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THE IMPACT OF TOTAL QUALITY MANAGEMENT ON THE PERFORMANCE OF THE BANKING INDUSTRY OF NIGERIA (CASE STUDY: FIRST BANK)

ABSTRACT
This study investigates the influence of Total Quality Management (TQM) on banking sector performance in Nigeria, using First Bank Nigeria Plc as a case study. The research assesses the effects of TQM practices including continuous improvement, customer focus, top management commitment, and employee involvement on critical performance metrics such as service delivery, customer satisfaction, profitability, and operational efficiency. Employing a descriptive survey methodology, data will be gathered from First Bank employees and customers via questionnaires, with subsequent analysis conducted using statistical techniques. Anticipated findings suggest that robust TQM adoption markedly improves banking performance, strengthening customer retention and competitive positioning within Nigeria’s financial landscape. The study recommends that financial institutions intensify TQM adoption to ensure sustained growth despite economic adversities. Keywords: Total Quality Management, Banking Performance, Customer Satisfaction, First Bank Nigeria, Operational Efficiency.

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

The banking sector in Nigeria remains a critical driver of economic growth, serving as the primary channel for financial intermediation, credit allocation, savings mobilization, and payment system facilitation. This role has become even more pronounced in recent years, as the sector supports national development agendas, including financial inclusion initiatives and contributions to GDP amid volatile macroeconomic conditions such as inflation, foreign exchange pressures, and post-pandemic recovery. The 2004-2005 banking consolidation exercise by the Central Bank of Nigeria (CBN), which reduced the number of banks from 89 to 25 through mergers and recapitalization, marked a turning point. It transformed the industry into a more consolidated, competitive, and resilient landscape, with larger institutions better equipped to withstand economic shocks and invest in technology (Awolusi, 2013). Subsequent recapitalization efforts, including the 2019 minimum capital requirements and ongoing prudential guidelines, have further intensified competition while exposing banks to heightened regulatory scrutiny and the need for operational excellence.

However, persistent challenges continue to test the sector’s resilience. Economic instability, including fluctuating oil prices, naira devaluation, and inflationary trends, has strained liquidity and profitability. Regulatory demands from the CBN, such as stricter risk management, anti-money laundering compliance, and consumer protection standards, require robust internal controls. Rapid technological adoption, driven by digital banking, mobile platforms, and fintech innovations, has raised expectations for seamless, 24/7 services while introducing cybersecurity risks. Customers now demand efficient, reliable, and personalized experiences, with low tolerance for delays, errors, or poor service quality. These dynamics have compelled Nigerian banks to adopt strategic management frameworks like Total Quality Management (TQM) to enhance performance, sustain competitiveness, and build long-term customer loyalty (Ochepo & Ikyanyon, 2025; Monday et al., 2024).

Total Quality Management (TQM) has emerged as a key philosophy for addressing these challenges in the service sector, particularly banking, where intangible service quality directly influences customer perceptions, retention, and organizational success. Pioneered by scholars like W. Edwards Deming and Joseph Juran, TQM promotes a holistic approach centered on continuous improvement (kaizen), customer focus, employee involvement and empowerment, process management, leadership commitment, and data-driven decision-making to achieve long-term excellence. In the Nigerian banking context, TQM shifts focus from short-term gains to systematic quality integration across all operations, from transaction processing to customer interactions (Awolusi, 2013). Empirical analyses demonstrate that TQM’s critical success factors such as top management commitment, strategic planning, process optimization, and information analysis positively affect customer service management, leading to improved efficiency, responsiveness, reduced errors, and enhanced satisfaction in deposit money banks (Awolusi, 2013; Monday et al., 2024).

First Bank Nigeria Plc, established in 1894 and one of the oldest and most prominent deposit money banks, provides a representative case for studying TQM’s application in this evolving environment. With an extensive branch network across the country, a strong digital presence, and a history of adapting to sector reforms including post-consolidation growth and fintech integration, First Bank has incorporated TQM elements to maintain market leadership and customer trust. Recent research specifically on First Bank Nigeria Plc in Makurdi, Benue State, reveals that TQM practices significantly enhance performance by improving service efficiency, minimizing operational errors, ensuring prompt customer responses, and boosting customer retention, as loyal customers are more inclined to stay with banks delivering consistent high-quality services (Ochepo & Ikyanyon, 2025). Similarly, studies on selected deposit money banks, including major players like First Bank, confirm that TQM practices contribute to firm performance through better productivity, operational effectiveness, and financial metrics such as profitability and return on assets (Olanipon et al., 2025; Isidore et al., 2023).

Broader investigations into deposit money banks in Nigeria affirm that TQM positively influences organizational performance. Practices such as top management commitment, people management, strategic planning, process management, and information analysis drive innovation, employee productivity, and overall efficiency (Iornum et al., 2024; Monday et al., 2024). In commercial banks, TQM application has been shown to boost customer satisfaction and loyalty while reducing quality-related costs, rework, and service failures, thereby improving output quality and competitive positioning (Eze & Okoli, 2025). These findings align with evidence from related sectors in Nigeria, where TQM fosters a culture of excellence, adaptability, and goal attainment in volatile environments (Chukwu et al., 2016).

