CUSTOMER SERVICE AND ITS IMPACT ON BANK PERFORMANCE

CUSTOMER SERVICE AND ITS IMPACT ON BANK PERFORMANCE

(A case study of United Bank of Africa (UBA) Plc)

ABSTRACT

Customer service is the series of activities designed to enhance the level of customer satisfaction-that is, the feeling that a product or service has met the customer’s expectation and even beyond his/her expectation. The main objective of the study is to assess customer service and its effect on banking business in Nigeria. Within this framework, the study seeks to find out if waiting situations and timely services will affect customers’ satisfaction and increase service efficiency. Data were collected using questionnaires and were analyzed using descriptive statistical tools which included the use of frequency, percentages and Pearson Correlation Coefficient. The study found out that customers are dissatisfied with long waiting times, they want timey services and at their convenience. Anything short of this might be an indication that there is a pervasive problem in banking services offered. The study concluded that Customer satisfaction provides an indication of how successful an organisation is at providing products and/or services to the marketplace.

CHAPTER ONE

1.1     INTRODUCTION

The origin of banking in Nigeria date back to the Goldsmith in Verice and up-till date, personal service is till the mainstay of banks output for her customers.

Service is the act of distributing the banks various production packages and marketing strategies implementation. It is also the bulwark of the industry in the face of government guidelines and hash monetary or fiscal policies. This is viewed by (Oguntade, 1992) in Business Time that by aggressive marketing advertisement with the current Central Bank directives on deregulation of interest rate, banks must work extremely hard to be able to survive.

In Nigeria, the economy has been largely exhibitive of classic sellers’ market in all sectors. Till the recent past, the country is under banked and bank customers have to accept or consume service without questions as in every seller’s market. No wonder (Irojiogu, 1991) in his write-up of pricing of Commercial Bank services in Business Times pointed out that so many factors militate against rendering efficient banking services in Nigeria.

But today banking in Nigeria has become more competitive. (Riege, 1990) stated in Business Times that as an effort to improve and provide innovative services, banks especially commercial banks must step in line will present trend in the market, the customers who are the ultimate aim of the bank should be satisfied through deliverance of services that will satisfy the need of the customers, the bank make their profits. Considering this fact and also the view that human needs are instable, there is the need for this study to improve the service rendered to customers. The idea of efficient services in the banking industry has been given serious attention not only by the management of bank (UBA), but also by the government. The view is that commercial banks should provide prompt, friendly, covetous, orderly, efficient and satisfying services to her customer.

In view, of the foreign relationship between a bank and her customers is contractual. This is because baking is about trust. The customers entrust his hard-earned money with the bank for safekeeping. Here the bank is a debtor/agent and the customer is the creditor/principal since she (bank) carries out instruction of the customers in consideration for these services, the bank is paid commission, interest or fee.

In some situation, the bank is the creditor while the customer is the debtor. Such situation like advances or credit facilities to customers. Yet, many banks are known for their slow pace in transacting business. Long queues with customers waiting for towns to cash their cheque or deposit their money. To open an account is characterized by “come today, come tomorrow and next week syndrome. To buy a bank draft is another story. The Vanguard newspaper (11^th June, pg. 14) in the treat of WAEC registration, had a cartoon of an employee who was asking for two days casual leave to enable him purchase bank draft.

Another, a bank customer was carrying a mat to the bank so as to sleep while waiting for his turn in the crowded banking hall to cash his cheque, yet another, a bank customer was being turned around by bank staff in his quest for the section of foreign exchange for him to exchange his foreign currency.

According to Gadzama (1989) in his chairman’s statement of Allied Bank Annual Report “that customers are treated with lack of seriousness by bank staff. They believe it is right to deliberately delay customers as a result of their non-challant attitude to work. It is always a daily, occurrence to hear abuses flowing from customers to bank staff over a protracted delay in completing bank transactions.

1.2     BACKGROUND OF THE STUDY

No wonder the Chief of General staff late vice admiral Augustus Aikuomu stressed the point while addressing delegates in the 10^th Anniversary of the Nigerian Institute of Bankers. He said” rather one observe buoyant balance sheet which are not as a result of quality services, (emphasis mine) or growth stimulation, but a because to a drastic shift in asset portfolio, characterized by a more total avoidance of risk altogether”. That is why there must be need for reorientation in attitude of bank staff towards their customers. In the next decade, banking and nation economic activities will certainly become more complex and sophisticated. 

