THE PROBLEMS FACING THE ESTABLISHMENT OF BANKS IN RURAL AREAS

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

Banking transactions in some selected local governments in Enugu such as Udi, Ezeagu Udoji is not new to us as we have been practicing this system for over thirty years after independence. However, it is on this background that two systems of operations were adopted for the effectiveness and efficiency of the product management in various banks. In the past, we use to have an orthodox banking process whereby the banker relaxes on this site waiting for customers to bring business. This type of banker is looked at as somebody with rigid ideas about bankable projects and which in turn retards the smooth flow of banking operations. Another type of banking process adopted as conventional is the unorthodox system whereby the banker is evolved in looking for customers. Because they want to maximize profit, the banks employ all possible marketing promotional strategies in order to survive, hence competitors have come into play and thereby creating innovation and business acumen. Knight Lester B. (1970: 7) status of banking marketing Washington D. C. American Bankers Association states that banks primarily especially commercial banks are engaged in the business of collection, payment and depository functions as well as credit management. According to Kotler (1980: 4) stated that the survival of any bank depends on the manner it functions and therefore it has to depend on the market place for its profitability and environments of the economy which it serves. It is worthy to mention that the ability of any business to serve and retain its customers depends mostly on the quality and the effectiveness of the product management it offers. The quality of services provided by any organization is better judged in terms of its ability to bestow the customers with the desired satisfaction. In this regard characteristics such as reliability, standardization, availability and other desired attributes associated with service combine to determine the effectiveness of the product management in the marketing of bank services in the three local government areas. Martins (1979: 12) confirmed that the image commercial bank has is important because it determines the customer’s patronage of the bank. According to advertisers watchdog (1983: 7), awareness creation strategy has been limited to an advertisement which does no more than informing the customers about the services they offer and the address of their location. All the claims about efficient courteous and speedy services are false and advertising in banking industries can only become a reality when services the bankers render is equated to match the claims they make in the advertisement. According to Azikiwe (1943: 16) expressed his annoyance and disappointment over the treatment meted on him from a bank staff in Lagos. The story is still the same everywhere even after the days of the white men. Loans are still granted guarding to customers and if granted, it is alleged that the managers demand personal cuts, long queues, man-know-man, etc. Banking habit among the people is still very low in spite of huge profits recorded by banks annually, according to Enugu and Warsaw (1979: 10) indicated that there is a ray of hope and government rural banking program if well planned, coordinated and pursued vigorously will help to increase the banking habit of our populace, increase efficiency and effectiveness of it product management”. There will also be an increasing competition among the banks for customers. As at the end of March 1985, there were thirty-two commercial banks, operating Udi, Ezeagu, and Udoji with a total of one thousand one hundred and fifty-nine (1,159) brand networks. By share volume, the commercial banks are the most dominant and by December 1980, they had a total capitalization of N16,340.50 million. The competition among banks would center on non-price lines since the Central Bank controls the interest, the aggregate among to be lent to some categories of customers, the sector that more funds should be decided to what should be accepted as security for the loans and especially the type of business that banks should go into. How banks attract serve and retain customers is left to decide. All these put together including deposits, loans and advances make for effective product management.

STATEMENT OF THE PROBLEMS

The business of banking entails the collection and transmission of funds from the saving surplus to the saving deficit economic units. Thus banks act as the mobilize of funds to all sectors of the economy. Commercial banks have grown from about seven in 1952 to thirty-two by March 1985 with 1159 branch network. But the industry has continuously been under attack by main observers especially marketing critics for failure to utilize fully the advantages of modern marketing principles in operating their banking business for better achievement of co-operate objectives and goals. Unfortunately, product management is the most criticized of all banking practices. Thus the poor product management practices of the banks have resulted in a sense of complaints of dissatisfaction among customers about the quality of services offered. To them, services are inadequate and poorly rendered. Beside most customers and potential customers are not fully aware of the bank services. The problems to be addressed in this study are: the customers have equally criticized the charges of the bank and the varsity of services offered by this bank. The importance of the industrials to the economy of the country need to be met to be over – emphasis but yet they are found writing in optimum satisfaction of its numerous customers. In view of the importance of this industry in the economy, the researchers sought to evaluate the effectiveness of product management in this industry for increased performance.

