Assessing The Leverage Effect Of E-Marketing On Performance Of Commercial Banks

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Assessing The Leverage Effect Of E-Marketing On Performance Of Commercial Banks


This study examines the leverage effect of E-marketing on performanceof commercial banks in Nigeria. The main objective is to investigate how the adoption of internet marketing enhances banking services in Nigeria. The study is a survey approach with sample of 180 respondents (employees & customers) drawn from four generation banks in the country, representing 65 percent of the total population (280). The data was analyzed using Descriptive Statistics and Chi-square to test the formulated hypotheses which revealed that the adoption of internet marketing has significantly enhanced customers’ banking services in Nigeria, particularly in the areas of improved patronage, on-time (effective) service delivery and reduced marketing costs. The study also found that internet marketing has created exciting new and cheaper ways to learn about and track customers, create products and services tailored to meet customer needs, distribute products more efficiently and communicate with potential customers effectively. Some recommendations were made; among the major recommendations is the need for all the barriers to effective internet marketing adoption such as poor connectivity, inadequate computers and ICT infrastructure, as well as cyber-crimes which constituted serious bottleneck to the overall success of banking operations in Nigeria should be addressed by managers and all stakeholders in the banking sector.

Chapter One


1.1 Background of the Study

The rapid changes in the cyber world, information resources available through computer networks and the internet, is causing changes in traditional marketing and among consumers (Schware, 2005). Given advancing technology, shifts in consumer consumption patterns and lifestyle, the platforms for communications are apparently becoming more complex. Hence, today’s markets illustrate advertising to be radically different from that of past years, where new means and ways coupled with innovative ideas have not only transformed traditional media advertising, but have also transcended to the new media, to gain better reach of the audience. Today, the global advertising foray is evolving from the traditional communications of advertisements to digitally led content advertisements. The industry is seeing new growth that extends beyond traditional revenue streams. This is in regards to the inclusion of the online medium of the Internet or new media, which is taking content to mass audiences using digital media communications channels and devices (Sekaran and Bougie, 2010).

With the recent emergence of Nigeria as the largest economy in Africa, the need for customer convenient marketing and service delivery in the banking sector has become more imperative. Studies have shown that Nigeria has the second largest financial services sector in Sub-Saharan Africa, after South Africa and it is fast growing and expanding internationally (Becker et al., 2008). Electronic banking (e-banking) has changed the face of commercial banking in recent times by bridging geographical, industrial and regulatory gaps as well as creating innovative products and services and more market opportunities for both banks and customers (Liao and Cheung, 2002; Khan and Karim, 2010). Therefore, banks have employed internet marketing to exploit such opportunities and provide services to their customers at their finger tips

The rapid technological diffusion makes the internet the best way to provide customers with banking services regardless of the limits of time and geography. And that’s what makes banks consider the internet as an important part of their strategic plans. Internet technology has changed the design and the way of delivering the financial services and as a result the banking industry has made continuous innovations – especially in the field of communications and information technology – that ultimately led to the emergence of the idea of what is known as the “online banking”. Banking services through the internet is a way to keep the existing customers and attract others to the bank (Pikkarainen et al., 2004).

As a result of its perceived benefits, internet marketing or electronic banking has attracted a lot of scholarly attention. Hitherto, studies have focused on Internet Banking- Benefits and Challenges in an Emerging Economy (Jayshree Chavan, 2013); E-Marketing – A literature Review from a Small Businesses perspective (Hatem El-Gohary, 2010); Electronic Banking And Bank Performance In Nigeria (Abaenewe, et al 2013); E-Banking in Developing Economy: Empirical Evidence from Nigeria (Elisha Menson, 2010); Impact of Mobile Banking on Service Delivery in the Nigerian Commercial Banks (Adewoye, J. O ,2013); The Challenges & Profitability of ebanking (Daramola, et al, 2014); Empirical Evaluation of Customers’ Use of Electronic Banking Systems in Nigeria (Onyedimekwu O. and Oruan M., 2013)

Most of these studies have focused on application of ICT in banking such as; electronic banking, mobile banking, e-payment etc, but few focus on the application and impact of internet marketing on banking services.

1.2 Statement of Problem

Marketing is about identifying and meeting human needs profitably (Kotler and Keller, 2004). Making the right decision about change is not always easy, good marketing is no accident, but a result of careful planning and execution (Kotter and Keller, 2004). The influx of new banks in the later eighties and nineties, commonly referred to as the new generation banks, tilted the business of banking to focus more on customer expansion. To effectively achieve this, most of these new generational banks created opportunities more for the female marketer as the core customer ratio was male dominated (Olabayo, 2007).

