IMPACT OF CUSTOMERS’ SATISFACTION ON SERVICE

QUALITY OF DEPOSIT MONEY BANK IN NIGERIA

(A STUDY OF UNION BANK)

BY

FALADE MOTUNRAYO OLUWATOSIN

HND/23/BFN/FT/0592

BEING A RESEARCH PROJECT SUBMITTED TO THE

DEPARTMENT OF BANKING AND FINANCE, INSTITUTE OF
FINANCE AND MANAGEMENT STUDIES

IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR

THE AWARD OF THE HIGHER NATIONAL DIPLOMA (HND)
IN BANKING AND FINANCE, KWARA STATE POLYTECHNIC,
ILORIN.

MAY, 2025

i
 CERTIFICATION

This is to certify that this project has been read and approved as meeting part of the

requirement for the award of Higher National Diploma, in the Department of Banking

and Finance, Institute of Finance and Management Studies, Kwara State Polytechnic,

Ilorin.

____________________ ________________
Mr. Babatunde A.R. Date
Project Supervisor

____________________ __________________
Mrs. Otayokhe E.Y. Date
Project Coordinator

____________________ __________________
Mr. Ajiboye W.T. Date
Head of Department

____________________ __________________
External Examiner Date

ii
 DEDICATION

This project is fully dedicated to God Almighty for without his grace this work would

not have been possible. And also, to my humble parents, Mr. and Mrs. Falade, for their

efforts towards the successful completion of this project cannot be overemphasized.

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 ACKNOWLEDGEMENT

Sincere gratitude and appreciation goes to God Almighty, the ever gracious and ever

merciful, for his innumerable mercies, graces and favor before and during the

compilation of this project.

I express profound gratitude to my project supervisor, Mr. Babatunde Rasak

Alanamu., and also to all lecturers of the department of banking and finance who

have in numerous ways impacted positively in my life.

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 TABLE OF CONTENT
Title page Pages
Certification i
Dedication ii
Acknowledgement iii
CHAPTER ONE: INTRODUCTION
1.0 Background to the study 1
1.1 Statement of the problems 3
1.2 Objective of the study 4
1.3 Research question 5
1.4 Research hypothesis 6
1.5 Significance of the study 6
1.6 Scope and limitation of the study 7
1.7. Definition of Terms 8
1.8 Plan of the study 9
CHAPTER TWO: LITERATURE REVIEW
2.1 Conceptual framework 11
2.2 Theoretical framework 21
2.3 Empirical framework 26
CHAPTER THREE: RESEARCH METHODOLOGY
3.0 Research Methodology 30
3.1. Source of data 30
3.2. Population of the study 31
3.3. Sample size 31
3.4. Method of Data collection 32
3.5. Method of Data analysis 32
3.6. Limitation to study 33
CHAPTER FOUR: DATA ANALYSIS DISCUSSION
4.0 Data presentation, analysis and interpretation of statistical data 34

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4.1. Data presentation 34
4.2. Data analysis 35
4.3. Interpretation of data 38
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1. Summary 42
5.2. Conclusion 43
5.3. Recommendations 44

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 CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
There is a high competition between the financial service sectors because of this

customer expectations increased about the product and heightened their standards of

services. Today customers are more aware about services of financial institutions so

they know when they need and what they need etc. Today demand for high quality

financial services and products significantly increase due to rapid development in

competitive financial markets and services. To fulfill high expectations customer need

new, high quality services and more advanced products from financial institutes. To

establish the long-term relationship with customer banks and other institutes, need to

provide high quality services that increase the customer satisfaction. This is also

increase the competitive advantage of banks. Perfection in personnel may lead to

increase the customer satisfaction level. This is one of the dimensions that may

increase the customer satisfaction. Moreover, concentration should be drawn to

elements that may not be ignored in service projects and their operations in order to

attain quality excellence perceived by customers. (Grigoroudis et al, 2002).

The banking sector carries significant importance in economy of Pakistan. It

plays a fundamental part in the financial progress of an economy and establishes the

base of the money market in established country. Banks have to provide numerous

types of financial services every day to its customers. It's really a fact that customers

are compulsory for the survival of any business. The banking sector is fighting against

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dynamic environment; technological innovativeness, economic fears, severe

competition and highly challenging customers has offered an extraordinary set of

experiments for these institutes. Banking sector is a service industry which is

concerned with customers, so quality of service is considered as differentiating factor

of banks and other financial institutes. The main determination for this varying

environment is changing customer demands and anticipations. Customers usually in

urban areas are not willing to wait in rows for banking transactions. This change in

customer approach is mainly due to the expansion of ATMs, online and mobile

banking accompanied by accessibility of financial services closer to customers. The

interest of banks in their customers is mainly determined by the recognition that high

quality services are related to customer satisfaction and commitment, more inclination

to mention to others, reduction in criticisms and increase customer withholding

(Buteele, 1996). Two terms are closely related one is customer satisfaction and other is

service quality. Both are directly proportional. If one increases, other increases vice

versa. Customer satisfaction is a term used to satisfy the customers by the service

quality provided by banks. Customer complaints are related with the customer

satisfaction. If customer complaints are less, then it means customers are more

satisfied (Lee, 2009). Service quality can be described as the understanding power of

the organization’s performance, achievements and efficiency. If perceived service

quality is good according to the customer behaviors and intentions, then customers are

more satisfied and loyal with their products (Zeithamal, 2000).(Yang, 2001)If service

2
quality of product is not good, then sales and profits will be reduced and ultimately

customers shift towards other competitor’s product (Yang, 2001).

