1. Introduction

Islamic banking has been in existence for almost three decades and the industry is regarded as one of the fastest growing industries in the world (Iqbal and Molyneux, 2005). Furthermore, the industry has gained recognition as an alternative to commercial banking because of its transparency and ethical values. In this regard, the ability of the Islamic banking industry to secure a greater market share in a rapidly evolving and demanding financial environment is dependent on the strategic positioning of the Islamic banking players to maintain their competitive edge and offer services that satisfy customers’ needs (Dusuki and Abdullah, 2007: 143).

In addition, customers of Islamic banks are no longer solely looking at compliance of Shari’ah (Islamic laws) (Amiri, 2008: 18) or religious loyalty. Their trust in employing Islamic financial products does not simply come from the products being Islamic, but also in their overall positive performance and the quality of service provided by Islamic banks. Clearly, Islamic banks can offer improved services to all clients by offering effective banking practices through individual banking services tailored to every client’s needs and raise the professionalism level of employees when dealing directly with clients in order to offer efficient services that result in gaining clients’ confidence.

Clearly, Islamic banks’ performance will have an impact on customers’ satisfaction towards them. With regard to this, the performance of Islamic banking in Malaysia has shown a positive trend whereby year by year it has shown a significant increase in terms of assets, deposits and lending (Muhamat et al., 2011: 344). However, there lies an interesting issue whether the service quality performance of Islamic banks in Malaysia is based on similar criteria or different criteria from one of the countries in the Gulf Cooperation Council (GCC), namely Kuwait. Hence, there is a need to study such differences and to understand their implications for the Islamic banking industry in the future. This study is crucial due to the development of the Islamic banking industry, and the growing concern for service quality issues among various players in the industry particularly in Malaysia and the GCC region. It is also important to understand what are the interesting factors that will determine customers’ satisfaction in both nations (Malaysian and Kuwaiti), towards Islamic banking.