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BANKS PERFORMANCE

AND CUSTOMER
SATISFACTION:
A STUDY OF FIRST BANK OF
NIGERIA PLC

By

SUNDAY ELISHA MANAGER


U06BA1015

Being a Research Project to the


Department of Business
Administration,
Faculty of Administration,
Ahmadu Bello University, Zaria, in
Partial Fulfilment of the
Requirements for the Award of
Bachelor of Science (B.Sc. Hons.)
Degree in Business Administration.
Banks Performance And Customer Satisfaction:

NOVEMBER, 2010.

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Banks Performance And Customer Satisfaction:

DECLARATION

I hereby declare that this research project titled:

Banks Performance and Customer Satisfaction: A Study of

First Bank of Nigeria Plc has been carried out by me under

the supervision of Dr. Auwal Y. Ahmad in the Department of

Business Administration, Ahmadu Bello University, Zaria.

The information contained in the reviewed literature

and other documentary sources referred to has been duly

acknowledged in the text and the list of references

provided. To the best of my knowledge, no part of this

project report has been previously presented for the award

of any degree or diploma in any higher institution.

_____________________________ ________________
SUNDAY ELISHA MANAGER Date

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Banks Performance And Customer Satisfaction:

CERTIFICATION

This project report titled: Banks Performance and

Customer Satisfaction: A Study of First Bank of Nigeria Plc

by Sunday Elisha Manager meets the regulations governing

the award of Bachelor of Science (B.Sc.) Degree of the

Department of Business Administration, Faculty of

Administration, Ahmadu Bello University, Zaria, and is

approved for its contributions to knowledge and literary

presentation.

________________________ ________________
DR. AUWAL Y. AHMAD Date
Project Supervisor

__________________________ ________________
AMINU S. GUMI Date
Project Co-ordinator

__________________________ ________________
DR. BELLO SABO Date
Head of Department

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Banks Performance And Customer Satisfaction:

DEDICATION

I dedicate this work to my Lord and Saviour Jesus

Christ. In the potters hand something is made out of

nothing. Thank you Father for your faithfulness, Grace and

Mercy. To God be the Glory.

To my Boss - Barrister Amos Adebayo Oriola. My story

could not have been complete without you. You gave me a

life that Im forever proud of. I am grateful for the love,

tolerance and kindness youve shown to me over the years.

I can never ever find words to thank you enough. My

children and generation unborn will hear of this great thing

youve done. You changed my story. May God bless and

reward you sir.

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Banks Performance And Customer Satisfaction:

ACKNOWLEDGEMENT

All Glory I return to God, whose hands provided all that

I need to undergo this programme. I am nothing without

you Yahweh.

My inestimable gratitude goes to my Project

Supervisor and my best lecturer Dr. Auwal Y. Ahmad for his

time given to my work, enabling me to come out with

something meaningful. My appreciation goes to my

lecturers that impacted so much in me ensuring that we are

upright both in academics and character. Some of whom

are Dr. A.B. Apkan, Dr. M.N. Maiturare, Dr. Sabo Bello (Head

of Department), Alh. Baba, Mal. Yakassai, Mal. Ado Garba,

Mal. Mohammed Ibrahim, Mal. Ladan, Mal. Saulawa, Mal.

Idris, Haj. Safiya Adamu, Mal. A.T. Sharubutu, Mal. Nasiru,

Mal. Aminu Gumi, Mal. Bashir Nafiu, Mrs. Helen Owolabi,

Mal. Yusuf Shafa, Mal. Hamisu (late) and finally Mal. S.M.

Gegu (late).

My profound gratitude goes to my Boss Barrister Amos

Adebayo Oriola. You championed my course in life. I lack

words to say thank you. I cant repay you but I pray God

will. May you live to be proud of me (Amen).

To my parent Mr. & Mrs. Manager Hamajan for love and

care given to me from childhood to this moment, ensuring

that I have all it takes to lead a good life. God bless you.

I am also indebted to my brothers and sisters for their

love and care to me. Jafaru, Alheri, Paulina, Adama, Rosa,

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Banks Performance And Customer Satisfaction:

Awuni, Ladidi, Biggy, Actor, Esther and finally Godffery

(late), you are my all in life.

My story will be incomplete without mentioning my

friends whom we went through the ups and down of the

campus together. Some of whom are Friday Omonu

(Bishop) the love I have for you is like that of David and

Jonathan, Faruk Lawal (my closest pal in school), Moses

Jonathan alias legend of the Seeker (my backbone in

Campus), Kunle Victor (Prof), Stephen Odawn, Kelechi

Mathew (Saint K.C.), Danjuma Akoh, Lord Eniaza, Francis,

Sunday Ameh, Shehu, Nuradeen (Chairman), Dauda, Philip

(Kotler), Kwasu Prince, Jonathan Enape (Joe), Amina Jummai,

Mariam, Gingin Rebecca, Lizzy, Hauwa, Ruyal, Bolaji Mejabi

(you-are-a-leader), Sultan, Nache (my first roommate),

Nyankashot, Jude, Ponjul, Hassan Alex, Harrison,. You are

the best. And what shall I more say? For, time would fail me

to tell of Adanna Ubani, Lekan, Ene, Sarah, Ete Ete, Alvan,

Nzeke, Christy, Kofa, Omoze, Promise, David, Uncle Emma,

Mr. Peter, Bro. Andrew, Bro. Ayo, Bro. Tope, Sis. Gladys,

Oluwaseye, Bumi and Pst. & Mrs. Steve. Finally, my best pal

Chef Okon, Blacky, Aminu; I love you all.

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Banks Performance And Customer Satisfaction:

ABSTRACT

This research work is an attempt on examining the services


that are rendered to customers by the banking industry,
with a view to determining whether customers are satisfied
or not vis--vis performance of Banks. The choice of this
research topic, was motivated by the need to look into the
incessant complaints of poor customer services in the
banking industry and the quest for more knowledge on
banker-customer relationship. The research study,
emphasised customers satisfaction as the essence for
every business existence. Also, it has established a
relationship between employees satisfaction with their
productivity which will determine the quality of services
they render to customers. Questionnaires were used as the
research method for the collection of the required data.
The total population of staff and management of First Bank
Nigeria Plc Zaria, No. 1 Crescent road was given to be 24 of
which the entire population was selected as the sample. In
an attempt to validate the research work, the following
hypotheses were formulated.
Ho: There is no relationship between Bank performance
and customer satisfaction.
H1: There is a relationship between Bank performance and
customer satisfaction.
The alternative hypothesis was accepted while the null
hypothesis was rejected. Data collected from respondents,
were presented and analysed with the use of simple
percentage. The hypothesis, was tested using correlation
and regression analysis. The data was further discussed
and interpreted. To this end, summary of the major
findings, conclusions and recommendations were also
made. The findings indicated that first bank Nigeria Plc
motivates its employees and that the motivation has a
significant impact on their employees productivity. This in
turn has a positive impact on the Banks performance,
leading to customers satisfaction. Among the
recommendations made were that First Bank Nigeria Plc
Zaria, should improve on its non-monetary rewards to
employees (intrinsic motivation). Intrinsic motivation such
as recognition should be given top priority among the
motivational incentives.

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Banks Performance And Customer Satisfaction:

TABLE OF CONTENTS

Title page - - - - - - - - i
Declaration - - - - - - - ii
Certification - - - - - - - iii
Dedication - - - - - - - - iv
Acknowledgement - - - - - - v
Abstract - - - - - - - - vii
Table of contents - - - - - - viii

CHAPTER ONE: INTRODUCTION


1.1 Background to the study - - - - 1
1.2 Statement of the problem - - - - 3
1.3 Research questions - - - - - 5
1.4 Objectives of the study - - - - 5
1.5 Research hypotheses - - - - - 6
1.6 Significance of the study - - - - 7
1.7 Scope of the study - - - - - 7
1.8 Limitations of the study - - - - -
8
1.9 Definition of terms - - - - - 9

CHAPTER TWO: LITERATURE REVIEW


2.1 Introduction - - - - - - 10
2.2 Concept of commercial banking in Nigeria - 10
2.3 Bank performance evaluation - - - 13
2.3.1 Bank services involving transactions with customers-
18
2.3.2 Quality of banks services - - - - 21
2.3.3 Indicators of banks high performance - -
23
2.3.4 Bank performance and customers retention -
26
2.4 Customers satisfaction era - - - - 27
2.5 Indicators of customer satisfaction - - -
29
2.6 Linking employee satisfaction with productivity,
performance and customer satisfaction - -
30
2.7 Banker-customer relationship - - - 32
2.7.1 Customers satisfaction as a source of
competitive advantage - - - - 32
2.7.2 Summary - - - - - - - 39
2.8 Brief history of first bank Nigeria Plc - - -
40

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Banks Performance And Customer Satisfaction:

CHAPTER THREE: RESEARCH METHODOLOGY


3.1 Introduction - - - - - - 43
3.2 Research Design - - - - - -
43
3.3 Population Of The Study - - - - 44
3.4 Sampling And Sampling Techniques - - 44
3.5 Research Instrument - - - - - 45
3.6 Statistical Tools - - - - - - 46
3.7 Method Of Data Analysis - - - - 47
3.8 Justification Of Methods Used - - - 49

CHAPTER FOUR: DATA PRESENTATION AND


ANALYSIS
4.1 Introduction - - - - - - 50
4.2 Data Presentation And Analysis - - - 51
4.3 Test Of Hypothesis - - - - - 60
4.4 Discussion Of Finding - - - - - 64

CHAPTER FIVE: SUMMARY, CONCLUSION AND


RECOMMENDATIONS
5.1 Summary - - - - - - 67
5.2 Conclusion- - - - - - - 68
5.3 Recommendations - - - - - 69
Bibliography - - - - - - 71
Appendices - - - - - - 72

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Banks Performance And Customer Satisfaction:

CHAPTER ONE
1.1 Background to The Study

The banking industry is highly competitive, with banks

not only competing among each other but also with non-

bank and other financial institutions. For centuries, banks

have played an important role in financial system of the

country. The vital role continues even today, although the

form of banking have changed with changing need of the

economy and individual. With expansion of trade and

commerce, the concept of banking has gained more

importance. Banking transcended from individual to groups

and later to companies.