In the modern world, service sector plays an important role in all the banks

either a conventional banks or non-conventional banks. Banking sector performs all its

activities either economic or social in all around the world. Service managers of banks

are more concerned about their quality of services and customer satisfaction.

Banking sector plays a significant role in every country for their economic growth and

development. Customer satisfaction and service quality are issues at global level that

affect all organizations.

The health, efficiency and productivity of the financial sectors are very important for

the economic growth of any country especially under-developed countries like

Pakistan in which growth cannot be sustained without a sound financial sector. As a

result, the performance of the banking sector has a direct relation with the financial

sector and economy of country.

Other authors have brought out theories relating customer satisfaction and service

quality in their researches. Wang & Hing-Po, (2002) showed that the dynamic

relationship among service quality, customer value is key factors of customer

satisfaction. Customer satisfaction is an outcome of good internal feelings arising from

3
quality services (Henning & Thurau, 2003). Satisfaction in banking subsector

represents the extent to which banking products and services meet customer needs.

According to various authors, customer satisfaction can be measured by looking at

different dimensions such as service quality, customer loyalty, repurchases behaviour

and trust, among others (Anderson & Fornell, 2001; Anderson & Mittal, 2000, with

conclusion that a satisfied customer is loyal and contributes to profitability.

1.2. Statement of the Problem

An examination of the structures in place by the Commercial Bank appears to suggest

a system of effective’s service delivery. However, inspite of the bank performance,

which is substantially credible, it is yet beset with some problems. Some of the major

problems are stated below:

i. Absence of well – train and professionally qualified banking staff

ii. Offensive and poor attitude and behavior on the banks staff in their dealings

with actual and potential customers

iii. Inadequate facilities and equipment required to provide modern banking

services

iv. Absence of frequent training programs for the staff to shape up their attitude

towards customers.

v. Unduly long processes in responding to customer’s needs.

vi. Excessive competition from banks which perform commercial banking

services.

1.2 Research Objectives

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Given the problems as stated above, the research work was undertaken specifically to:

i. To Evaluate the level of service quality and customer satisfaction at the

Nigeria deposit Bank

ii. To Examine how the Nigeria deposit money Bank marketing of the bank

services enhance customer satisfaction

iii. To Determine how customers service influence customers retention rates

1.3 Research Questions

With respect to the objectives set out above, the research work seeks to address the

following research questions:

i. Will the patronage of Deposit Bank services increase if there is an

improvement in level of customer’s services?

ii. Will customer’s retention rates improve if the duration required for a bank

transaction is curtailed?

iii. What will be the response of customers to improved quality of the customers’

service?

1.4 Research Hypothesis

Ho: an improvement in banking services does not enhance customer retention and

customer satisfaction

Hi: an improvement in banking services does enhance customer retention and

customer satisfaction

1.5 Significance of the Study

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The study of customer satisfaction and its implications on bank performance in

Nigeria was proposed with the purpose of identifying the areas where the deposit

money banks has not done enough in order to meet the community expectations. The

study provide empirical evidence as regards to factors that leads to customer

dissatisfaction with banking services as well as possible strategies that can be adopted

to address this problem. All these findings pave the way on re-setting the policies and

plans of the commercial banks in order to keep pace with the growing competitive

environment so as to meet the community satisfaction.

The research work when completed, will give me an insight into a practical situation.

However, it will also indicate how to combat the service quality problems the banks

with regards to the level of customer’s satisfaction. In addition, it will serve as a

source of reference for similar research in future.

Finally, it is also intend to facilitate the effort of policy makers to come out with

policies that will embody effective customer satisfaction strategies.

1.6 Scope of the Study

This project work will cover the activities of selected deposit money Bank (i.e. First

bank, GTB, UBA, union bank) and its customers and non-customers within the Ilorin

metropolis in Nigeria. It will focus on services quality and customers satisfactions.

1.7 Limitation of the Study

The limitation to this revolves around finances and time constraint. Imagine a research

project that could last a life time is expected to be completed within stipulated time of

4 to 5 months coupled with lectures and other academic activities.

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1.8 Organization of Study

The research work consist of five chapters, these are chapter one, containing the

background of the study, statement of the problem, research objectives, research

questions, research hypothesis, significance of the study, scope of the study, limitation

of the study and the organization of the study.

Chapter two examines relevant related literature. The research methodology is the

focus of chapter three.

Chapter four consists of data presentation and analysis and the final chapter which is

chapter five, discusses the summary of the findings, conclusions, and

recommendation.

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 CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction
This chapter presents a review of literature, which related to the research work as

documented by authorities on services quality and customer satisfaction.

It will cover the definitions of service, characteristics of service, classification of

services, the scope of services, service quality, the need for service quality, benefits of

services quality and definitions of customer satisfaction. It will also take into a look at

major themes in the financial services sector.

