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CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

A successful marketing management is about making decisions that are customer driven, taking into consideration the changes in consumer taste/behaviour while evaluating the different strategic alternatives available, to make sure that any choice made must satisfy the need of the consumer, motivate and influence his buying decisions. Hence marketing begins and ends with the consumer.

Bank location is studied here as a factor and influence on customer banking behaviour to enable us learn why some banks in the industry perform below average in terms of the scope of geographical coverage and profit turnover over a period, since it is customers that make banks what they are.

Several theories in the field of marketing discovered that marketing activities are goal/ target oriented. Bank location is very central to attraction and patronage of target customers.

So influencing the customers banking behavior unto high patronage is possible through location of bank branches closer to the customers business area, to achieve the goal of the banking industry.

According to Jonah (2003:10) location of bank branch is one area that management has to take into consideration, factors within the economy such as the population of the areas, the nature of business community of the area, the category of work force of the area and the security of the area. Considering the present state of economy in Nigeria, Elumelu (2004) observed that United Bank of Africa (UBA) was heavily bent on evaluating the average contribution of customers in an area before opening a branch of the bank.

Banks should as a matter of responsibility create an enabling environment (by locating branches in the area) in which customers would be sufficiently motivated to enable them establish/finance their small or medium scale business to enhance economic growth in the target area of the bank location and their contribution towards the increased productivity of the bank.

Customers are usually better off with branches that are nearer to their business areas, favourable customer service relationship, feeling of commitment and dedication by the customer service officers of the bank.

This necessitated the need to study Bank location as a factor and influence on customer banking behaviour, to address the issues pertaining to low rate of extension of bank branches and poor patronage of customers as a result of long distance of bank location and its resultant effect on both customers and the banking industry at large.

1.2 STATEMENT OF PROBLEM

This study is intended to investigate the Bank location as a factor and influence on customer bank behavior.

The performance and location of Nigerian banking sector has been very unimpressive in the recent past, banks were only interested in locating branches in commercial cities (business oriented places), this made it very difficult for customers in the rural area to access the banking services, many opted to the risk of burrying their money in the ground, hanging it in the kitchen etc, exposing them to danger of theft, those deposits that suppose to accrue to the bank from the rural areas to improve their turnover/productivity were lost because there was gap between the customers and producers of these services, which would have been bridged. Had bank branches been located closer to the customers, it would also have influenced their banking behavior positively to patronize the banks.

The inability of a bank to be located closer to the customer constitutes a problem to every bank. This is because most customers tend to patronize those banks that are closer to them. Moreover, the proficiency of services rendered has been one of the major factors that contributed to banks inability to grow. The poor security in the country posses a very big risk to the customers, they find it difficult to take this risk of carrying cash to travel from their business area to cities where the bank is located to deposit.

It also becomes a problem for customers to easily accept cheque as medium of settlement of debt, because it costs more to get where the bank is located and more cost for not using the money immediately since cheque will still go through clearing for some days.

Bank location as a dependent factor enhances/influences customer’s banking behavior, especially when the location strategy or decision is centred on marketing concept that focuses on the consumer as a king and the reason why the business exists; hence his satisfaction is seen as paramount in the business objectives.

1.3 OBJECTIVES OF THE STUDY

The following objectives are formulated:-

1. To determine how bank location influences customer’s banking behaviour.

2. To ascertain the extent proximity to customers’ business area affects bank customer’s banking behaviour.

3. To determine the effect of IT driven on-line banking on bank location and the effect or b ranch information technology on customer satisfaction.

4. To make recommendations that will improve bank locations and customer services.

1.4 RESEARCH QUESTIONS

1. How does bank location affect bank customers’ banking behaviour?
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2. How does proximity to customers’ business area affect customers’ banking behaviour?

3. What is the effect of IT driven on-line on bank location and what is the impact of branch information technology on customer satisfaction?

4. What recommendation can improve bank locations and customer services?

1.5 RESEARCH HYPOTHESES

The following hypotheses are formulated:

• Proximity of bank location influences customer money withdrawal frequency and timing.

• The far the bank is from the customer location, the lower the frequency of withdrawal and vise versa.

• The availability of information technology has reduced the need for multiple bank branches.

• The use of information technology has improved customer satisfaction in bank service delivery.

• The nearer the bank is to the customer location the higher the frequency of depositing money.

1.6 SIGNIFICANCE OF THE STUDY

This study will be useful to the following groups:-

1. The Bank Industry: The relevant of this study cannot be over-emphasized with respect to banking industry. It is assumed that the wealth of ideas and knowledge revealed from this study under customers perception, behaviour and responsiveness to location of bank will be utilized by bank industry when setting up bank. It will enable them apprehend what, why and how to position their location in order to satisfy and retain the customer.

2. The General Public/Customer:

The centre piece of this study is adored on customer satisfaction.

The philosophy or concept of consumerism regards “customers as kings” and customer recognition or stimulation of their interest survives every business. Thus, customers here will understand that they are the fulcrum that determine the location and progress of an organization.

1.7 SCOPE OF THE STUDY

The study covers only banks in Nigeria. To carry out this study, Central bank was visited to know its policies on rural banking including several commercial banks in Enugu and their regional headquarters: FBN, UBA, BID and DBN.

1.8 LIMITATIONS OF THE STUDY

The researcher visited many places in Enugu, Onitsha Aba, Owerri, and Benin. Many people interviewed were skeptical initially as to the geniuses of our purpose, unit public relations officers came and cleared the air. This was after several weeks were wasted, engulfing both money and time, leading to the prolongation of the time initially scheduled for this research.