CUSTOMER SERVICES IN FINANCIAL INSTITUTIONS, A STEP TOWARDS IMPROVING PROFITABILITY

(A CASE STUDY OF UNION BANK PLC, OKO)

By

NWORJI NGOZI .G.

Presented To

Department of Marketing

ABSTRACT

Due to the importance of customers service in the business world. many privileged organizations most especially the financial institutions are now depending strongly on it to enhance or improve their profitability. ideas and opinions were received from staff and reputable customers of union bank of nigerian plc, oko branch, which was used as a case study.

these ideas and opinions were got through the use of open and close ended questionnaires, interviews and observation. the data collected was analysis with the use of chi-square (x2) which is a statistical technique used in comparing the differences between observed and expected frequencies. actually only banks with foresight with respect to customer service will succeed amidst competition.

Meanwhile union bank of nigeria plc will really benefit more if they take advantage of the result of this research work, here by sustaining its customers and at the same time keeping them happy

TABLE OF CONTENT

Title page i

Approval ii

Certification iii

Dedication iv

Acknowledgement v

Table of content viii

Abstract vi

Chapter One

10 Introduction 1

11 Background of study 4

12 Statement of the problem 5

13 Purpose of the study 6

14 Hypothesis 7

15 Scope/Limitation of the study 9

16 Significance of the study 10

17 Definition of terms 11

Chapter Two

Review of Related Literature 15

20 Introduction 15

21 Budget 15

22 Budgeting

23 Historical development pf budgeting 21

24 Reasons for budgeting 23

25 Types of budget 29

26 Variance Analysis 38

27 Importance of Variance Analysis 38

28 Controllable and uncontrollable cost 44

29 Responsibility accounting 44

210 Budget Administration 45

211 Budgetary Control 46

212 Objectives of Budgetary control 47

213 Basic requirements for a good Budgetary

Control System 48

Chapter Three

Research Methodology 51

30 Introduction 51

31 Population of the study 51

32 Sample Size 52

33 Sample method of data 52

34 Sources of data collection 53

35 Administration and Retrieval of Questionnaire 53 
36 Procedure used for data analysis 54

Chapter Four

Presentation and data analysis 56

40 Introduction 56

41 Presentation and Analysis 56

Chapter Five

50 Introduction 75

51 Summary of findings 75

52 Conclusion 76

53 Recommendation 77

54 Suggestion for further research 78

55 Limitation of the study 79

References 81

Appendix A 83

Appendix B 84

CHAPTER ONE

INTRODUCTION

The topic of this research work is of course, customer services in the financial institutions, a step towards improving profitability (a case study of Union Bank Plc Oko)

Woodruff (1997) defines profitability as the ability of an investment or a company to make a profit after costs Overhead, etc profit on the other hand, is the difference between the income of the business and all its costs and expenses over a period of time

Shaw (1990) defines a service as a performance that delivers some combination of benefit to the customer

Union Bank of Nigeria Plc, a bank established in 1917, as Bank of Colonial Africa, increased its profits after tax from 5035 billion in 2001 to 9375 billion naira in 2005 In July 2009, the bank was rated the 556 ^th largest bank in the world and the 14^th largest bank in Africa, with an asset base of US $826 million

However, the bank was one of the banks that were controversially indicated by the Central Bank of Nigeria in November 2009, for what the apex bank termed as improper loan and financial management

The profitability of banks could be increased through a plethora of ways These include the aforementioned financial management, the recruitment and training of seasoned personnel, honesty of staff intensive/extensive selling efforts and other factors Nevertheless, the focus of this work is to examine how profitability could be increased through improved customer services This line of thought is congruent with the marketing concept, which makes consumer satisfaction the fulkrum of all organizational activity, banks not being exceptions

11 BACKGROUND OF THE STUDY

In the last ten years there have been important changes in the business of consumer financial services The main characteristic that has marked the evolution of the financial system has been paradoxical (in the sense of reduction in number of banks but increase in their ability to compete, through bank consolidation) increase in competition in the sector The banking business has undergone changes in the regulation of the sector, changes in consumers demand for services, technological changes and the entry of new competitors from businesses outside banking (Gardner et al, 1999) Due to this an increasingly open and competitive framework has been formed, in which many financial entities are beginning to be concerned about developing defensive strategies, in order to avoid in discriminate loss of customers According to Jacuhy and Chestnut (1978), firms should strive to maintain long-term relationships with their customers, in order to obtain the advantages of a clientele loyal to the firm

Union Bank of Nigeria Plc was established in 1917, as Bank of Colonial African It opened its bank at Oko in August 15,1995 The bank, since its inception has initiated several customer friendly innovations and strategies which it also extended to its Oko branch These innovation and strategies include the use of Automatic teller machines (ATM), Computerized banking services, automated security check doors, bullet proof bullion services, flash me cash, air conditioned banking hall, cable television etc

We will examine, in the course of this research work of course, at a macro level, how these customer services innovations and strategies have increased the profitability of the bank we will also recommend ways in which the bank could improve the effectiveness and efficiency of its service delivery system

12 STATEMENT OF THE PROBLEM

i Lack of customers satisfaction

ii Loss of market share

iii Poor customer relationship

iv Lack of improved customer service

v Poor quality services rendered to their customers

13 PURPOSE OF THE STUDY

i To determine if customers are satisfied with performances of the bank

ii To find out the best way to increase the banks customers

iii To increase the staff and customer relationship

iv To determine how best to improve customer service

v To find out how to improve the quality of services rendered to the customers

14 SIGNIFICANCE OF THE STUDY

This research work may be helpful to those who are either carrying out research work in banks profitability, customer service, hotels any other establishments in the service industry

It will also be useful to scholars and students of the aforementioned areas

15 RESEARCH QUESTIONS

The following are the research questions

i) How is Union Bank of Nigeria Plc, Oko branch rated by its customers and the general public, in terms of profitability?

ii) Which of Union Bank of Nigeria's customer service innovations are its customers aware of?

iii) How do they rate them, vis-à-vis their ability to engender customer satisfaction?

iv) What perception do the customers of Union Bank of Nigeria have of the courteousness and friendliness of their staff at Oko branch?

v) What do the customers of Union Bank of Nigeria Plc, Oko branch feel about their speed of service?

16 HYPOTHESIS

The hypothesis was formulated based on the problems stated above

i Null Hypothesis - Ho: The profitability of financial institutions in Nigeria cannot be increased through improved customer service

ii Alterative Hypothesis - Hi: The profitability of financial institutions in Nigeria can be increased through improved customer service

17 SCOPE OF THE STUDY

This research work is limited to Union Bank of Nigeria Plc, is services are more or less similar to that of other banks

Based on this, the researcher has decided to find out the kind of services and how to satisfactorily these services are rendered to customers

18 DEFINITION OF TERMS

The following terms are hereby defined:

i) Customer Services: An instrumental activity performed for a consumer or a consummatory activity involving consumer participation in but not ownership of a company's product and facilities

ii) Marketing: Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating offering and exchanging products of value with others

iii) Marketing Concept: is a corporate state of mind that insists on the integration and co-ordination of all the marketing functions which in turn are melded with all other corporate functions, for the basic purpose of producing optimal consumer benefits and maximum long-range corporate profit

iv) Commercial Bank: is an institution which accepts deposits, makes business loans and offers related services for profit

v) Bank: This is any person or institution responsible for collecting deposits and other valuable items from customers for safe-keeping

vi) Customer satisfaction: - This is the extent to which a firm fulfills customers needs desires and expectations