2.1 Definition of Key Concepts

The study of customer satisfaction with services rendered by a firm requires a clear

understanding of basic concepts. This part therefore provides some operational

definitions and brief description of key concepts that are used in this study.

2.1.1 Customer Service

This is not merely customer relations or how nice front line workers are to customers,

rather satisfying or even delighting customers is the goal of excellent customer

service. Since customers are in need of different types of services have different

needs, different customer service strategies and this must be tailored to the targeted

customers. According to Gronröos (1984) quality in service is defined as a construct

composed of what is delivered by the company to the customer (technical aspect), and

the way the service is performed (functional or relational aspect). A number of

empirical researches have validated this definition and indicated a strong relation

8
between these two quality dimensions and customer’s satisfaction (Cronin and Taylor,

1992; Lassar, et al., 2000; Maddern et al., 2007; Tontini and Silveira, 2007).

Deterioration of one often leads to deterioration of the other. Although some scholars

claim that quality precedes satisfaction (Cronin and Taylor, 1992), others writers

suggests that customer satisfaction is necessarily founded by quality of service or

product (Heskett et al., 1994; Anderson and Mittal, 2000). That’s why in the present

study, quality in service is understood as satisfaction antecedent.

According to Gronröos (1984) quality in service is defined as a construct composed of

what is delivered by the company to the customer (technical aspect), and the way the

service is performed (functional or relational aspect). A number of empirical

researches have validated this definition and indicated a strong relation between these

two quality dimensions and customer’s satisfaction (Cronin and Taylor, 1992; Lassar,

et al., 2000; Maddern et al., 2007; Tontini and Silveira, 2007).

2.1.2 Customers’ Satisfaction

Customer satisfaction means something more than a happy customer; it is broadly

used in commerce and business sector. Customer satisfaction is a term used in

business explaining about the quality of product and service that are being provided by

companies to fulfill the need of their customers. For some, it is also a key performance

indicator (KPI) of company (Jayaraman Munusamy, Chelliah, & Mun, 2010). It is

noted that satisfied customers are the core element in long-term success of

business(McColl-Kennedya & Schneiderb, 2000) .Returns of the companies are seen

9
to have a highly positive relationship with strong base of satisfied customers(Yeung,

Ging, & Ennew, 2002).

In banking, customer is the person who executes transaction and efficiency of the

institution relays on the quality of services delivered by that institution. To sustain in

this competitive environment, satisfied customers are the key element which one can

attain by continuous improvement in the quality of their services. To retain market

share it is necessary for the organization to beat/outperform its competitors which

could be done by ensuring quality of products and services to attract and retain

customers by keeping them satisfied (Tsoukatos & Rand, 2006).

2.1.3 Classification of Service

In the option of Churchill and Peter (1995), Machogu & Okiko (2015), service can be

classified in several ways. These include the way the service is delivered, the type of

organization providing the service and the type of customers they target.

Means of Delivering the Service: this may be equipment based. In other words,

services may be delivered primarily by equipment, as in the case of movies theatres

and airlines or they may be delivered primarily by people, as in the case of janitorial

service and accounting.

The means of delivery influences where quality is most at stake in the product mix.

For equipment-based service, Marketers must be concerned that the equipment is of

good enough quality to meet customers’ need.

They must ensure that the employees who keep the equipment operating or come into

contact with users are skilled and interested in meeting customer needs. Thus, the

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quality of computer programming service depends on both the user and the

programmers themselves.

Type of Providers: This is another way of classifying service, and it is in term of the

kind of organization providing them. Service providers may include businesses,

government and non-government or non-profit making organizations. Business

organizations offer goods and services in order to earn a profit.

Government organizations also provide service; include mass transport, state lotteries

and the military.

The not-for-profit making organizations also use marketing to help them identify

needs and target services build support for causes and solicit contributions.

The Purchase Decision for Service: This describes the way in which consumers and

organization buyers arrive at their purchasing decision.

2.1.4 Scope of Service

The wide range of services marketed by profit –making firms is reflected in the

following classification by industry:

a) Housing Rentals of hotels, motels, apartment house and farms

b) Household operations like utilities, house repairs, repairs of equipment in the

house, land scalping and household cleaning.

c) Recreation and entertainment such as theatres, spectator sports, amusement

parks, rental and repairs of equipment used to participate in recreation and

entertainment activities.

d) Personal care such as laundry, dry cleaning, beauty care

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 e) Medical and other health care including all medical services, dental nursing,

hospitalization, optometry, and other health care

f) Private education like vocational school, nursery schools and some continuing

education programs.

g) Business and other professional services such as legal, accountancy, and

management consulting.

h) Insurance, banking and other financial services such as personal and business

insurance, credit and loan services and investment

i) Transport including flight and passenger services

j) Communication as in telephone and computer and copying services.

2.1.5 Service Quality

Johansson (1997), spelt out that the intangibility of service is typically assumed to

make consumers evaluations of quality more difficult than for tangible products. This

views based on the natural hesitation of people to evaluate things they cannot touch.

