APPLICATION OF TOTAL QUALITY MANAGEMENT IN THE BANKING INDUSTRY A STUDY OF UNITED BANK FOR AFRICA PLC AND FIRST BANK OF NIGERIA PLC

ABSTRACT

The topic of this research is the application of Total Quality Management in the banking industry, (A study of UBA Plc and First Bank of Nigerian Plc).

The major objective of the study is to enquire into problems

encountered in  the  provision of  good  quality  services  to customers in commercial banks with focus on UBA Plc and First Bank Plc and to determine specifically the impact of the application of TQM on the services of UBA Plc and First Bank Plc to the banking public. The  instrument  of  data  collection  is  questionnaire  and research questions, which formed the  source  of  primary data, while materials from various published articles; textbooks, journals newspapers and annual report and statement of account of UBA and First Bank as well as mateials from internet formed the secondary data.

The method of analysis is the use of tables, percentage and chi-square. The major finding of the research is that problems encountered in the provision of services in UBA Plc and First Bank Plc includes finance, manpower, Technology among others. The study recommended subordinates and employees be given equal opportunity to participate in decision making the study concluded that there is a bright and abundant prospect for the use of Total Management in the Banking Industry.

CHAPTER ONE

INTRODUCTION

1.1  BACKGROUND OF THE STUDY

It is apparent that modern Nigeria cannot exist without the financial service industry. In the recent past, this study has experienced tremendous growth and undergone great changes. In the country, varying forms of deregulation, competition, more demanding customers and drive to exceed customer’s expectation have created an environment significantly different from that which existed long ago.

Udegha (1999:) observes that Nigerian banks are regarded as the most important custodians of the liquid asset of most Nigerian citizens, foreigners, groups, organization and  government, they  receive money  in  the form of deposits, transfers or payment from these individuals, social or economic units and government for safe keeping, transfer and so on and are obliged to make sure funds available to their clients on demand. Banks also provide loans to various groups, organizations, and government  agencies.  Although  these  functions  of  the

Nigerian banking industry appear simple in outlook, they have very important social and economic ramifications like other banks world wide.

The discreet services used at one time or another include routine financial transaction, provisions of long term loans, insurance, investments and savings, to mention but a few. These services are provided by distinct sectors of the industry  such  as  banking,  insurance and  brokers.  They mobilize  funds  that  would  have  otherwise  laid  idle  by making what is entrusted to them available for productive purpose, thereby funds entrusted to them by the citizenry, banks provide needed security and peace of mind to the citizens (Shoroye, 1990;1).

At a time, the deregulation of financial services and consequent ready access to funds produced a new competitive environment. Both  the commercial and merchant banks in the country then were competing with finance and mortgage houses, insurance companies and stockbrokers. The new competition brought about successes for some and spectacular failures for others. In the new

millennium, banking has gone even beyond expectation, and for the surviving banks, competition has just began. According to Macdonald. “The financial service sector has not been immune from or ignored the quality of revolution. New products sought initial competition advantage, new attractive interest rate, strategies, automation, electronics banking, quicker turnaround time, all in the bid to attract more  customers to  them,  but  were  step  by  step  rapidly marked by competition.

Udeaha (1999:2) contended further that before 1986, banks were forced with little or no challenges. The issue of proper bank management did not receive enough attention resulting in arm chair banking. Today, the situation is different as competition in the banking industry in growing fast. The competition was occasioned by the structural adjustment programme, which pared way for the licensing of more banks. The competition in the industry heightens banks no longer feel safe to play arm chair role to their customers, as was the case before. In the early 1990’s there was a sea of change in the industry that sent many chief

executives of the industry back to the drawing board to find new ways to compete. At the time, the tope management of the industry learned the fundamental lesson that customers were  willing  to  pay  a  price  premium  for  products  and services that consistently met high standard of quality. Customers now perceive that they have the right to demand good service, since they pay for it. As the service industries are  selling  promise,  all  the  customer  want  is  that  the promise is kept.

The  successful banks  were  those  that  change their processes and empowered their staff through total quality management principles and techniques. The top management of the banking industry also learnt the good quality of services rendered to customers has been an important part of operating practices that successful business demand excellent service from all employees and excellent service imply customer delight with the courtesy, responsiveness, product knowledge, integrity, honesty and trust demonstrated by the staff.