The Nigerian Banking industry occupies an important

place in the nations economy. It plays a pivotal role in the

economic development of the country and forms the core of

money market in an advanced country. The question then

arises as to whether the Banking sector renders efficient

services to their huge earnings, and are customers

adequately compensated by the Banking Industry for their

patronage?

In evaluating the performance of Banks, some analysts

use the profit as a test of economic efficiency. Thus,

classifying banks as performing or non-performing using

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Banks Performance And Customer Satisfaction:

profit as a yardstick for measuring their efficiency may not

give the true picture of Bank performance. Recent studies

have revealed this. Hence, the use of multivariate approach

which includes the degree of satisfaction the customer

derives from the services rendered by the Bank is the most

appropriate.

Banks have started realising that success depends on

the quality of services they render, and also on customers

satisfaction. Thus, compelling them to improve on customer

services and build up better relationships with customers.

The working of the customers mind is a mystery which

is difficult to solve. And the understanding of the nuances of

what customer satisfaction is, is a challenging task. This

exercise, in the context of the Banking industry will give us

an insight into the parameters of customers satisfaction.

Banks have to deal with many customers everyday and

render various types of services to their customers. Its a

well known fact, that no business can exist without

customers. Therefore, customers have become the focal

point for an organization that wishes to survive in a highly

competitive environment. For the banks, customers

constitute the most important reason for their operations.

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Banks Performance And Customer Satisfaction:

Therefore, any issue relating to customer satisfaction must

be given due consideration.

The Bank- customer relationship, will be explained in

order to acquaint both the banker and the customer with

their rights and responsibilities. This research study is

motivated because of the complaints and series of

allegations, levelled against the Banks on their poor

customer services. If these complains are neglected, it

would affect the overall performance of banks.

Consequently, their objective of maximising profit would not

be realised. This study also aims at educating customers

more on their rights and obligations, given the fact that the

relationship between the Banker and his customer is a

contractual one. The recommendations will focus on

improving the performance of the banking sector. Against

this Background, the study intends looking at Bank

performance and customer satisfaction.

1.2 Statement of the Problem

Over the years, there have been considerable

criticisms by many customers on the performance of banks.

Most managers have been accused of being too hard on

their employees, due to the fact that they want them to

perform.
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Banks Performance And Customer Satisfaction:

Unproductivity, they believe emanates from a negative

attitude towards work. Simply put, the average Nigerian

worker detests work environment. If this be the case, it

implies that the productivity or output of the Nigerian

worker will be minimal and may not meet the needs of the

populace. This, insinuates that the economic development

of the nation will be impaired to eschew this. It is therefore

imperative that workers productivity be improved and also

that customers needs be satisfied. It should also be

recognised by management, that satisfaction is as

important to the customer as profit is to the organisation. A

study of this nature, deals with a sensitive business

( Banking ) in the Nigeria Business Environment. It centres

on the type of services Banks render to their customers,

how satisfactory these services are to customers and to the

economic development of the nation.

However, as important as the Banking Sector is to the

customer, Banks on the other have hand failed to realise

how the important their customers are to them - the

reason for their employment. It is against this background

that the researcher wishes to evaluate Bank Performance

and how it affects the customer.

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Banks Performance And Customer Satisfaction:

There has been public outcry against the poor services

delivered by the Banks to their customers. If the

performance is poor due to the fact that it is understaffed or

there are inexperienced or unskilled staff, then what are the

likely consequence to individual Banks, the Banking industry

and the entire economy?

Therefore, the research study attempt to ascertain

whether there is a relationship between bank performance

and customers satisfaction or whether no relationship exist

between bank performance and customer satisfaction.

1.3 Research Questions

In the course of the research, the research attempted

to answer the following research questions.

- To what extent can Bank performance affect

customers satisfaction?

- Is there a relationship between Bank performance

and customer satisfaction?

- To what extent can lack of motivation affect

performance?

- To what extent can inadequate manpower affect

performance?

1.4 Objective of the Study

The objective can be summarised as follow;

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Banks Performance And Customer Satisfaction:

- To examine factors that enhance performance.

- To identify the standard set by management and

how performance is measured.

- To examine how productivity of staff can be

improved.

- To ascertain whether there is actually a better

working condition in the Banking industry.

- To carryout a critical analysis on the type of

services offered by Banks.

- To investigate the criticism of poor customer

services often levelled against the Banks.

- To enlighten the customer as to the role that

Banks are expected to play in the society which

will enhance a good bank-customer relationship.

- To recommend measures that will enable banks

improve their performance.

1.5 Research Hypotheses

The following hypotheses have been formulated and

would be tested in the course of this study.

H o: There is no relationship between Bank

performance and customer satisfaction.

H1: There is a relationship between Bank

performance and customer satisfactory.


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Banks Performance And Customer Satisfaction:

1.6 Significance of the Study

The significance of this research work, is to examine

the impact that Bank performance will have on customers.

This research is very important because it intends to explain

those rating techniques necessary to improve employees

performance. This will help management to solve problems

of unproductivity. This is because no organisation will be

able to achieve its objectives effectively without attaining

certain level of performance. This research will be useful for

managers, who want to motivate their workers in order to

have a more productive result. In addition, this research

can help other researchers who are interested in working on

this field of study. This work is also useful for the general

public who want to know about the Banking Industry (i.e.)

First Bank of Nigeria Plc.

1.7 Scope of Study

It is apparent to state that in a research of this nature,

the researcher has to limit himself to a particulars area.

There are so many banks, but the researcher has chosen

First Bank of Nigeria Plc. Zaria, and he intends to use the

management, staff and also customers of the bank.

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Banks Performance And Customer Satisfaction:

This research also attempts to investigate the

following:

i. The quality of services as presently offered by

Banks in Nigeria.

ii. Causes of poor quality banking services.

iii. The impact of bank performance on customer

satisfaction.

1.8 Limitations of the study

In the course of this research, the researcher

encountered some problems. Firstly, the researcher could

not gain easy access to the staff of the organisation under

study. However, the problem was solved through conviction

by the researcher with the letter of introduction obtained

from the department.

Secondly, the researcher could not retrieve some of

the questionnaires taken to the field of study.

Finally, the researcher also encountered financial

problem in the course of this research. However, the

problems encountered in the field did not in any way affect

the validity and reliability of the study.

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Banks Performance And Customer Satisfaction:

1.9 Definition of Terms

Customer: A person becomes a customer

immediately he opens an account: he does not need to

have habitual dealings with a banker in order to rank

as a customer.

A Bank: An organisation which deal in money

receiving on deposits from customers, honouring

customers drawings against deposits on demand,

collecting cheques for and lending or investing surplus

deposits until they are required for repayment.

Customer Satisfaction: The good feelings that

customers have as a result of the good treatment

received from their bank which induces loyalty.

Quality: A high standard.

Performance: How well or badly something is done.

Commercial Bank: Commercial Bank is also known

as clearing bank, which takes cash and collect cheques

of their customers drawn on other banks.

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Banks Performance And Customer Satisfaction:

CHAPTER TWO
LITERATURE REVIEW

2.1 Introduction

It appears that what customers are saying, is that they

expect good product and services from their banks. What is

more important to them is to have courteous and

professional employees whom they can trust to explain to

them and correct problems when they happen. Of

importance to them also, is not only the account itself but

the quality of services rendered.

Thus, this chapter considers operations of commercial

banks, the relationship with their customers and most

importantly establishes a relationship between employees

satisfaction and performance which determines the level of

customers satisfaction.

2.2 Concept Of Commercial Banking In Nigeria

Banking operations began in Nigeria in 1892 under the

control of expatriates and by 1945, some Nigerians and

Africans had established their own banks. The first era of

consolidation ever recorded in Nigeria banking industry was

between 1959 1969. This was occasioned by bank failures

during 1953 1959 due mainly to liquidity of bank. Banks,

then do not have enough liquid assets to meet customers


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Banks Performance And Customer Satisfaction:

demand. There was no well-organised financial system with

enough financial instruments to invest in. Hence, banks

merely invested in real assets which could not be easily

realised to cash without loss of value in times of need. This

prompted the federal government then, backed by the

World Bank Report to institute the Loynes Commission on

September 1958. The outcome was the promulgation of the

1958, which established the Central Bank of Nigeria (CBN).