The post-consolidation era and accelerated digital transformation have further underscored TQM’s relevance. Banks adopting TQM report superior handling of customer-centric processes, better alignment of quality initiatives with strategic goals, and stronger positioning against fintech disruptors like mobile money operators and digital banks (Awolusi, 2013). In First Bank, TQM has supported digital initiatives (e.g., enhanced mobile apps and online platforms), quality assurance mechanisms, and continuous improvement efforts, contributing to sustained patronage, reduced fraud risks, and improved financial performance indicators (Isidore et al., 2023; Ochepo & Ikyanyon, 2025). Scholarly consensus, drawn from recent empirical studies, highlights TQM as a vital tool for Nigerian banks to navigate macroeconomic challenges, regulatory pressures, and competitive threats while achieving sustainable performance and long-term success (Olanipon et al., 2023; Monday et al., 2024; Olanipon et al., 2025). Effective TQM implementation not only mitigates operational vulnerabilities but also positions institutions like First Bank to capitalize on opportunities in Nigeria’s dynamic financial landscape.

1.2 STATEMENT OF THE PROBLEM

Despite the potential benefits of Total Quality Management (TQM), the Nigerian banking sector continues to encounter persistent performance challenges, including inconsistent service delivery, customer dissatisfaction, operational inefficiencies, and vulnerability to economic fluctuations. Issues such as extended transaction processing times, recurrent system failures, and transactional inaccuracies remain widespread, contributing to customer attrition and diminished institutional trust (Awolusi, 2013). Within First Bank branches, these problems are evident through frequent customer grievances and subpar service performance, often attributable to incomplete or ineffective TQM adoption (Ochepo & Ikyanyon, 2025).

Research demonstrates that while TQM offers considerable promise, its uneven application within deposit money banks yields marginal improvements in productivity and innovation (Iornum et al., 2024). For example, certain TQM components may clash with sales-driven operational priorities, adversely affecting employee motivation and organizational efficiency (Olanipon et al., 2025). In commercial banking environments, deficiencies in workforce engagement and training further impede the full realization of TQM advantages, resulting in elevated operational expenses and weakened customer retention rates (Eze & Okoli, 2025).

External pressures compound these challenges. Regulatory modifications, inflationary conditions, and competition from digital financial platforms necessitate adaptable quality management systems, yet numerous banks encounter difficulties in seamless integration (Awolusi, 2013). Investigations into First Bank reveal that insufficient institutionalization of TQM restricts performance enhancements, particularly concerning service dependability and client retention (Isidore et al., 2023). Moreover, organizational hierarchies and cultural impediments discourage employee participation in quality improvement initiatives, fostering resistance and incomplete TQM execution (Olanipon et al., 2023).

Existing literature presents divergent findings, with some studies indicating variable TQM effects on specific performance indicators due to implementation hurdles (Iornum et al., 2024). Failure to address these barriers may result in Nigerian banks, including First Bank, forfeiting competitive advantages and experiencing declining financial returns. This study seeks to examine these discrepancies by analyzing TQM’s influence on performance optimization at First Bank, providing actionable recommendations for overcoming implementation constraints to facilitate long-term sectoral advancement.

1.3 OBJECTIVES OF THE STUDY

The main objective of this study is to examine the impact of Total Quality Management on the performance of the banking industry in Nigeria, using First Bank Nigeria Plc as a case study.

The specific objectives are to:

1. Assess the effect of TQM on service quality delivery in First Bank.
2. Evaluate the influence of TQM on customer satisfaction and retention.
3. Analyze how TQM contributes to operational efficiency and profitability.
4. Identify challenges in TQM implementation and propose recommendations.

1.4 RESEARCH QUESTIONS

1. To what extent does TQM affect service quality delivery in First Bank Nigeria Plc?
2. How does TQM influence customer satisfaction and retention in the Nigerian banking industry
3. What is the impact of TQM on operational efficiency and profitability at First Bank?
4. What are the key challenges in implementing TQM in Nigerian banks, and how can they be addressed?

1.5 RESEARCH HYPOTHESES

H01: There is no significant relationship between TQM practices and service quality delivery in First Bank Nigeria Plc.

H02: TQM does not significantly influence customer satisfaction and retention in the Nigerian banking industry.

H03: TQM has no significant impact on operational efficiency and profitability at First Bank.

1.6 SIGNIFICANCE OF THE STUDY

This study will provide valuable insights for bank managers, policymakers, and researchers on leveraging TQM to improve performance in the Nigerian banking sector. For First Bank, it will offer practical recommendations to enhance quality initiatives. Academically, it contributes to the body of knowledge on TQM in developing economies, aiding future studies.

This study holds substantial significance for various stakeholders in the Nigerian banking sector, given the critical role of Total Quality Management (TQM) in addressing persistent challenges such as service inconsistencies, customer dissatisfaction, operational inefficiencies, and competitive pressures from fintech innovations and economic volatility.