In United Bank for Africa Plc, where the case study is based on the story is not different. A brief mention of the origin of the bank will be made. United Bank for Africa Plc, was originated from Britain and France, the British French Bank Limited itself, metamorphosed from Bruci Paris (Banque National Parle commerce et al, Industries) established in 1932. The officially opened to business in December 1949 with a staff strength of twelve.

In 1960, the went public in accordance with the policy and intention of the French owners of bank to sell off their shares to Nigerians on February 1961, the United Bank for Africa was incorporated to take over the assets and liabilities of the British for business under this new name on October 3^rd 1961. The also serve a good number of customer. But because the two parties (staff and customers) are not satisfied with each other, hence the study.

1.3     STATEMENT OF THE PROBLEMS

In the service ministry effectiveness of management is often by the quality of service rendered. There is in turn determined by the time spent to obtain the service and the circumstance in which it is received. Customers are satisfied when they get the services they want at the right time, right place, right price and in the right manner. As customers and users of bank directly or indirectly are aware of the various problems faced by customers.

1. It has been very difficult to understand the characteristics of the bank staff and customers.
2. Despite the enhanced status of the bank staff, it has been a problem to know the adequate of resources-human and material resources for effective operations.
3. Their had been complaint from the customers of non-satisfactory services.
4. More the extent of staff/customer relationship in United Bank for Africa Plc. Is not convincing.

1.4     OBJECTIVES OF THE STUDY

Bearing the stated problem in mind, this study will find a way of correcting the problems and to improve on them. The purpose of the study includes the following:-

1. To find out the characteristics of staff and customers of United Bank for Africa Plc.
2. To determine the extent of customers compliant of non-satisfactory services.
3. To evaluate the extent to which commercial banks have succeeded in dispensing their services to their customers.
4. To suggest avenues and method of improvement to the identified problems. And in so doing, to further give an insight into this sector of our economy for the future use of professionally qualified and skillfully trained personnel in furthering the staff-customer relationship.

1.5     SIGNIFICANCE OF THE STUDY

It has been said that the ultimate aim of any organization is to obtain success by way of achieving its objectives. An organization will go to any length by apply strategies that help them meet their target or achieve their goals. Considering the uniqueness of the problems identified in this research, the findings are expected satisfaction of customers’ needs through improved quality services.

The important of this study is to throw more light on some of the causes and effects of unsatisfactory counter services in the Nigerian banks which are the base of the current Nigerian banking system. The bank staff/management will also benefit from this study.

Furthermore, this study will go a long way by educating the commercial banks on how to dispense their services to their customers and also to help the average Nigerian bank customer to learn how to be patience in dealing with the bank staff and not always be in a hurry.

Finally, I hope that this work will provide basis for future research.

1.6     RESEARCH QUESTIONS

1.       What are the characteristics of staff and customers of United Bank for Africa Plc?

2.       How long have customers been complaining of non-satisfactory services?

3.       Have the commercial banks succeeded in dispensing their services to their customers?

4.       What are the avenues and methods of improvement to the identified problems?

1.7     RESEARCH HYPOTHESIS

Based on the problem statements, the research proceeds to formulate the following hypothesis, which will be tested in the course of the study.

H_o:    There is no significant difference in the perception of customers and staff on whether the services received in the bank meets the needs and interest of the customers.

H­_i:     There is significant difference in the perception of customers and staff on the services received in the bank meets the needs and interest of the customers.

1.8     SCOPE OF THE STUDY

This study has been concentrated on United Bank for Africa Plc Abuja as represents the biggest branch of United Bank for Africa Plc Abuja.

A study about commercial banking would not be adequate without an analysis of impact of commercial banking on the development of the general economy. But the scope of activity would be practicably impossible within the available time, finance and also with respect to the Limited space for the study to cover whole branch of UBA.

Therefore, this study examines the causes of poor customer services and ways of improving it. Considering this factors, the data and response to questionnaires were limited to staff and customer of United Bank for Africa Abuja.