Akpeyi (1996:10) observes that successful financial service industry especially the new generation banks have responded to increased international competition by striving harder to improved quality. This has increased the forces on service quality as a differentiator between competitive product and service as well as price and design, many organizations have recognized this trend and have increased their  company’s  commitment to  high  services  quality  in order to compete successfully and service.

The emergence of the “new generation” bank/bankers. That had to open even on Saturday, and go the extra mile. If it would attract “the customer”. Crosby (1989) observes with total commitment to customer service, a new style of management is required in the banking skills and recruiting knowledgeable people at all levels throughout the organization. Also, it should be a style based on clear standards. It is worth to understand that customer service is much more  than  being nice  to  those  who  patronize the organization. It is primarily about satisfying their legitimate

needs  in  a  manner, which is  effortless on  their  part.  It requires people to interact more efficiently.

According to Akpeyi (1996:16) in the bid to improve the quality of service delivery and to maintain their own share of the market; banks must embark on aggressive strategies of improving  on  its  services,  which  can  be  achieved  by adopting the concept of total quality management (TQM) in banking industry. The concept integrates basic management techniques and is directed towards increased customers satisfaction,   company’s   survival   and   success   in   the business.

The quality initiatives in the banking industry in Nigeria, fall short of the following greater objectives of TQM as”

–       Most lack an executive-driven service improvement vision or strategy.

–       The initiatives are delegated to lower level and rarely involve management

–       Implementation     of     the     visionalised     quality management becomes only a dream.

–       Organizational and internal business objectives take precedence over customer needs

–       Most are short term programs rather an ongoing process of improvement.

–        Quality is not seen as an integral part of overall business improvement

In essence TQM process is concentrated on elements such as

–      Management commitment

–      Quality awareness at all levels of the organization

–      Integration and teamwork

–      Focusing on products and process

–      Focusing on prevention rather than inspection

–       Long-term   commitment   by   the   employees   to continuous improvement

“Total quality management is a philosophy that strives to continually improvement in quality and customer service while simultaneously pushing dawn costs” Underlying TQM is a process of continuous improvement to ensure that the

industry continues to meet its customers rising needs and expectation.

In  elaborating  on  t  he  subject  of  Total  Quality

Management, Macdonald (1995:6) explains TQM as follows; Total  means  that  everyone  in  the  organization  is

involved in the final product or service to the customer.

Quality does not mean luxuriant. We need a describing quality that leaves no room for subjective opinion. Precisely, quality means conformance to requirement.

Management recognizes that TQM will not happen by accident. TQM is a managed process which involved people, system and supporting tools and techniques.

Quality should begin to permeate financial institution as a way of life and it should begin with employee’s satisfaction.  The  TQM  concept  through  a  recent phenomenon is important in the banking industry. Unlined Traditional quality concept, TQM emphasis is basically commercial oriented, Quality as a means of gaining competitive advantages in business. TQM is the natural way, it recognizes the internal customer, and TQM has evolved as

a management concept out of the need by organizations for continuous quality improvement and critical importance of increased profitability and survival in the face of competitive challenges in the market. This starts with the customers, by learning to identify and meet their basic requirements, and then empowering staff by giving them the tools they need to perform the way you need them to.

It is in this regard that the research is interested in investigating and evaluating total quality management in the banking industry (A case study of United bank for Africa Plc and First Bank of Nigeria Plc).

1.2  STATEMENT OF THE PROBLEM

A couple of years before, there has been a dawn turn in the Nigerian Banking Industry and this calls for caution in the day to day running of the affairs of a bank to avoid sudden distress situation that could lead to liquidation.

The quality of services being rendered by banks have not improved significantly and banks still offer more or less the  same  range  of  services/products. Although  the  very

assumption of TQM is that developing a dominant culture will improve commitment, it is most unlikely to achieve its aim of total employee’s involvement and may act to system or even create ethnic divisions. Also the struggles of people buying to  apply  the  TQM  approach especially in  service organizations bears a resemblance to a struggles people had with the old management by objective (MBO).

Furthermore many mangers have classified TQM as another fad. It is likened to many short lived programme that were touted as the ultimate solution.

In addition, many organizations are disappointed over

TQM because of the following.

