Customer Satisfaction And Its Implication On Banks Performance In Nigeria

Customer Satisfaction And Its Implication On Banks Performance In Nigeria
Abstract
Satisfaction is the customer’s evaluation of a product or service in terms of whether that product or serve has met their needs and expectations. Happy and satisfied customers behave in a positive manner. However, almost every Nigerian banks encounters similar problems in meeting customer’s expectation of services and customer satisfaction. It is against this backdrop that this study tries to evaluate customer’s satisfaction and its implication on banks performance in Nigeria. The study uses a primary source of data collection i.e. questionnaire structured by respondents and validity by two experts. Basically, this study adopts both the descriptive and explanatory survey design methods. Result from the study shows that customer appreciates electronic banking services but still not satisfied with the quality and efficiency of the services. This is expressed in the number of times customers physically visit the banks and length of time spent before such services are reviewed. The study concludes by suggesting that banks should improve their service delivery to justify the benefits of electronic banking products and services, by this, customer’s interest would be aroused.
Chapter One
Introduction
1.1 Background to the Study
It is believed that the goal of every organization is to meet the needs and the requirements of its stakeholders. Meeting the needs and the requirements of the stakeholders will not only ensure the survival of the organization but also allow it to flourish. Customers are presumed to be one of the most important stakeholders in any organization because without them, organizations are not likely to succeed. Hence, marketers emphasize on research in the area of consumer behaviour and particularly behavioural intention. Knowledge of consumer behaviour will go a long way in ensuring effective marketing policies towards the interest of customers which will eventually facilitates positive customer attitude towards the organizations. More especially, since customer behavioural intention is a strong indication of his actual behaviour
As a result of financial sector liberalization in Nigeria in the 1980s, the banking sector experienced a boom. Low entry requirements by the regulatory authority and the high premiums that could be earned through foreign exchange business led to the quick entry by new players into the lucrative banking industry. Between the period of 1985 and 1993 the number of licensed banks rose astronomically from 41 to 120 (Central Bank of Nigeria, 1995). And this led to the increase of the sector’s contribution to GDP and employment. Given that banks are important constituents of the sector, it can therefore be argued that banks in Nigeria contribute significant percentage of the country’s GDP in the recent past. (Adeoye, 2007). For instance, the sectoral reconstitution of service industry to the growth of GDP for 2004, 2005, 2006, 2007 and 2008 were 8.8, 8.0, 9.2, 9.9 and 10.5 respectively (CBN, 2009) The importance of the Nigerian banking sector does not limited to Nigeria alone but also spill over to most. This significant contribution of the services industry and specifically banking sector in Nigeria really warrant investigation in order to enhance the sector’s continuous growth which will eventually result in the better performance of the economy It is however noted that one of the ways through which banks can meet the expectations of their customers who are the back-bone of the banks’ business is via the understanding of the customers’ behaviour.
The customer service unit has become important in many ways for most organizations, but the general view is that many organizations do not take it too seriously. Customer service may be provided by a person, group or by an automated means called “Self Service”. The customer service management is a compulsory section of the bank. Commercial banks form the largest and are the country’s most important group of financial institutions. With stiffer competition among domestic and foreign banks, therefore it is important for the commercial banks in Nigeria to improve the quality of their services. The growth of competition in banks has led to the customer being stronger because he or she has many options to choose from. It is those banks that have excellent customer satisfaction levels that succeed in this environment of hyper competition. Success of a service provider depends on the high quality relationship with customers which determines customer satisfaction and loyalty. The corporate objective of any bank which is “maximization of shareholders wealth” can only be achieved if customers are retained and satisfied. This is in line with the perception that the key to successful marketing of financial services is identification and packaging of customers’ needs to their satisfaction.
Customer service therefore involves the means through which there would be a mutually beneficial satisfaction of non-tangible product needs of the people who have a will to satisfy these needs. It’s focused on the predicted upon concept which involves a proper identification and understanding of needs of potential and actual consumers as well as adaptation of organizational operations to deliver the right customer service more effectively and efficiently
1.2 Statement of Problem
Over the years in developing economy like Nigeria banks are faced with the problem of distress lack of public confidence, inability of banks to meet up with customers satisfaction in terms of granting of credit facilities spending an average time in the bank halls for transactions, inadequate capital base, etc. the researcher is of the view to carryout an investigation into these remote causes of banks inability to meet up with customers needs and requirements and how this had affected the banks performance over the years, after this investigation the result from this study should be able to proffer to solutions to banks inability to satisfy their customers in Nigeria, hence how to impress its performance through total quality management.
1.4 Objectives of the Study
- To ascertain the extent of relationship between service quality and bank performance
- To examine if there is a positive relationship between customer’s level of loyalty and performance.
- To find out how quality customer satisfaction affects bank performance
1.4 Research Hypotheses
In order to achieve the stated objectives of this study, the following hypotheses are formulated:
Hypothesis One
- HI: There is a positive relationship between service quality and bank performance
- HO: There is no positive relationship between service quality and bank performance
Hypothesis Two
- HI: There is a positive relationship between customer level of loyalty and bank performance
- HO: There is no positive relationship between customer level of loyalty and bank performance.
Hypothesis Three
- HI: There is a positive relationship between customer satisfaction bank performances.
- HO: There is no positive relationship between customer satisfaction bank performances.
1.5 Significance of the Study
This research work will attempt to examine the performance of bank in Nigeria. The significance of this study is to examine the extent to which bank performance has geared up the growth of the Nigeria economy through loan and advances for investment.
Hence, the research is interested in the effect of the customer’s satisfaction and dissatisfaction, characteristics of service, assessment and measurement of customer’s satisfaction in bank for more clarity of the study.
