Sustaining Competitive Advantage Through Innovative Activities

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1 Sustaining Competitive Advantage through Innovative Activities: A case of Nigeria’s Retail Banking

SUSTAINING COMPETITIVE ADVANTAGE THROUGH INNOVATIVE ACTIVITIES:

A CASE OF NIGERIA’S RETAIL BANKING.

A Dissertation by:

Udonna, Christopher Okeke.

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Submitted to

Dr. Elizabeth Alexander

In partial fulfillment of the requirement for Masters in International Management by Bristol Business School, University of the West of England, United Kingdom

2012

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DECLARATION This dissertation is written in partial fulfillment of the requirement for master’s degree in International

Management by Bristol Business School, University of the West of England. It is the original work of

the researcher, conducted under the topic: sustaining competitive advantage through innovative

activities: A case of Nigeria’s retail banking.

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Table of Contents DECLARATION ...................................................................................................................................................2

ACKNOWLEDGEMENT ...................................................................................................................................6

ABSTRACT ............................................................................................................................................................7

KEYWORDS ..........................................................................................................................................................8

ABBREVIATIONS ...............................................................................................................................................8

LIST OF TABLES .................................................................................................................................................9

LIST OF FIGURES ............................................................................................................................................ 10

CHAPTER 1 ......................................................................................................................................................... 11

1.1 Research Background ................................................................................................................. 11

1.2 Research Aims and Objectives ................................................................................................... 13

1.3 Research Structure ...................................................................................................................... 13

CHAPTER 2 ......................................................................................................................................................... 15

LITERATURE REVIEW .................................................................................................................................. 15

2.1 Introduction ................................................................................................................................ 15

2.2 Innovation ................................................................................................................................... 15

2.3 The meaning of innovation ........................................................................................................ 16

2.4 Sources of Innovative Activities in Retail Banking ................................................................... 21

2.5 Overview of multiple types of innovation in the Nigeria’s retail banking ................................ 24

2.6 The way in which the activities are organized or the value chain: ............................................ 24

2.6.1 Customer Service Improvement…………………………………………………………. 26

2.6.2 Branch and Operational Repositioning ............................................................................... 27

2.6.3 Staff Competencies ............................................................................................................. 28

2.6.4 Bank Reputation and Ethical Behavior ............................................................................... 29

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2.6.5 Product and Service Innovations ........................................................................................ 29

CHAPTER 3 ......................................................................................................................................................... 31

OVERVIEW OF NIGERIA’S RETAIL BANKING INSTITUTIONS .................................................. 31

3.1 Summary of Nigeria’s Retail Banking Activities ...................................................................... 31

3.2. Nigeria’s retail banking after consolidation ............................................................................... 35

3.3 The Dimension of Performance in the financial service Organization ...................................... 38

3.4 Research Model and Hypothesis ................................................................................................ 43

CHAPTER 4 ......................................................................................................................................................... 47

RESEARCH METHODOLOGY ..................................................................................................................... 47

4.1 Introduction ................................................................................................................................ 47

4.2 Research Paradigm and Philosophy ........................................................................................... 47

4.2.1 Positivism ............................................................................................................................ 48

4.2.2 Interpretivism ...................................................................................................................... 49

4.2.3 Realism ............................................................................................................................... 49

4.3 Research Approach .................................................................................................................... 50

4.4 Research Method ........................................................................................................................ 52

4.5 Research Strategy ....................................................................................................................... 53

4.6 Research Population, Sampling and Data Collection ................................................................. 54

4.6.1 Self Administered Questionnaire – The Quantitative Approach ........................................ 54

4.6.2 The Evaluation of the Data Collection Method .................................................................. 56

4.6.3 The Reliability of the Questionnaire ................................................................................... 56

4.6.4 The Validity of the Questionnaire ....................................................................................... 57

4.6.5 The Generalisability of the Questionnaire .......................................................................... 57

4.7 The Survey Questionnaire .......................................................................................................... 58

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4.8 The Plan for Data Analysis ........................................................................................................ 58

4.8.1 Factor Analysis: .................................................................................................................. 58

4.8.2 Regression Analysis ............................................................................................................ 59

4.9 The Ethical Consideration .......................................................................................................... 59

CHAPTER 5 ......................................................................................................................................................... 60

THE RESEARCH FINDINGS ......................................................................................................................... 60

5.1 Analysis of the Research Findings ............................................................................................. 60

5.2 The Correlation Matrix for the Research Variables ................................................................... 60

5.3 KMO and Bartlett’s Test ............................................................................................................ 62

5.4 The Rotated Component Matrix ................................................................................................. 62

5.5 Regression Analysis for the Conceptual Model and Hypothesis ............................................... 65

5.5.1 Model Summary and ANOVA for Online Banking ........................................................... 66

CHAPTER 6 ......................................................................................................................................................... 71

RESEARCH DISCUSSION AND CONCLUSION ..................................................................................... 71

6.1 Discussion of Main Result ......................................................................................................... 71

6.2 Recommendation for further research ........................................................................................ 75

6.3 Personal reflections on the experience of undertaking this dissertation. ................................... 76

REFERENCES .................................................................................................................................... 78

APPENDIX I.......................................................................................................................................................88

APPENDIX II........................................................................................................................................92

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ACKNOWLEDGEMENT

First, I give glory go to God Almighty for the strength and wisdom to put all the research materials

together, for His faithfulness and mercies throughout the period of this research.

