Impact of Enhanced Customer Service on the Growth and Profitability of Banks

Impact of Enhanced Customer Service on the Growth and Profitability of Banks (A Case Study of Union Bank of Nigeria Plc)

Banking is a personal service industry whose business is with people. The need to enhance existing customers’ service in the banking sector therefore cannot be over-emphasized.

This is so because banks cannot exist without customers. Thus an enhanced customer service will not only satisfy but also retain customers.

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In today’s competitive banking environment, customers’ service is one of the major distinguishing elements that banks can exploit to establish a competitive advantage. In view of the fact that most banks offer comparable products and services, they continually search for a competitive advantage that will attract new customers and help them retain existing ones. Therefore, banks must develop creative programs and initiative to maintain superior customer services at reasonable profit levels.

The purpose of this research is two-fold. The first is to determine the probable gap in the service delivery of Union Bank of Nigeria PLC. The second is to evaluate ways and means of improving the identified lapses and clear the lapses and meet the service needs of the customers.

The financial service sector, like other-service-oriented sectors, provides service to individuals and corporate bodies in a society.

The way and manner each institution relates with these individuals and organizations have a direct impact on the company’s earnings, profitability and survival. To acquire new customers, as well as retain old ones, each player in the industry needs to build and follow through a good and enduring customer -relationship.

The service being rendered by the operators in the financial service sector are to a large extent, homogeneous, it therefore follows that to remain relevant, banks must always keep a breasts of the needs of customers and specifically tailor their services to meet such needs satisfactorily. By so doing, banks would be able to retain consumer’s confidence existing clients and increase their market share.

In the emerging banking business environment, turning customers to clients as evidenced by repeat business and referrals has become an important concern of management in the industry. To compound the growing challenge of competition banks have to cope with the over increasing sophistication of the Nigerian Customers, both individuals and corporate bodies.

In the face of these developments and challenge there is little doubt that the quality of each bank’s customer relationship effort and in particular the performances of its customer services system will be major determinant of its competitive as well as advantage.

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The need for the study of this nature stems from the stiff competition in Nigeria banking industry which has resulted from the forces of globalization and the deregulation of the banking industry. As a result of these factors the number of players in the industry has increased significantly over the years. Consequently, to survive the competition game, it has become imperative for banks to know what the customer want to enable them provide services that meet the customers’ banking needs.


The problem that prompted this research is the dynamic nature of the competitive economy in banking sector.

The Nigerian banking environment is highly competitive. Hence, banks must distinguish themselves through unique selling propositions in order to meet customers’ expectation at all times. To survive the stiff competition, banks must not only ensure that customers are aware of the range of available services. They must also arouse the interest of these customers and get them to patronize their services.

It is therefore pertinent to state that banks today find it is virtually  impossible  to  create  any kind of sustainable competitive advantage based on  product  alone.  The  upshot has been a commitment by many companies to be outstanding in interactions with customers. The idea is to beat the competition not just by having a better product but also by being better in terms of how that product is sold and delivered to the customers.

Hence, bank staff should take cognizance of the fact that without providing quality service, treating their customer with respect as in giving appropriate attention to them, that they are liable of loosing them to other corporate organizations. The issue of rendering quality service entails that banks should avoid any situation whereby their customers have to queue for hours before transaction is made or may not transact at all after a long queue. This is disastrous as they may not transact with the bank anymore.

So this problem should be avoided in order to gain their patronage.

Having established the fact that banks are face with challenges and stiff competition, especially where they provide similar products, banks must evolve means of overcoming these challenges. It requires that banks create avenues on how they interact with customers and design a way of interacting that makes an indelible impression on customers, one that so utterly distinguishes them from others that it becomes brand in itself.

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The primary objective of the study is to assess the contribution of Union Bank of Nigeria PLC to quality customer service delivery in Nigeria and the variables that affect its success in future endeavors. This attempt is hoped to provide a greater insight in the bank’s failure in quality customer service. Other objectives are as follows,

  1. To determine the extent to which motivation is related to services provided.
  2. To ascertain the impact of manpower training on the quality of service provided.


The banking industry has recorded remarkable growth in the past few decades. Banks are emerging to satisfy customers with their best services. The quest for provision of efficient and cautious service had led to keen competition among banks. Banking institutions today face many challenges including global competition for deposits loans and underwriting fees, increasing customers demands, shrinking profit margin and the need to keep up with new technologies as they encounter these obstacles, bank future depend on one critical factor – strong customer relationship, and these relationship depend on the institutions ability to provide personalized service to every customer, every time and every where.

It is hoped that at the end of this study, students, Communities and corporate organizations especially banks would be in a better position to achieve their primary objective of generating financial surplus, sustaining competitive advantage and ultimately increasing revenue and higher profit levels.

Research Questions

The following research questions were put forward:

  1. What is the degree of relationship between motional and services provided.
  2. Is the quality of service provided influenced by manpower training?


(1)   There is no significant relationship between motivation and services provided.

  • Training does not influence the quality of service provided


This study deals only with tackling the minor problems mentioned in this chapter that is, as it affects Union Bank of

:Nigeria PLC with respect to enhancing the customer service as it affects profitability.

It is not intended to discuss all the aspects of customer service. Inadequate time and finance to put together a more comprehensive project was a major constraint on the part of the researcher. In addition to the administration of questionnaire on the busy management staff of Union Bank was also a limiting factor, for the methodology.

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Advances – overdrafts

ASSETS  –       Goods, property, resources of all kinds of an individual

BALANCE SHEET A statement of assets and liabilities of a business concern as at a particular date

BANK RATE – The basic lending rates of banks on which are lending rates and deposits interest rates are founded.

BEARER – The person in possession of a bill or cheque payable to bearer.

COLLECTION – Method of obtaining of the proceeds of cheques through the clearing system.

DRAWER – The person who signs a cheque or bill of exchange.

SAFE CUSTODY – The safe keeping of documents, deeds boxes or valuables by the bank or customer normally for a fee.

DRAWEE – The bank on which a cheque is drawn or the person to whom a bill of exchange is addressed.

GUARANTEE – An undertaking to the collaterally responsible for the debt or default of another person

INTEREST – Money paid for a loan or for use of someone else’s money

BILL OF EXCHANGE – An unconditional order in writing, addressed by one person to another signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time.

OVERDRAFT – A sum of money drawn or borrowed from a bank in excess of one’s credit balance.

 Impact of Enhanced Customer Service on the Growth and Profitability of Banks (A Case Study of Union Bank of Nigeria Plc)


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