The intangibility of services make them much more subjective product. Quality is a

matter of how we feel and of our particular taste Machogu & Okiko(2015). This

dependence on subjective feelings means that what is perceived as high quality service

may differ between individuals.

2.1.6 The Need for Service Quality

Ennew, Watkins & Wright (1993), mentions that the need for service quality is driven

by customers, employees and a changing business environment. Customers, be the

individuals, households or organizations are increasingly aware of alternatives of the

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financial services on offer, provider organizations and also of rising standard for

service. Consequently, expectations rise and consumers become more critical of

quality of service received and so companies can be complacent.

Furthermore, knowledge of the cost and benefits of keeping existing customers

relative to attracting new ones draws companies’ attentions to looking after present

customers, responding to their needs and problem developing long-term relationships.

2.1.7 Benefits of services Quality

Without the focus on service quality, financial service organizations may face

complaints from customers. Further, a proportion of dissatisfied customers will

complain and tell a number of others, generally it is stated that, if a financial company

gives a service to one customer, it gain three, and loses nine when give poor service to

one customer, hence it is better to gains three than looking nine, generating adverse

word of monthly publicity and some may switch to companies. However, with focus

on service quality, an organization can expect a number of benefits.

Customer loyalty through satisfaction increased business and this may lead to attract

new customers; hence customer retention is more cost effective than trying to attract

new customers.

Customer satisfaction lead to increase in opportunities for cross-selling,

comprehensive and up to date service knowledge and sales techniques among

employee, combined with developing relationships.

Good service quality enhance corporate image and may provide insulation from price

competition.

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2.1.8. Customer Loyalty

Loyalty in service is more often predetermined by the customer’s belief that the

quantity of the value received from a service provider is not only higher but also more

competitive than the one offered by other suppliers (Reichheld, 1993). Two major

dimensions of loyalty have been known for years (Jones and Taylor, 2007).

These are behavioral dimension which include intention to repurchase, intention to

change and intention to give exclusivity to the service supplier; and attitude or

cognitive dimension which include issues such as preference over a supplier, advocate

the company, willingness to pay more, and identification with service supplier.

Therefore, loyalty is highly related to behavioral, attitudinal and cognitive aspects for

its measurement. In the present study, loyalty was represented through three

dimensions: intention to remain a customer of Union bank ; price sensitivity; and

intention to recommend the service to third parties, bearing in mind that these

dimensions are more frequently used as loyalty measures in the service literature.

2.1.9. Bank service and Customer Loyalty

Loyalty in service is more often predetermined by the customer’s belief that the

quantity of the value received from a service provider is not only higher but also more

competitive than the one offered by other suppliers (Reichheld, 1993). Two major

dimensions of loyalty have been known for years (Jones and Taylor, 2007).

These are behavioral dimension which include intention to repurchase, intention to

change and intention to give exclusivity to the service supplier; and attitude or

cognitive dimension which include issues such as preference over a supplier, advocate

14
the company, willingness to pay more, and identification with service supplier.

Therefore, loyalty is highly related to behavioral, attitudinal and cognitive aspects for

its measurement. In the present study, loyalty was represented through three

dimensions: intention to remain a customer of Union bank; price sensitivity; and

intention to recommend the service to third parties, bearing in mind that these

dimensions are more frequently used as loyalty measures in the service literature.

2.2 Theoretical Review

The issue of customer satisfaction has been explained by numerous theories developed

by several authors. Generally four groups of theories have been used to understand the

process through which customers form satisfaction judgments (Adee, 2004). The Four

psychological theories are (1) Assimilation theory; (2) Contrast theory; (3)

Assimilation-Contrast theory; and (4) Negativity theory (Anderson, 1973).

2.2.1 Assimilation Theory

The theory of assimilation asserts that consumers make some kind of cognitive

comparison between expectations about the product and the perceived product

performance (Anderson, 1973). The assimilation theory was introduced after

discovering that the consumer evaluates the products after using them. Anderson

(1973) asserted that consumers seek to avoid dissonance by adjusting perceptions

about a given product to bring it more in line with expectations. According to this

theory consumers can reduce the tension resulting from poor product performance

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either by distorting expectations so that they coincide with perceived product

performance or by raising the level of satisfaction by minimizing the relative

importance of the disconfirmation experienced. This theory was however criticized by

several authors. For instance, Payton et al., (2003) pinpointed a number of

shortcomings including the fact that the simplicity of assumed relationship between

expectation and satisfaction without specifying how disconfirmation of an expectation

leads to either satisfaction or dissatisfaction. Further criticism from Payton et al.,

(2003) is based on the theory’s claim that consumers are motivated enough to adjust

either their expectations or their perceptions about the performance of the product.

Therefore, it would appear that dissatisfaction could never occur unless the evaluative

processes were to begin with negative consumer expectations (Bitner, 1987).

2.2.2 Contrast Theory

Another theory is known as Contrast theory that was introduced by Hovland et al., in

1987 (Reginald et al., 2003). The contrast theory asserts that consumers have a

tendency of magnifying the discrepancy between their own attitudes and the attitudes

represented by opinion statements. Discrepancy of experience from expectations will

be exaggerated in the direction of discrepancy (Reginald et al., 2003). Thus if a firm

under-promise in advertising while it over-deliver then the customer’s experience will

be higher that promised leading to positive exaggerated disconfirmation. Conversely,

if the firm raises expectations in its advertising, and then customer’s experience is

only slightly less than that promised; the product/service would be rejected as totally

un-satisfactory.