I am grateful to my supervisor, Dr. Elizabeth Alexander, for her contributions and advice on the best

style to put my thoughts together. To a great extent, the impact of your supervision to this research work

can never be overemphasized; thank you very much.

My special appreciation goes to my program director, Dr David Sarpong. Your encouragement and

advice throughout the period of my program added to the success of this research work. Again, I am

highly grateful to all my tutors in Bristol Business School, your teaching style added to the motivation of

this research work.

I am highly indebted to my mum, Roseline Okeke. Your continuous prayers and belief in me inspired

me never to give up in pursuing my academic dreams. I cannot adequately express my appreciation to all

my family members, especially my mentor and Godfather, Dr Ebere Okeke. Your love motivation,

encouragement, support and believe in my future dreams and interest kept me going throughout my

study period.

This part of the research will not be complete without saying thank you to my best friend, Onyinychi

Agbodike, your prayers and inspiration is well appreciated. Finally, my special thanks goes to all my

friends especially, my senior colleague in the University of the West of England, and all the people that

contributed in one way or the other to the success of this research work.

Thank you and remain blessed.

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ABSTRACT Sustaining competitive advantage in all the areas of business operations is critical to every top

executive. This is due to continuous changing business environment both locally and globally. As

industry competitors and regulatory authorities intensify their activities, different organizations and

institutions are rapidly re-strategizing their business operations in order to remain relevant in the highly

competitive business environment.

This research aims to examine how the integration of different innovative activities within

Nigeria’s retail banking institution contributes to competitive advantage within their focal industry. The

research sampled customers from 12 of Nigeria’s retail banking institutions. Quantitative methods of

data collection were utilized and 162 responses were generated through a close-ended questionnaire that

was administered to different groups of the banks’ customers. With the response that was generated,

factor analysis was done to classify the critical factors; Product and services accessibility, New

Generation banks, Bank reputation, Staff Competence, and Customer service, that influences online

banking in creating competitive advantage. Using SPSS, regression analysis was carried out to find out

the level of significant between these variables that contribute to competitive advantage, which is

modeled as customer perceptions of ‘online banking’.

The results of the analysis showed that a significant relationship exist between online banking and

these factors. The research finding shows that young and working class customers use most of the

innovative services while older people resort to traditional branch network services. In addition, the

finding proves that banks that are located in the city tend to create better products and services than

banks located in the rural areas.

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KEYWORDS

Innovation

Competitive advantage

Retail banking

Processes of innovation

Sources of innovation

Types of innovation

Online banking

Products and service innovation

ABBREVIATIONS CBN – Central Bank of Nigeria

CEO – Chief Executive Officer

GTB - Guaranty Trust Bank

ATM – Automated Teller Machine

PC – Personal Computer

SAP – Structural Adjustment Program

COB – Currency Outside Bank

DD – Demand Deposit

RCOB – Ratio of Currency outside the Banks

RDD – Ratio of Demand Deposit

ROI – Return on Investment

OP – Operating Profit

ROA – Return on Assets

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LIST OF TABLES

TABLE TITLE DESCRIPTION PAGE NUMBER Table 3.1 Ownership structure of the Nigeria’s retail banks 32

Table 3.2 Volume of currency outside banks and total demand deposits 33

Table 3.3 The emerging banks in Nigeria and their new capital bases 36

Table 3.4 Operating profits of Nigeria’s retail banks 41

Table 5.1 The correlation matrix for the research variables 62

Table 5.2 KMO and Bartlett’s test table 63

Table 5.3 The factor loading and measures of individual variables 65

Table 5.4: Model summary table 67

Table 5.5: ANOVA table 68

Table 5.6 Table of Coefficients 69

Table 6.1 Summary of the result of the conceptual framework and

hypothesis testing 73

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LIST OF FIGURES FIGURE TITLE DESCRIPTION PAGE NUMBER

Figure 2.1 Abernathy and Utterback’s model of Innovation life cycle 19

Figure 2.2 A simple model of the Innovation process 20

Figure 2.3 Where do innovations come from? – Tidd and Bessant, 2009 22

Figure 2.4 A (stylized) value chain, extracted from Robert and Amit (2003, p.

110). 25

Figure 3.1 The Number of the Nigeria’s retail bank between 1970 - 2010 32

Figure 3.2 The percentage growth of the operating profits of Nigeria’s retail banks

between 2008 and 2010 43

Figure 3.3 Sources of Innovation in Nigeria Retail Banking 45

Figure 3.4 The conceptual framework of the relationship between different

innovative variables 46

Figure 4.1 Different research philosophical view adapted from Saunders et al.,

2008. 49

Figure 4.2 Deduction Process, adapted Bryman and Bell (2011, p. 11). 52

Figure 5.1 The conceptual framework of the research findings 67

Figure 5.2 The result of the hypotheses and the conceptual framework. 69

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CHAPTER 1

1.1 Research Background

The past global financial crises and the present euro zone economic down-turn have posed great

challenges to developed, underdeveloped and emerging economies in the world. Business organizations

are continuously evolving towards finding a better way of doing business in order to remain relevant in

the highly competitive business environment. Nigeria’s retail banking institutions are not an exception to

the present challenges prevailing in the global business environment.

Prior to consolidation in 2005, Nigeria’s retail banking institutions were known for poor customer

service delivery, uncompetitive products and services, lack of technological facilities, poor reputation

and inadequate staff competencies (Soludo, 2006). This was as a result of introduction of the Structural

Adjustment Program (SAP) in 1986 that opened the window for banking licensing between 1986 and

1993, making it possible for banks operating in Nigeria to rise from 41 to 120, as discussed in Chapter 3

below (Central Bank of Nigeria, 1995; Ehigie, 2006).