1.9     LIMITATION OF THE STUDY

Considering the factor made on the scope of this study of this chapter that is the constraints, notable among them were time and finance factor as the researcher was combining the research work and class work at the same period which are not easy. It is wise for Abuja to be used, which is a bonus area for getting the required data.

This study also was limited to Abuja with the hope that conclusions reached in the cause of the study should apply to other commercial banks.

1.10   DEFINITION OF TERMS

1. CUSTOMER: – According to Oxford Advanced Learners Dictionary of current English. Customer s defined as a person who buys things, especially one who gives his custom to a shop.
2. SERVICE: – This refers to a system or arrangement that supplies public needs especially for communication.
3. MANAGEMENT: – This refers to the body in an organization responsible for planning, organizing, directing and controlling activities in the organization.
4. RELATIONSHIP:  -This means the connection between one thing, person, idea and another.
5. BANK: – Establishment for keeping money other valuables safety.
6. STAFF: – Group of assistants working together under a manager or head.
7. PERFORMANCE: Performance in this context entails how well or badly an individual/organisation does something or how well or badly something works.

REFERENCES

Gadzama M.W. (1989): Allied Bank Annual Report. Chairman statement P. 10.

Irojiogu .E. (1991) July 11: Business Times. Pricing of Commercial Bank service P.5.

Oguntade Adekunle .M. (1992): February 2 Strategic Issues Business Times, marketing of Bank Services P. 3.

Reige Ani (1990): The Alliance Silver Jubilee Edition Interview with Founding Chief Executives P. 15.

AN EMPIRICAL ANALYSIS OF BANK PERFORMANCE IN NIGERIA

AN EMPIRICAL ANALYSIS OF BANK PERFORMANCE IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.           Background to the Study     

Banks serve vital intermediary role in a market oriented economy and have been seen as the key to investment and growth. Falegan (2016) and Bashir and Kadir (2017) observed that commercial banks play a crucial role in the nation’s economy, by using various financial instruments to obtain surplus funds from those that forgo current consumption for the future. They also make same funds available to the deficit spending unit (borrowers) for investment purposes. In this way, they make available the much need investible funds required for investment as well as for the development of the nation’s economy.

Performance failure among Nigerian banks has resulted in loss of public confidence in the banking sector. Performance links an organization’s goal and objectives with organization decisions. Public confidence on the banking industry in Nigeria depends greatly on the profitability of the participating banks in Nigeria. This explains why the call for the critical assessment of the performance of the banking system in Nigeria. The efficiency of the banking system has been one of the major issues, in the new monetary and financial environment of the world today. The efficiency and competitiveness of financial institutions cannot easily be measured, since their products and services are of an intangible nature.

There have been several attempts in the past to improve the performance of Nigeria’s banking sector through the periodic review of bank reforms. However, the recent policy reform tagged “Bank Consolidation and Restructuring” was aimed at resolving the critical issue of financial distress, restoring public confidence in the banking industry and putting the banks in a leadership position to compete with banks in other countries of the world (Soludo, 2004). In Nigeria, the ability of the banking industry to play its role has been periodically undermined by its vulnerability to systemic financial crises and macroeconomic instability. Some banks are still tottering, and worse still are at the verge of distress and liquidation. Even though several studies have been embarked upon in this area, still the paramount truth is that there are inconsistencies in the findings of these studies. Thus, the present study would go beyond determining the effectiveness of these reforms for ensuring the stability of bank industry to determining their impact on bank performance.

Several bank reforms have been adopted by the CBN to resolve issues of financial distress, restore public confidence in banking industry and to put the banks in a leadership position to compete with banks in other countries (Akingbola, 2006). Notably, the Nigerian banking industry has evolved through four major reforms including the laissez-faire regime(1930-1959), the control regime(1960-1985), the de-control regime(1986-2004) and the consolidation and restructuring regime(2005-present). In spite of this, the base of Nigeria’s bank industry has continued to remain too fragile to play the supportive role to the public and private sectors. The continuing rise in interest rate and the prevailing macroeconomic instability in Nigeria have raised the issue bordering on the effectiveness of the various reforms in the banking industry. It is against this background that this study seeks to carry out an empirical analysis of Bank performance in Nigeria.

