Full Project - THE RELATIONSHIP BETWEEN SERVICE QUALITY AND PROFITABILITY

Full Project – THE RELATIONSHIP BETWEEN SERVICE QUALITY AND PROFITABILITY IN FIRST BANK OF NIGERIA PLC

Click here to Get this Complete Project Chapter 1-5

CHAPTER ONE

1.0 Introduction

Background of Study

Competition for consumers is fierce in the banking industry, as it is in many other industries. Beginning in the 1980s, Nigeria’s regulatory authorities began implementing a series of monetary, fiscal policies and programs that spurred competition among the country’s banks.

The Structural Adjustment Program (SAP) of 1986 was the first step toward banking sector regulation in the United States. There was a dramatic increase in the number of banks competing for deposits after deregulation. As a result of this predicament, the banks stepped up their efforts to entice clients. Additionally, in 2001 the Central Bank of Nigeria granted universal banking licenses to every bank in the country. Commercial banking tasks may now be performed by Merchant banks, which previously could not do so. In some cases, new management teams were brought in and the banks were renamed; in others, operating licenses were handed to new institutions. Since most of these new banks are focused on strengthening their liability base and the quality of their risk assets, this has greatly intensified the competitive pressures on the market. The number of commercial and merchant banks in Nigeria now stands at 88 institutions. Including non-bank financial entities does not include this category.

Banks rose from 40 in 1985 to 125 in 1991, according to Ogunsemore (1992:15). To stay in business and compete, banks will have to entice their consumers away from “armchair banking,” which was common among the first-generation banks. An armchair banker is someone who sits in their chair and waits for business to come to them.

Banks are increasingly competing with one other to attract new clients and keep the ones they already have by providing excellent service at all times, making them stand out in a competitive market. To stay competitive, even the first-generation banks had to significantly enhance their services and overhaul their systems. Blue-chip firms and some clients are becoming progressively over-banked, which has resulted in shrinking margins over time in this industry. Banks may make a difference in this area by providing first-class service in order to stay competitive and relevant. The following is an excerpt from Adekanye, 1986:12: ”

Nwankwo, (1994:5), highlights that the Structural Adjustment Program (SAP) used by several African nations aims to overhaul the banking sector. The financial sector’s deregulation has resulted in financial institutions encroaching on each other’s area. It is becoming more difficult for banks to operate effectively since non-bank financial organizations are actively intruding on their tasks. A steady stream of new items enter the market as well as a steady stream of repackaging of older ones. Copycat mindset is prevalent in the banking business. It’s not unusual for banks to “Xerox” anything that looks to be successful. Public relations and marketing have become more important in today’s business climate. Customers are expected to choose the bank that best meets their specific requirements and preferences. The ordinary bank client is now so well-informed and well-versed that they want more from their bank than simply basic financial services. Customers will prefer goods and services that are created from the perspective of the customer (customer orientation). Most banks extended their product offerings to increase their deposit base and boost competitive efficiency by investigating new technology based methods for delivering banking services. Competition in the business has resulted in better services, as banks continue to phase out manual procedures.

In the new competitive environment, banks driven by survival instincts are forced to respond to threats in the environment. Martin, (1998:203), indicates that service quality is a natural fall-out of the intense competition going on in the market. High service quality is something the banking industry as a whole seems to have forgotten for a long time, and was relegated to the background. It took the entrant of foreign banks, renewed competition, spurred by de-regulation of industry for today’s banks to re-discover quality in everything they do. Banks must strive for service quality continuously; always realizing they could fall short of perfection.

Service quality means delighting the customer by continuously meeting and improving their expectations. Exceeding the expectations of increasingly sophisticated customers is paramount. It is influenced at every level of an organization and often depends on how well the levels work together. From the gate man up to the Chief Executive Officer of the bank, should be involved in the culture of service quality because it is of paramount importance to the growth and survival of the banking institutions.

Bankers are increasingly becoming aware of the strategic importance of improving the quality of their offer and the need to make extra effort towards satisfying their customers. The customer is king. Where the customer derives maximum satisfaction is where he/she will frequent. Because bank products and services are very similar, to be distinct and be heard in a large market place, quality of its service must set it apart from its competitors.

A lot of banks have come to realize this and are conducting training programmes for their staff to imbibe the culture of quality service and create an error-free environment. The way to the future is service excellence.

1.2 Statement of the Problem

Nearly all banks offer the same products and services; the distinction is no longer clear. Whatever new products are introduced, with time, other banks catch up. How then can a bank be heard in a large market place? Service quality is the answer. It is the ability of the bank to make its offer different from others that will keep its customers coming back.

In order to continuously exceed set goals and objectives, banks must identify what makes them different from the other, from the perspective of the customer and ascertain the role and impact of service quality when practiced.