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 While assimilation theory posits that consumers will seek to minimize the

discrepancy between expectation and performance, contrast theory holds that a

surprise effect occurs leading to the discrepancy being magnified or exaggerated

(Reginald et al., 2003). Although several studies in the marketing literature have

offered some support for this theory this theory is weak because it predicts customer

reaction instead of reducing dissonance; the consumer will magnify the difference

between expectation and the performance of the product/service (Oliver et al., 1994).

2.2.3 Assimilation-Contrast Theory

In effort to improve the previous theories, Anderson (1973) proposed another theory

which is known as Assimilation-contrast theory. His theory is raised from the context

of post-exposure product performance (Anderson, 1973). Assimilation-contrast theory

proclaims that if performance is within a customer’s range of acceptance, even though

it may fall short of expectation, the discrepancy will be disregarded. This is because

assimilation will take place and the performance will be deemed as acceptable. On the

other hand, the theory asserts that if performance falls within the range of rejection,

contrast will prevail and the difference will be exaggerated. As a result the product or

service will be unacceptable (Terry, 1997).

The assimilation-contrast theory has been proposed as yet another way to explain the

relationships among the variables in the disconfirmation model. This theory is a

combination of both the assimilation and the contrast theories. “This paradigm posits

that satisfaction is a function of the magnitude of the discrepancy between expected

and perceived performance. As with assimilation theory, the consumers will tend to

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assimilate or adjust differences in perceptions about product performance to bring it in

line with prior expectations but only if the discrepancy is relatively small.

According to Reginald et al., (2003) this theory suggests that both the assimilation and

the contrast theory can be applied to study customer satisfaction. However, the theory

has attracted a number of criticism including methodologically flawed attempt at

reconciling the two earlier theories (Anderson, 1973); whereas Oliver et al., (1994)

argues that only measured expectations and assumed that there were perceptual

differences between disconfirmation or satisfaction (Reginald et al., 2003).

2.2.4 Negativity Theory

Negative theory states that when expectations are strongly held, consumers will

respond negatively to any disconfirmation. This theory developed by Carlsmith and

Aronson (1963) suggests that any discrepancy of performance from expectations will

disrupt the individual, producing ‘negative energy’ (Teery, 1997).

2.2.5 Disconfirmation Theory

Disconfirmation theory argues that customer satisfaction is related to the size and

direction of the disconfirmation experience that occurs as a result of comparing

service performance against expectations’. According to Ekinci and Sirakaya (2004)

disconfirmation paradigm is the best predictor of customer satisfaction. This theory

has been acknowledged by Mattila and O’Neill (2003) that it is among the most

popular satisfaction theories. Basically, satisfaction is the result of the process of

comparing perceptions against a standard (or expectations). However, the weakness of

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this theory is that research also indicates that customer satisfaction is more importantly

also influenced by how the service was delivered than the outcome of the service

process, and dissatisfaction towards the service often simply occurs when guest’s

perceptions do not meet their expectations (Mattila and O’Neill, 2003).

2.2.6 Cognitive Dissonance Theory

The theory of cognitive dissonance proposes that people have a motivational drive to

reduce dissonance by changing their attitudes, beliefs, and behaviours, or by justifying

or rationalizing them (Festinger, 1957). Cognitive dissonance is an uncomfortable

feeling caused by holding two contradictory ideas simultaneously. The phenomenon

of cognitive dissonance has been quickly adopted by consumer behaviour research as

it is believed to exert high exploratory power in explaining the state of discomfort

buyers are often in after they made a purchase (Thomas and Monica, 2010). Although

cognitive dissonance is popular in consumer behavior research, applications are

relatively scarce in current marketing research because dissonance is often temporary

and difficulties in collecting data and measuring cognitive dissonance (Thomas and

Monica, 2010).

2.2.7 Adaptation-level Theory

According to adaptation-level theory customers perceives a product or service

according to the adapted standard which is arising from the perceptions of the product

or service itself, the context, and psychological and physiological characteristics of the

customer. Once created, the ‘adaptation level’ serves to sustain subsequent evaluations

in that positive and negative deviations will remain in the general vicinity of one’s

19
original position. Only large impacts on the adaptation level will change the final tone

of the subject’s evaluation. This theory was originated by Helsen in 1964 and applied

to customer satisfaction by Oliver and Hanming, (1994).

2.2.8 Equity Theory

This theory is built upon the argument that a “man’s rewards in exchange with others

should be proportional to his investments” (Oliver and Hanming, 1994). According to

this theory equity or relative deprivation is the reaction to an imbalance or disparity

between what an individual perceives to be the actuality and what he believes should

be the case (Oliver and Hanming, 1994). As applied to customer satisfaction research,

satisfaction is thought to exist when the customer believes that his outcomes to input

ratio is equal to that of the exchange person (Adee, 2004). To dispute this theory,

equity appears to have a moderate effect on customer satisfaction and post-purchase

communication behavior (Oliver and Swan, 1989).