Ultimately, the introduction of the consolidation and recapitalization exercise by the Central Bank

of Nigeria in 2005, has forced most of the retail banks operating in the country to embark on different

operational and administrative strategies in order to respond continuously to market changes and

competition (Ehigie, 2006). Consistent with Porter (1996), operational efficiency is dependent upon the

strategy implementation of an organization in the continuous changing and dynamic business

environment. Drawing on Rumelt (1980, p. 361), a strategy is creating situations for economic rents and

finding ways to sustain them. This implies that the retail banks must effectively utilize their resources

and competencies to ensure that they deliver products and services that must appeal to customers.

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Also significant to banking strategies is the adoption of innovation both in products and service

design and distribution technology. According to Nelson and Winter (1982), the adoption of innovation

is dependent upon the organizational stock of strategic, operational and administrative skills. Porter

(1996) stressed that competitive strategy implies being different in integrating various activities that

make up the organizational value chain. The integration of different innovative activities has become

very significant in creating competitive advantage for different organizations especially as it concerns

retail banking institutions (Roberts and Amit, 2003).

In Nigeria’s retail banking institutions, studies of how different innovative activities create

sustainable competitive advantage have received minimum attention. Most of the research work has

focused on issues such as customer royalty, marketing, branding, bank privatization and performance,

and financial regulation and deregulation (Ehigie, 2006; Knox and Maklan, 2005, 2009; Beck et al.,

2005; Ezeoha, 2007; Soyibo and Adekanye, 1992; Uche and Ehikwe, 2001). The literatures within the

field of strategic management and innovation have suggested that there is link between organization

history of innovative activities and competitive advantage (Roberts and Amit, 2003; Roberts, 2001;

Damanpour, et al., 2009; Damanpour and Aravind, 2006), Porter, 1985; Bessant and Tidd, 2011), but

the nature of such relationship has not been established for retail banks in Nigeria.

In recent times, due to the need to create competitive advantage, most of Nigeria’s retail banks

have searched for different innovative activities within and outside the focal industry. In view of this, it

has been hypothesized that, it is the integration and adoption of these different innovative activities that

create competitive advantage for the retail banking institutions. Against this backdrop, this dissertation

reviews different relevant literatures on strategic management and innovation in order to present an

empirical study that shows how the integration of different innovative activities can create sustainable

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competitive advantage. And the measure of competitive advantage used here is that of customer

perceptions related to online banking.

1.2 Research Aims and Objectives

Different scholars in the field of strategic management and innovation are concerned about how

different organizations can rapidly compete and sustain competitive advantage within their industry of

operation, for instance in the retail banking industry. It is very significant that the role played by

innovative activities in creating sustainable competitive advantage be established.

The research question is to determine how the effects of different external and organizational

variables contribute to customers valuing innovative activities, and hence that can contribute to a

sustainable competitive advantage within the Nigeria’s retail banking institutions. Therefore, this

research aims to evaluate how different innovative activities in the retail bank’s product, operational

process and distribution technology, impact on their competitive advantage.

1.3 Research Structure

This section presents the summary of each of the following chapters of the research. The rest of this

dissertation is divided into five (5) different chapters as follows:

Chapter 2: This chapter evaluates and synthesizes relevant literatures on innovation concepts, the

meaning and process of innovation, typologies, sources and adoption of innovation within the retail

banking institutions. It also explains the main innovative activities that affect competitive strategy within

the financial institutions.

Chapter 3: This chapter presents the overview of Nigeria’s retail banking institutions and how they

sustain competitive advantage. It further discusses and evaluates the activity of the institutions before

and after the banking consolidation that was initiated by the Central Bank of Nigeria in 2005. Also

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presented in this chapter is a brief description of the financial performance of Nigeria’s retail banking

institutions. The final part looks at the innovative climate in Nigeria’s banking institutions and the major

sources of innovation in Nigeria’s retail banking institutions based on the reviewed literatures in chapter

two, the conceptual framework and the hypothesis.

Chapter 4: This chapter examines the approach and the rationale through which the research data are

collected. It discusses the epistemological and ontological issues underpinning the research

methodology. In conclusion, it evaluates the limitation and the ethical consideration underpinning the

research approach.

Chapter 5: This chapter presents the analysis of the research findings using the Statistical Package for

the Social Sciences (SPSS) to conduct factor analysis and regression analysis.

Chapter 6: The final chapter provides the discussion of the research findings, the implications of the

research findings, recommendation for further research, and a personal reflection on the experience of

undertaking this dissertation.

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CHAPTER 2

LITERATURE REVIEW

2.1 Introduction

The concern of every value-oriented organization is to develop a unique competitive strategy that

will sustain its competitive advantage and, at the same time, maximize profit and shareholder’s equity.

Multiple schools of thought in strategic management and innovation have emerged to review and

explain how different firms in the service industry, for example retail banking institutions, sustain their

competitive advantage through innovative activities (Porter 1985; Cooper and Kleinschmidt, 1987;

Roberts, 2001; Roberts and Amit, 2003). The first part of this chapter will evaluate and synthesize

relevant literatures on innovation concepts: the meaning and processes of innovation, typologies,

sources, and adoption of innovation within the retail banking institutions. The second part will explain

the main factors affecting competitive strategy in financial service institutions, especially with an

emphasis on the Nigeria’s retail banking institutions. To buttress the review of how the Nigeria’s retail

banking institutions sustain their competitive advantage, the third part will evaluate their activities

before and after the consolidation in 2005 initiated by the Central bank of Nigeria. The final part will

assess different performance measurements applicable to the retail banking industry.