The period (1959 1969) marked the establishment of

formal money, capital markets and portfolio management in

Nigeria. In addition, the company Acts of 1968 were

established. This period could be said to be the genesis of

serious banking regulation in Nigeria. By January 2001,

banking sector was fully deregulated with the adoption of

universal banking system in Nigeria which merged merchant

banks operation to commercial banks system, preparatory

towards consolidation programme in 2004.

Source: http//www.eurojournls.com

Osubor J.U. in his book Business Finance and Banking

in Nigeria, posits that commercial banks are a nations most

important financial institutions in the sense that, their

performance of services are unique and are distinguished

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Banks Performance And Customer Satisfaction:

from other forms of financial institutions or intermediaries

because of the following characteristics:

a. Commercial banks hold the nations money

supply;

b. They are the only financial intermediaries whose

demand deposits circulate as money;

c. Commercial banks lending can create additional

bank deposits through redeposit of the money by

the borrower, unless the public choose to hold

more currency;

d. They have the sole power to create money

through the monetisation of debt or through a

promise to pay, I.O.U.: and also, the power to

destroy money.

Commercial banks in Nigeria, is said to be one of the

oldest industries. These banks are the most important type

of financial institution in terms of aggregate assets. In

terms of employment, commercial banking is one of the

largest industries. In Nigeria ,commercial banks have

continued to be the dominant segment in the banking

industry. Assets of commercial banks which stood at 32.89

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Banks Performance And Customer Satisfaction:

percent of the GDP in 2004, rose marginally to 35.43

percent in 2006.

Source: http//www.eurojournls.com

This is an indication that commercial banks are not just

the cornerstone in the banking industry, but also for the

countrys financial system as a whole.

2.3 Bank Performance Evaluation

Over the years, numerous complaints have been

received from customers, concerning the poor treatment

they receive from their banks, ranging from poor human

relations to their financial performance which are most often

not encouraging. The question here is are things as bad as

they seem to be? In order to make an objective and sound

evaluation of banks performance, there is every need to

consider the past performances alongside with the present.

Bank performance will be categorised into two aspects

for the purpose of this research work.

1. Banks financial performance

2. Employees performance

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Banks Performance And Customer Satisfaction:

Performance Pre And Post Consolidation Financial Of

Banks

The current credit crisis, have questioned the

effectiveness of bank consolidation programme as a remedy

for financial stability and monetary policy in correcting the

defects in the financial sector.

We denote year 2004 as the pre-consolidation and

2005 and 2006 as post-consolidation period for our analysis.

In terms of Assets, the table below shows that the total

asset of all the 89 banks operating in Nigeria in 2004 prior

to the consolidation was N3,753.28 billion (US$28.250

billion) and rose to N6400.78 billion (US$49.88 billion)

indicating a growth rate of 70.54.16 percent within one year

after consolidation.

The asset size of an average bank which was N42.172

billion (US$0.3174 billion) grew geometrically to N267.482

billion (US$2.0856 billion) within a year after the

consolidation exercise, a growth rate 534.27 percent. This

was said to be an impressive performance.

Source; http://www.eurojournals.com

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Banks Performance And Customer Satisfaction:

Table 1: Pre-Post Consolidation Performance Of The

Nigerian Banks

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Banks Performance And Customer Satisfaction:

The profit efficiency/asset utilisation has not been

impressive. Although the banks have been able to double

their gross earnings from their pre consolidation

performance level, their profit and asset utilisation

efficiencies have declined since the conclusion of the

consolidation. For instance, the industry return on equity

declined from 35.28 percent in 2004 to 11.12 percent in

2006, while return on asset declined from 8.37 percent to

2.09 percent over the same period. The asset utilisation

ratio also declined; while an average bank was able to earn

34 kobo for every N1.0 asset in 2004, this declined to 11

kobo in 2006. Thus, while the consolidation has improved

the structure of the Nigerian banking industry in terms of

asset size, deposit base and capital adequacy the profit

efficiency has not been impressive. The banks will need to

become more efficient in terms of their ability to generate

enough return, to justify the increase in the equity base as

well as the resources put at their disposals by their

stakeholders. The lending capacity of the banks improved

significantly as a result of the consolidation. As at 2004, an

average bank could only lend about N14,371 billion. Where

as, the consolidation strengthened the banks. where a

typical bank in Nigeria in 2006 could lend an average of

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Banks Performance And Customer Satisfaction:

N80,788 billion. This represents a growth of 462.13 percent

growth.

Source; http://www.eurojournals.com

The above analysis reveals that banking sector is

becoming competitive. And that market forces are creating

an atmosphere where many banks simply cannot afford to

have weak balance sheets and inadequate corporate

governance. Of key interest to the customer is the balance

sheet of the banks. The assets of banks draw customers

interest. An astonishing asset level of banks keeps

customers fears allay and makes them put confidence on

the system. A sound balance sheet, often makes a

customer sound.

Banks Employees Performance

Over the years, numerous bank customers have

forwarded complaints on the poor human relations they get

from bankers. The question here is who is to blame?

Dick Clark (2003) noted that it is common sense,

when people feel great about the place where they work

they provide better customer service.

Perhaps, reason why customers receive undue

treatments from their bankers may be traced to the fact

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Banks Performance And Customer Satisfaction:

that these employees are not intrinsically motivated.

Intrinsic motivation means that employees are motivated

because of the satisfaction they get while doing their job. It

comes from within the employee rather than from any

extrinsic rewards, such as monetary incentives. Intrinsic

motivation also shows that the employee is more interested

in the job which interests him with good working

environment and a sense of responsibility to perform the

task. Such an employee is motivated to work, because he

finds the job interesting enough to give him satisfaction

after completing it. When employees are satisfied with their

jobs and the working conditions, they tend to give in their

best to the work.

Thus, worthy of note is that for bank employees to

maintain a friendly behaviour towards customers, managers

must ensure that their employees find their jobs interesting,

with a good working environment. And also, should ensure

that employees are satisfied with the conditions of service

including their monetary rewards.

2.3.1 Bank Services Involving Transactions With

Customers

The primary operations of banks include:

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Banks Performance And Customer Satisfaction:

a. Keeping money safe while also allowing withdrawals

when needed.

b. Issuance of check books so that bills can be paid and

other kinds of payments can be delivered by post.

c. Provide personal loans, commercial loans, and

mortgage loans (typically loans to purchase a home,

property or business).

d. Issuance of credit cards and processing of credit card

transactions and billing.

e. Issuance of debit cards for use as a substitute for

cheques.

f. Allow financial transactions at branches or by using

Automatic Teller Machines (ATMs).

g. Provide wire transfers of funds and Electronic Fund

Transfers between banks.

h. Facilitation of standing orders and direct debits, so

payments for bills can be made automatically.

i. Provide overdraft agreements for the temporary

advancement of the banks own money, to meet

monthly spending commitments of a customer in their

current account.

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Banks Performance And Customer Satisfaction:

j. Provide charge card advances of the banks own

money for customers wishing to settle credit advances

monthly.

k. Provide a check guaranteed by the bank itself and

prepaid by the customer, such as a cashiers check or

certified check.

l. Notary service for financial and other documents.

Other Types Of Bank Services

a. Private banking private banks provide banking

services exclusively to high net worth individuals.

Many financial services firms require a person or

family to have a certain minimum net worth to qualify

for private banking services. Private banks Often

provide more personal services, such as wealth

management and tax planning, than normal banks.

b. Capital market bank bank that underwrite debt and

equity, assist company deals (advisory services,

underwriting and advisory fees), and restructure debt

into structured finance products.

c. Bank cards include both credit cards and debit cards.

Bank of America is the largest issuer of bank cards.

d. Credit card machine services and networks

companies which provide credit card machine and


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Banks Performance And Customer Satisfaction:

payment networks call themselves merchant card

providers.

Foreign Exchange Services

Foreign exchange services are provided by many

banks around the world. Foreign exchange services

include:

a. Currency Exchange where clients can purchase and

sell foreign currency banknotes.

b. Wire Transfer where clients can send funds to

international banks abroad.

c. Foreign Currency Banking banking transactions are

done in foreign currency.

Investment Services

a. Asset management the term usually given to

describe companies which run collective investment

funds.

b. Hedge fund management hedge funds often employ

the services of prime brokerage divisions at major

investment banks to execute their trades.

c. Custody services the safe-keeping and processing of

the worlds securities trades and servicing the

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Banks Performance And Customer Satisfaction:

associated portfolios. Assets under custody in the

world are approximately $100 trillion.

2.3.2 Quality Of Banks Services

Service quality refers to a number of inter-related

factors including the way in which individuals are treated by

providers, the scope of services available to clients, the

quality of the information provided to the clients and quality

of the counselling skills, the promotion of individual choice,

the technical competence of providers, and the accessibility

and continuity of services.

SOURCE: http://erc.msh.org/mainpage.cfm.

The Japanese industrial standards committee defined

quality as a system of means to economically produce

goods or services which satisfy customers requirements.

SOURCE: http://www.qualitydigest.com.

Longman dictionary 2003 defined quality as a high

standard.

The quality of commercial banking services in Nigeria,

has caused quite some stir in recent times. Customers are

clamouring for high standards of the services rendered by

banks. Customers have always wanted their banks to

understand that a customer is not an interruption in the

bankers work; but he is the purpose for the bankers work.

