IMPACT OF NEW PRODUCTS ON THE PROFIT PERFORMANCE OF COMMERCIAL BANKS IN NIGERIA
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IMPACT OF NEW PRODUCTS ON THE PROFIT PERFORMANCE OF COMMERCIAL BANKS IN NIGERIA
ABSTRACT
The purpose of this study is to investigate the response of Nigerian Commercial Banks to the need for innovation (through the introduction of new products and services) in order to improve their profit position in the face of 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 policy and condition alternatives are intended to introduce a measure of progress and sanity into the banking industry and the economy in general by banks active and prudent management of depositor funds
mobilised to avoid distresses and eventual bank liquidation 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 carry out this research, the researcher collected data on the type of product offered by the chosen bank (First Bank Plc), their annual report for the previous five years, and an oral interview with management and staff directly involved with the product implementation.
The information gathered was analysed using simple statistical tools such as chi-square and the apparent man rank order correlation co-efficient.
The findings of the study indicate that there is a favourable association between the goods introduced and the profit performance of commercial banks in Nigeria.
This discovery has the potential to improve commercial banks’ positive responses to the launch of new products or the remodelling of current ones, thereby establishing healthy competition and sound banking practises for the country’s effective growth and progress.
As a result, the research concludes that the journey towards a product (service) having an impact on the profit performance of commercial banks in Nigeria does not end with the introduction of the product,
but also includes effective and efficient management of the human and material resources available to the banks, as well as maximum implementation of the various identified product implementation instruments.
INTRODUCTION TO CHAPTER ONE
BACKGROUND OF THE STUDY
The commercial banks of study, which in this research work is limited to First Bank Plc, provide a full range of commercial banking products (services) to their numerous customers across the country, 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. All of these items and the advantageous economic conditions result in a decrease in sales and a subsequent decrease in profit performance (Anibueze 1998).
As a result, the bank developed new goods such as automated teller machines, smart cards, computers, and Western Union money transfer, all of which are aimed at enhancing these banks’ profit performance (Nwankwo 1990).
1. WESTERN UNION MONEY TRANSFER SYSTEM: Since its inception in February 1996, Western Union Money Transfer Services has evolved into a very rapid, convenient, dependable,
and safe method of receiving money from relatives and friends living outside the country. The technology operates over a telecommunication network and transmits information on a transfer in minutes.
2. SMART CARDS: First Bank is investigating a related technology (smart card) that would provide customers with more convenient services in the form of stored value as an alternative to bank draughts and bank cheques. This is intended to discourage more cash transactions due to the risk involved.
3. COMPUTER: First Bank of Nigeria Plc has computerised all main processes in their branches around the country. Such operations include giving quick customer balances immediately after each transaction, updating the bank’s accounting records, customer signature verification, and many others. This has resulted in better service delivery to clients.
4th. AUTOMATED TELLER MACHINE
This is also a first for First Bank Nigeria Plc. To accommodate consumer demand for superior banking services, the bank has expanded payment outlets in several parts of the country using automated teller machines.
1.1 BACKGROUND OF THE STUDY
The first bank, known as the Bank of British West Africa (BBWA), was established. It was the first successful bank in Nigeria. The first bank’s name was adopted in 1979 lever pool was the residence of the bank’s founder “Bank of British West Africa.”
Levers Tones and George William were the two founding fathers of the Bank of British West African, which is now known as First Bank, while Alfred Lewis Jones was the driving force of action required for the materialisation of the most creative ideas. Mr. George Neville proposed establishing this bank on his visit to England in 1891, and the plan was accepted at the June 4, 1891 meeting of the board of directors.
On March 31, 1894, the Bank of British West Africa was founded and established in London as a limited liability corporation with a capital of one million pounds. The bank’s headquarters were in Liverpool, and it had branches in Lagos and Calabar, the latter of which opened in 1907.