For bank managers and practitioners, particularly those at First Bank Nigeria Plc and other deposit money banks, this research provides actionable, evidence-based insights into leveraging TQM practices to drive measurable improvements in organizational performance. By examining the specific impacts of TQM dimensions such as customer focus, continuous improvement, employee involvement, process management, and top management commitment, the study offers practical recommendations for enhancing quality initiatives, reducing service errors, minimizing rework and fraud-related costs, and optimizing operational processes. For instance, effective TQM implementation has been shown to significantly boost service efficiency, ensure timely customer responses, and foster greater customer retention, enabling banks to achieve higher levels of mutual stakeholder satisfaction and sustain competitive advantage in a dynamic market environment. Managers can use these findings to strengthen internal control systems, promote rigorous monitoring of TQM practices, and align quality strategies with broader organizational goals, ultimately leading to improved profitability, return on assets, and market share.
Policymakers and regulatory bodies, including the Central Bank of Nigeria (CBN), stand to benefit from the study’s implications on promoting quality-oriented frameworks within the financial sector. As the CBN continues to emphasize risk management, consumer protection, and prudential standards, this research highlights how widespread adoption of TQM can support national objectives like financial stability, inclusion, and economic resilience. It underscores TQM as a strategic tool for mitigating operational vulnerabilities, enhancing customer trust, and curbing quality-related expenses across the industry, thereby informing policy guidelines that encourage banks to integrate TQM principles into corporate governance and compliance structures.
Academically, the study contributes meaningfully to the growing body of knowledge on TQM application in developing economies, particularly within the Nigerian banking context where empirical research remains somewhat limited despite the sector’s importance. By focusing on First Bank as a prominent case study, it bridges theoretical TQM frameworks (rooted in Deming and Juran’s principles) with real-world outcomes in a service-oriented, post-consolidation environment. This adds depth to existing literature by providing nuanced evidence on how TQM influences key performance indicators like customer satisfaction, employee productivity, innovation, and financial metrics in deposit money banks. Future researchers can build on these findings to explore comparative analyses across regions, longitudinal effects of TQM post-digital transformation, or its interplay with emerging technologies, thereby enriching scholarly discourse on quality management in emerging markets.

Furthermore, the study holds broader practical and societal value by promoting a culture of excellence and continuous improvement in the Nigerian banking industry. In an era where customer expectations for reliable, efficient, and personalized services are escalating amid economic challenges, effective TQM adoption can lead to enhanced customer loyalty, reduced churn, and stronger public confidence in the financial system. This, in turn, supports sustainable growth for institutions like First Bank, contributes to overall sector competitiveness against global and local disruptors, and indirectly aids national economic development through improved financial intermediation and resource allocation.

1.7 SCOPE OF THE STUDY

The study focuses on the impact of TQM on banking performance, limited to First Bank Nigeria Plc branches in selected regions of Nigeria. It covers key TQM elements like customer focus, continuous improvement, and employee involvement, with data collection spanning 2025-2026

1.8 LIMITATIONS OF THE STUDY

The study may be constrained by respondents’ bias in survey responses, limited access to internal bank data, and the generalizability of findings beyond First Bank. Time and resource constraints also limit the sample size.

1.9 DEFINITION OF TERMS

• Total Quality Management (TQM): A management approach focused on long-term success through customer satisfaction and continuous improvement.
• Banking Performance: Measures including profitability, customer satisfaction, operational efficiency, and market share.
• Customer Retention: The ability of a bank to maintain its customer base over time.
• First Bank Nigeria Plc: A leading commercial bank in Nigeria, used as the case study.

REFERENCES

Awolusi, O. D. (2013). The effects of total quality management on customer service management in the Nigerian banking industry: An empirical analysis. International Journal of Management and Network Economics, 3(1), 57-77.

Chukwu, B. A., Adeghe, R. I., & Anyasi, E. (2016). Impact of total quality management on performance of beverage companies in Nigeria. International Journal of Economics, Commerce and Management, 4(11).

Eze, J. C., & Okoli, I. E. (2025). Total quality management and organizational performance in selected commercial banks in Nigeria. Academia.edu.

Iornum, N. A., Korve, K. N., & Jato, T. P. J. (2024). Effect of total quality management on employee productivity in Nigeria’s banking industry. International Journal of Management, Social Sciences, Peace and Conflict Studies.

Isidore, G. U., Umanah, I. J., Ajibade, F. O., & Nkutt, N. M. (2023). The impact of Total Quality Management on organizational performance: A study of First Bank Nigeria Plc. ResearchGate.

Ochepo, J., & Ikyanyon, D. (2025). Effect of Total Quality Management on the performance of Nigerian banking industry: A study of First Bank Nigeria PLC, Makurdi, Benue State. International Journal of Banking and Finance Research (IJBFR), 11(7).

Olanipon, O., et al. (2023). Effect of total quality management practices on organisational culture among deposit money banks in Nigeria. ResearchGate.

Olanipon, O., et al. (2025). Total Quality Management practices on firm performance: A study of selected deposit money banks in Nigeria.