1.6 Scope and Limitations of the Study
This study covers customer’s satisfaction in bank performance. A sample of one hundred and thirty three (133) was taken from the total population of the study. This study was conduct amongst staffs of a selected bank in Benin City to know how customer’s satisfaction has implication on bank performance for a period between 2010 – 2013.
In carrying out research work, a number of constraints have militated against this research work. Every human endeavour is said to be limited by some factor and this research work is not on exceptional to the rule. There was low response rate. There was difficulty in obtaining information from respondent as they often referred to height schedule and fatigue in fitting the questionnaire. This being that the researcher cannot administer the questionnaire to other respondent form other part of the country.
1.7 Definition of Terms
Organization:
This is a social unit of people that is structured and managed to meet a need or to pursue collective goals.
Stakeholders:
These are persons or group or organization that has interest or concern in an organization.
Customer’s Satisfaction:
A business term, is a measure of how products and services supplied by a company meet or surpass customer.
Brand Loyalty:
When consumers become committed to your brand and make repeat purchases over time.
Profitability:
This is the primary goal of all business ventures. Without profitability, the business will not survive in the long run. It is measured with income and expenses.
Competition:
The existence within a market for some good or service of a sufficient number of buyers and sellers such that no single market participant has enough influence to determine the going price of the good or service.
Defensive Strategy:
A management approach designed to reduce the risk of loss.
Service Quality:
An assessment of how well a delivered service conforms to the clients expectations.
Reliability:
The ability of a system or component to perform its required functions under stated conditions for a specified period of time.
Empathy:
This is the capacity to recognize emotions that are being experienced by another sentiment or fictional being.
1.8 Organization of the Study
This research work is organized in five chapters, for easy understanding, as follows
- Chapter one is concern with the introduction, which consist of the (overview, of the study), statement of problem, objectives of the study, research question, significance or the study, research methodology, definition of terms and historical background of the study.
- Chapter two highlight the theoretical framework on which the study is based, thus the review of related literature.
- Chapter three deals on the research design and methodology adopted in the study.
- Chapter four concentrate on the data collection and analysis and presentation of finding.
- Chapter five gives summary, conclusion, and recommendations made of the study.
Chapter Five
Summary Conclusion and Recommendation
5.1 Introduction
It is pertinent to note that this research was aimed at cross examining the business ethics practiced by financial institutions in respect to customer’s satisfaction, thus the topic “customer satisfaction and its implication on banks performance in Nigeria”.
In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges associated with customer’s satisfaction in Nigeria banks.
5.2 Summary
This study attempts to find value drivers in customer’s satisfaction within the commercial banking sector in Nigeria. The results of the study findings suggest that there is a long-run relationship among number of bank staff, number of Nigerian banks, number of bank branches, number of working days, bank profitability, customer switch and customer satisfaction in the Nigerian banks.
The study established that customer’s satisfaction affects banks performance which is supported by the fact that customers are used on a basis of security. Security is associated with words like promises, honesty, trust, reliability, predictability, and stability, fear of being led down and reduction of uncertainty and risk. A quality customer satisfaction services renders reduces the rate at which customer switch from one bank to another. A customer remains loyal to a particular bank in which he/she is being guided by moment of truth. This study reveals that, customer’s satisfaction, assist banks in understanding customer psyche. Banks financial performance is also enhanced through improvement in customer retention. Also, customer relationship marketing translate into customer retention for banks thereby increase their market share (Akpan, 2005).
5.3 Conclusion
Customer satisfactions are essential for profit maximization in the banking industry. Customer satisfaction are major factors to contend with, especially in service organizations like banks. It can thus be concluded that customer satisfaction drives the performance of banks in Nigeria as it is only when such employees and customers are satisfied that their morale is boosted to put in more effort at work.
Furthermore, customer satisfaction can greatly enhance bank performance because enhanced customer satisfaction in the form of improved service quality leads to less complaints, less costs and repeated patronage on the part of the customer. Moreover, a satisfied customer is motivated to attract more customers to the bank. On the whole, more satisfied workers and customers will tend to add more value to an organization. Employee and customer satisfaction is thought to be one of the primary requirements of a well-run organization and considered an imperative by all corporate managements.
Finally, it is concluded that service quality, customer satisfaction and customer trust have positive influence and impact on customer loyalty in Nigerian banking industry.
5.4 Recommendations
Based on the findings of this study, the researcher suggested the following;
- For satisfaction to be achieved, the banks have to improve on the speed and quality of service delivery, train their staff on customer relationship, guarantee security and confidentiality of transaction, provide competitive commission and interest rate and reduce customer waiting time at any given transaction.
- Since improved customer service delivery is a reliable tool to increase customer base, Nigeria banks should ensure customer satisfaction at all time by ensuring that queue vanishes in our banking halls. Banks should always notify customers before making adjustments in their service delivery.
- Banks should work towards gaining speed and promptness in their service delivery so as to reduce the duration of waiting time and number of queues in the banking halls.
- Banks should increase their branch networks in order to increase their coverage and customers’ convenience in accessing banking services.
- The banks should provide additional channels such as ATM, POS, on-line banking etc. and improve the quality of service provided by the existing ones. For instance, banks should provide additional ATM outlets to avoid poor services and reduce long queue. Also, attach an employee to ensure orderliness in using ATM machine and quickly report to the management in case of any machine malfunctioning.
- Finally, banks should ensure that well trained and experienced professionals should be in charge of customer service. The research discovered that majority of the customer service officers in Nigerian banks does not have sense of direction in handling customers issues. Some have personality problems in terms of the way they approach customers thus making customers aggrieved and not satisfied with the service rendered by the banks, thus not making customers get value for their money and this could make them switch to other banks


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