The marketing department was officially carved out in the late nineties as against the old banking system that dwelt on paper documentation and manual recording. The days when customer’s transactions were manually manipulated to reflect deposits and withdrawals, and balances, all, stored in a file attached to the name and address of the customer (Obut, 2001). Compared to the early years of banking where willing customers walk into banks to open savings and salary accounts, marketers and marketing were designed to seek out the customers. This change in pattern soon differentiated banks into old and new generation, where the new generation banks were carefully involved in identifying and meeting prospective customers need (Okeke, 2006). The profit margin in these new generation banks led to the opening of more banks and branches, creating healthy competition that revolutionized the industry in the nineties (Amodu, 2003). Can this revolution and spread in banking activities be responsible, for the later need of electronic means of executing banks’ operations? At what stage was it applied to marketing and what was the leveraging effect on the performance of banks then? How did the old generation banks respond?

Electronic marketing involves using information and communications technology to reach diverse customers, even in their comfort and distant zones (Echejile, 2008). Experiences from developed countries have shown greater customer care and comfort and confidence in the use of information and communication technology in banks’ operations. With more efficient technology, marketers have simply grown their lists of satisfied customers at limited costs, since it easily affords them the opportunity to reach global customers.

Marketing prospective customers made easier through the application of information and communication technology means reaching far and distant customers in no time, opening of business relationships without requiring physical presence and making services available to customers via the internet Nduka, 2006). Banks in developed countries have broken territorial barriers reaching and harnessing business opportunities in third and developing countries, at the expense of the local banks operating in those economies. The question is, have the Nigerian old and new generation banks taken full advantage of these begging opportunities and projected to the rest of the World? What are those factors militating against local Nigerian banks and depriving them from taking absolute advantage of e-marketing? What inherent opportunities are hiding behind these challenges and how can they be unwrapped to the benefit of the Nigerian society? Can we assess the performance of old and new generation banks on the basis of the Leveraging effects of electronic marketing in the South Eastern Nigeria?

1.3 Objectives of the Study

The main objective of this study is to assess the leveraging effect of electronic marketing on the performance of commercial banks in South East Nigeria.

The specific objectives are to:

  1. Determine the extent to which old and new generation banks leverage an electronic marketing in their various business operations.
  2. Compare the influence of electronic marketing between the old generation and new generation banks in Nigeria, using the South East region as a reference point.
  3. Identify the challenges which both new generation and the old generation banks face with cognizance to the use of electronic means in banks’ marketing designs.
  4. Decipher how a bank in a competitive business environment applies electronic marketing tools and strategies in the performance of their selling duties.
  5. Make adequate suggestions cum recommendations towards the improvement of information and communication technology usage both in the old and new generation banks’ marketing activities.

1.4 Research Questions

The beauty of electronic marketing in a welt developed business sector is limitless, especially the flexibility which it permits in sub-sectors like the banking system (Uzoechi, 2006). The full utilization of the internet for advertisement and the hosting of websites, where every information concerning the banking group can be surfed with contact telephone numbers and business addresses, is made possible.

Electronic software for capturing customers’ data means that business people on the go can access banking services irrespective of the place, time or (imitations. Mobile transfer of money, deposits and withdrawals alerts on mobile handsets, faxing of account opening documents without location challenges, automatic teller machines and cards, point of sale services, and many other daily developments, have made electronic infusion into marketing a wonder to behold (Osiagwu, 201 1). The interest of this researcher however, is to assess how effectively and efficiently the old and new generation banks in Nigeria have fared with respect to leveraging on electronic means of marketing. It has therefore become pertinent to x-ray the following research questions:

  1. To what extent has information and communication technology contributed to the development of bank marketing in Nigeria?
  2. How well have the Nigerian banks’ marketer tapped into the opportunities that electronic marketing provides and what is the impact on the banking public?
  3. What are the impediments encountered in attempting to market electronically In South-East Nigeria?
  4. Are there inherent benefits in electronic marketing that has not been fully harnessed in the Nigerian banking sub-sector?
  5. What possible steps should be taken in other to improve electronic marketing in Nigerian banks?
  6. Who should do what to ensure uninterrupted provision of banking services to the common Nigerian businessman in the South-East?

1.5 Research Hypothesis

For the purpose of this study, the for (lowing hypotheses have been put forward and wilt be tested in line with the relationship between the old generation and new generation leveraging effects of electronic marketing usage.

  1. Ho: The benefits of e-marketing have been fully tapped in the Nigerian banking system.
    Hi: The benefits of e-marketing have not been fully tapped in the Nigerian banking system.
  2. Ho: Electronic marketing is better implemented in new generation banks than the old generation banks in Nigeria
    Hi: Electronic marketing is not better implemented in new generation banks than the old generation banks in Nigeria
  3. Ho: The application of electronic marketing method in banking is highly affected by the attitude and training of bank’s marketing officers
    Hi: The application of electronic marketing method in banking is not highly affected by the attitude and training of bank’s marketing officers

1.6 Significance of Study

The level of graduate unemployment in the Nigerian economy has continued on the rise and all efforts to mitigate it and its harsh effect on the citizenry has resisted possible near solutions. Prior to the coming of Professor Chukwuma Soludo to Central Bank of Nigeria (CBN) the over eighty banks that were in existence then virtually had very insignificant impact in the day to day life of the ordinary Nigerian. the consolidation of the banks into twenty-five banking groups opened the economy to lots of graduate employment opportunities creation, stability in the banking operations and the opening of branches closer to business concerns.

