THE IMPACT OF NEW PRODUCTS ON THE PROFIT PERFORMANCE OF COMMERCIAL BANKS IN NIGERIA
(A CASE STUDY OF FIRST BANK PLC SUBMITTED)
This study is set out to investigate the response of the Nigerian Commercial Banks to the need for innovation (through the introduction of new products service) for the enhanced improvement in their profit position, giving the ever-changing financial and monetary policies, the creation and establishment of new financial institutions which makes competition inevitable and the deregulation of the banking environment.
These alternatives of polices and conditions are intended to introduce a measure of progress and sanity in the banking industry and the economy in general through banks active and prudent management of the funds mobilized from depositors to avoid distresses and eventual liquidation of banks as witnessed in the early 1950’s and most recently the liquidation of 26 commercial and merchant banks as announced in the last federal budget in 2001.
To carryout this research work, the researcher collected data on the type of product offered by the selected bank (i.e. First Bank Plc), their annual report for five years and oral interview was conducted through the management and staff directly concerned with the products implementation. The data collected was analyzed using some basic statistical instrument such as chi-square and appear man rank order correlation co-efficient.
The result of the analysis point to the fact that there is an existent of positive relationship between products introduced and profit performance of commercial banks in Nigeria.
This finding have the benefit of enhancement of commercial banks positive response to introduction of new products or remodeling of the existing ones, which will help to entrench healthy competition and good banking practices for effective growth and progress of the country.
Therefore, it is the view of the research that the journey towards a product (service) making an impact on the profit performance of commercial banks in Nigeria does not and at the introduction of the product but includes the effective and efficient management of the human and material resource available to the banks and maximum implementation of the various identified instruments of the product implementation.
TABLE OF CONTENTS
CHAPTER ONE: INTRODUCTION
1.1 Background of study
1.2 Statement of problem
1.3 Objective of the study
1.4 Research question
1.5 Statement of hypothesis
1.6 Significance of study
1.7 Scope and limitations
1.8 Definition of terms
CHAPTER TWO: LITERATURE REVIEW
2.1 The concepts of quality products
2.2 Products planning and development
2.3 The demand for products
2.4 The price and quality of new products
2.5 Gaps in product quality
2.5a Meeting customer’s expectation
2.5b Setting wrong standard of new products
2.5c Services performance
2.5d The effect on new products (service)
2.6 Quality as a vita factor in profit performance
2.7 The impact of new products to bank
CHAPTER THREE: RESEARCH DESIGN AND METHODOLOGY
3.1 Research design
3.2 Area of study
3.4 Sample and sampling techniques
3.5 Instruments of data collection
3.6 Methods of data presentation
3.7 Methods of data analysis
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS
4.1 Discussion of result
BACKGROUND OF THE STUDY
The commercial banks of study, which in this research work is limited to First Bank Plc, provides their numerous customer across the country with a full, range of commercial banking products (services) (First Bank, 1997), including but not limited to current, saving and deposit accounts, loan and overdraft, provision of international banking services, export credit and financial advisory services, automated teller machine, smart card, computer and western union money transfer system. All these products and the favourable economic there is a decline in sales of these products and subsequent decline in their profit performance (Anibueze 1998).
As a result the bank introduced new products such as automated teller machine, smart card, computers, and western union money transfer, which are all aimed at improving the profit performance of these banks (Nwankwo 1990).
1. WESTERN UNION MONEY TRANSFER SYSTEM: The Western Union Money Transfer Services, which took off in February 1996, has been adjusted at very fast, convenient, reliable and secured way of receiving money from relative and friends out side the side the country. The system works through telecommunication network and passes information about a transfer within minutes.
2. SMART CARDS: First bank is looking into a relevant technology (smart card) that would deliver more convenient services to customer s in the form of stored valued a complement to bank drafts and bank cheques. This is aimed at further discouraging cash transaction’s because of the risk involves.
3. COMPUTER: First Bank of Nigeria Plc has computerized all major operations in their branches nation wide. Such operation as providing instant customers balances immediately after each transaction updating of the banks accounting records, verification of customer’s signature and many others. This has improved the delivery of services to clients.
4. AUTOMATED TELLER MACHINE
This is also an innovation by the First Bank Nigeria Plc. To meet the demand of customers for quality banking services automated teller machine has helped the bank in spreading out payment outlets in some parts of the country.