Is there a growing recognition amongst banks that the way forward is enhanced service quality, otherwise, why would certain customers prefer to bank with a particular bank in the present competitive environment? This study would strive to identify that increased service quality would lead to increased market share, customer loyalty and ultimately, profitability.

Objectives of the Study

This study is aimed at achieving the following objectives namely:-

To examine the key variables that determines service quality and the extent to which all these variables are applied in the banking industry.
To ascertain the impact of service quality on customer satisfaction and loyalty.
To identify growth and profitability potentials in a competitive environment where the principles of service quality is adopted.
To identify the key issues banks are confronted with when adopting the principles of service quality.

Relevant Research Questions

For the purpose of this study, the following research questions were formulated to act as a guide.

Why do bank customers prefer the services of one bank to the other?
To what extent do banks concern themselves with delivering service quality to customers?
What role does service quality delivery play in Nigerian banks?
What has been or will be the returns if increased service quality is practiced in Nigerian banks?
To what extent is service quality free?

1.5 Statement of Hypotheses

Ho: Banks who do not practice service quality will not induce customer loyalty and satisfaction.

Hi: Banks who practice service quality will not induce customer loyalty and satisfaction.

Ho: Increased level of service quality will not bring about profitability potentials.

Hi: Increased level of service quality will bring about profitability potentials.

Scope and Limitations of the Study

The study concentrated on First Bank Plc (FBN) with at least 109 years of operations in Nigeria. The reason being that FBN has gone through an evolutionary change in the last six (6 ) years. It is no longer enough to be the largest bank in Nigeria; they have to fight to remain profitable and maximize returns due to the competitive pressures faced in the industry. In order to have an increased share of the mind and wallet, what will set them apart and ahead of competitions is the quality of services rendered.

The primary data was administered on members of Management of the bank, who set the goals and objectives of the bank and the strategy to be adopted to meet those goals and objectives. Secondary data and interviews were also administered. It is limited to delivery of service quality to customers in the Nigerian banking industry and focused on customer interaction within the service delivery. It would also exploit what banks are doing to improve service quality and its direct impact on the bottom line.

The study was limited to the First Bank Plc Head Office where the largest concentration of management staff are located, and the bank customers located on the Island, which includes Victoria Island, Ikoyi and Lagos Island. The sample size cannot be as large as desirable because of the process of administering interviews and questionnaires to a large number of bank customers as well as employees. And thus would demand more time than is available.

Other limitations include:-

The unwillingness of relevant people to grant interviews, due to their busy schedules;
Reliability and accuracy of information supplied by respondents of the questionnaires

1.7 Significance of the Study

Service quality has played a significant role in the banking industry. Due to increased competitions, whereby too many banks are chasing two few banks, the customer is king. He determines which bank he will patronize and if he is not getting services there, he can always move on, the choices are many.

This study would assist FBN Plc to better understand the importance of service quality and the returns they would derive in the medium to long term if practiced diligently. FBN Plc is the largest bank in Nigeria and the banking public has at one time or the other used the bank and to continuously attract these customers and retain them being that most banks offer almost the same products and services, FBN Plc would have to set themselves apart from the competition. The answer lies in improving service quality.

This study would also assist the society and the individual in particular to increase and improve their awareness of service quality and what it is all about. With this knowledge, their decision to use a bank would be determined by the level of service they obtain and the options open to them to meet their needs.

Service quality has now taken a prominent position in the strategy of most banks. There is a lot of focused attention on this in the banking industry in Nigerians and banks are continuously exploring ways and means as to which they can deliver faster and error-free services to their customers. In addition, banks can no longer afford to ignore this variable, as it has an impact on their operational risk.

1.8 Definition of Terms

Customer Orientation: Is a marketing philosophy, which states that all business activities should be geared towards the needs and wants of the customers.

Service Quality: This means delighting the customer by continuously meeting and exceeding their expectations.

Profitability: The returns gained in a business as a result of expending effort.

Get the Complete Project

This is a premium project material and the complete research project plus questionnaires and references can be gotten at an affordable rate of N3,000 for Nigerian clients and $8 for International clients.

Click here to Get this Complete Project Chapter 1-5

You can also check other Research Project here:

Education

Full Project – THE RELATIONSHIP BETWEEN SERVICE QUALITY AND PROFITABILITY IN FIRST BANK OF NIGERIA PLC

Full Project – THE RELATIONSHIP BETWEEN SERVICE QUALITY AND PROFITABILITY IN FIRST BANK OF NIGERIA PLC

Full Project – THE RELATIONSHIP BETWEEN SERVICE QUALITY AND PROFITABILITY IN FIRST BANK OF NIGERIA PLC

Related Posts