E-marketing could hold the key behind the door of many more employment opportunities in Nigeria and Africa at large. The technological revolution that is currently sweeping across China, and the beehive of activities

being witnessed in the Arab Emirates are all attributed to information and communication technologies properly grafted in the financial sectors. The ingenuity of the Nigerian youth which were expressed negatively can be harnessed into profitable e-businesses. The banking sub-sector is so vital to the development of every economy and all efforts geared towards its stability and development will be reverberated into the overall well being of the Nigeria citizenry.

Furthermore, the globalization that turned the entire world into a single reachable market has got its basis in electronic banking, e-commerce, e-petroleum, e-gold, e-business, e-library, e-communication, and e-marketing are all indication of the e-human. Every effort directed towards empowering

igeram incognizance to re-positioning effectively to harness the opportunities which the e-industry provides must be adequately received. The power of e-marketing is that it gives the marketer greater advantage within shortest possible costs to increase and manage more customers in the network. Put succinctly, the e-marketer has more opportunities to reach more customers without spending corresponding amount of resources. Empowering more Nigerians financially could be very vital towards reducing unemployment, poverty, hunger, strife robbery, kidnapping and even terrorism. More financially empowered Nigerians can truncate and reverse the constant primary exports in favour of secondary goods and service exports. This alone would impact highly on the economic life of the ordinary Nigerian man or woman, improving the welfare level in the country Gross Domestic Product (GDP) and the perception of Nigerians by the rest comity of nations.

It is the belief of the researcher that the findings of this work to a large extent will, be useful to stakeholders in marketing in Nigeria and other players within the Nigerian economy both in policy construction and strategy implementation sections. It is also the researcher’s utmost belief that this work will be an eye-opener to business enterprises that are yet to embrace and reap from the opportunities which e-marketing provides. It is hoped also that the work will provide enough insight to counter some of the misconception connected to the subject matter, and so provide a leeway for professionals to embrace.

Profile of the Banks

Zenith Banks was incorporated on May 30th 1990 as a private Limited Liability Company with hundred percent equity ownership by Nigerian citizens and institutions. It commenced banking operations on July 16th, 1990, The bank became a Public Liability Company on 20th May 2004 and concluded its Initial Public Offering (IPO) in July 2004. The bank was listed on the Nigerian Stock Exchange (NSE) on October 21st 2004. The bank’s shares then were investors delight chucking-in so much value within very short period of time.

Zenith Bank Plc is currently one of the most capitalized and third most profitable banks in Nigerian, with total assets plus contingents of N30.72 Billion and profit before tax of N9.1 Million as at June, 2005.The bank’s post initial public offering stood at N36 Billion.

Zenith bank has maintained a triple (A+++) rating for six consecutive years since 1999 as adjudged by Augusto a Company – Nigeria foremost rating agency. They categorized the bank as a financial institution of impeccable financial condition with overwhelming capacity to meet obligations as and when they fall due. The bank has maintained very good assets quality achieving the lowest non-performing loans ration of 1.05% as at 2004 year end compared to industry average of about 21.5%. Zenith bank has also been rated AA for three years consecutively by Fitch Rating, an International rating agency, which is the highest rating for any Nigerian bank.

Zenith Banks returns on assets and equity remained strong and compares favourably amongst emerging markets. The quantum growth in the Bank’s key financial indicators is clear evidence of increasing confidence in the bank. Zenith bank’s impressive growth streak, no doubt confirm determined efforts towards meeting challenges ahead by striving constantly to renew its strategic direction and surpassing its records even when ahead -of competition. Zenith bank is at the forefront of the Nigerian banking industry in terms of growth, profitability, excellent services and comprehensive universal banking services. This is done from various branches throughout the country with aid of fully computerized state-of-the-art information and communication technology (ICT). At Zenith bank, speed, efficiency and flexibility are abiding watchword and the banks customers specific approach has consistently reinforced its value creation processes by helping customers develop strategies that help them excel. The bank is also creating digital value through electronic commerce (e-commerce) displaying an uncommon level of innovation and flexibility while constantly seeking to improve customer-satisfying standards. The bank’s main customer delivery channel remains its network of over four hundred branches located in business districts across the country with an online, real time service-delivery. In zenith bank, the head office coordinates the marketing activities, the online systems and strategies necessary to meet daily customers’ needs. Paramount is their method research to find out the basic needs of the customers. In so doing they tend to study the networks and customers to draw conclusion on the findings reached.