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Banks Performance And Customer Satisfaction:

Not until recent times that it dawned on providers of

banking services that they are not doing customers a favour

by rendering quality services, but that a satisfied customer

is a key to continued existence. Customers expect their

transactions with the banks to be hitch free and time saving.

Thus, quality of bank services can be seen from these view

points:

a. Friendliness/courteousness of employees.

b. Responsiveness to requests.

c. Appearance of physical facilities.

d. Approachability of the services provider.

e. Willingness to listen to customer.

f. Honesty and an ability to communicate in clear

language.

g. Safety in terms of the customers money (financial

safety).

Bankers are bent on improving the standard of their

services to their customers, upon the realisation that

customers are the reason for the existence of the business.

2.3.3 Indicators Of Banks High Performance

Kazmi (2006) noted that Performance indicators are

well understood as being metrics or measures in terms of

which performance is measured, evaluated or compared.

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Banks Performance And Customer Satisfaction:

Key Performance Indicators (KPIs) are the metrics or

measures in terms of which the critical success factors are

evaluated. What makes the key performance indicators

key is their relationship to the critical success factors and

ultimately, to the vision of the organisation/industry. An

organisation for instance might have the vision to be the

most profitable company in the industry. In making this

vision operational, it needs to determine key performance

indicators such as pre-tax profit or shareholder equity that

measure profitability.

In the banking industry, a firm that considers high

service quality or cost efficiency as its critical success

factors, has to think of metrics in terms of which will

measure these parameters. Since every firm in the banking

industry aims at providing quality service to its customers at

low cost in order to maximise profit, below are factors that

indicate whether a firm is performing as it ought to or not.

High Performance Indicators

a. High return on investment.

b. First trial customers.

c. Repeat customers.

d. Number of complaints received compared to the

number of complaints solved.


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Banks Performance And Customer Satisfaction:

e. On-time service delivery.

f. Proper check of fraud.

a. High Return on Investment: The ratio measures the

ability of the firm to utilise assets to a profitable level.

A high ratio signifies high profit, while a low ratio

signifies a low profit.

b. Repeat Customers: When a customer after his first

trail, comes back again, this indicates that he was to a

large extent satisfied with the treatment he received

from the bank on his first trial. A high number of

devoted customers, indicates that the firm is

performing up to customers expectation.

c. Number of Complaints Received and the Number

of the Complaints Solved: A high number of

complaints shows that a bank is wanting in a certain

areas. Also, when complains are received the number

of such complaints that are solved also tells how

effective the firm is in handling customers.

d. On-Time Service Delivery: Customers are delighted

when their transactions with their banks are completed

in the shortest possible time. A service provider that

delivers services to customers saving the customers

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Banks Performance And Customer Satisfaction:

time and energy, is surely satisfying one major area of

customers desire.

e. Adequate Check of Fraud: Organisations with no or

little account of fraud are perceived to be credible and

financially prudent. Customers minds are at rest when

their money is secured from fraudsters. This is also an

indicator of good performance.

2.3.4 Bank Performance And Customers

Retention

The essence of a business idea is not just to attract

new customers but also, to retain the existing customers by

delivering satisfaction.

Jagdish (2004) believed that the twin strategies of

business success are employee satisfaction and customer

satisfaction. He observed that in the early stages of a

companys lifecyle, its success depends heavily on

employees and their soldier-like devotion and hard work.

And in the maturity stage of the companys life cycle,

success depends on retaining existing customers.

Jagdish, emphasised that at the maturity stage, a

smart management must focus on the external world of

customers and their needs, in addition to the internal world

of employees and their operations. At this stage,

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Banks Performance And Customer Satisfaction:

customers interest must be given top-most priority,

otherwise, customer defection arises. Customer defection

which means losing a business. This occurs when an

unhappy customer decides to stop the hire or purchase of

the services or products of the firm and decides to find

some other suitable alternative that satisfies his needs

which the organisation has failed to deliver.

Customer defection is a threat to the organisation

which is very obtainable in the banking industry. When

customers expectations are not met, or bankers

relationships are not too cordial with their customers, this

could result in customer defection. On the other hand,

customers retention is a great opportunity to the

organisation.

Hay Day (2003) also noted that staff commitment is

the key to improved performance. To retain customers,

management must seek to improve the quality of their

services by performing better and better as days go by.

There is need for innovation. There is need to correct the

flaws of the past and improve on past successes. This is a

key to retaining customers.

2.4 Customers Satisfaction Era

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Banks Performance And Customer Satisfaction:

In the past few decades, consumers choices have

exploded in retailing, banking, telecommunications,

broadcasting, and many other spheres of business. The

world we live in has clearly become a much more complex

environment. With these constantly changing

circumstances, has come the need to develop stronger,

deeper relationships with customers. To deliver a greater

level of satisfaction to customers for which they pay for.

The fundamental principle behind customer

satisfaction and its measurement as noted by Jagdish, is

that business performance creates satisfaction. And

satisfied customers are more likely to be loyal (and

recommend the service to others). And loyal customers

with longer life times and high life time values mean

greater market shares and profits.

In satisfying customers, the first step is to identify the

three groups of customers those in pain, those merely

satisfied and those who are delighted. Managers should

make efforts by increasing their performance level so as to

move customers in pain region to delight region. Customers

that are merely satisfied should be moved to delight region

by making an improvement in performance no matter how

small. Likewise, managers should maintain or make slight

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Banks Performance And Customer Satisfaction:

improvement in their performances level to those customers

that are delighted with the services they receive in order to

keep them floating at the delight zone. Therefore, it is

worthy of note that customers demand quality services like

never before. Hence, to keep an organisation going,

managers must realise that the present era is an era to keep

customers satisfied otherwise the organisation is heading

for doom.

Source: http://www.ipsos.ca/prod/loyalty/newEra.cfm

2.5 Indicators Of Customers Satisfaction

Customers satisfaction is sometimes hard to achieve

because it changes from customer to customer and day to

day. It is ever moving. However, it is possible to know

whether customers are satisfied or not.

One can tell if a customer is satisfied by looking at the

following criteria:

1. How much do the customers consistently buy from the

company? Is the rate increasing or decreasing?

Satisfying customers needs, leads to retaining the

customers. Satisfied customers find a way to do more

business or transaction with the company. If the rate at

which customers consistently buy a companys product or

use the companys services is decreasing, this indicates


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Banks Performance And Customer Satisfaction:

customers dissatisfaction. But if on the other hand, the rate

at which customers consistently use the companys services

is increasing, this is a sure indicator that customers needs

are being met and that they are satisfied.

2. Do customers pay their bills on time?

Satisfied customers pay on time. Since they feel

satisfied with the services rendered by the organisation, and

are happy with treatment they receive from their service

providers, they seek to reciprocate the gesture by paying

their bills in good time.

3. Do they give you referrals? If asked, satisfied

customers give referrals.

Another indicator of customer satisfaction is when you

ask the customer is there any thing else I can do for you at

this time? A satisfied customer will answer no. If they

have other unmet needs/concerns, and are truthful and

appreciate your service, they will tell you the areas they are

not satisfied with.

Therefore, it is imperative to know whether customers

are satisfied with the services they receive or whether they

are not. This is because satisfied customers make the

business go on.

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2.6 Linking Employees Satisfaction With

Productivity, Performance And Customer

Satisfaction

Employees in service jobs often interact with

customers. Since the management of service organisations

should be concerned with pleasing these customers, it is

reasonable to ask: is employees satisfaction related to

positive customer outcomes? For frontline employees who

have regular contact with customers, the answer is yes.

The evidence indicates that satisfied employees

increase customer satisfaction and loyalty. Why? In service

organisations such as banks, customer retention and

defection are highly dependent on how frontline employees

deal with customers. Satisfied employees are more likely to

be friendly, upbeat, and responsive which customers

appreciate. And because satisfied employees are less prone

to turnover, customers are more likely to encounter familiar

faces and receive experienced service. These qualities of

the employees build customer satisfaction and loyalty.

Clark (2003) stated that it is common sense when

people feel great better customer service.

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Banks Performance And Customer Satisfaction:

Federico (2003) also stated that employee

satisfaction leads to customer satisfaction. When internal

customers (employees) are happy, they treat external

customers well. Customers will keep coming back for more.

This enhances their relationship and leads to customer

loyalty.

2.7 Banker-Customer Relationship

The world we live in has clearly become a much more

complex environment. With things constantly changing,

there is need for banks to develop stronger, deeper

relationships with customers in order to keep customers

satisfied at all times.

The relationship between banker and customer is a

contractual one. The contractual relationship which exists

between banker and customer is a complex one founded

originally upon the customs and usages of bankers. Many of

those customs and usages have been recognised by the

courts, and, to the extent that they have been so

recognised, they must be regarded as implied terms of the

contract between banker and customer.

Therefore, relationship between the banker and the

customer exist mainly at these two points.

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Banks Performance And Customer Satisfaction:

i. The cashiers point

ii. The managers point

i. The Cashier And The Customers:

The cashier by virtue of his duties comes into contact

with the public (customers) more often than any employee

of the bank. The numerous functions the cashier performs,

makes specialisation a must so as to make transaction

easier. The cashier must therefore possess the spirit of

tolerance, must be accommodating. It is expected of him to

have technical and interpersonal skills to handle customers

appropriately, knowing the implications of his every actions.