–      Lack of vision and planning

–      Satisfaction with the quick fix

–      The process of change becoming too bound

–      The world quality becoming too bound

–       Culture  change  versus  project  approach  become conflicted

–      Quality management become bureaucratic

–      Management do not change it behaviour

–      People were not really involved

–      Lack of business measurable to measure TQM

These are the problems which the research seeks to find solution to in the course of the study.

1.3  OBJECTIVE OF THE STUDY

The objective of the study include among others, the following

1. To determine specifically the impact of the introduction of TQM on the services of UBA Plc and First Bank Plc to the Banking public.

2. To  enquire  into  the  problems  encountered  in  the provision of good quality services to customers in commercial banks with a focus on UBA Plc and First Bank Plc.

3. To  find  out  if  TQM  has  been  instrumental  to  the effective service delivery in most banking industry

4. To examine the performance of these banks generally and to see the areas that the use of total quality management has helped to increase their efficiency and productivity.

5. To evaluate the kind of quality services that the bank has been offering.

1.4  RESEARCH QUESTIONS

The following questions would be the major focus of the study.

1. What is the impact of TQM on the services of these banks’ services and productivity.

2. Are there any problems encountered in the provision of good quality services to customers in these banks.

3. Is TQM being used as a management tool by these banks.

4. What was the overall performance of these banks?

5. What is the kind of quality service UBA Plc and First

Bank Plc has been offering?

1.5 RESEARCH HYPOTHESIS

The  following  hypothesis  shall  be  tested  in  this research work;

H1:   There is a relationship existing between the application of TQM and improvement of quality services provided by UBA Plc and First Bank Plc.

H0:   There   is   no   relationship   existing   between   the application TQM and the improvement of  quality of services provided by UBA Plc and First Bank Plc.

H1,2  The application of TQM has impact on the service delivery of UBA Plc and First Bank Plc.

H0,2   The application of TQM has no impact on the service delivery of UBA and First Bank Plc.

1.6  SCOPE AND LIMITATIONS OF STUDY

This study covers total quality management in the banking industry. (A case study of UBA Plc and First Bank Plc in Enugu Metropolis.

This researcher is only interested in the impact of TQM on the efficiency and productivity of these banks in relation to customer services relationships, and marketing of  the company’s products.

The researcher however encountered a number of constraints in  the process of  carrying out this research. These problems constitute the limitations of the entire research work. They are as follows.

Fund: The study was solely sponsored by the research without any government assistance and as such money was required for stationary, photocopying, typing, cyclostyling   of   questionnaire   and   other   writing materials and transportation cost.

Time: A  study  of  this  nature requires a  lot  of  time  for sourcing of materials for the study. This research work was carried out along side with academic course work.

1.7  SIGNIFICANCE OF THE STUDY

The significance of the study can be viewed from many stand points. The role of banks in the economic life of a nation is so vital and strategic that efforts must be made to eliminate impediments to the quality of service to their customers

The study is intended therefore a useful guide to bank managers in the performance of the responsibilities.

To the bankers in the bank under study, it will expose to them the relevant of TQM and the reaction of customers.

For   the   policy  markers,  the   study   will   help   to formulate, modify and even steam line existing government policies which have an impact on total quality management in financial institutions.

For researchers the study will provide useful mateials to researches who may wish to delve into the study in the future. It will also contribute to the enrichment of the literature to TQM in banking industry.

It will suggest ways based on empirical evidence of enhancing services in the banking industry in Nigeria.

The study will serve as a body of reserved knowledge to be referred to by researchers.

1.8  HISTORICAL BACKGROUND OF THE BANKS

(i)     Untied Bank for Africa (UBA) Plc

Today’s United Bank for Africa Plc (UBA) is the product of the merger of Nigeria’s third (3rd) and fifth (5th) largest banks,  namely  the  old  UBA  and  the  erstwhile  standard Trust Bank Plc (STB) respectively, and a subsequent acquisition of the erstwhile Continental Trust Bank Limited (CTB). The Union emerged as the first successful corporate combination in the history of Nigeria banking.