OBJECTIVES OF THE STUDY

The objective of this study is to determine the effectiveness of product management as adopted by the 1st Bank in the marketing of banking services in Udi, Ezeagu, and Udoji Local Government Area. At the end of this research, it is hoped that this exercise will assist to provide the management with relevant information as an aid towards effective marketing of its services.

This research work seeks to:

1) To determine the length and quality of service being afforded by the first bank limited to its customers.

2)  To determine whether the attitude of the bank staff affects the customer’s patronage of the bank

3)  To find out whether writing time and armchair posture adopted by the banks affects the quality of services they render to customers.

4)  To demonstrate the importance of applying marketing, principles, and practices and determine if the concept of man-know-man affects bank loan and advances.

5) To find out if there is any effect of non-availability first banking services in the rural areas and the effect of proximately on customers’ patronage.

6)  To obtain any information which many are relevant to the management in the planning and executives of promotional decision for effectiveness and efficiency.

SCOPE OF THE STUDY

This study is limited to the first bank in the 9th Mile corner Ngwo and also customers of the bank within Udi, Ezeagu, Udoji metropolis.

STATEMENT OF HYPOTHESES

1)   Ho:   The quality of services offered by the first bank does not lead to customer patronage.

Hi:    The quality of services offered by the first bank lead to customer patronage.

2)   Ho:   The First bank changes do not lead to increase customer’s patronage.

Hi: First bank changes do to increase customer’s patronage.

3)  Ho:    The effectiveness of product management of the first bank does not lead to its availability.

Hi:     The effectiveness of product management of the first bank leads to its availability.

4)   Ho:   The promotional activities of the first bank impact negatively on customer’s awareness of the services.

Hi:   The promotional activities of the first bank impact positively on customer’s awareness of the services.

SIGNIFICANCE OF THE STUDY

The importance of this study is that after looking into the effectiveness of product management of the First bank in marketing their services, one will be a position to see whether the quality of services rendered by the First bank has an influence on the customers. It will help us to find out whether the attitude of the bank staff affects the customer’s patronage. This study will also help us to find out whether armchair alleviates whether promotional problems the bank may have been encountering in the marketing of their services.

Finally, it is hoped that the findings of this study will be of immense help to the banking industries as a whole and first bank Ltd in particular in that it will attempt to highlight areas of deficiency with a view to helping management improving its services and our recommendation if implemented would help the bank to improve its operations and profit figures.

DEFINITION OF TERMS

Promotion: Promotion has been defined by the American Marketing Association as a strategy for stimulating marketing demand and gaining a competitive edge by informing, persuading and services and identified audience.

Strategy: Strategy refers to the planning and adjustment of efforts to attain a specific objective. The strategy also encompassed the act of conducting a campaign and maneuvering things.

Marketing: According to Kotler, marketing is a human activity directed at satisfying needs and wants through the exchange process.

Services: These are separated indefinable activities, which provide wants satisfaction when marketed to consumers/industrial users and which are not necessarily tied to the sale of a product or another service. J. M. Rathmell, Journal of Marketing, October 1966, 33.

Banking: The banking ordinances of 1952 defined banking business as the business of receiving from the public on the current account, money which is to be payable on demand by cheques and of making advances to the customer?

Banker: A banker is a dealer in debt. It is also anybody or body persons whether in cooperated or not that carry on the business of banking.

Customer: There is no statutory definition of a customer. The relationship arrives when a person or group of persons, society, firm customer, which the bank normally accepts customer also means one accustomed to frequent a certain place of business or a buyer.

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