Service Quality in the Nigerian Banking Industry

ABSTRACT

This research was undertaken to examine the overall customer satisfaction with service quality delivered by Nigerian Banks through the use of ATM and to also ascertain whether some service quality factors exert a strong influence on the level of customer satisfaction;

The concept of service quality has become eminent in every business discourse; a high service quality serves as an incentive for customers to come back due to satisfaction. To consistently maintain a high level of customer service, service firms must recognize that every aspect of their business has an impact on the customer.

In this study, two types of data were collected; Primary Data and Secondary Data. This was necessary since it helped to add to the findings of the researcher. A simple random sampling and purposive sampling method were used. This ensured that every member of the population had an equal chance of being part of the sample. The sample size chosen was 200 bank customers.

It was revealed in the survey that customers think that the banks need to improve on their quality of ATM services and a high number of the customers are willing to switch banks for the sole reason of an ATM that offers the highest service quality.

The study also revealed some of the problems associated with the services provided by the ATM that the customers dislike and want to be adjusted, they are ATM cash out, the limit placed on daily withdrawal, Transaction error, slow response to dispute resolutions, Network problems, Long queues, Security issues and Card retraction.

INTRODUCTION

Background to the study

Service marketing literature has advanced to a certain height of sophistication and more and more research is being carried out to address more rudimental questions regarding the deeper understanding of service quality concept. (Groonroos, 1994: Rust and Oliver, 1994). Many service organizations now realized the need to constantly improve the quality of services that are offered to customers. One of the ways by which a firm can continually achieve a strong reputation for quality service is when customers' expectations are consistently met. According to Lee (2005), There is an increasing awareness among customers all over the world for the demand for more quality services/products therefore customers" requirements for higher quality service have been increased. With the existence of multiple choices, customers are not willing to settle for anything less than the best. In recent times, more banks have recognized the need to meet customers' expectations because the customers are the major judges of the quality of service and they do this by assessing service and comparing the service received to the services desired.

In a service-centric industry like banking, the difference between a bank that provides service quality and the one that does not is significantly obvious. With the increasing provision of various financial services and products by banks, there is a need to integrate these highly dissimilar systems into a coherent framework and at the same time delivering customer service at the highest level there is. In the last few years, there have been phenomenal changes in banking operations. Banks are impelled to provide excellent services to their customers to benefit from the industry sustainable competitive advantage. Resultantly, service quality is an exceptive galvanising force necessary to drive the banks up the high technology ladder.

The Nigerian Banking Industry has been experiencing remarkable changes and development in its Information and Communication Technology over the years. One of such developments is the introduction of Automated Teller Machine (ATM) that intends to aid customers consummate bank related transactions such as withdrawal, cash deposit, transfer of fund between accounts etc. which will help to decongest the banking halls. In the face of evolving customer behaviour and expectations, it has become imperative for the Nigerian banks to listen to the voice of customers as input in shaping their strategies. For the first time since the financial crisis, excellent customer service has replaced financial stability as the primary reason for maintaining a banking relationship in the retail and cooperate segment. (KPMG, 2013).

Service relationships/ Interactions between customers and employees are a crucial part of service quality. As a result of the relationships, the creation of value becomes the focus of marketing instead of the giving of readymade value to customers. The effects of knowledge gap (the gap between consumer expectation and management perception) will be minimised properly as a result of the collaborative efforts, consumer experience will be enhanced as well as customer perception of quality. Continuous interaction could lead to customer loyalty. According to David et al (1995), banks now understand that customers will be loyal if they provide better quality services than their competitors can. Besides, higher profits can be earned if they can position themselves better than competitors. As a result, there is a need to employ focus on service quality as a core competitive strategy.

Service quality is fundamental in bonding the relationship between customers and the organisation, and it's a flow of value in a two-way direction. Simply put, customer derives real value from the relationship, which transposes into value for the organisation in the form of increased profitability for a long period. As customers feel satisfied due to high service quality, they are more likely to consistently patronize the firms' services, recommend to others and even ignore other competitors' offers. It is therefore expedient to continuously measure service quality to determine those areas that need modifications. Furthermore, it is important to find out what specific factors that influence customers' satisfaction most and seek out the most controlling factor in determining customer satisfaction. This way there could be increased chances of retaining customers and maintaining loyalty.

Statement of the problem

The Nigerian banking industry is highly competitive and its performance is significant to the development of Nigerian business. The industry has experienced a lot of shortfalls and this has affected customers experience, The Central Bank of Nigeria (CBN) in 2011 gave a directive to all banks to expand the current ATM help desk to handle all customers' complaints due to increasing number of complaints the CBN was getting from bank customers on various banking products and services (CBN circular, 2012). There is the need for the industry to deliver its products and services in a way that allows easy accessibility of customers in the most proficient, equitable, cost-effective and satisfying way possible and frequent restructuring is often done by the apex bank.

The restructuring that took place in the Nigerian banking industry in 2004/2005 and its aftermath effect coupled with the 2008/2009 global financial crises and nose-diving of share prices has led to the loss of public confidence in the banking sector. The strategies for maintaining customer's confidence will involve improving the quality of services offered to customers by continually listening to customers ordeals and using them as a basis for innovation, The era when the banking business used to be entirely an armchair profession is long gone: Bankers can no longer afford to bear the tag of being a set of conservative people who are devoid of innovations.