2.4 Empirical Review

Ameme & Wireko (2022) claimed in his research that in today’s competitive world

where technology plays a very important role and if we talk about banking sector or

industry there is a positive relationship between technology and customer satisfaction.

They also stated that satisfaction of customers is not merely introducing innovative

products and services rather it is much more than that. They also found that if the bank

wants to become the market leader in the competitive environment it must use the

innovation approach in all the aspects like products and services. Also there is a

20
significant relationship between technological innovation and cost. As the innovation

increase the cost is also increase.

Machogu & Okiko (2022) research brought to light that with e-banking complexities

on customer satisfaction. Results shows that there are factors which leads to customer

satisfaction particularly in e-banking, which is one of the very important and fast

growing way of doing banking. Factors are accessibility, convenience, security,

privacy, content, design, speed, fees and charges have influence on customer

satisfaction where the other factors notified have no significant influence.

Chochol'áková, Gabcová, Belás & Sipko (2021) evaluated the comparison with

dissatisfied customers, satisfied customers were significantly more like by to

recommend their bank to their friends and to consider using their current bank in the

future, and they are more resistant to offers from other banks. Loyal customers are

more interested in the services of their own banks when considering investments in all

the aspects such as in the financial market, deposit their own savings to their own

bank, take out a mortgage from their own bank and use other banking products and

services from their current bank. In Ernst & Young (2019), the financial literacy of

ordinary bank customers is still relatively low, but personalized recommendations still

work well here. According to the results of our research, loyalty of customers with

different intensities transforms into a potential purchase of additional banking

products. The biggest potential interest of the bank customers was in depositing

savings in the bank and in mortgage loans. The intensity of interest in the purchase of

investments and other products was relatively low. Findings of Deloitte research

21
(2012), only 17% of respondents in the Czech Republic have changed their bank in the

past or have accounts in two different banks, in comparison with Slovakia where 52%

of respondents changed their account to another bank (12% in Poland, 28% in

Hungary and 42% in Romania)

Kaur, & Kiran (2020) founded in their research which was on public, private and

foreign shows that customer are more satisfied with the services quality of the foreign

banks then the private and public banks.

Kundu & Datta (2018) research found regarding e-service quality, customer

satisfaction and trust they found that there is a significant relationship among e-service

quality, trust and customer satisfaction. Internet banking service quality has huge

impact on trust. They also researched that in case of internet banking privacy and

fulfillment are the main factors of service quality which have influence on trust. Also

banks should be more concerned about the privacy of individual transaction of the

customers. According to Ernest and young 2012 survey showed that price factor was

the main concern for 50 percent customers.

Zeinalizadeh, Shojaie & Shariatmadari(2018) opined that out of the nine customer

satisfaction factors fees and loan, prompt service and appearance are the major factors

which have more significant impact on customer satisfaction followed by interest rate

and accessibility of bank and availability of service which have less impact on the

satisfaction on the banking customers.

Rahi (2017) research findings show customers are more loyal towards those banks that

are facilitating internet banking services. Also good brand image build relationship

22
between banks and customer and enhance the customer loyalty toward bank. He also

concluded that those banks that are giving internet banking services to their customers,

loyalty of those customers are more towards the banks. He also suggested that if the

brand image also plays a significant role between loyalty of the customers and internet

banking. The role of brand image is positive in making a positive relationship between

customers and internet banking.

23
 CHAPTER THREE

METHODOLOGY
3.1. Research Design

According to Kothari 2nd edition (2004) Research design is the arrangement of

conditions for collection and analysis of data in a manner that aim to combine

relevance to the research purpose with economy in procedure. The study used cross-

sectional research design because data was collected with only a single time of contact

between the researcher and the population being studied. This approach is dissimilar to

longitudinal design which requires repeatedly data collection. The choice of cross-

sectional research design was based on the fact that it requires short time, and it is cost

effective amid the limited resource.

3.2. Population of the Study

The population of this study includes the customers of Union Bank plc, Ilorin branch

but because of the difficulty involved in study the entire customers base of Union

Bank, a sample size of 100 customers were chosen.

3.4. Sample Size

A sample size is a subset of the examined target population. Due to the great size of

the population, a sample size is required. The sample must be a relative population

representative so the researcher must take into account its characteristics.

In this study, random sampling was used in selecting the data gathered and the

sampled size representing the entire population was chosen to be one hundred (100)

customers of the Union bank plc, Ilorin Branch.

24
3.5. Methods of Data Collection

A combination of both primary and secondary methods of collecting data was used.

Primary or original data was collected by the researcher from the field personally for

the purpose of the research work. It was carried out mainly through the use of

questionnaires and interviews to obtain original data for the purpose of answering the

research questions or problems.

Secondary data was used to ensure completeness of the research work. It involved the

consultation and use of articles from the Daily newspapers, management’s reports and

from the internet.

The secondary data was to supplement the information and explanations which the

source could not provide for the research work.

