THE EFFECT OF CUSTOMER SERVICE ON ORGANIZATIONAL PERFORMANCE IN NIGERIA BANKING INSTITUTIONS (A CASE STUDY OF FIRST BANK PLC, WARRI, DELTA STATE)

CHAPTER ONE

INTRODUCTION

1. BACKGROUND OF THE STUDY

The banking sector which is a prominent and pertinent sector of the economy determines to a great extent the overall growth of the economy and the standard of living of their customers. The banking industry of any nation is the machinery which propels the development and growth of its economy. Many commercial banks have been established and thereby giving grounds to the competitive banking services that may bring about satisfactions to their customers. These services could vary depending on the patronage of the customers, their level of consumption and savings. 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 who determine 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. As globalization and liberalization of financial institutions accelerate, competition among banks in offering products and services becomes more intense. In spite of such limiting banking strategy, the rapid transformation of Nigerian retail banking sector has redefined the role of banks in Nigeria from financing trade to one of mobilizing and channelling resources more effectively to customer needs. These changes were indicated by the emergence of many new financial institutions, the introduction of new financial instruments and services, the securing of financial operations, and the elimination of strict gender demarcation lines among different types of customers. These changes in the banking system have created a new dimension in the Nigerian banking industry within which the banks have to compete both vertically and horizontally for consumers’ disposable income. The competition in Nigeria banking sector is very high, due to regulatory imperatives of universal banking and also due to customers’ awareness of their rights. Bank customers have become increasingly demanding, as they require high quality, low priced and immediate service delivery. They want additional improvement of value from their chosen banks. Service delivery in banks is personal, customers are either served immediately or join a queue (waiting line) if the system is busy. This customers patronage could be describe as the backbone of a highly liquid financial institutions.

Banking refers to the business of receiving money and collecting drafts for customers, subject to the obligation of borrowing cheque drawn upon them time to time by the customers, to the extent of the amount available in their current account. A commercial bank can be defined as a monetary institution owned by either government or private businessmen for the purpose of profit. Profit maximization objective may not be easy to achieve in banking, without a good level of customer base, as this customer base enhances the effectiveness and efficiency of the services rendered to the customers. In other words, the faster they get attended to, the more the customer would be encouraged to keep their money with a bank. Customer satisfaction is derived largely from the quality and reliability of products and services.

However, almost every Nigerian bank encounters similar problems in meeting customer’s expectation of services and customer satisfaction. For example, the issue of money transfer in banks is one major problem that customers of certain banks have been made to experience. In most cases the customer hardly receives the payment of the money transferred into account immediately. The long queues and huge crowds in the banking halls can be highly devastating and discouraging most times, especially when the weekend is near. Most times, this long queues are as a result of the breakdown of the computers used by these cashiers, sometimes it occurs as a result of the cashiers, pushing duty to one another as to who is to attend to the customers or not. 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. STATEMENT OF PROBLEM

Customer satisfaction is the single most important issue affecting organizational survival. It has the most important effect on customer retention and in order to narrow it down, focus on customer service quality as one of the customer satisfaction factors. Despite this fact, most companies have no clue what their customers really think. They operate in a state of ignorant bliss, believing that if their customers were anything less than 100-percent satisfied they would hear about it. Then they are shocked when their customer base erodes and their existence is threatened. The key to competitive advantage is proactively gauging customer perceptions and aggressively acting on the findings. The techniques for doing this do not have to be difficult; they just have to be timely and effective. Knowing that customer service is a pillar of the bank, the researcher therefore decided to find out whether the kind of customer service being provided in first bank plc has any effect on customer satisfaction and whether there are barriers that prevent quality customer delivery.

1. AIMS OF THE STUDY

The major purpose of this study is to examine the effect of customer service on organizational performance in Nigeria banking institutions. Other general objectives of the study are:

1. To examine extent to which customer service mechanisms and strategies have enhanced the performance of first bank.

2. To examine the influence of customer service provision on customers‘acceptability of services provided by first bank.

3. To examine customer service management and its effect on banking business in Nigeria.

4. To examine customer satisfaction level with banks’ service delivery channels.

5. To examine the relationship between customer service and organizational performance.

6. To examine the available mechanisms and strategies to improve customer service at first bank.

1.4 RESEARCH QUESTIONS

1. What is the extent to which customer service mechanisms and strategies have enhanced the performance of first bank?

2. What is the influence of customer service provision on customer’s acceptability of services provided by first bank?

3. What are customer service and its effects on banking business in Nigeria?

4. How is customer satisfaction level with banks’ service delivery channels?

5. What is the relationship between customer service and organizational performance?

6. What are the available mechanisms and strategies to improve customer service at first bank?

1.5 RESEARCH HYPOTHESES

H₀₁: Customer service management has no effect on banking business in Nigeria.

H₀₂: There is no significant relationship between customer service and organizational performance.

1.6 SIGNIFICANCE OF THE STUDY

The study is deemed important and relevant to the field of organizational and human resource management as it is to increase employee‘s passion and deliverables in performing their work for the firm‘s performance. Again, eliminating unnecessary barriers to perform and deliver services may hinder employees from becoming an organization with the performance-based culture. Thus, the study assists employees and employers to put forward mechanisms and strategies relevant for enhancing customer care services. Furthermore, this study is also an important part for the researcher‘s master degree accomplishment and knowledge generation.

1.7    SCOPE OF THE STUDY 

The study is based on the effect of customer service on organizational performance in Nigerian banking institutions: case study of first bank Plc; Warri, Delta.

1.8 LIMITATION OF STUDY

Financial constraint– Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint– The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.8 DEFINITION OF TERMS

Customer Service: Is the process of ensuring customer satisfaction with a product or service. Often, customer service takes place while performing a transaction for the customer, such as making a sale or returning an item. Customer service can take the form of an in-person interaction, a phone call, self-service systems, or by other means.

Organizational performance: It comprises the actual output or results of an organization as measured against its intended outputs (or goals and objectives). Specialists in many fields are concerned with organizational performance including strategic planners, operations, finance, legal, and organizational development.

Banking institution: (also referred to as a universal or commercial bank) can range from a large financial institution with a highly visible brand name and an international presence to a small organization with a local presence.