1.1 BACKGROUND OF THE STUDY
First bank was formed known as the Bank of British West Africa (BBWA). It was first successful bank to operate in Nigeria. The name of first bank was adopted in 1979 lever pool was the home of the founder of the bank “Bank of British West Africa. The two founding fathers of the Bank of British West African that is currently known as First Bank are Levers Tones and george William while the driving force of action necessary for the materialization of the most fertile ideas was that of Alfred Lewis Jones. The proposal for settling up this bank was made by Mr. George Neville when he made his visit to England in 1891 and the proposal was accepted during the meeting of the board of director which was hold June 4, 1891.
The Bank of British West Africa was registered and established in London as a limited liability company with an authorized capital of 1,000,000 on March 312, 1894. The head office of the bank was at Liverpool and has a branch in Lagos and Calabar that of Calabar was opened in 1907.
At the board extra ordinary meeting of June, 1957 a spread resolution was passed to change the name of the bank by trooping the word British to Bank of West Africa.
In 1966 the bank of the West Africa was changed to Standard Bank of West Africa (SBWA).
On June, 20 1969, based on the company decree of 1968, a separate existing (SBWA) was incorporated in Nigeria under a new name ‘Standard Bank Nigeria Limited”.
The indigenization policy was put in place by the government during the second national development plan 1970-1974. His objective was to alter the objective of ownership, control and management enterprise from expatriates to the indigene this affected the bank seriously.
On March 19, 1976 the board approved allotine of public issue of the company’s share total 2559,674 at one Nigeria period early and this encouraged participation of small Nigeria investor in the shareholding.
At the board meeting of July 24, 1999, it was approved that the appropriate name of the bank to be changed, with effect from October 1, 1979 the Standard Bank of Nigeria United took a new name and re-established.
STATEMENT OF PROBLEM
Experience has shown that introduction of new products in commercial banks (First Bank Plc) has impinges positively light of the forgoing, the research work seek answer to the following questions?
1. What are the new products introduces from 1990-2005?
2. How effective is the new product toward profit performance of commercial bank? (First Bank Plc)
3. To what extent has some selected new products such as Automated Teller Machines card (ATM) the meet customers satisfaction?
4. What are the problems associated with profit performance of commercial bank as a result of the introduction of new product?
1.2 OBJECTIVE OF THE STUDY
1. To identify the impact of new products on the profit performance of commercial banks (First Bank Plc).
2. To determine the role of new product on the profit performance of commercial bank (First Bank Plc).
3. To ascertain the effect of Western Union money transfer on the profit performance of commercial bank (First Bank Plc).
1.3 RESEARCH QUESTIONS
The following research question will be applied to enable the researcher present the work in such a manner as to bringing out clearly the problems areas of the inquiry.
1. What are the problems encountered in the introduction of new products?
2. What are the roles of new products in the profit performance of commercial banks (First Bank Plc)?
3. To what extent has some selected new products such as automated teller machine (ATM) meet customer’s satisfaction?
4. What the impact of new product toward profit performance of commercial bank (First Bank Plc)?
1.4 STATEMENT OF HYPOTHESIS
H0: The introduction of new product has not improved the profit performance of commercial bank (First Bank Plc).
Hi: The introduction new product has improved the profit performance of commercial bank (First Bank Plc).
H0: The selected new product such as automated teller machine (ATM) has not meet customer satisfaction.
Hi: The selected new product such as automated teller machine (ATM) has not meet customer satisfaction.
1.5 SIGNIFICANCE OF STUDY
It is believed that this project work will serve the need of many interest groups operating in the economy.
The research work will go a long way to appraising the government’s introduction of Structural Adjustment Program (SAP). The government will at the end of the end of this study discover how (SAP) have encouraged banks to be innovative in their marketing difficulties.
This research will also serve as a basic further research by other researchers. It will give the man insight into the need for further work, which will help many banks customers to learn of the available new products in the banking industry.
These research works will enhance the efficiency of banks management of new products towards profit target. Other banks, which have not discovered the impact of new products on their profit performance, will find the need to introduce one in their range of products (Service) state (Brown .A.J 1997).
1.6 SCOPE OF STUDY
This research work was not extended to all commercial banks in the country but was limited to only First Bank of Nigeria Plc. Though the study of this bank will be considered for reference purpose but for the course of this study and the scope, the study of this bank into considered for mentioning.
The scope of the study is First Bank Plc and the dimension is from the period the new products (service) was introduced to the last annual report of the bank in question.
1.7 DEFINITION OF TERMS
PRODUCT: It is used here is an interchangeable commodity or an act performed by a bank in order to attract customers or deposit placement (Nwankwo G.I. 1991).
PROFIT: This is a return on investment to determine the new income.