3.6. Research Instruments

For the purpose or the merits of this research work questionnaire and interviews were

used. A questionnaire is a list of highly structured questions written and handed over

or mailed to respondents to provide relevant answers or solutions to the questions. An

interview is a structured or unstructured way of obtaining information on focused

content. The two types of questionnaires were used by the researcher. These are the

open-ended and close-ended type of questions.

3.7. Methods of Data Analysis

For the purpose of analysis data as a way of comparing, contrasting and describing

such data, descriptive statistics was used.

25
The data collect was enhanced pictorially in their presentation with the aid of tables,

chart and graphs.

26
 CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS OF DATA
This chapter deals with the presentations and analysis of data collected from

interviews conducted to get sample opinions of customers who patronize the company

and non-customers who are potential customers.

4.1 Presentation of Results

More than 120 customers were interviewed, out of which 100 customers of the bank
answered satisfactorily. This shows that the degree of response was very high. Though
the questions asked covered various issues, only the relevant findings are reported
here.
TABLE 4.1 Sex of The Respondents

SEX RESPONDENTS PERCENTAGE

Male 61 61.00

Female 39 39.00

TOTAL 100 100.00

Source: Field Survey, 2025

The table 4.1 above shows that 61 respondents representing 61% are male, while the
remaining 39 respondents representing 39% of the respondents are female. This shows
that majority of the customers are male.
TABLE 4.2 Age of The Respondents

AGE GROUP RESPONDENTS PERCENTAGE

18-25 39 39.00
26-40 35 35.00
41-60 26 26.00
TOTAL 100 100.00
Source: Field Survey, 2025

27
Table 4.2 above shows the age of the respondents as grouped. They are as follows: age

group 18-25, 39 respondents, representing 39%, age group 26-40, 35 respondents,

representing 35%, and age group 41-60, 26 respondents, representing 26% . This

shows that the age group 18-25 has the highest number of respondents. This also

shows that the majority of the customers that patronize the bank are the most active

population who are in the age bracket of 18-40.

TABLE 4.3 Category of Occupation of the Respondents

CATEGORY OF OCCUPATION RESPONDENTS PERCENTAGE

Civil Servants 28 28.00

Organized Private Sector 21 21.00

Self-Employed 18 18.00

Traders 6 6.00

Artisan 5 5.00

Others 22 22.00

TOTAL 100 100.00

Source: Field Survey, 2025.

The Categories of occupation of the respondents as reported in table 4.3 above reveals

that Civil Servants occupied 28% of the respondents, Organized Private Sector 21%,

Self-Employed 18%, Traders 6%, Artisans 5%, and Others which is a combination of

students, housewives and entrepreneurs were 22%. It is important to note that the

analysis shows that the civil servants had the highest point which is 28%. The

implication of this result is that civil servants form majority of the bank’s customers.

28
TABLE 4.4 Respondents Response on How Easy It Is To Use ATM Cards
DEGREE OF EASE RESPONDENTS PERCENTAGE

Very Easy 33 33.00

A bit Easy 44 44.00

Easy 20 20.00

Not Easy 3 3.00

TOTAL 100 100.00

Source: Field Survey, 2025.

The percentage of respondents’ response on how easy it is to use ATM cards is shown

in Table 4.4 above. The percentage of those that felt that it was very easy was 33%, a

bit easy 44%, easy, 20%, and those that felt that it was not easy 3%. The analysis

shows that the level at which people use ATM cards is on the high side. And also

indicates that some people still find it difficult to adapt to the use of technology as a

means of promoting customer service.

TABLE 4.5 Respondents Response on the Degree of Effectiveness in the Use of

ATM Cards
DEGREE OF RESPONDENTS PERCENTAGE
EFFECTIVENESS

Very Effective 23 23.00

A bit effective 36 36.00

Effective 35 35.00

Not Effective 6 6.00

TOTAL 100 100.00

Source: Field Survey, 2025.

29
The percentage of respondents’ responses on the degree of effectiveness in the use of
ATM cards is presented in Table 4.5 above. The response shows that those
respondents that indicate very effective are 23%, a bit effective 36%, effective 35%
and not effective 6%. The group with the highest response is those that stated that the
use of the ATM cards is effective. This is an indication that in some cases, customers
are disappointed with the ATM transactions as series of problems are associated with
its operations such as lack of enough cash, poor network, etc.
TABLE 4.6 Respondents Response on the Frequency of Lending Service by the

Bank to Customers

FREQUENCY OF LENDING SERVICE RESPONDENT PERCENTAGE

S

Regularly 6 6.00

Often 3 3.00

Seldom 20 20.00

Sometimes 10 10.00

Irregular 61 61.00

TOTAL 100 100.00

Source: Field Survey, 2025.

The table 4.6 above shows the respondents response on the frequency of lending

service offered by the bank to its customers. It is interesting to note that a more

proportionate percentage of the respondents (61%) indicate that the frequency of

lending service by the banks to customers is irregular. This shows that banks in

Nigeria have failed in their intermediation role. It should be noted that the primary role

of banks is to channel funds from the surplus unit to the deficit unit so that such funds

30
can be invested into productive activities. This might have been one of the factors that

are leading affecting the performance of banks in Nigeria.