The cashier must be courteous, address customers in a

cultured manner and most importantly exude confidence.

ii. The Manager And Customers

The branch manager is at the apex in the branch of a

bank. And also, represents the management. He is more of

the chief public relation officer of the branch. Therefore, he

must be in the forefront, in projecting the good image of the

bank through his attitude to customers. He must know who

the customers of the bank are, as well as try to win more

customers. He must understand their problems, grant them

audience and seek for suggestions from them on how to

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Banks Performance And Customer Satisfaction:

improve on the services rendered to the customers. This

makes a customer have a feeling of being recognised.

2.7.1 Customers Satisfaction As A Source Of

Competitive Advantage

Customer satisfaction can provide a firm with major

competitive advantages, which can directly lead to increase

in profitability and growth.

Jagdish in his article titled Competitive Advantages

through Customer Satisfaction observed that in the early

stages of a companys lifecycle, the companys success

depends heavily on employees and their soldier-like

devotion and hard work. But noted that when the business

grows, and the company reaches the maturity stage of its

lifecycle, it is common to find satisfied employees but

dissatisfied customers. The company now depends much

more on its customers and not the other way round.

Success now depends heavily on how satisfied the

customers are with the services or products of the company.

Below are five competitive advantages a company

gains from satisfying customers.

1. Repeat buying results in lower costs.

2. Customer satisfaction creates price advantages.

3. Customer satisfaction limits corporate crisis.

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Banks Performance And Customer Satisfaction:

4. Satisfied customers generate new customers.

5. Customer satisfaction encourages successful

innovations

Repeat Buying Results In Lower Costs

Jagdish noted that in a matured market, perhaps the

best competitive advantage a company can maintain is

through retaining its customers, since as much as 90 to 95

percent of total business comes down from existing

customers. Competitive strategies for retaining existing

customers, tend to be less costly than those for gaining new

customers. He noted that in matured markets, with repeat

purchase the cost of doing business with satisfied customers

goes down. It demonstrates that the economy of scale

advantages, in manufacturing operations attained through

volume and worker experience are equally appropriate

concepts and consequences in the sales and service

environment.

It is obvious that dissatisfied customers increase the

cost of sale. They slow down in their payments, elevate

complaints to higher level management and even engage

their legal departments to fulfil their expectations. And, if

the customer engage their legal departments, the

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Banks Performance And Customer Satisfaction:

organization must also engage its legal department,

resulting in cost escalation.

It is estimated that one dissatisfied customer takes the

profitability out of five satisfied customers. Unfortunately,

this is hidden and dispersed through out the organisation,

and therefore, not notice by top management.

Customer Satisfaction Creates Price Advantage

Unless there is a strong incentive satisfied customers

are unlikely to switch suppliers. After all, they have invested

significant amount of time, effort and expertise in searching

and selecting the right vendors in the first place. There are

minimal cost associated with switching vendors and in some

cases they can be prohibitive. For example once a customer

is linked by computerised order entry systems, it is very

difficult for him to switch to another supplier.

Therefore, if a competitor wants to capture your

satisfied customers, It must provide significantly better

value of performance or by increasing performance levels at

the same price. The larger the satisfied customer base you

own, the greater the amount of entry barriers for other

competitors.

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Customer Satisfaction Limits Corporate Crisis

A third major competitor advantage through customers

satisfaction which is linked to profits, is in the area of

corporate crisis. Satisfied customers want the company to

survive any crisis it experiences and they try to assist the

company to ensure its survival. Customer satisfaction is

probably the best source of insulation against corporate

crisis.

Satisfied customers want the company to survive any

crisis it experiences, and they try to assist the company to

ensure its survival. Customer satisfaction is probably the

best source of insulation against corporate crisis.

Customer Satisfaction Encourages Successful

Innovation

Satisfied customers are more open to sharing their

product use experience. They not only allow, but encourage

suppliers to visit their facilities, talk to their employees and

in general encourage learning about what they do with your

products and services.

This open door communication and exchange is

extremely important for new product innovations. It allows

your Research and Development department to interface

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Banks Performance And Customer Satisfaction:

with the customers as they are developing new

technologies. The customer input in the early stages of

technology development, has been recognised as one of the

major reasons for the success of an innovation.

Indeed, in many industries, customers engineering

departments take the lead in new product development

often resulting in worldwide patents.

However, the customer does not want to diversify from

his business operations and passes on the new discovery or

the new design to preferred vendor. This has been found to

be true in process technologies, in material substitutions, as

well as in support services.

Satisfied Customers Generate New Customers

The best way to grow business profitably, is to gain

new customers without significant investment of your

product, marketing, and sales resources. This is possible

through word of mouth communication. If you have satisfied

customers, they are more than willing to call or visit

potential new customers.

They are willing to put in their time and effort for

several reasons. First, they want to share their appreciation

for being treated well as customers. Second, it is in their self

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Banks Performance And Customer Satisfaction:

interest to drive out bad companies or inferior products from

the market, by promoting your products and your company.

Finally, customers acquire market price if they

concentrate their purchases from one or two vendors. This

makes you more dependent on them and creates a balance

of power between you and your customers.

Word of mouth communication is a very powerful form

of communication and influence. It is more credible, goes

through less perceptual filters and can enhance the product

better than any sales communication. Indeed, a slight

negative word of mouth can more than offset any amount of

sales and advertising effort.

Research evidence shows that satisfied customers talk

to three other customers. However, dissatisfied customers

talk to seven other customers. Counting both positive and

negative word of mouth Communication, suggest that one

customers influences ten other customers. However, this

average of the word of mouth communication goes up

significantly more in all those purchase situations where the

potential buyers perceives a high degree risk if he or she

makes a wrong decision.

2.7.2 Summary

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Banks Performance And Customer Satisfaction:

This chapter examined a wide range of commercial

banking activities in Nigeria, in relation to their customers.

It was disclosed that the whole essence of a business

existence is to deliver satisfaction to its customers,

considering that only when customers are satisfied that the

business can keep going. Customers satisfaction was also

linked with employees performance, revealing that when

employees are satisfied with their work, they provide better

services to customers.

This study adopts Jagdishs belief of the twin

strategies of a companys success which are Customers

satisfaction and employees satisfaction. Thus,

management should seek to satisfy customers by satisfying

their employees first.

Finally, customers satisfaction provides competitive

advantages to a firm such that satisfied customers become

loyal to the company. Therefore, such customers are

retained and new customers are attracted to the company.

2.8 Historical Background

The First Bank of Nigeria was first established as the

Bank of the British West Africa (BBWA). The BBWA was

registered in London as a limited liability company on the

31st of March 1894. The 4th of May and the month of


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Banks Performance And Customer Satisfaction:

October in the same year in 1907 saw the opening of the

first and second branches in Lagos and Calabar respectively.

The number of branches has grown steadily since then to

over 300 branches that are well distributed around the

country and with a branch in the United Kingdom.

In 1912, the same year during which the first branch in

northern Nigeria was opened precisely in Zaria, the board

approved the takeover of bank of Nigeria, which was first

established in Anglo African Bank in 1897. This bank

happened to be its first competitor. In 1957, June, 13 th also

saw the change of its name to Bank of West Africa, by

special resolution of the board.

The banks merger with the standard bank London

commenced on 1st of March, 1966 and a special resolution

to change the name of the company to Standard Bank of

West Africa (SBWA) on 29th August, however it was

incorporated on 20th June 1969 as a Standard Bank of

Nigeria (SBN) Ltd in Nigeria. The Board resolved to change

the corporate name of the bank to First Bank of Nigeria

Limited on July 24, 1979. This took effect from October 1,

1979 and this change did not alter its equity to holding nor

its relationship with standard chartered bank. It however,

did re-establish the banks historically prominence, as the

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Banks Performance And Customer Satisfaction:

first successfully modern bank, in the Nigeria financial

system. Exactly 11 years later the pronounce First Bank of

Nigeria Plc was formalised on the 1st of October 1960.

The bank slogan truly the first was introduced during

chief O. Adeoguns era (1987 1990) and its mission

statement was clearly defined.

The mission of First Bank of Nigeria Plc is historically

determined. Its primary objective must be to remain true to

its name at all times as the leading financial institution in

the country by providing to its customer across the nation

and beyond within parameters of regulated policies, the

best banking services available.

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Banks Performance And Customer Satisfaction:

CHAPTER THREE
RESEARCH METHODOLOGY

3.1 Introduction

This chapter deals with the various research

techniques and methods used by the researcher. In this

chapter, the highlights of the basic research design, sources

of data collection, instrument for data collection, techniques

of data collection and techniques of data analysis, sample

size and population, sampling technique are looked at.

3.2 Research Design

According to Asika (2006), research design means

structuring of investigation aimed at identifying variables

and their relationships to one another. This is used for the

purpose of obtaining data to enable the researcher test

hypotheses or answer research questions. (Page 27)

Research design can be thought of as the structure of

research it is the glue that holds all of the elements in a

research project together. In this study, descriptive and

survey types of research are used. This is to enable the

researcher gain an in-depth knowledge of the phenomena

and to assess data for analysis and testing of hypothesis.

3.3 Population Of The Study

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Banks Performance And Customer Satisfaction:

The population of this research however, consist of

the management and staff of First Bank Nigeria Plc. Zaria,

which comprises of 24 Staff and the numerous customers of

the bank.

