CHAPTER ONE
INTRODUCTION
1.1
Background to the Study
In every economy,
the Banking Industry plays very vital roles in the financial system and
therefore is a crucial agent of the developmental process in the economy. Banks
in their capacity as financial intermediaries channeled savings and investment
from the surplus units to the deficit units thereby increasing the volume of national
savings and investment and consequently, the national output. The organic
growth of the Nigerian financial sector between independence in 1960 and the
era of Structural Adjustment Program (SAP) in 1986 was indeed remarkable (Central
Bank of Nigeria, 2011). The growth in the number and variety of financial
institutions as well as the financial instruments and operations during this
period attest to the relevance of the sector in national economic development.
The structural readjustment in the financial sector which commenced in 1986 was
directed towards enhancing the banks’ efficiency through increased competition,
strengthened supervisory role of the Regulatory Authorities and streamlined
public sector relationship with financial sector. This since the early 90’s,
the phenomenon growth of the Banking Industry in Nigeria following the
deregulation of the industry has generated interest and enthusiasm amongst top
notch stakeholders and institutions in the industry, stressing the urgent need
for strategic decisions (Wodi, 2010).
Prior to the
liberalization of the Nigerian financial system, there was a clear-cut
distinction between Merchant and Commercial Banks. However, at the turn of the
new millennium and as a result of liberalization, these distinctions were
removed by the Central Bank of Nigeria to create a level playing field in the
industry; endorsing the concept of Universal Banking in all its ramifications,
setting the stage for all players to develop niche areas where they were most
efficient in the context of the philosophy of guiding deregulation (Central
Bank of Nigeria, 2002). Most
significantly in 2002, the Central Bank of Nigeria dismantled the divide
between commercial and investment banking
via the full introduction of Universal Banking; a culmination of a
process commenced two years earlier with the Government’s approval of the
conversion of Merchant to Commercial Banks. Universal Banking further
heightened the competitive pressure in the banking sector with more merchant
banks venturing into retail banking and subjecting operating margins to severe
stress. This factor along with the new commercial banks that were licensed and
the rapid branch expansion by operators in the system re-echoed the needs for
banks to create more value-added services that would guarantee some competitive
leverage. Thus, banks with a view of survival can no longer on their “efficient
personnel” solely but must synchronize personnel capabilities with appropriate
systems and structures in order to wade
the storm of competition, survive the tide of changing customer needs and take
advantage of emerging technology; shifting several old economy business
practices towards organizing by customer segment rather than by products,
focusing on customer lifetime value instead of transactions alone, focusing on
stakeholders and not only shareholders getting “all hands on deck” while
building products and services acquisitions, retention and satisfaction (Ogunleye,
2012).
Popularized
during the “internet Gold Rush” in the mid ‘90s’ Customer Relations (CRs)
suggest on overall shift from product-based marketing to a customer focused approach;
rather than “out of box” software which can be effectively used with little or
no customization (American Marketing Association, 201
1.2 Statement
of Research Problem
Customer
Relations are critical to organizational survival in the 21st
century. Any organization that wants to stand the “test of time” has to take CRs
very serious, knowing fully that organizations are established in order to
satisfy people and those they wish to satisfy must be given a pride of place in
the scope of the organization. But many organizations still take it with levity
and this accounted for many banks closure leading to increase in unemployment
rate and
shareholders
resources are wasted thereby discouraging further investment by the
stakeholders (Levitt, 2010). Also, Kolter (2012) argued that building customer loyalty
requires organizations to build effective Customer Relations in order to stand
the fierce competition in the industry. Hence, the importance of CRs should be
emphasized for the survival of the organization and the growth of the economy.
1.3 Research Questions
In the light of
the research problem, and in the course of this study, the following questions
are expected to serve as a guide to achieve the purpose of the study.
i.
What
is the extent at which Customer Relations enhance corporate performance in
Nigeria?
ii.
What
is the extent at which Customer Relations guaranteed customer satisfaction?
iii.
What
is the level of increase in profitability in the banking industry with the
introduction of Customer Relations?
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