1.1 Background of the study
Customers are presumed the stakeholders
of an organization and for an organization to flourish, the needs of the
customers must be met. Without the presence of customers, the goals and
objectives of an organization will not be achieved. It is therefore
pertinent to carry out a research on the behaviors of customer, because
knowledge of this will help an organization know how to deal rightly
with their customers.
In the 80s, the banking sector of
Nigeria did not have many policies as regards the way customers’
services should be met. During this era, the number of banks increased,
there was availability of foreign reserves, the GDP increased and there
was job creation. The banking sector contributed enormously to the
economic growth of Nigeria (Adeoye, 2007). In 2005, 2006, 2007 and 2008
were 8.1, 9.2, 9.8 and 10.6 respectively (CBN, 2009). The truth still
remains that the banking sector does not only contribute to the growth
of Nigeria alone, but in a way contributes to the economic growth of
surrounding African countries.
The satisfaction of customers should be
the primary aim of any organization. Retail banks use customer
satisfaction as a tool to measure their quality and management of
customer relationship with customers (Mihelis et al., 2001). In
addition, customer satisfaction as a marketing tool helps an
organization know its strengths and weaknesses while offering its
products and services. Customers could prove dissatisfaction of either
the products or services of a bank either through complaints or raining
abuses on the bank. When customers complain of dissatisfaction, it can
affect the customers’ loyalists and further make them to patronage other
However, when customers are satisfied,
it makes them happy, fulfilled and excited (Hoyer and MacInnis, 2001).
It creates this impression that the value of their money is fully
achieved and they will not think of switching banks. Also, it will make
customers good referrals of their banks, subsequently bringing in new
customers. There are four factors that assess the customer satisfaction
in banks: optimum facilities of a branch, economic satisfaction (bank
charges and interest rates), presence of e-banking and Automated Teller
Machine (ATMs) (Chakrabarty 2006). Service and product quality are the
measures banks need to put in place to serve their customers
Meanwhile, banks in Nigeria through
their services, most especially when it has to do with charges make
their customers dissatisfied. Recently, the Central Bank of Nigeria
approved some laws with regards to charges on banks’ customers. Some of
those charges include: a charge of N1.00 for every debit transaction
done on a current account, the N50 stamp duty on non-oil revenue
transactions, N100 e-DMMS Application fee for investors, the N65 ATM
withdrawals from other banks and NSE/CSCS Trade Alert. Charges of these
sorts have the tendency of affecting the customers and purposively, the
There are cases of bank customers
storming the bank, most especially the customer service unit to find out
why some certain amounts were deducted from an account. Cases like this
can leave the customer angry, lost of customers’ trust, customers’
switching to other banks and the reputation of the bank being at risk.
However, Nigerians complain a lot about
the charges of banks on their customers, and United Bank for Africa plc
(UBA) is a clear culprit of this. This is why this study is meant to
discover how bank charges affect customer satisfaction.
BRIEF HISTORY OF UNITED BANK FOR AFRICA (UBA)
UBA’s has more than 65 years of
providing uninterrupted banking operations dating back to 1948 when the
British and French Bank Limited (“BFB”) commenced business in Nigeria.
BFB was a subsidiary of Banque Nationale de Crédit (BNCI), Paris, which
transformed its London branch into a separate subsidiary called the
British and French Bank, with shares held by Banque Nationale de Crédit
and two British investment firms, S.G. Warburg and Company and Robert
Benson and Company. A year later, BFB opened its offices in Nigeria to
break the monopoly of the two existing British owned banks in Nigeria
Following Nigeria’s independence from
Britain, UBA was incorporated on 23, February 1961 to take over the
business of BFB. UBA eventually listed its shares on the Nigerian Stock
Exchange (NSE), in 1970 and became the first Nigerian bank to
subsequently undertake an Initial Public Offering (IPO). UBA became the
first sub-Saharan bank to take its banking business to North America
when it opened its New York Office (USA) in 1984 to offer banking
services to Africans in Diaspora.