3.4 Sample Size And Sampling Technique

A sample as defined by Osuala (2005) is a unit of a

defined population selected from the population with care

and precision. Here, the researcher determines how many

population members are to be included in the sample.

Having to work with the size of the population of the

company, the researcher decided to use the entire

population as the bases for the study.

The researcher made use of the entire staff population

of First Bank Nigeria Plc Zaria, which is made of 24

employees. The rationale behind using the entire population

as the sample size of the study is that the entire population

is not too large to be studied. Hence, the researcher

deemed it fit to use the entire population as the sample

size.

Also, considering the large customer base of the bank,

the researcher selected a sample size of 100 customers for

the sake of the research. To this end, a sample size of 24

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Banks Performance And Customer Satisfaction:

(the entire Staff population) have been chosen for the

purpose of this research.

3.5 Research Instruments

To ensure authenticity of generated data, the

researcher will employ two sources of data collection

namely:

a. Primary sources

b. Secondary sources

Primary Sources

In the primary source of data, the instrument used in

the collection of data is the questionnaire. In the use of

questionnaire, the researcher posed a number of questions

ranging from personal data of respondents to leadership

style adopted by the organisation. The questions were

structured and administered to the entire population of the

bank employees and a selected sample of the bank

customers.

The researcher structured the questionnaire in such a

way that respondents were at liberty to respond to the

questions. The structured questions were to ensure that the

subject matter of the study is constantly in focus. Thus,

options were provided to guide the respondents and all that

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Banks Performance And Customer Satisfaction:

was required of the respondents was to encode the input

option in the column provided for that purpose.

Secondary Sources

The researcher used secondary sources in collecting

some data among which were documentary records from

the case study, text books, internet and journals. The data

collected from these sources were however relevant for

literature and which also confirmed relevant points or facts

in the questionnaire.

3.6 Statistical Tools

Considering the nature of this study, two forms of

techniques of data analysis were used:

i. Tabular Analysis: This technique is informed of a

decision table. It involves the tabulation of information

obtained from data.

ii. Use of correlation and regression analysis: This

technique considers the relationship between the

variables; that is to determine the degree of

relationship between employees performance and

customers satisfaction. In determining this

relationship between the bank performance and

customers satisfaction, the researcher intends to use

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Banks Performance And Customer Satisfaction:

the banks profit before tax within the period of 5

years( year 2005 to 2009) as the bases for the banks

performance and the customers deposits on current

account within the same period of time to represent

customers satisfaction.

3.7 Method Of Data Analysis

The tabular method of data presentation was adopted

in this research. The data were analysed using frequencies

and simple percentages to aid comprehension and easy

comparison of trends.

For the test of hypothesis, the Karl Pearsons statistical

technique was employed to determine the strength or

degree of association subsisting between the variables of

measurement under this study.

For the purpose of the analysis, the variables identified

by the researcher for assessing the impact of bank

performance on customers satisfaction are profit before tax

(as a proxy for bank performance considering that profit

before tax reflect gross performance) and Deposits on

Current Accounts (as a proxy for customer satisfaction). In

choosing these variables, the researcher considers that the

performance of the bank influences its Current Account

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Banks Performance And Customer Satisfaction:

Deposits. Therefore, satisfactory bank performance

improves the customer deposits while unsatisfactory bank

performance results to dissatisfied customer and hence, a

reduction in the deposits by Current Account holders.

The Karl Pearsons formula for determining the

correlation coefficient is expressed as follows:

n XY X Y
r
n X 2
X 2
n Y 2
Y 2

Where:

r = coefficient of correlation
n = number of years
x = the explanatory variable (Bank performance)
y = The dependent variable (customer

satisfaction)

In an attempt towards predicting or establishing the

linear relationship subsisting between profit (X) and

customer satisfaction (y), the simple regression model was

employed. The econometric form of the model is:

Y = 0 + 1X1

Where

Y= The dependent variable.

0 = The intercept term (It gives the effect on Y, of all

other variables not included into the model.

Mechanically, it is the level of customer

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Banks Performance And Customer Satisfaction:

satisfaction when the level of bank performance

is zero).

1 = The slope term (It gives the mean changes in Y

per unit change in X).

X = The explanatory or independent variable (Bank

performance).

Decision rule: if tcalculated is greater than ttabulated we

reject the Ho and if otherwise, we do not reject H o.

Alternatively, the P value will be applied thus:

If P < 0.05, we reject Ho otherwise, there is no enough

statistical evidence reject Ho.

3.8 Justification Of Methods Used

Taking prudence measure into consideration, it is

worthwhile to choose questionnaire as the research method,

not only for the analytical nature of the method but to

provide or obtain a first-hand data from the respondents on

the research topic.

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Banks Performance And Customer Satisfaction:

CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS

4.1 Introduction

This chapter presents and analyses the data collected.

It is divided into three parts. The first part is the

presentation of the data in a tabular form showing the

number of respondents and their percentages, analysing the

data. Part two involved testing the hypothesis while the last

part involves discussion of findings.

In order to know the true position of the services which

the bank render to customers, the extent of satisfaction

derived by customers, and the impact of bank performance

on customers satisfaction, two sets of questionnaire were

administered. One set was meant for the bank staff while

the other was for the customers.

On the whole, 124 questionnaires were distributed, out

of which 40 were dully filled and returned by customers.24

bank staff were reached but only 20 responded with the

questionnaires filled.

4.2 Data Presentation And Analysis


Table 1: Age bracket of respondents
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Banks Performance And Customer Satisfaction:

Age No. of Percentage (%)


Respondents
25 35 10 50
36 45 6 30
46 55 4 20
Total 20 100
Source: Administered questionnaire 2010.

The above table shows that 50 percent of the

respondents are between the age of 25 35 years, 30

percent are between the age of 36 45 years, and 20

percent are between the age of 46 55 years. Thus, a

greater percentage of employees are between the age

bracket of 25 35 years.

Table 2: Staff employment Basis


Employment No. of Percentage (%)
basis Respondents
Permanent 15 75
Temporary 4 20
Contract 1 5
Probation - -
Total 20 100
Source: Administered questionnaire 2010.

The above table shows that 75 percent of the

respondents are permanent staff of the Bank, 20 percent are

temporary staff, 5 percent were employed on contract and

no worker was employed on probation. Thus a greater

percentage of employees were employed as permanent

staff.

Table 3: Employees length of service with the bank


Length of service No. of Percentage (%)

A Study Of First Bank Of Nigeria Plc Page 51


Banks Performance And Customer Satisfaction:

Respondents
Les than a year 2 10
1 5 years 9 45
5 10 years 7 35
10 years and above 2 10
Total 20 100
Source: Administered questionnaire 2010.

The above table shows that 10 percent of the

respondent have been working for less than a year with the

Bank, 45 percent have been working between 1 5 years

with the Bank, 35 percent have been working between the

period of 510 years with the Bank and 10 percent have

been working with the Bank from 10 years and above.

Thus, a greater percentage of the employees have been

working with the Bank between the periods of 1 5 years.

Table 4: Employees satisfaction with the condition of


service
Responses No. of Percentage (%)
Respondents
Yes 14 70
No 6 30
Total 20 100
Source: Administered questionnaire 2010.

The above table shows that 70 percent of the

respondents are satisfied with the condition of service of the

Bank, while 30 percent of the respondents are not satisfied

with the condition of service of the Bank. Thus, a greater

percentage of the employees are satisfied with the condition

of service of the bank.

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Banks Performance And Customer Satisfaction:

Table 5: How regular employees come in contact with


customers
Responses No. of Percentage (%)
Respondents
Very regular 16 80
Not regular 3 15
Rarely 1 5
Not at all - -
Total 20 100
Source: Administered questionnaire 2010.

The above table shows that 80 percent of the

respondent regularly come in contact with the customers,

15 percent do not regularly come in contact with the

customers, while 5 percent rarely come in contact with the

customers. Thus, a greater percentage of the employees

regularly come in contact with the customers.

Table 6: Employees perception of customers always


being right
Responses No. of Percentage (%)
Respondents
Yes 18 90
No 2 10
Total 20 100
Source: Administered questionnaire 2010.

The above table shows that 90 percent of the

respondents agreed to the motion that customers are

always right while 10 percent went against the motion.

Thus, a greater percentage of the respondents agree to the

motion that customers are always right.

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Banks Performance And Customer Satisfaction:

Table 7: Do you think customers enjoy preferential


treatment?
Responses No. of Percentage (%)
Respondents
Yes 13 65
No 7 35
Total 20 100
Source: Administered questionnaire 2010.

The above table shows that 65 percent of the

respondent said Yes to the motion that customers enjoy

preferential treatment while 35 percent of the respondent

said no to the motion. Thus, a greater percentage of the

respondents agrees to the motion that customers enjoy

preferential treatment.

Table 8: Do you think your bank needs to improve the


services rendered to customers?
Responses No. of Percentage (%)
Respondents
Yes 20 100
No - -
Total 20 100
Source: Administered questionnaire 2010.

The above table shows that the entire respondents

agreed that there should be an improvement in the quality

of service rendered to customers.