2.2 Innovation The concept of innovation is an area of extreme interest in the field of strategic management. Its

impact cannot be overemphasized because of the role it has played in the consistent growth and

sustainable competitive advantage in the business environment (Doz, Santos, and Williamson, 2001).

Afuah (2003) described innovation as the use of new knowledge to offer new products or services that

satisfy customers’ needs and wants, while meeting the organizational business objectives. Such

knowledge can be technological or market related (Drucker, 1991). Technological knowledge is the

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knowledge of components, linkage between components, methods, process and techniques that go into a

product or services, while the market knowledge is knowledge of distribution channels, product

applications, customer expectations, preferences and needs (Afuah, 2003).

The adoption of innovation by service organizations is a means of adaptation and change aimed at

achieving the organization’s performance objectives, especially with respect to highly competitive and

changing business environments, scarce resources, and customer’s continuous demand for high quality,

plus better products and services (Boyne et al., 2003; Jansen et al., 2006; Roberts and Amit, 2003).

Drawing from Jansen et al. (2006), the means of adaptation of innovation varies among different

organizational units and industries. For instance, Cardinal’s (2001) research in the pharmaceutical

industry shows that innovation in the area of drug enhancement is achieved through centralization of

operational activities. In the financial service industry, the decision authority is required to be

decentralized in order to execute tasks and generate ideas for innovation of products and services

(Kirkman and Rosen, 1999). Essentially, providing an insight into the innovation concept will require an

understanding of the meaning and process of innovation.

2.3 The meaning of innovation A central aspect of innovation is that “it is widely considered as the life blood of corporate

survival and growth” Zahra and Covin (1994, p. 183). Early definition of innovation by Thompson

(1965, p.2), described innovation “as the generation, acceptance and implementation of new ideas,

process and products or services”. Innovations represent change in the products and services which an

organization offers, and the changes in the way they are created and delivered (Tidd and Beassant,

2009). However, Kimberly (1981, p. 108) looked at innovation from various forms. He stated that

“There are three stages of innovation: innovation as a process, innovation as a discrete item including,

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products, programs or services; and innovation as an attribute of organizations”. A recent definition by

Damanpour (1996, p. 694) gave an in depth definition of innovation,

“As a means of changing an organization, either as a response to changes in the external

environment or as a pre-emptive action to influence the environment. Hence, innovation is here

broadly defined to encompass a range of types, including new product or service, new process

technology, new organization structure or administrative systems, or new plans or program

pertaining to organization members”.

Baregheh et al. (2009, 1334) in his argument about the multidisciplinary definition of innovation

noted that the meaning of innovation has continued to be inconclusive, underdeveloped and inconsistent

as a result of numerous definitions of innovation. His research therefore suggested that “Innovation is

the multi-stage process whereby organizations transform ideas into new/improved products, service or

processes, in order to advance, compete and differentiate themselves successfully in their marketplace”.

Innovation is driven by the ability to forecast business connections, to spot opportunities and to

take advantage of them. Essentially, this is traceable to the early work of Schumpeter (1934, p. 208 cited

in Roberts, 2001) who stated that firms that enjoy a higher return on investment are those that by nature

and programming are continually engaged in doing new things and are really nothing but forms for

continual new enterprises. Literally, “The process of innovation cannot be separated from a firm’s

strategic and competitive context” (Porter 1990, p. 780), so that the foundation of innovation is based on

the level of impact it creates for the firm’s competencies and capabilities (Afuah, 2003).

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Different theoretical research on innovation processes are emerging. For example, the process of

innovation and the diffusion of innovations (Robertson, 1967); dynamic process of innovation

(Utterback and Abernathy, 1978); towards the sixth generation research and development management

process (Nobelius, 2004); new service development process (Menor and Roth, 2007); and the simplified

model of innovation process (Tidd and Beassant, 2009). The following section discusses innovation

processes.

Utterback and Abernathy (1978) put forward that three processes of innovation can evolve within

an industry: the fluid phase, the transitional phase and the specific phase (see figure 2.1). In the fluid

phase, technology is in a state of flux because of market uncertainty, flexibility and lack of clear

objectives. In the transitional phase, through the ‘producer-customer interactions’, a dominant design

emerges as a result of integration and standardization of components (Afuah, 2003, p. 33). The specific

phase is the stage at which specialization is achieved; here products and services are highly

differentiated (Afuah, 2003). Utterback and Abernathy (1978), suggested that the effectiveness of

developing and implementing innovation processes will involve three distinct factors; the characteristics

of the firm’s business environment, internal competencies and capabilities of the firm, and the flow

between the firm and its environment.

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Figure 2.1: Abernathy and Utterback’s model of Innovation life cycle

On the other hand, Nobelius (2004) notes that the viewpoint on managing innovation processes

has changed from a technology – centered model to a more interaction – focused model over the years.

In the service industry, Tidd and Beassant (2009) believed that the innovation process should involve the

integration of technological, internal competencies and market change (see figure 2.2).