UBA’s history dates back to 1948 when the British and French Bank Limited (BFB) commenced business in Nigeria and the erstwhile STB and CTB both in 1990. Following Nigeria’s independence from Britain UBA was incorporated in 1961 to take over the business of BFB. Although today’s UBA emerged at a time of industry consolidation induced by regulation, he consolidated UBA was borne out of a desire to lead the domestic sector to a new era of global relevance by

championing the creation of the Nigerian consumer finance market, leading a private/public sector partnership development, and growing the institution from a banking to a one-stop financial services institution, while spreading its footprints across Africa to earn the reputation as the face of banking in the continent.

Today, the consolidated UBA is the congest financial services institution in West Africa with balance sheet size in excess of one Trillion naira (under USD 8b) and more than 7 million (7m) customers across 750 branches in 14 African countries, with 8 branches in Ghana, presence in New York, London, Paris and Cayman Island and assets in excess of &

19bn, UBA is your partner for banking service for Africans and African related business globally.

UBA’S VISION:

“To be the undisputed leading and dominant financial services institution in Africa”.

Key elements of the vision are as follows;

–      Leading

–      Dominant

–      Financial Service Institution

–      Undisputed

UBA’S Mission Statement

“To be a role model for Africa businesses by creating superior  value  for  all  our  stakeholders,  abiding  by  the utmost professional and ethical standards, and building an enduring institution.

UBA’S business decisions are driven by the desire to achieve   significant   value-added   for   all   stake-holders. Integrity and professionalism governs the character of UBA’s interaction will all stake holders.

UBA  parades governance and  strategic management practices that ensures that the organization will successfully anticipate and respond to environmental discontinuities and effectively management leadership transitions at all levels.

SHARE VALUES

UBA’s corporate identity rest on four fundamental values.

–       Humanity – Relating with the customers as the essence of the corporate being

–       Empathy – Putting the bank in the position of the customer.

–       Integrity – Being transparent in all relationships with customers.

–       Resilience  –  Evoking  entrepreneurial  spirit  to excel in all challenge situation.

Management: The management team is made up of crop of seasoned and industry recognized professionals with diverse but complementary skills in various backgrounds as well as depths of experiences (garnered from national and international institutions).

Over the years, these executives have brought their knowledge, experience and leadership to bear in the development and delivery of solution (through products and services) to meet the needs of our customers and in the process contributing to sustaining the performance of the group till date.

PRODUCTS AND SERVICES

The success of the Bank (UBA) reflects its ability to continuously deliver a wide range of products and value to millions of customers in the local and international markets.

Below are the products:

–      Afritrade

–      Bureau de change

–      UBA Remit

–      Money gram

–      Executive loan

–      Co-operative loans

–      Bankers Acceptance

–      Commercial papers

–      Money Market Deposits

–      Treasury Bills

–      Bonds

–      Spots

–      Overdraft max

–      Executive personal overdraft

–      Revolving personal overdraft

–      No Wahala loan

–      E-mail Alert

–      SMS Alert

–      Food security support

–      U – card savings account

–      UBA Debit card

–      UBA Master Card

–      UBA V. pay

–      Assets finance

–      Personal overdraft

–      Home or land acquisition

–      U-mobile Banking

–      Current Account

–      Cash fast

–      Pay direct

–      UBA school online

–      UBA savings Account

–      Copers savings Account

–      UBA Employee savings account

–      Freedom savings account

–      U – pay

–      U – Direct

–      UBA Import Plus

(ii)   First Bank f Nigeria Plc

For over a century now, First Bank of Nigeria Plc has distinguished itself as one of the very foremost banks in the industry and a major contributor to the economic advancement and development of Nigeria.

Founded in 1894 by Sir Alfred Jones, a shipping magnate from Liverpool. This predate IV birth of the Nigerian nation. The bank commenced business in the office of Elder Dempster & Co in Lagos.

It was incorporated as a limited liability company in London on March 31, 1894 with Head Office in Liverpool and started business under the corporate name of the Bank of British, West Africa (BBWA).

To justify its West African coverage, in 1896 it became sole banker to the government of West African Colonies and opened offshore branches in Accra, Ghana, and another in Freetown, Sierra Leon in 1898. The second branch of the bank in Nigeria was opened in the old calabar in 1900 and also opened branches at Ibadan and Abeokuta in 1911.