Table 9: What reason can you attribute to the delay in the


bank if any?
Responses No. of Percentage
Respondents (%)
Staff laziness 5 25
Official bottleneck 8 40
Lack of necessary 3 15
equipment

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Banks Performance And Customer Satisfaction:

Customers incorporative 4 20
attitude
Total 20 100
Source: Administered questionnaire 2010.

The above table shows that 25 percent of the

respondent attributed staff laziness to delay in the Bank, 40

percent attributed official bottleneck to delay in the Bank,

15 percentage attributed lack of necessary equipment to

delay in the Bank, 20 percent attributed customers

incorporative altitude to delay in the bank. Thus, a greater

percentage of the respondents attributed official bottleneck

to the delay in bank.

Table 10: Is your branch fully computerised?


Responses No. of Percentage (%)
Respondents
Yes 19 95
No 1 5
Total 20 100
Source: Administered questionnaire 2010.

The table above shows that 95 percent of the

respondents agrees that the branch need to be fully

computerised while 5 percent of the respondents disagree

to the motion. Thus, a greater percentage of the

respondents said yes to the motion that the branch needs to

be fully computerised.

Table 11: Employees assessment of the degree of


customers satisfaction
Responses No. of Percentage (%)
Respondents
A Study Of First Bank Of Nigeria Plc Page 55
Banks Performance And Customer Satisfaction:

Very satisfied 6 30
Satisfied 14 70
Dissatisfied - -
Total 20 100
Source: Administered questionnaire 2010.

30 percent of the respondents believed that their

customers are very satisfied and 70 percent of the

respondents agreed that their customers are just satisfied

with the bank.

Table 12: How does the bank determine whether


customers are satisfied.
Responses No. of Percentage (%)
Respondents
Customers loyalty 8 40
Interview 4 20
Suggestion boxes 8 40
Others - -
Total 20 100
Source: Administered questionnaire 2010.

40 percent of the respondents determine customer

satisfaction through customers loyalty, 20 percent through

interview with customers and 40 percent of the respondents

ascertain if customers are satisfied through suggestion

boxes.

Table 13: Determining the reason for employees


commitment to the job
Responses No. of Percentage (%)
Respondents
Committed because 9 45
of monetary rewards
Committed because 11 55
you enjoy the work
Total 20 100

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Banks Performance And Customer Satisfaction:

Source: Administered questionnaire 2010.

In determining why employees are commitment to

their job, 45 percent of the respondent stated clearly that

they are committed because of the monetary rewards they

get while 55 percent of the respondents were committed to

their job not because of the monetary rewards they get but

for other reasons. Such as the satisfaction they derive from

the job.

Table 14: Educational qualifications of the respondents


Educational No. of Percentage
qualification Respondent
s (%)
G.C.E./O.N.D. 4 20
B.Sc./H.N.D 13 65
Other higher qualification 3 15
(MBA, Ph.D, etc)
Total 20 100
Source: Administered questionnaire 2010.

The above table shows that 20 percent of the

respondents are O.N.D. holders, 65 percent are B.Sc./HND

holders while only 15 percent have other higher

qualifications such as Masters degree and doctorate.

Table 15: Length of customers patronage


Length of No. of Percentage (%)
patronage Respondents
1 11 months 12 30
1 3 years 8 20
4 years and above 20 50
Total 40 100
Source: Administered questionnaire 2010.

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Banks Performance And Customer Satisfaction:

The above table shows that 30 percent of the

respondents are new customers; have been banking with

the bank for the period of 1 11 months, 20 percent of the

respondents have been banking with the bank for about 1

2 years and 50 percent (half of the respondents) have been

patronising the bank for about 4 years and above.

Table 16: Assessment of bankers relationship with the


customers
Responses No. of Percentage (%)
Respondents
Very cordial 20 50
Not too cordial 18 45
Not cordial 2 5
Total 40 100
Source: Administered questionnaire 2010.

As shown by the above responses, the relationship

between the bankers and customer is applaudable although

50 percent of the respondent claimed that their relationship

with the bankers is very cordial 45 percent and 5 percent of

the respondent are of the opposite view. This reveals that

there is a need for the bankers to improve on the level of

their friendliness between their and their customers.

Table 17: Customers level of satisfaction with the banks


performance
Responses No. of Percentage (%)
Respondents
Very satisfied 20 50
Fairly satisfied 18 45
Not satisfied 2 5
Total 40 100

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Banks Performance And Customer Satisfaction:

Source: Administered questionnaire 2010.

The above table shows the responses of customers of

how satisfied they are with the services of the bank 50

percent claimed that they are very satisfied while 45

percent of the respondent claimed that they are fairly

satisfied, with 5 percent of the respondent not satisfied with

the banks performance.

Table 18: Banks profit and customers deposits on current


account
Year Profit before tax Deposits on Current
(Nmillion) Account
(X) (Y)
2005 15,145 264,988
2006 16,128 390,846
2007 22,097 581,827
2008 38,020 661,624
2009 46,110 1,071,836
Source: www.firstbanknigeria.com/annual-report/2009

4.3 Tested Hypothesis

Microsoft Excel Statistic package was applied to

ascertain the correlation coefficient (r), coefficient of

determination (r2) and the equation of the line of best fit.

Also, the output of the regression analysis revealed the t

statistic and the P value which were applied in testing the

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Banks Performance And Customer Satisfaction:

formulated hypothesis at the 0.05 level of significance and

( n 2) degree of freedom.

The hypotheses are restated as follows;

H o: There is no relationship between bank

performance and customer satisfaction.

H1: There is a relationship between bank

performance and customers satisfaction.

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Banks Performance And Customer Satisfaction:

Table 19: Correlation between Profit After Tax and Customers Deposit On Current Account
SUMMARY
OUTPUT

Regression Statistics
0.93595707
Multiple R 1
0.87601563
R Square 9
Adjusted R 0.83468751
Square 9
Standard
Error 125741.171
Observations 5

ANOVA
Significanc
df SS MS F eF
3.35136E+1 3.35136E+1 21.1966000 0.01926744
Regression 1 1 1 8 2
4743252623 1581084207
Residual 3 8 9
3.82569E+1
Total 4 1

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Banks Performance And Customer Satisfaction:

Coefficient Standard Upper


s Error t Stat P-value Lower 95% 95%
-
19821.4439 136849.562 0.89401981 415694.940 455337.828
Intercept 7 5 0.14484112 5 6 5
20.8873729 4.53681132 4.60397655 0.01926744 6.44921451 35.3255313
X Variable 1 5 3 1 2 4 8
SOURCE: Microsoft Excel (2007) Regression Results from Data in Table 18.

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Banks Performance And Customer Satisfaction:

INTERPRETATION OF RESULTS

(i) Multiple R = 0.955957071

This shows that there is a strong positive linear

relationship between bank performance and customers

satisfaction. In other words, both variables move in the

same direction with bank performance strongly influencing

or driving customers satisfaction.

(ii) R Square = 0.876015639

This indicates that 87.60% of the variation in customer

satisfaction is explained by variation in bank performance.

In other words, 87.60% of the changes in savings and

current accounts deposits are accounted for by changes in

the profit before taxation declared by the bank.

(iii) Adjusted R Square =

0.834687519

The adjusted R2 is computed to reflect both the

number of independent variables in the regression model

and the sample size. Hence, 83.47% of the variation in

customer satisfaction is explained by the simple regression

model adjusted for number of independent variables and

sample size.

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Banks Performance And Customer Satisfaction:

(iv) Standard Error = 125741.171

The standard error represents a measure of the

variation around the prediction line. It is measured in the

same unit as the dependent variable Y. Hence, the typical

difference between actual annual customer satisfaction

level (Deposits and current accounts deposits) and the

predicted annual level of Bank performance (profit before

tax) is 125,741,171 millions of Naira.

(v) Observations = 5

This shows that the number of periods considered is 5.

(vi) Coefficients: Intercept =

19821.44397;

X variable 1 = 20.8837295

The regression equation: Y = 0 + 1X1

Where: 0 = The intercept term

1 = The slop term

X1 = The independent variable (Bank

performance)

Y = the dependent variable (customer

satisfaction)

Y = 19,821.440 + 20.8874x.

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Banks Performance And Customer Satisfaction:

The Y intercept, 0, is +20.8874. This means that for

each increase of 1 unit in X, the mean value of Y is

estimated to increase by 20.8874 units. In other words, for

each increase of 1.0 increase in bank performance (i.e.,

profit before tax), the mean annual savings and current

accounts deposits (customers satisfaction are estimated to

increase by 20.8874 millions of Naira.

Decision

Using the 0.05 level of significance, the critical value

of t with n 2 = 3 degrees of freedom is 3.1824. Since t =

4.6040 > 3.1824, we reject H o. Alternatively, using the P-

value, because P-value = 0.0193 < 0.05, we reject H o and

accept H1: that there is a relationship between bank

performance and customers satisfaction. Hence, the

researcher concludes that there is a significant relationship

between bank performance and customers satisfaction.

Furthermore, the regression equation y = 19,821.4440

+ 20.8874 confirms that there is a positive linear

relationship between x (bank performance) and y

(customers satisfaction). This implies that as X increases, Y

also increases. By the same token, as X decreases Y also

decreases. Both variables move in the same direction.

4.4 Discussing Of Findings


A Study Of First Bank Of Nigeria Plc Page 64
Banks Performance And Customer Satisfaction:

Given the presentation and analysis of data collected,

on the research project bank performance and customers

satisfaction, the following were revealed.

