CHAPTER ONE

INTRODUCTION

• Background to the Study

The development of any nation’s economy depends to a large extent on the strength of its banking sector and the outcome of the manufacturing sector to produce need satisfying products (goods and services) to meet the demand and the need of the population. An effective and efficient banking sectors is essential not only for the production of efficient intermediation but for the protection of the depositors, encouragement of the healthy competition, maintenance of confidence, and stability of system and protection against systematic risk and collapse (Adewoyin, 2006). Retaining customers and attracting them has constituted of the toughest and most challenging activities of financial institutions in most developing countries like Nigeria (Banabo and Koroye,2011). Among the numerous problem faced by financial institutions are issues of customer retention strategies in a highly competitive banking industry, hence the consistent strategies on different forms of sales promotion to attract depositors as well as incur huge cost in training and retraining personnel for more efficient service delivery.

Investigations and studies have shown that banks are the best organizations in Nigeria that train their staff for effective customer relations. (Akpankpa, 2009, Yishau, 2008; Neakama, 2003; CBN .2004). This is a result of the competitiveness of the industry and the struggle for survival of banks especially in the face of the post consolidation challenges. It is this need for greater level of competition, organizational survival, safety of depositors funds etc, that Central Bank of Nigeria embarked on the consolidation exercise in other for the financial system in the country  to be more efficient and effective, face global challenges, threats, and opportunities, contribute to economic development of the nation, enable banks to be more liquid with =N=25Billion as minimum capital base, enable banks to become more stronger players in national economic development with longer life span and higher returns, as well as facing the challenges of the deregulation of the financial sector, globalization of operators, technological innovations, and prudential requirement that conform to international standards (Andabai, Eke and Omesi:2010, Soludo, 2004; Odufu, 2005; Kama,2006; Kolo,2007; Udoma, 2004; Ajayi, 2005)

According to Wounters (2001), Customer service is considered to be a vital concept with the potential to bridge the gap between the ever-expanding customer demands for flexibility and, at the same time, the need to reduce production and distribution costs. By bridging this gap, a sustainable competitive advantage can be achieved. This suggests the customer service is viewed as a competitive strategy instrument.

Kalu (2008), states that customer services are those activities that occur at the interface between the customer and the corporation which enhance or facilitate the sale and use of the corporation’s products and services. It includes all of the things that a manufacturer does for a customer in moving a product from the end of production to the consumption (Wounters, 2001). Customers’ perceptions of service quality result from a comparison of their before-service expectations with their actual service experience. The service will be considered excellent, if perceptions exceed expectations; it will be regarded as good or adequate, if it only equals the expectations; the service will be classed as bad, poor or deficient, if it does not meet any of the above (Naik et al, 2010). According to Uppal (2009), banks are looking for more and more interaction with customers to build customer relationship.

Shankar (2004) report that customer focusing is not viewed as just a business strategy but should become a corporate mission. Once quality service is extended to a customer, a loyal customer will work as an agent to the bank and facilitate growth of business (Bhaskar, 2004). Customer relationship management is the vital factor to improve the performance of banks (Sugnadhi, 2003). Therefore, the customer orientation builds long term relationships resulting in customer satisfaction and cash flows to the bank (Swarup, 2004). A good customer relation in banks should have three basic rules: courtesy, accuracy and speed (Ganesh and Varghese, 2003). In view of the importance of customer service delivery to the performance, growth and survival of a bank, this study critically looks at the need for improved customer service experience in the banking industry in Nigeria with emphasis on Jaiz bank plc.

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