1.           Statement of the Problem

The problem which this study seeks to solve is to ascertain the reasons for banks poor performance in the post consolidation era in Nigeria. As a result of poor performance the Nigerian banking sector have witnessed several regulations, despite the regulation in place, more banks have continued to be in distress even with forceful merger and acquisition initiated over the years aimed at reducing the rate of bank distresses in Nigeria. The Soludo administration in CBN started in 2004 with a new form of reform. Soludo (2004), the then governor of the CBN described the industry as being generally characterized by small-sized and marginal players with very high overhead cost. The primary objective of his reform was to guarantee an efficient and sound financial system. These reforms were designed to enable the banking system develop the required resilience to support the economic development of the nation by efficiently performing its functions as the fulcrum of financial intermediation (Lemo, 2005). The CBN 2004/2005 raised the share capital to twenty-five billion Naira (N25Bn) from the existing two billion (2Bn) and upheld the existing 2005 compliance period under. It is against the backdrop of several reforms and consolidations that this study seeks to empirically analyse the bank performance in Nigeria.

1.3     Objectives of the Study                   

The general objective of this study is to carry out an empirical analysis of bank performance in Nigeria. The specific objectives include to:

1. Ascertain whether shareholders fund have positive significant impact on Return on Asset (ROA)
2. Determine if shareholders fund have positive significant impact on Return on Equity (ROE)
3. Examine if shareholders fund have positive significant impact on Net Interest Margin (NIM)

1.4     Research Questions

1. Does Shareholders fund have positive significant impact on Return on Asset (ROA)?
2. Does Shareholders fund have positive significant impact on Return on Equity (ROE)?
3. Does Shareholders fund have positive significant impact on Net Interest Margin (NIM)?

1.5     Statement of Hypothesis       

H₀₁: Shareholders fund does not have positive significant impact on ROA.

H₀₂: Shareholders fund does not have positive significant impact on ROE.

H₀₃: Shareholders fund does not have positive significant impact on NIM.

1.6     Significance of the Study      

The findings of this study will of great significance to the following peoples:

1. Policy Makers and Regulators in the Industry:  To policy makers and regulators in the industry, it will present a scheme, through its analysis that could assist them in enunciating policies that will not only positively impact on banks’ performances but also remain relevant in the economy of Nigeria.
2. Bankers: To bankers in general, it will expose the relationship existing between our relevant variables, which will be of great interest to them in their respective banks. Specifically, to bankers in the banks under study, it will expose to a large extent the goings-on in their organizations with respect to our relevant variables and a comparative analysis of their actions over some relevant years.
3. Academicians: In the academic arena, this study will prove to be significant in the following ways: v It will serve as a body of reserved work and knowledge to be referred to by researchers.  It will add value and enrich other literatures on banks’ performances in Nigeria and the world at large. It will suggest ways of enhancing the performance of the banking industry in Nigeria and the entire Nigerian economy. This will in turn, boost development positively which is usually affected by banks and their activities.

1.7     Scope of the Study                

The research covers all the commercial banks in Nigeria which amount to 21 Banks operating presently in the country. The scope of the study is further limited to the period of 2010-2019.

1.8     Definition of Terms

Bank: A bank is a financial institution that accepts deposits from the public and creates credit. Lending activities can be performed either directly or indirectly through capital markets.

Performance: Performance can be defined as an approach to determining the extent to which set objectives or goals of an organization are achieved in a particular period of time. Bank Performance is defined as the capacity to generate sustainable profitability (European Central Bank, 2010).

Return on Asset (ROA): Return on assets (ROA) is an indicator of how profitable a company is relative to its total assets. It shows the percentage of how profitable a company’s assets are in generating revenue.

Return on Equity (ROE): The Return on Equity is a measure of the profitability of a business in relation to the equity, also known as net assets or assets minus liabilities. ROE is a measure of how well a company uses investments to generate earnings growth.

Net Interest Margin (NIM): Net Interest Margin is a measure of the difference between the interest income generated by banks or other financial institutions and the amount of interest paid out to their lenders (for example, deposits), relative to the amount of their (interest-earning) assets.