Afribank Transformation to Mainstreet Bank

Following its recapitalization which shored up its capital base to 45 Billion, Afribank Plc has continued to sharpen its competitive edge with market and customer centric initiatives. The developments are meant to ensure that its new -competitive status as a one Billion Dollar Bank, delivers commensurate returns to shareholder and entrench it among the top financial brands in the world. True to expectations, the banks strategies are already delivering superior returns even above its Last Public Offer projections. To effectively utilize its full potentials and convert opportunities which its new size offers, the bank is re-aligning its human resources with a view to ensuring maximum -output from each staff. The initiative is part of the broad strategy of the executive management and the Board which will make the bank meet all round impressive performance.

Renowned consultants, KPMG, were engaged to help the bank re-assess its human capital gap and achieve re-alignment that would place staff in qualified positions. The assessment would also reveal the training needs of each staff and this will inform training arrangement for all categories of staff.

Presently the bank is in the forefront of Nigerian banks investing heavily on information and communication technology. Afribank believes that its stronghold on the market can only be sustained by offering innovative e-Banking services to modern day customers. The continuous upgrade of its platform would ensure that it conveniently copes with market speed and the upsurge in its customer’s base. Global ranking ICT specialist Altos Origin were engaged to help upgrade its ICT structure and architecture to the likes of international brands whose market focus is the six continents of the world.

A nimble platform that would enable the bank operate more effectively and efficiently is being set-up. The bank has consequently reviewed its operations and marketing models with a view to making sure that the new bank have a mixture of old legacy and

newer technology. Afribank Nigerian Plc deploys resources at its disposal in a manner that eliminates waste, offer best asset mix and yield good returns on investment.

However, despite all the efforts by the management of this bank towards useful transformation, the bank was forcefully acquired by the Federal Government of Nigeria. Studying the series of challenges, which this bank face, particularly in adopting electronic marketing in business operation, would provide a good insight into the performance of banks in Nigeria.

1.7 Scope and Limitation of Study

Research works of this nature have its scope and Limitations especially as it has to do with degree work. Paramount among them is the time and monetary restrictions differentiating it from full scale company sponsored projects. This kind of thesis work would have gone excellently well in the research and development department of the Federal Ministry of Finance and the Central Bank of Nigeria.

Again, the choice of only two banks (Zenith bank and Mainstreet bank) creates another limitation because many other new and old generation banks’ data could add meaningful insight to the research findings and conclusion. Some of the other different banks could have more effective e-marketing technologies and strategies of operations. A comparative analysis of information and communication technology used by various Nigerian banks would provide some other quality results capable of impacting positively in the search for better e-marketing systems. The reason behind this being that it is not only Zenith and Mainstreet bank that makes use of ICT – other banks could have better quality gadgets.

However, it is my prime objective and goal to reduce these limitations to the barest minimum and ensure that the research work is fully detailed to elicit the right impact and results

Chapter Five

Conclusion and Recommendations

5.1 Conclusion

There is no doubt that the adoption of adoption of internet marketing has played significant roles in improving customers’ patronage of banking services in Nigeria, through strategies and electronic measures such as telemarketing, catalogue marketing, direct mail, e-payment, ebanking, e-marketing, e-commerce and e-business. However, in spite of the numerous contributions, there are still certain challenges which represent barriers to it effective adoption in most banks and by most customers in the country. Infrastructures such as Internet connectivity, GSM system, computer, and online tools for effective marketing and communication of banking services are either grossly inadequate or lacking completely in some areas within the country. The study concludes that; banking organizations that embrace the powerful force of internet stand to reap immense benefit as it is the means by which they can be effective and efficient and thus, remains successful in the competitive banking industry.

5.2 Recommendations

Based on the above conclusion, the following recommendations were made:

  1. In view of the benefits associated with the adoption of internet marketing, Commercial Banks in Nigeria should adopt some measures to ensure the effective utilization of the internet as a strategic marketing tool in their banking operations.
  2. Banks should not only provide internet service facility but should also focus on how to improve on other forms of internet marketing activities such as telemarketing, catalogue marketing, direct mail, e-payment, e-banking, e-marketing, e-commerce and e-business.
  3. All the barriers to effective internet marketing adoption such as poor connectivity, inadequate computers and ICT infrastructure, as well as cyber-crimes which constitutes a serious bottleneck to the overall success of banking operations in Nigeria should be addressed by managers and stakeholders in the banking sector.
  4. Nigerian bank managers should develop marketing strategies that will help them use internet marketing to deliver the satisfaction more effectively and efficiently than other competitors so as to continue to retain existing customers and attract new ones.

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