ABSTRACT
The study examine effects of banks marketing services and profitability of banks with reference to study of Guanratee Trust Bank Plc. Abia state, using time series analysis spanning from 2006-2017. The data set were analyzed using Ordinary Least Squares (OLS) multiple regression technique. From the results, it was found that Gifts and Donations have positive and significant effect on the profitability of Guarantee Trust Bank plc. Secondly, Customers Deposit also have positive and significant effect on the profitability of Guarantee Trust Bank plc. Also Electronic banking services of Guarantee Trust Bank plc has negative and significant effect on their profitability. In conclusion, Banks in improving their marketing operations and liquidity strength, customer relations, credibility, and effective participation in the resuscitation of the economy which in turn affect their profitability. However, gift and donation and customers deposit affects the profitability of Guarantee Trust Bank plc. But the relationship between Electronic Banking and profitability of Guarantee Trust Bank plc was found to be negative. Thus indicating that inefficiency in electronic banking is related to decrease in profitability of Guarantee Trust Bank Plc. Therefore, the study recommends that (i) Guarantee Trust Bank Plc. should continue investing on corporate social responsibilities, for the continued existence of the industry, increase in profitability and the development of the Nigerian economy. (ii) With respect to customers deposit in relation to bank profitability, all the units of the bank should be involved in marketing while banks should continue to make their customers feel important and have well equipped and experienced staff personnel in customer services unit to be able to provide solutions to customer’s complaints and challenges. (iii) Banks customers, management and shareholders should adopt and maintain good practices of electronic banking operation so that it will lead to increase the level of bank profitability.
TABLE OF CONTENTS
Cover page i
Title Page ii
Declaration iii
Certification iv
Dedication v
Acknowledgement vi
Table of Contents vii
Abstract viii
CHAPTER ONE
INTRODUCTION 1
1.1 Background
for the study 1
1.2 Statement of the Problem 3
1.3 objective of the study 4
1.4
Research Questions 5
1.5
Research Hypothesis 5
1.6 Scope of
the Study 5
1.7 Significance
of the Study 6
1.8
Limitations of the study 6
CHAPTER TWO
REVIEW OF RELATED
LITERATURE 8
2.1 Conceptual Framework 8
2.1.1 Concept of Bank
Marketing Services 8
2.1.2 Marketing in Banking 10
2.1.3
Structure of Bank Market 10
2.1.5
The Marketing Mix in Banking Sector Service 13
2.1.6 Development in Marketing Scope at the Aspect
of Service Marketing 13
2.1.7 Internal Marketing 13
2.1.8
Relationship Marketing 14
2.1.9
Product and Service 15
2.1.10
Marketing Approach to Banking Services 16
2.1.11
The Reason for Marketing of Banking Services. 17
2.1.12 Various Products or Services Banks Provide
in Nigeria. 18
2.1.13 Characteristics of Financial Services 18
2.1.14 Factors that Influences Marketing of Banking
Services. 19
2.2 Theoretical Framework 21
2.2.1
Game Theory 21
2.2.2 Signaling Theory.
21
2.2.3 Innovation Theory 22
2.2.4 Product Quality Theory 22
2.3 Empirical Framework 23
CHAPTER THREE
RESEARCH METHODOLOGY 27
3.1 Research
Design 27
3.2
Area of the Study 27
3.3
Population of the Study 28
3.4 Nature
and Sources of Data 28
3.5 Model Specification 28
3.6 Techniques of Analysis 29
3.6.2 Multiple
regression 29
3.7 Test of Significance 29
3.8
Decision Criterion 30
CHAPTER FOUR
PRESENTATION OF DATA, ANALYSIS AND INTERPRETATION 31
4.1 Presentation of Data 31
4.2 Test of Hypotheses 34
4.3 Discussions of Findings 35
CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION 37
5.1 Summary of Findings 37
5.3 Conclusion 37
5.2 Recommendations 38
References
Appendix
CHAPTER ONE
INTRODUCTION
1.1 Background for the study
The effect of bank
marketing services in improving banking profitability cannot be over
emphasized. The most important objective in any business organization is to
identify and satisfy customers as a result, marketing is central in any
business firm and business executive must understand his or her role to the
organization. Marketing can be defined as all activities directed to
identifying and satisfying customers’ needs and wants (Kotla, 2010).