In 1912, the Bank acquired Anglo-African Bank established in 1899. In the same year, the Bank appointed by West African currency Board as the sole agent to distribute currency in West Africa. In 1914, Kano branch was opened to extend its service to the Northern Nigeria. The Bank changed its name from bank of British West Africa to bank of West Africa in 1957. In 1958 the bank provided 10- year loan to government for expansion of railway. The Bank changed its name to standard Bank of Nigeria in 1969 and in 1971 listed on the Nigeria stock exchange. In 1979, the bank eventually change its name to first Bank of Nigeria Ltd.

In 1991, the bank introduced ATM (First cash) into the Nigerian financial Landscape and changed its name to First Bank of Nigerian Plc. The bank established second subsidiary, first Trustees, asset management company in

1992.  in  2002,  the  bank  established wholly.  Owned  UK subsidiary FBN Bank (UK) Ltd and also opened South Africa representative office in 2004 and also became most Active stock (Market Excellence) – Peal Awards.

The bank acquired FBN (Merchant Bank Ltd and MBC International Bank Plc. In 2007, there is N100 billion hybrid offer oversubscribed by 753%, total amount raised N250 billion. In 2008, FBN UK opened office in Paris and fist quoted  company  to  bit  N1  trillion  market  capitalization. Then in 2009, the Bank office in Beijingm China.

Headquarters in Lagos, First Bank is with about 1.3 million shareholders across several countries, First Bank is quoted on the Nigerian Stock Exchange and has an unlisted Global Depository Receipt (GDR) programme.

Drawing from experience that span 115 years of dependable service, the bank has continued to strengthen it’s  relationships  with  customers,  consolidating  alliances with key sectors that have been strategic to the well-being and growth of Nigeria: First Bank, unarguably the country’s most diversified financial services group serves 1536 locations in Nigeria.

First bank Mission Statement: To remain time to our name by providing the best financial services possible.

First Bank Vision Statement: To be the clear leader and

Nigeria’s bank of first choice.

First bank Brand Pillars

–      Enterprise

–      Services Excellence

–       Heritage

–      Leadership

First Bank Strategic Priorities

–      Growth

–      Performance Management and People

–      Operational Excellence

First Bank Products and Services

To  ensure  continuous  reinvigoration  of  relationship with established customers and  develop bonds with new ones, through provision of far-reaching products and services, that contributes to the will being of the people and development of the Nigeria economy. Some of the Banks products and services and highlighted below.

–      First Savings plus

–      Hifi (children’s savings account)

–      First Easy (Domiciliary Account)

–      First loan

–      Mortgages

–      Automobile loans

–      Asset acquisition loans

–      Personal loans/overdrafts

–      Master card

–      Visacard

–      First cash card (Cash Direct)

–      V-pay card

–      First online

–      First alert

–      First mobile

–      Automated Teller Machine (ATM)

–      Farmers first

–      Guaranteed fund credit (GFC)

–      Western Union Money Transfer

–      Commercial Agricultural credit scheme

–      Utility Bills and payment

–      First collect

–      First pay

–      First contact and many more.

1.9  DEFINITION OF TERMS

Bank: A financial institution that carries out business of accepting   deposits   from  customers   and  carrying   out business with these funds. Udeagha A. (1999).

Deposit: Money placed under the rare of bank by customers

who will make use of it wherever there is need. Shoroye, G. (1990)

Nigerian Banking Industry: The companies of the central Bank of Nigeria, Commercial Banks, Merchant Banks, Development Banks and Micro-finance Banks. Udeagha, A. (1999).

Idle Funds: Funds initially held by customers, which do not

yield any returns to the customers. Udeagha A. (1999) Customer: Anybody who receives service either within or outside the organization, customers can be classified into internal customers as well as external customer. Shoroye, G. (1990).

Quality: It is the conformance to customer expectations in respect of goods and services. Crosby, P. B. (1989).

Total Quality Management: This is a set of management

practices throughout the organization geared to ensure the organization consistently meets or exceeds customer requirement. Akpeyi, V. (1996).

Team Work: A team is collection of member with identical interest,  goals  and  objectives,  concern  commitment  and dedication  to  the  pursuit  of  common  objectives  equally shared by members of the team. Akpeyi, V. (1996). Satisfaction: This is delighting the customer (internal and external) to such a point as to make the customer to accept the products it is the fulfillment of a need, clean or desire. Macdonald J. (1992).

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