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Figure 2.2: A simple model of the Innovation process

In the model shown in Figure 2.2, Tidd and Beassant (2009) discussed four stages of a simple

model of innovation process – these are the search, select, implement and capture phases. In the search

phase, organizations are faced with significant change and signals that could be threats or opportunities

to innovate new products and services. The selecting phase requires the organization to make a decision

based on its competencies and capabilities, about which threat or signals to respond to. At the

implementing phase, organizations begin to plan how best to launch the innovation into the market

based on the signal received about change (Tidd and Bessant, 2009). The capture phase emerges as

organizations tend to sustain adoption and the diffusion process. Most importantly, at this stage,

organizations must ensure that learning, as the innovation progresses, must be sustained so that “the

organization can build its knowledge base and improve the ways in which the process is managed” (Tidd

and Bessant 2009, p. 54).

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Although the process of innovation varies within industry and organizations, Menor and Roth

(2007, p. 828) concluded that innovation focused organization will always search for innovation and at

the same time “possess a systematic means of transforming an idea into an offering”. Hence, firms must

be aware of the sources of innovation confronting them.

2.4 Sources of Innovative Activities in Retail Banking In recent times, retail banks were faced with the different challenges brought about as a result of

dynamic changes in business environment. Devlin (1995, p. 19) described these changes as “supply and

demand side of the market” which includes factors such as changes in regulatory policies, changes in

technology, and changes in market structure as a result of new entrants in the market. Also included in

the change factors are changes in consumer taste, preferences and expectations, bringing in changes in

what he called the “Modus Operandi” of the financial service. Responding to these changes has become

the desire of top management executives of different Nigeria retail banks. For example, a statement

made by the former CEO of one of the sampled banks in this research (Guaranty Trust Bank, Plc.)

reveals:

“Some of our competitors have even managed to do things better than we have. Somewhere

along the line—around the late 1990s we took our eyes off the ball and underestimated our

competitors and they had a surge in growth. But I will say that over the last three or four years

we have regrouped and we are re-strategizing. We are still one of the top banks. We believe one

of our challenges is to continually redefine things and reinvent ourselves. We don’t think other

people will do it for us; we are not—and have never been—a follower. Part of our mission is to

continuously seek new ways of doing things for others to copy and follow (innovation). . . . (A

speech by Tayo Aderinokun, cofounder and former managing director, Lagos, March 2004).

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Similarly, understanding the sources and the signal processes of innovation is very critical for

every organization because it shapes the structure of the organization (Yam et al., 2011). Roberts and

Amit, (2003), in their research about innovation and competitive advantage in the Australian retail

banks, believed that most of the innovative activities found with the retail banks were based on the

“ideas sourced from outside focal firm”. In short, they generalized that, sources of innovation for the

retail banks were generated from the external environment and innovation tended to diffuse very quickly

among competitors within the same industry. On the other hand, Bessant and Tidd (2011) in their view

summarized that innovation can come from many different directions. They proposed that, there are

different motivations of innovation (see figure 2.3), two of which they identified as the knowledge push

and need pull.

Figure 2.3 where do innovations come from? Source: Bessant and Tidd (2011, p. 205).

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Knowledge push innovation is a source of innovation resulting from the need to develop research

and development on a particular need arising in an organization or an industry as whole. A systematic

activity of organizing research and development that is targeted at solving an identified problem in an

organization which have the tendencies of leading to gradual breakthrough that set the platform for

incremental innovative activities (Bessant and Tidd, 2011).

Different innovation scholars are of the opinion that the need pull innovation is the type of

innovation that is driven by the need of the user of the innovative activities (Chau and Tam, 2000). In

collaboration with Bessant and Tidd (2011, p. 208), it is simply described with the phrase “necessity is

the mother of innovation”. That is to say, it is an innovation that evolves as result of perceived or real

need for change in an organization. For example, the quantum leap experienced in the pattern of

customer’s service delivery in most of Nigeria’s retail bank’s was as a result of investment in training

and development of management staff and the restructuring of the network operations (Maklan and

Knox, 2009) and this is credited to one of the sampled banks revolutions, which thus stated that:

“When we opened our doors; it created a revolution in Nigerian banking. We cashed checks in 5

to 10 minutes . . . imagine the impact upon people. Our branches were beautiful; we took down

the cages and made it open plan. This told people that we trust them, we respect them . . . their

time is important to us. Customers were greeted at the door. People who had previously sent

underlings to the banks now wanted to come themselves and see what we had done. There was

nothing remotely like it in Nigeria at the time”. (Joke Giwa, Assistant General Manager,

Guaranty Trust Bank, UK, November 2003).

Need Pull innovation portrays commercial success of innovative activities and is more ubiquitous

in the financial industry because retail banks tend to be involved in innovating products and services

suitable for the perceived needs of the customers.

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Perhaps, this type of innovation is synonymous with the invention of Automated Teller Machine

and Online banking. Consoli (2008) emphasized that the automaton of retail banking services is

significant in providing easy and accessible payment system for customers at every giving point in time.

Furthermore, Young (2001) found that internet banking at a point has become the major distribution

channel through which bank’s products and services are delivered to their customers in different

locations and at all points in time.

2.5 Overview of multiple types of innovation in the Nigeria’s retail banking Authors such as Roberts and Amit (2003) and Damanpour et al. (2009) have argued that achieving

high performance cannot be attributed to one particular type of innovation activity, rather from the

combination of different types. Engaging in different types of innovation facilitate the development of

competencies and capabilities that delivers on business objectives, providing better business

performance and not only that, it encourages the first movers advantage in the banking competitions and

boosts the banks chances of gaining substantial competitive advantage over a giving period of time

(Cohen and Levinthal, 1990; Roberts and Amit, 2003).