Today’s UBA emerged from the merger of
then dynamic and fast growing Standard Trust Bank, incorporated in 1990
and UBA, one of the biggest and oldest banks in Nigeria. The merger was
consummated on August 1, 2005, one of the biggest mergers done on the
Nigerian Stock Exchange (NSE). Following the merger, UBA subsequently
went ahead to acquire Continental Trust Bank in the same year, further
expanding the UBA brand. UBA subsequently acquired Trade Bank in 2006
which was under liquidation by the Central Bank of Nigeria (CBN).
1.2 Statement of the problem
It is very obvious the way bank
customers in Nigeria are switching from one bank to the other seeking
for a bank with lower bank charges.
Bank charges by banks in Nigeria have left Nigerians unsatisfied with the services offered.
However, the high level of illiteracy
among Nigerians contributes to the bank charges meted on them. In the
sense that, Nigerians unknowingly accept to some terms without a clear
understanding of its implication. For instance, some bank customers
subscribe for some alerts (credit, debit and ATM alerts) without the
knowledge that it will be deducted from their accounts.
In addition, customers are not well
enlightened about the services of the bank and what follows, and this
poses a problem at the end of the day.
Another problem bank charges can have on
its customers; is that it can affect the reputation of the bank.
Customers will go about complaining to friends and family members about
how their bank charges and this will discourage prospective customers,
thereby reducing productivity.
In conclusion, the tenet of business
which refers to customers as king is being forfeited; as they are left
unhappy and discouraged through the products and services of the bank.
1.3 Aims/ Objectives of the study
The major aim of this study is to examine bank charges and customer satisfaction in the Nigerian banking sector.
Other specific objectives include:
- To determine the significant difference between bank charges and customer satisfaction.
- To determine how well Nigerians are informed about bank charges.
- To determine the relationship between bank charges and the economy.
- To determine if bank charges affect bank’s productivity.
- To determine if the Federal government can scrape out bank charges.
- To determine if bank charges can discourage Nigerians from saving in the bank.
1.4 Research questions
- Is there a significant difference between bank charges and customer satisfaction?
- Are Nigerians well informed about bank charges?
- Is there a relationship between bank charges and the economy?
- Do bank charges affect bank’s productivity?
1.5 Research Hypothesis
H0: There is no significant difference between bank charges and customer satisfaction.
H1: There is a significant difference between bank charges and customer satisfaction.
Significance of the study/ Justification of the study
This study is meant to educate the
general public, the banking sector and the government on bank charges
and customer satisfaction in the Nigerian banking sector.
It is meant to bring to the knowledge of
the banking sector on the need to carry their customers along in other
to grant them the needed satisfaction they require. In addition, the
study is meant to inform the banking sector, that many charges on their
customers can affect their patronage.
However, this study is meant to bring to
the knowledge of the government that they can through the CBN help
curtail these chargers on customers.
This study will be of immense benefit to
other researchers who intend to know more on this topic and can also be
used by non-researchers to build more on their work. This study
contributes to knowledge and could serve as a guide for other work or
1.6 Scope/ Limitations of the study
This study is restricted to bank charges
and customer satisfaction in the Nigerian banking sector, a case study
of UBA plc, Onitsha.
Limitations of study
- 1. 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).
- 2. 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
1.7 Definition of terms
Bank charges: This
covers all charges and fees made by a bank to their customers. In common
parlance, the term often relates to charges in respect of personal
current accounts or saving account. These charges may take many forms,
including: monthly charges for the provision of an account.
Customer satisfaction: Is
a marketing term that measures how products or services supplied by a
company meet or surpass a customer's expectation. Customer satisfaction
is important because it provides marketers and business owners with a
metric that they can use to manage and improve their businesses.
Banking sector: This is
the section of the economy devoted to the holding of financial assets
for others, investing those financial assets as leverage to create more
wealth, and the regulation of those activities by government agencies