1. It was discovered that the staff of the bank are

satisfied with the conditions of service as shown

in table 3. Therefore, the staff are willing to

continue rendering their services to the bank.

2. The response from the employees as shown in

table 8 indicated that there is need to improve

the services rendered to customers. The entire

respondents stood for this.

3. The research study reveals that there is

apparently delay in the bank which the

respondents attributed a greater percentage to

the official bottleneck in the organisation.

4. The response from the employees with regards to

customers satisfaction revealed that their

customers are simply satisfied, this they

determine from how loyal customers are, from

interview with customers, through suggestion

boxes, as shown in table 11 and table 12.

5. As for the reason for employees commitment to

their job, it was discovered that 45 percent of the

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Banks Performance And Customer Satisfaction:

respondents are committed because of the

monetary rewards they received and 55 percent

of the respondents are committed as a result of

the satisfaction they derive from the job. Thus,

they are intrinsically motivated.

6. The response of customers as shown in table 16

shows that the Bank-Customers relationship is

fairly impressive. The response shows that 50

percent of customers indicated a cordial

relationship with the bank and 50 percent of the

respondents on the other hand indicated that

their relationship with the bank is not too cordial.

7. In table 17, 50 percent of the respondents agreed

that they are satisfied with the banks

performance. 45 per cent here fairly justified

and 5 percent not satisfied.

8. It was discovered that there is a relationship

between bank performance and that it is a

positive relationship. The positive relationship

connotes that an increase in the banks

performance lead to an increase in customers

satisfaction. They both move in the same

direction.

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Banks Performance And Customer Satisfaction:

CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMEND
5.1 Summary

The research work has so far considered the topic

Bank performance and customer satisfaction. The study

was limited to the performance of commercial banks in

Nigeria using first bank Nigeria Plc Zaria as the case study.

The background of study was discussed. The problem

under study along with objectives of the research work was

stated in chapter one. The statement of hypothesis was

also stated, being the Null and Alternative hypothesis. The

scope of the research work was also stressed together with

the significance of the study.

A review of relevant literatures was undertaken to see

the view of other researchers on the subject matter Bank

Performance and customer satisfaction. A brief history of

First Bank Nigeria Pc was discussed.

The researcher adopted the survey method of research

collecting data from the primary and secondary sources.

It is thus imperative to note here that the tool for data

analysis employed was the Karl Pearsons Statistical

technique, which determines the strength or degree of

association subsisting between the variables under this

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Banks Performance And Customer Satisfaction:

study. A brief history of First Bank Nigeria Plc was given in

chapter three.

Chapter four of the research work offers data

presentation and analysis. Analysis in this chapter revealed

some findings. Finally, the hypothesis tested shows that

there is a very strong correlation between Bank

performance and customer satisfaction and that they are

positively related. This connotes that increase in bank

performance will lead to increase in customer satisfaction

and vice versa. They both move in the same direction.

5.2 Conclusion

In view of the foregoing, the researcher wishes to

conclude that the banks performance is impressive and that

customers are satisfied with the bank. Responses from

customers revealed this.

Considering that the banking industry is characterised

by intense competition, there is need to keep customers

satisfied in order to continue surviving.

Thus, banking services can be effective if the

customers do not have to go through pains to obtain bank

services.

Most important to note is that bank performance and

customers satisfaction are positively related. This is to say


A Study Of First Bank Of Nigeria Plc Page 68
Banks Performance And Customer Satisfaction:

that an increase in bank performance will lead to an

increase in customers satisfaction. We can conclude that

bank performance is a major driver of customers

satisfaction. This connote that bank performance strongly

influences the extent to which customers are satisfied.

5.3 Recommendations

The research has shown that First Bank Nigeria PLC

Zaria motivates its employees and that the employees are

satisfied with the condition of service. However, the

researcher wishes to make the following recommendations.

1. Adequate and continuous training should be

given to the bank staff at all levels to enable

them improve their efficiency as regard to

services rendered to the customers and the

public in general. The bank under study is

making effort in this direction which is worthy of

commendation. Training is an important

management tool; it has to be systematic if it is

to give desired result.

2. The bank-customer relationship should be

strengthened so as to maintain the traditional

integrity of the banking profession. In this

regard, there is need for investment in customers

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Banks Performance And Customer Satisfaction:

enlightenment programme. Booklets containing

the activities and procedures of the bank written

in a simple and straight forward language should

be made available to customers.

3. Reward for excellence be given adequate priority.

This would boost the morale of the staff and

encourage others to emulate.

4. The organisation should improve prove the

employees working conditions, knowing that

employees output largely depends on how

satisfied they are with their job.

5. The bank should at regular intervals seek for

their customers view on how effective their

performance is, and make use of such

information.

6. Service delivery should be such that it will save

customers time and energy.

7. Intrinsic motivation is highly recommended.

Rewards should not only be monetary but also

non-monetary rewards such as recognition,

responsibility etc. should be employed by the

organisation.

8. Monetary rewards should be adequate

considering the skewed nature of the economy.

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Banks Performance And Customer Satisfaction:

BIBLIOGRAPHY
Asika N. (2006). Research Methodology in the Behavioural
Sciences; Esto printers, Lagos; Pg 27

Clark D. (2003). Linking Employees Satisfaction with


Productivity, Performance, and Customer Satisfaction.
Catalog number: CLC114T2FH

Federico (2003). Linking Employees Satisfaction with


Productivity, Performance, and Customer Satisfaction.
Catalog number: CLC114T2FH

Hay Day (2003); Linking Employees Satisfaction with


Productivity, Performance, and Customer Satisfaction.
Catalog number: CLC114T2FH.

http://erc.msh.org/mainpage.cfm.

http://www.eurojournls.com

http://www.ipsos.ca/prod/loyalty/newEra.cfm

http://www.qualitydigest.com

Jagdish (2003): http://www.jagsheth.net/docs/Competitive_


advantages_Through_Customer_Satisfaction.pdf

Kazmi A. (2008). Strategic Management and Business Policy;


Tata McGraw-Hill Publishing co. Ltd, West Patel Nagar,
New Delhi.

Longman Dictionary (2003).

Osuala, E.C. (2005). Introduction to Research Methodology;


B.p Limbe. South West Providence, Cameroon.

Osubor, J.U. (1984). Business finance and banking in


Nigeria, Owerri: New Africa Publishing Co. Ltd.

A Study Of First Bank Of Nigeria Plc Page 71


Banks Performance And Customer Satisfaction:

APPENDIX
QUESTIONNAIRE

QUESTIONNAIRE FOR STAFF OF FIRST BANK OF


NIGERIA PLC ZARIA

Instruction: Please Tick/fill where appropriate.

1. What age bracket do you belong?


25 35 [ ]
36 45 [ ]
46 55 [ ]

2. Your employment is on what basis?


Permanent [ ]
Temporary [ ]
Contract [ ]
Probation [ ]

3. How long have you been with the bank?


Less than one year [ ]
1 5 years [ ]
5 10 years [ ]
10 years and above [ ]

4. Are you satisfied with the condition of services?


Yes [ ]
No [ ]

5. How regular do you come in contact with customers?


Very regular [ ]
Not regular [ ]
Rarely [ ]
Not at all [ ]

6. Do you believe in the concept that customers are


always right?
Yes [ ]
No [ ]

7. Do you think customers enjoy preferential treatment?


Yes [ ]
No [ ]
8. Do you think your bank need to improve the services
provided to customers?
A Study Of First Bank Of Nigeria Plc Page 72
Banks Performance And Customer Satisfaction:

Yes [ ]
No [ ]

9. What reason can you attribute to the delay in the bank


if any?
Staff laziness [ ]
Official bottleneck [ ]
Lack of necessary equipment [ ]
Customers incorporative attitude [ ]

10. Is your branch fully computerised?


Yes [ ]
No [ ]

11. To what extent are customers satisfied with your


services?
Very satisfied [ ]
Satisfied [ ]
Dissatisfied [ ]

12. How do you ascertain the degree of customers


satisfaction?
Customers loyalty [ ]
Interview [ ]
Suggestion boxes [ ]
Others (specify)

13. Are you committed to this work because of the


monetary rewards or because you enjoy the work
itself?
Committed because of monetary rewards [ ]
Committed because you enjoy the work [ ]

14. What is your educational qualification?


a. G.C.E. [ ]
b. O.N.D [ ]
c. B.Sc./HND [ ]
d. Other higher qualification

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Banks Performance And Customer Satisfaction:

QUESTIONNAIRE FOR CUSTOMERS OF FIRST BANK OF


NIGERIA PLC ZARIA

1. How long have you been banking here?


1 11 months [ ]
1 3 years [ ]
4 years and above [ ]

2. How would you assess your relationship with the


bankers?
Very cordial [ ]
Not too cordial [ ]
Not cordial [ ]

3. How satisfied are you with the performance of this


bank?
Very Satisfied [ ]
Fairly Satisfied [ ]
Not satisfied [ ]

4. In what areas of service do you feel that this bank


should improve on? (Please
specify)___________________________
_______________________________________________________
_______________________________________________________
_______________________________________________________
_______________________________________________________

A Study Of First Bank Of Nigeria Plc Page 74