Roberts and Amit (2003, p. 118) pointed out that in the retail banking industry, ‘firm’s history of

innovative activity in products and services play a significant role in measuring their financial

performance’. Drawing from Sorescu et al. (2011, S3) proposal on retail business innovation model,

innovation in the retail banking can be observed from different points; “the way in which the activities

are organized or the value chain”. A brief look at different scholarly literatures shows how different

Nigeria’s retail banks explore value chain in creating innovation.

2.6 The way in which the activities are organized or the value chain: Value chain represents the logical organization of the activities of the retail banks designed to

create values for customers and appropriate value for the banks (Sorescu et al, .2011). Barnett and

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Robert (1996) described value chain as the strategic innovative activities which combine together to

provide valuable products and services for customers. Porter (1985, p. 33) referred to it as the stylized

value chain of activities which “disaggregates a firm into its strategically relevant activities in order to

understand the behavior of costs plus the existing and potential sources of differentiation”. It is

represented in Figure 2. 4 below.

Figure 2.4: A (stylized) value chain, extracted from Robert and Amit (2003, p. 110).

According to Robert and Amit (2003), the stylized value chain above reveal that the retail banks

have a variety of processes that take inputs and transform such inputs into valuable products and

services for the customers. More so, with specific products and services, each of the retail banks have a

very organized administrative framework that delivers on each of the activities found within the value

chain.

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The value chain creates innovation through management’s ability to view it as an integrated flow

rather ordinary means of transforming raw materials into finished products and services (Hansen, 2007).

By and large, some of Nigeria’s retail banks have focused on integrating customer service improvement,

branch and operational repositioning, online banking, staff competencies and bank reputation in their

operations (Maklan & Knox 2005). Drawing on Maklan and Knox (2005), retail banks can achieve

strategic position and sustain competitive advantage by having a unique organizational value proposition

that embraces the integration of different ideas within and across the organizational unit. They explained

that, such integration for example, have enabled Guaranty Trust Bank and Zenith Bank to grow rapidly

to become parts of the leading Nigeria’s retail banks that were both highly profitable and the first Fitch

AA-rated banks in the country (Maklan and Knox 2009; Zenith Bank, 2006).

2.6.1 Customer Service Improvement In the retail banking institutions, one of the key issues of discuss is customer service improvement.

This is because most of the retail banks’ executives appreciate the fact that, standing out in the highly

competitive business environment implies creating better and sustainable customer service.

Customer service has become one of the important processes that can lead to competitive

advantage in today’s business environment (Lee and Xon, 1996). Based on this fact, retail banks are in

perhaps in ‘search of’ knowing how best to adopt innovations that can translate to a better customer

service improvement. Szymigin and Carrigan (2001) put forward that the scope of good customer

services encompasses innovating based on the needs of the customers and designing effective

operational and administrative activities that delivers the product and services on time. Furthermore,

Szymigin and Carrigan (2001) emphasized that continues customer development shows retail banks’

commitment to fulfilling the value proposal promised to customers beyond and above the banks’

competitors.

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Different studies (for example Mols, 1999; Jun and Cai, 2001) have shown that customer service

improvement in the retail banking is achieved through innovation in the online banking and product and

services. With respect to online banking, Jun and Cai (2001, p. 283) stated that customer service

improvement refers to “the concept that, provide the customer with enhanced quality services and meet

their constantly changing needs. Thus innovation in online banking should always enhance the quality

levels of the banks products and services and online systems”.

2.6.2 Branch and Operational Repositioning In Nigeria’s retail banking, branch networks before now have served as the main distribution

channel for the delivery of the retail banking products and services. (Miles, 2001; Devlin, 1995).

Drawing from Devlin (1995), the branch network is the most situated way through which transaction are

being carried out because the branch network provides opportunities for customers to be part of the

service creation and distribution process. Delvin (1995) further stated that, branch network was the

perfect platform for establishing maximum relationship, loyalty and trust between the banks and its

customers.

One of the issues with branch networks has to do with delay in service delivery due to too many

operational processes that most times result in long queues before customers can perform their

transactions (Ehigie, 2006). With the need to continuously improve customers’ service, there is a

significant increase in the level of competition between different Nigeria’s retail banks. Subsequently,

this has introduced change in the distribution strategy of different retail banks’ such that as the level of

competition increases, the need for effective innovative activities to sustain each of the bank’s

competitive advantage has also escalated.

Apparently, this intense competition has strained the banks to re-evaluate their branch networks

and the level of functional and operational activities being carried out by the branches (Devlin, 1995).

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The advent of different technologies such as Automated Teller Machine (ATM), online banking, point

of sale, credit, debit card and PC banking had a considerable effect on the distribution system of the

retail banking product and services in Nigeria. They have become very significant in facilitating how

customers now have access to their funds without experiencing delay. For instance Devlin (1995)

highlighted that different banks now install their ATM machines or cash points in different super

markets, shopping malls and strategic locations. This has made available to their customers the benefit

of having access to their funds and as well reduced the amount of contact they have with the branch

staff.

2.6.3 Staff Competencies Early research by Duchesneau et al. (1979) established that staff competencies and capabilities

have a significant influence on innovation. According to Chisea et al. (1996) innovations within the

retail banking institutions require that organizational resources are harnessed to ensure that the

integration of functional and operational systems is achieved. Chisea et al. (1996) also stated that

innovations have continued to alter different work performed by bank’s staff, and, as a result, attention

must be paid to staff competencies so as to develop key skills required for the management of

innovation. Different authors (for example Carroll 1967; Becker and Stafford, 1967; Nejad, 1997) have

argued that organizations with highly educated staff, technical skills and more diverse knowledge are

more receptive to the adoption of innovation. This is because through their knowledge depth, they make

different suggestions on how best to utilize innovative activities within and across organizational units.