The CBN recently introduced an innovative policy (the cashless policy) in all parts of Nigeria that aim to engender financial inclusion by limiting the volume of cash transactions and boost electronic-based transactions in payments of goods and services (Cenbank.org, 2012). One of the most used electronic platforms is the ATM, increasing amount of bank customers' use this electronic platform. The tense competition among Nigerian banks who have mould niches in the stock market, coupled with the massive number of potential patronage due to the high population of Nigeria makes ATM adoption for banks fundamental to their sustainability. At the functional level, ATM usage has reduced long hours of queues in the banking halls and has allowed for faster and more efficient use of bank services. However, the challenges listed by users are on the increase such as cash dispensing errors; infrastructural problems associated with the ATM network and ATM fraud among others.

Sentient to the above, there need to be answers to some questions on the relevance of ATM to bank customers and how customers perceive the quality delivery in the use of ATM. Thus, this study seeks answers.

Objectives of the study

Given the above, the paper seeks to:

- Investigate the extent of bank customers' satisfaction with the service quality delivered through the use of Automated Teller Machine in the Nigerian Banking industry.
- To ascertain whether some service quality variables exert a strong influence on customer satisfaction with the service quality of ATMs

Research questions

- What relationship exists between the ease of use of the machine and customer satisfaction with service quality?
- What relationship exists between money availability (reliability) in the booth and customer satisfaction with service quality?
- How does responsiveness to dispute resolution impact on customers' satisfaction with service quality?
- How does the security and privacy of ATM influence customers' Service quality satisfaction?

Significance of the study

The relevance of this study focuses on the balanced discussion between the satisfaction customers derive from the use of an ATM and the service quality provided by banks. The importance of the private sector as an essential pillar for achieving the sustained economic development of a nation is revealed in this study as well as ways by which government can address the issues of customers and service providers by helping to curb the many barriers that impede private sector roles of investment, expansion, job creation and sustainable growth. The study also recognizes that the private sector must play a major role to achieve the policy objectives of the nation as far as access to banking services and the contribution of the industry to the country's overall development agenda are concerned.

The findings and results of this study will expose the weaknesses of the banking industry and how this affects service delivery and customer satisfaction in the long run by providing scientific measure and perspective necessary for the overall evaluation of the satisfaction customers derive from using the service of the bank.

This paper will further contribute to the extant literature on the study of customers' satisfaction in the use of ATM service in the Nigerian Banking Industry further stressing the importance of service quality and delivery by revealing the strength and opportunities available in the industry for a more sustainable competitive advantage and the need for the provision of more satisfactory services.

The study will set the stage for further empirical studies to be conducted in the banking industry as it sets to come out with suggestions required to improve the use of customer service quality as a prerequisite tool which will enable all stakeholders: consumer group, investors, shareholders, employees among others to have invaluable information on several ways to improve service delivery in the banking industry.

Context of the study

The context of this study reviews Internet publications, magazines, and journals on the Nigerian Banking Industry use of the automated Teller Machine. It probes into the global history of ATM, its introduction to Nigeria and its impact on the Nigerian Banking industry

LITERATURE REVIEW

The Concept of Service

In service quality literature, the quality of any product and service is whatever the customer perceives it to be (Grönroos, 2007). Service providers need to view quality in the same way customers do, by doing so, it will be possible to evaluate the perception and influence them in the desired direction. According to Palmer (2011), service can be defined as ''the production of an essentially intangible benefit, either in its own right or as a significant element of a tangible product, which through some form of exchange satisfies an identified need'' There are complications in trying to analyse service quality because production and consumption of service will often occur simultaneously. Services often involve complex processes, hence, the quality of services are equally complex.

There is three well definitive attribute of service: inseparabilit y, intangibility and heterogeneity and. These attributes must be well acknowledged before the comprehension of service quality can be fully grasped. The intangibility of service as explained in (Bateson 1977, Berry 1980, Lovelock 1981, Shostack 1977) is based on the facts that services are performances rather than physical objects where uniform specification can rarely be set. Firms may find it difficult to understand how customers perceive and evaluate services because services cannot be measured, inventoried or verified in advance to assure quality. (Islam et al, 2008:Yang and Fang, 2004)

Traditional and Early Service Quality Literature

Traditional service delivery system entails that the customer interacts with contact personnel and physical support to produce a service. (Leblanc, 1990). However, with automated services, the engagement of the customer in the facilitation process has significantly increased with the absence of contact personnel and more interaction with physical support. It is of utmost important to measure how customers' expectations of service measure closely to the perception of service as a result of their interaction with the physical support - in terms of quality of service and efficiency of service. Service quality has been defined as the comparison made by customers between their expectation of service and their perception of how the service was performed. (Grönroos, 1984: Parasuraman et al.1985, 1988, 1991.) As a result of the intangibility, heterogeneity and inseparable nature of service: Zeithmal et al (1988) defined service quality as the' consumer's judgment about a product's overall excellence or superiority'. Bitner and Hubbert, (1994) defined service quality as the 'consumer's overall impression of the relative inferiority /superiority of the organization and its services.'

One of the earliest literature on service quality was from (Grönroos, 1984) who believes that it is pointless for any service firm to develop the quality of their service for effective competition without first determining how consumers perceive the quality of service and how service quality is being influenced. Services require consumer involvement in the consumption process, which means that the consumer experience of service can be expected to influence the post­consumption evaluation of service quality. Grönroos further explained that two variables determine the quality of service: expected service and perceived service. The study revealed that consumers are not just interested in what is received as an outcome of the entire production process but also in every process involved. Two major dimensions were developed: technical and functional quality. The technical quality involves 'what 'the customer gets-the intended service while the functional quality involves 'how 'the customer gets it. The third dimension is the cooperate image of the service provider; it answers the question of how the customers perceive the firm's service. The two major dimensions build up the image dimension among other less important factors like advertising, word of mouth and ideology.

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