TABLE 4.7 Respondents Response on Whether There is a Relationship Between

Customers Satisfaction and Banks Performance

RESPONSE RESPONDENTS PERCENTAGE

Yes 73 73.00

No 23 23.00

Not Sure 4 4.00

TOTAL 100 100.00

Source: Field Survey, 2025.

The table 4.7 above shows the respondents views on whether there is a relationship

between customers’ satisfaction and banks performance in Nigeria. The percentage

distribution shows that a larger proportion of the respondents agree that there is a

relationship between customers’ satisfaction and banks’ performance. Thus, what this

means is that the relationship between customers satisfaction and banks performance

is highly significant. Also, one can deduce that an effective customer relation can

improve the performance of banks.

31
TABLE 4.8 Distribution of Respondents Description on the Impact of Customers

Satisfaction on Banks Performance

DEGREE OF IMPACT RESPONDENTS PERCENTAGE

Negative Impact 2 2.00

Easy Transaction 6 6.00

Very Poor 18 18.00

Improve Effectiveness of 20 20.00

bank

Satisfactory 30 30.00

Customer’s very 5 5.00

Important

Fairly Good 13 13.00

Low lending rate for 14 14.00

SME’s

Comfort ability of 2 2.00

Customers

TOTAL 100 100.00

Source: Field Survey, 2025.

As shown in table 4.8 above, while some of the respondents believe that the impact of

customers’ satisfaction on banks performance is satisfactory in Nigeria, some also still

believe that the impact is still very poor as a lot needs o be done on banks-customers

relationship in order to improve their performance.

32
TABLE 4.9 Distributions of Respondents Suggestions on How Banks Should

Improve Customers Satisfaction

SUGGESTIONS RESPONDENTS PERCENTAGE

Visiting of Customers 7 7.00

Appreciating of Customers 13 13.00

Attending to Customers 30 30.00

online

Good Tools 8 8.00

Improve Systems 4 4.00

Staff Motivation 15 15.00

Employment of male staff 6 6.00

Reduction in lending rate 2 2.00

Encouraging Customers 15 15.00

TOTAL 100 100.00

Source: Field Survey, 2025.

The table 4.9 above shows the distribution of respondents’ suggestions on how banks

should improve customers’ satisfaction. More importantly, the respondents were asked

to give suggestion on how customers’ satisfaction can be improved by the banks.

Majority of the respondents feel that attending to customers online is a major way to

improve the satisfaction of the customers. This implies that the use of technology is

very important as it will reduce the waiting time of customers in the banking hall.

33
 CHAPTER FIVE

SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

This chapter presents a summary of the research work. It covers the major findings,

conclusions arrived at and the recommendations made.

5.1 Summary of Findings

This research work was a descriptive study which examined the impact of banks

service quality and customer satisfaction in the performance of Nigerian banking

industry. Essentially its purpose was to evaluate the level of service quality and

customers satisfaction at the Union bank of Nigeria, Plc. Ilorin branch and recommend

ways to improving service quality to management, determine how customers service

influence customer retention rates, explore staff attitude towards customers of the

bank, examine how the commercial bank goes about the marketing of banks’ services

and evaluate the quality of staff at the bank in terms o training and background.

The major findings are summarized below:

1. There were more males to females and generally most of the respondents were

in their youthful age.

2. It was realized that the bank has a poor image in the eyes of the public.

3. It was realized that service quality and customer satisfaction is the prime

objective of the bank but how to approach it was a problem.

4. Respondents in their response were merely satisfied with respect to the level of

satisfaction they derive from the service provided by Union Bank Nigeria Plc.,

Ilorin branch.

34
5.2 Conclusions

In view of the findings of this research work, it is concluded that banks in Nigeria are

yet to create any impact on service delivery which will consequently lead to improved

customer satisfaction. The findings also shows that many bank customers in Nigeria

are fully aware of the positive developments of information technology and

telecommunications which led to the introduction of new delivery channels for

Nigerian commercial banks’ products and services. The aim is to satisfy and get

customers delighted.

It is also concluded that customers enjoying banking services are still not satisfied

with the quality and efficiency of the services. A lot needs to be done to create

confidence in the minds of customers about the benefits and security of new delivery

channels. Lack of patronage for banking products is expressed in lack of confidence.

5.3 Recommendations

Based on the findings of this research, the following were recommended:

 Much needs to be done in the area of creating awareness about the availability

of electronic banking products and services, how they operate and their

benefits.

 Banks should improve their delivery service to justify the benefits of the

banking products and services. This way, customers’ interest would be

aroused.

35
  Government should provide an adequate regulatory framework that will ensure

customer protection and security of the transaction. This way, bank customers’

satisfaction in electronic banking and other banking services would be secured.

 In order to improve the level of customer satisfaction and retention with Union

Bank, the need is recognized to improve the quality of financial services by the

bank. This can be done by institutionalizing quality control and assurance

measures as well as strong monitoring and evaluation for the quality services

within the bank.

In addition, the monitoring and evaluation system should also include a feedback

mechanism from the customers so as to inform decisions. Through these measures, the

level of satisfaction of the customers with the welcoming attitude of the Union Bank

staff will be further improved.

36
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