Consequently, staff competency is critical in the innovation process, because it keeps staff aware of the

bank’s operational direction and encourages innovation (Chisea et al., 1996). For example, Maklan and

Knox (2005, p. 743) highlighted that;

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“In order for Guaranty Trust Bank Plc, to ensure the bank delivered the highest levels of

customer service and professionalism, the founders recruited and personally trained all

management-level people for the first five years of the bank’s operations. Each new manager

was provided with extensive training in both areas of professional competence and the bank’s

vision and values. In this way, the founders embedded their revolutionary zeal into all managers

and created a true sense of community and purpose.......”

2.6.4 Bank Reputation and Ethical Behavior

At present, there are different conceptual definitions of organisational reputation (Gotsi and

Wilson, 2001; Berens and Van Riel, 2004; Chun, 2005; Barnett et al. 2006). Building on Barnett et al.

(2006: 33), organizational reputation consists of an overall, generalized assessment of the organization’s

favourability, including “esteem, regard in which the firm is held, and how attractive the firm is”. Herbig

and Milewicz (1993) assert that organizational reputation is an estimation of the level of consistency in

the tribute of an organization, towards delivering on its business value propositions to different

customers. Essentially, reputation is a characteristic of an organization that exists in customers’

perceptions and has a significant role to play in creating sustainable competitive advantage in retail

banking institutions (Bontis and Booker, 2007).

2.6.5 Product and Service Innovations Vargo and Lusch (2004, p. 2) define services as “the application of specialized competences

(knowledge and skills) through deeds, processes, and performances for the benefit of another entity or

the entity itself.” On the other hand, Barras (1986) gave the definition of a product to be goods or

services that are offered to customers by an organization. Product and service innovations therefore, are

made up of internal and external foci as they are generally determined by the market requirements and

the impacts to the organization’s business objectives (Abernathy and Utterback, 1978).

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Prior to the retail banking consolidation in Nigeria, most of the retail banks were traditionally

known for poor customer service, lack of corporate governance, low quality product and services that

were targeted to only high net worth individuals (Maklan and Knox, 2009). Matthews and Shulman

(2005) hinted that what determines the level of product and service innovation in retail banking can be

ascribed to customers and the continuous rational decisions of the retail banking executive to make

superior profits, and increase the shareholders return. Therefore, retail banks predominantly engage in

innovative activities in terms of product and services that must satisfy the needs of the customers.

Appendix 2 shows different products and services of the sampled Nigeria’s retail banks beginning from

2004. For example, most of the retail banks now have account products for different segments such as

children, graduate, special current and savings account for different categories of customers.

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CHAPTER 3

OVERVIEW OF NIGERIA’S RETAIL BANKING INSTITUTIONS

3.1 Summary of Nigeria’s Retail Banking Activities Generally, Nigeria’s retail banking industry has experienced tremendous growth in different areas

in terms of size and structure. Remarkable changes have also been noticed in the regulatory and

operational activities, growth in the number of bank branches, and increases in the amount of depositors’

money in the banks. This growth occurred as a result of technological innovation and adoption,

deregulation of financial industry, and globalization of operations of the banking industry (Beck et al,

2005; Soludo, 2006; Ezeoha, 2007). Reflecting on the history of Nigeria’s retail banking, several authors

(Inanga and Soyibo, 1989; Ezeoha, 2007) used different phases to represent the era of changes that have

occurred in Nigeria’s banking system since 1894 to 1989, which are:

1. The era of relatively stable banking environment (1894-1952);

2. The first banking boom era (1952-59);

3. The era of regulation (1959-86);

4. The era of deregulation (1986 – 2004);

5. The era of recapitalization (Post 2004).

From the contextual perspective, from 1894 to 1952 was the period of the free banking era in

Nigeria. The beginning of the era saw the banks that were foreign-owned such as the Bank of British

West Africa, Barclays Bank, and the British and French Bank, operating with no legal framework from

the regulatory authority, while there were only two operated by the Nigerians, the National Bank of

Nigeria and the African Continental Bank (Ezeoha, 2007). Following this period, the Central Bank of

Nigeria was established on the 1st of July, 1959 to regulate the activities of the industry. As

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strengthening of the industry became pertinent, and the need to exercise direct control of the industry

through ownership, interest rate and credit control, the Central Bank introduced stronger entry barriers in

1970 (Beck et al., 2005). Consequently, Ayadi et al. (2008) note that in the 1980s, due to economic

crises and financial crises that led to the collapse of the Nigerian currency and external debt repayment

issues, the Federal government of Nigeria introduced the Structural Adjustment Program (SAP) in 1986,

which led to the de-regulation of the Nigeria banking industry. Predominantly, such an initiative created

an open window for the issue of retail banking licenses, as well as widespread economic liberalization,

hence, increasing the number of retail banks operating in Nigeria as shown in figure 3.1 below (Ezeoha,

2007). Critically, between 1980 and 1990, the number of banks operating in Nigeria increased from 20

to 58 representing a substantial increment of about 190% percentage point. Furthermore, the number

continually increased to about 13.80% points between 1990 and 1993.