Marketing in any organization is to identify the most
profitable marketing services now and in the future, and accessing the present
and future needs of customers. It involves setting business goals; making plans
to meet them and manage their services to such a way that those plans are
achieved (Nwite, 2011).
Uppal (2010) defined bank marketing as the process of
providing services to satisfy customer’s needs and wants financially. Marketing
of banking services in any country lies on the hand of systematic and
professional approach towards satisfying customers’ needs (Ojha 2017 in Uppal,
2010.)
Marketing
of banking services is of recent origin. It is only during 1950s banks came to
accept the marketing concept for bank services. Bank marketing is the aggregate
of functions directed at providing services to satisfy customers’ financial
needs and wants more efficiently and effectively than the competitors in
consonance with the organisational objectives. In a true sense, it is the
application of marketing techniques in the banking services. Application of
marketing techniques in banking, in simple terms, means a coordinated
organisational effort to reach the customer to fulfil his specific needs for
getting his patronage, through utilisation of people, products or services,
price, promotion, branch outlets and distribution policies for maximising
customer satisfaction. In a competitive situation banks sell their services
through branch counters throughout the entire country through the employees who
act as salesmen recruited by the management (Uppal,
2010).
Banking industry in Abia state depends on the growth of
interest rate that come from the services banks provide to maximize profit.
Bank customers sometimes feel reluctant to make use of bank services or product
and as well hand over their hard earned money to the bank for safe keeping,
when they know that they have little or no interest that accrues on it (CBN,
2011). The difference between this interest rate, that is, the deposit
interest, and that on loan which is the services bank provide becomes the
interest rate margin. The bank thus relies on the magnitude of this gap to make
their profit (Ikpefan, 2014),
Profitability of Abia state commercial banks expresses the
gain made by banks from their operations or services or products. At the micro
level, profit is the essential prerequisite of a competitive banking
institution and cheapest source of fund. This is why Gitman (2017) observed
that without profit, no firm can attract outside capital. Levine (2012) opined
also that the outcome of investigations by financial experts on the service
banks provide and profitability show a direct relationship between financial
development, bank profitability and economic growth in both developed and
developing countries.
Adeyemi, (2016), the financial institutions especially the banks feature
prominently in competitive economic atmosphere principally focusing their
operations in the marketing of their services to the general public. However,
some of these services include among other, loan and advances,
electronic banking, issue and purchase of securities,
provision of sate depositories to customers as well as facilities for making
payments through bank notes and cheques. It is therefore a simply obvious that
an institution like bank should evolve sound management techniques coupled with
effective marketing and services strategies within its socio-economic and
political ambient (Uppal, 2010). It also follows that certain operational
problems may try to impinge on the efforts of the Bank to stand firm amidst the
winds of economic vacillation and constant policy changes.
The
Guarantee Trust Bank Plc, one of the leading Banks in the marketing of Bank
services has taken various strategic steps in a bid to improving its
marketing operations and liquidity strength, customer relations, credibility,
and effective participation in the resuscitation of the economy which in turn affect
her profitability (Nnaemeka, 2017).
In
conclusion, from above exposition entails that there are salient factors that
influence the level of banking marketing services and its effect on bank
profitability. Therefore, in related terms, the essence of this paper is to
investigate the effect of banking marketing services on banks profitability, with
respect to The Guarantee Trust Bank Plc. Abia
state.
1.2 Statement of the Problem
The
Banking industry has been identified over the years as having the potential of
transforming the basic economy of any community, state or nation, if properly
established and well constituted, controlled and managed. In the banking
industry today, certain problems affected the effective and efficient services;
thereby preventing them from achieving their target aim.
Since the financial institutions especially the banks feature
prominently in competitive economic atmosphere principally focusing their
operations in the marketing of their services to the general public. However,
some of these services which include among other, loan and advances, issue and purchase of securities, provision of sate
depositories to customers as well as facilities for making payments through bank
notes and cheques, as relate to bank services which influence profit, poses a
huge problem when not properly strategized to satisfy their customer.
