THE IMPACT OF CUSTOMER RELATIONS ON CORPORATE PERFORMANCE: A SURVEY OF SELECTED DEPOSIT MONEY BANKS IN NIGERIA.

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 21^st 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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