At the June 1957 board extraordinary meeting, a resolution was voted to change the bank’s name from British to Bank of West Africa.
The bank of West Africa was renamed Standard Bank of West Africa (SBWA) in 1966.
On June 20, 1969, a distinct existing (SBWA) was registered in Nigeria under the new name “Standard Bank Nigeria Limited” based on the company decree of 1968.
The government implemented the indigenization strategy during the second national development plan, 1970-1974. His goal was to shift the ownership, control, and administration of the firm from expatriates to indigenous people, which had a significant impact on the bank.
On March 19, 1976, the board approved the allotine of a public issue of the company’s shares totaling 2559,674 at one Nigeria period early, which encouraged small Nigerian investors to participate in the shareholding.
At the board meeting on July 24, 1999, it was decided that the bank’s name should be changed. As of October 1, 1979, the Standard Bank of Nigeria United was renamed and re-established.
STATEMENT OF THE PROBLEM
Experience has proven that the launch of new products in commercial banks (First Bank Plc) has a favourable impact. In light of this, the study effort seeks answers to the following questions?
1. What new items were introduced between 1990 and 2005?
2. How beneficial is the new product in terms of commercial bank profit performance? First Bank Plc (First Bank Plc)
3. To what extent have some selected new items, such as Automated Teller Machine (ATM) cards, satisfied customers?
4. What are the issues associated with commercial bank profit performance as a result of the introduction of a new product?
1.2 PURPOSE OF THE STUDY
1. Determine the impact of new products on commercial bank profit performance (First Bank Plc).
2. To ascertain the impact of a new product on the profit performance of a commercial bank (First Bank Plc).
3. Determine the impact of Western Union money transfers on the profitability of a commercial bank (First Bank Plc).
1.3 RESEARCH QUESTIONS
The following research question will be used to help the researcher describe the work in a way that highlights the problem areas of the investigation.
1. What issues have arisen during the introduction of new products?
2. What roles do new products have in commercial bank profit performance (First Bank Plc)?
3. To what extent have chosen new items, such as automated teller machines (ATMs), satisfied customers?
4. How will the new product affect the profit performance of the commercial bank (First Bank Plc)?
1.4 STATEMENT OF THE HYPOTHESIS
H0: The introduction of a new product has had no effect on the profit performance of the commercial bank (First Bank Plc).
Hi: The introduction of a new product has enhanced the commercial bank’s (First Bank Plc) profit performance.
H0: The chosen new product, such as an automated teller machine (ATM), did not satisfy customer expectations.
Hi: The chosen new product, such as an automated teller machine (ATM), did not satisfy customer expectations.
1.5 THE SIGNIFICANCE OF THE STUDY
This project activity is expected to meet the needs of a wide range of economic interest groups.
The research will help to evaluate the government’s implementation of the Structural Adjustment Programme (SAP). The government will learn how (SAP) have encouraged banks to be innovative in their marketing challenges at the end of this study.
This study will also serve as a foundation for future research by other researchers. It will provide the guy with insight into the necessity for further labour, which will assist many bank customers in learning about the new products accessible in the banking business.
These studies will improve the efficiency with which banks manage new goods in order to meet profit targets. Other banks who have not identified the influence of new products on their profit performance will see the necessity to include one in their product line (Service) state (Brown.A.J 1997).
1.6 SCOPE OF THE STUDY
This study did not include all commercial banks in the country, but rather solely First Bank of Nigeria Plc. Though the study of this bank will be regarded for reference purposes, the study of this bank will be considered for mentioning for the course of this research and the scope.
SCOPE
The study’s scope is First Bank Plc, and the dimension is from the time the new products (services) were introduced to the bank’s most recent annual report.
1.7 DEFINITION OF TERMS
PRODUCT: An interchangeable commodity or an act performed by a bank in order to attract consumers or deposit placement is employed here (Nwankwo G.I. 1991).
PROFIT: This is the return on investment used to calculate the new income.
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