Another major problems in the banking industry is the poor
customer services shown by long but avoidable delays in accomplishing simple
transaction. These transactions range from encashment of cheques, opening of
new accounts to processing of loan and overdraft applications. This delay of
services is obviously detrimental to office owners, international businessmen
and students, as they sneak out of their different places of work to withdraw
some small amount of money.
Furthermore,
E-banking services which in turn aids e-transactions of the bank customer are
face by poor network system, incompetent staff management and lexical attitude
of the worker toward efficiency of their electronic device such as Automated
teller machine (ATM), Point on sale (POS), and so on. are always neglected
which lead to infection transactions. This is because well qualified and
ethical staff are not employed, this in turn affect the return on ROA and Net
profit of the banks.
Another
problem is the need to bring to the fore, a thorough understanding of the
impact of bank marketing services in the quest for continuous relevance and
survival by banks.
1.3 objective of the study
The
main objective of this study is to examine effects of banks marketing
services and profitability of banks (a study of GTBank Abia state).
With specific objectives
as to;
i.
Evaluate the impact of Gift and Donation on
profitability of Guarantee Trust Bank plc.
ii.
Examine the effect of customers deposit on
profitability of Guarantee Trust Bank plc.
iii.
Determine the extent to which Electronic
Banking influences the profit of Guarantee Trust Bank plc.
1.4 Research
Questions
The
following research question are to be answered in the cause of this study;
i.
How has Gifts and Donations impact on
the profitability of the Guarantee Trust Bank plc?
ii.
Does customers deposit affect the
profitability of Guarantee Trust Bank plc?
iii.
To what extent has Electronic Banking
influences the profit of Guarantee Trust Bank plc?
1.5 Research
Hypothesis
The
research hypothesis is thus formulated;
Ho1: Gifts and Donations does
not have positive and significant impact on the profitability of Guarantee Trust Bank plc.
Ho2:
Customers deposit does not have positive and significant
effect on the profitability of
Guarantee Trust Bank plc.
Ho3:
Electronic Banking does not have positive and significant influence
on the
profitability of Guarantee Trust Bank
plc.
1.6 Scope
of the Study
The
study covers the period 2006 to 2016. This study is concerned
with assessing the effect of bank marketing services and profitability of banks
with respect to Guarantee Trust bank Umuahia, Abia state. The study will be
limited to the profitability of the bank.
1.7
Significance of the Study
This
study will be significant in the following groups in the society:
- This research will be of immense
benefit to policy makers in Nigeria. The priority areas needed to be
emphasized in government attempts to enhance the banking industry and
development of other financial firms. Also attention will be drawn to the
impact of previous attempt by government and its agencies to ensure
economic growth. Therefore the policy implications of this study will
assist them in proper planning.
- Another group that will benefit
from this research is the bank management, directors and shareholders
which have interest on bank profits, to know the ability of the bank on
profit and wealth maximization.
- It will contribute to the
existing body of knowledge. The recommendations of this study will go a
long way in adding to existing body of literature available in this area
of finance.
1.8 Limitations of the study
The limitations of this
study include some of unavoidable constraints and problems encountered in the
process. They are as follows:
(i)
Finance: The
problem of finance is not left out in the course of research to this study.
This type of study required adequate money and time to enable the researcher
visit the necessary places for collection of data. Insufficient fund will
hinder an in-depth study of this research since it is financed from pocket
money of the researcher.
(ii)
Non-availability of records: This
is one of the most important limiting factors in the course of the study. This
includes the problems of easily getting the appropriate data due to bureaucracy
which, hinders the information flow in the country, especially banks.
(iii)
Non-challant attitude of bank officials:
The
reluctance of bank officials to reveal information on the need for this study,
for fear of breach of duty of secrecy to customer’s exposure of banks
administrative short-comings.
(iv)
Time: Since
this study is one of the many courses offered by the researcher, the researcher
will be constrained by time to carry out an indent research on the study due to
time-frame required to submit the work.
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