Figure 3.1: The number of Nigeria’s retail bank from 1970 – 2010 Sources: Central Bank of Nigeria (various dates) CBN Statistical Bulletin.

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However, due to distress experienced by some of the banks that were mostly owned by individuals

(see table 3.1) that wholly depended on private sector deposit; there was consistent fluctuation in the

number of retail banks operating in Nigeria between 1997 and 2004. Despite the fact that the number of

retail banks continued to fluctuate, there was a corresponding increase in the number of branch

networks. For instance, as at 1970, the industry recorded about 273 branches nationwide which further

rose to 1,394 in 1986, 2,013 in 1990, and 2,391 in 1992 and finally rose to 3,300 which indicate a

significant percentage point increase of about 44%, 18.8% and 38.02% respectively (Beck et al, 2005;

Ezeoha, 2005, 2007).

Table 3.1 Ownership structure of the Nigeria’s retail banks

Status 2000 2001 2002 2003 2004

Private 76 77 78 77 77

Government 1 1 1 1 1

Foreign 10 11 11 11 11

Total 89 89 90 89 89

Source: Central Bank of Nigeria.

As a result of these developments, the ratio of individual currency outside the banking system was

higher than the currency in the banking system showing high level of incompetence in the operation of

various branches (see table 3.2 for amount of currency outside the bank between 1992 to 2003).

Table 3.2 Volume of currency outside banks and total demand deposits

Year Currency outside

banks (COB) (N Million)

Demand deposits (DD) (N Million)

Narrow money (M1) (N Million)

Ratio of COB to M1 (%)

Ratio of DD to M (%)

1992 36,756 39,215 75,970 48 52

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1993 57,845 60,908 118,753 49 51

1994 90,601 78,791 169,392 53 47

1995 106,843 94,571 201,415 53 47

1996 116,121 111,343 227,464 51 49

1997 130,668 137,955 268,623 49 51

1998 156,716 161,860 318,576 49 51

1999 186,456 206,663 393,079 47 53

2000 274,011 363,721 637,731 43 57

2001 338,671 478,037 816,708 41 59

2002 386,942 559,311 946,253 41 59

2003 412,155 813,404 1,225,559 34 66

Average 191,149 258,815 449,960 47 53

Source: Central Bank Statistical Bulletin (various issues) referenced in Ezeoha (2007).

One of the major characteristics of the industry “after 1986” was the fact that competition among

all the retail banks was of the same kind. Consequently, key activities were buying and selling of foreign

exchange, government treasury bills and marketing of the same kind of products and services. They used

the same distribution strategy, operational patterns and marketing strategy. The products include but are

not limited to issuing of open letters of credit, Electronic Fund Transfer (ETF) and high net worth type

of accounts (Roberts and Amit, 2003; Uche and Ehikwe, 2001; Soludo 2006).

Currency outside banks (COB): Currency outside banks comprises of all banknotes and coins in the national currency held by economic subjects 56

Demand deposits (DD): An account from which deposited funds can be withdrawn at any time without any notice to the depository institution 46. Narrow money: This is highly liquid of money. It includes currency, bank note, coins and over nigh deposit 42

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Meanwhile, according to Soludo (2006, p. 2) “the small size of the most of the Nigerian banks

operating with very expensive headquarters, heavy fixed cost and operating expenses and with too many

branches located in less strategic business environment, has necessitated a high cost of intermediation

and, as well, subjected most of the individually owned banks into unnecessary pressure to embark in

sharp practices as a means of survival”. For instance about 26 banks were liquidated in 1998 due to

financial insolvency (Soludo, 2004; Uche and Ehikwe, 2001). With these shortcomings, strengthening

the Nigeria retail banking became a worrisome issue for the Central Bank of Nigeria, hence the need for

consolidation through mergers and acquisition (Soludo, 2006).

3.2. Nigeria’s retail banking after consolidation The idea of consolidating the Nigeria retail banking was an attempt by the Central Bank of Nigeria

(CBN) to strategically reposition and intensify the operation of the retail banking system in order to

meet and compete with the global financial institutions. The ailing position of most of Nigeria’s retail

banks called for urgent attention in repositioning their operations. One assessment shows that while the

overall health of Nigeria’s retail banking system could be described as generally satisfactory, the state of

some banks was less cheering. Specifically, as at end-March, 2004, the CBN’s ratings of all the banks,

classified 62 as sound/satisfactory, 14 as marginal and 11 as unsound, while 2 of the banks did not

render any returns during the period” (Soludo, former CBN Governor, 2006).

Ezeoha (2007) believed that consolidation through mergers and acquisition has become the unique

strategic approach adopted in the repositioning of banking all over the world, and examples abound in

America, Europe, Asia and some parts of Africa. In the case of Nigeria, different authors (Soludo, 2006;

Ezeoha, 2007; Maklan and Knox, 2009) believed it was necessary because it would encourage the

achievement of economies of scale among banks and establish best-practice corporate governance,

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improve self-regulation, and enhance the capital base. Furthermore, consolidation instituted an IT-driven

culture and positioned banks to be competitive among global financial institutions in the areas of

product and service innovation, distribution channel technology, back office operations and

administrative innovations. Table 3.3 represents the list of banks that attained the recapitalization

exercise mandated by CBN in 2005.

Table 3.3 The emerging banks in Nigeria and their new capital bases

Name of Banks

Consolidating institutions New capital base in

billions of Naira

New capital base in millions of Pounds

(At £1=N224) as at 2005

Access Bank Plc

Access Bank, