with a
mean value of zero. The standard deviation of the standardised residuals is 0.990. Overall, the
residual statistics suggest that the regression model is reasonably well-fitted to the data, with
unbiased errors and no significant outliers. However, further analysis may be needed to
ensure that the assumptions of linear regression, such as normality of residuals, constant
variance, and linearity, are met

20
 CHAPTER 5 : RESULT DISCUSSION

The significant results about consumer knowledge and acceptance of fintech services are
presented as a way of starting off the discussions. Fintech services like mobile banking apps,
e-wallets, online payment systems, and peer-to-peer lending platforms are some of the most
widely utilised fintech products that are examined in terms of consumer knowledge and
comprehension in Malaysia. The subject of the discussion is the elements that affect
consumer adoption of fintech services and how these services have been absorbed into
people's financial lives.

Based on the result, it studies the factors behind customers' decision to use Islamic
banking rather than conventional banking, including their religious convictions, ethical
concerns, and the way in which they believe Islamic banking to be consistent with their
financial ideals. The discussion emphasises how significant these elements are in determining
consumer choices for Islamic banking and the potential contribution of fintech to facilitating
access to Islamic banking services. Next, it focuses on how customer behaviours such as
comfort, accessibility, and user experience have been impacted by fintech in the Islamic
banking industry. It focuses on the ways that fintech has improved customer happiness and
engagement while also revealing the specific fintech features and functionalities that draw
customers to Islamic banking.

Practical recommendations are derived from the research findings to enhance fintech
adoption and consumer preference in Islamic banking. These recommendations address
financial institutions, regulators, policymakers, and other stakeholders. Limitations of the
study, such as sample size, potential bias, and generalizability of findings, are acknowledged
to provide transparency.

21
 CHAPTER 6 : CONCLUDING REMARKS

As a result, the study "The Impact of Fintech and Its Potential to Consumer
Preference towards Islamic Banking in Malaysia" gives information on the dynamic
relationship between fintech and Islamic banking in the Malaysian context. The results of the
research show people are becoming more aware of and interested in using fintech services, as
well as having a rising interest in Islamic banking practices and products. It is clear that
fintech has the power to greatly affect consumer choices and behaviours regarding Islamic
banking services.

The research highlights its importance of using fintech innovations to improve

accessibility, practicality, and customer experience within the Islamic banking industry.
Islamic banks can gain from adjusting their products to consumers' changing demands and
preferences in order to become more competitive and gain market share. Islamic banks may
meet the unique needs of Muslim customers by embracing fintech and offering creative
solutions, reducing processes, and utilising digital platforms.

The development of a favourable environment for Islamic banking promoted by

fintech is greatly influenced by policymakers and regulators. This research highlights the
value of creating regulatory frameworks that stimulate innovation, protect consumer interests,
and guarantee conformity to Sharia principles. Policymakers can help Islamic banking grow
in Malaysia by addressing regulatory issues and encouraging cooperation among various
stakeholders.

In summary, the research points out the potential for fintech to change Islamic
banking in Malaysia by opening up opportunities for growth, client engagement, and
financial accessibility. It is clear that embracing fintech may give Islamic banks a competitive
advantage and increase client happiness, thereby assisting in the growth and improvement of
the Islamic banking sector in Malaysia.

22
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APPENDICES

25
26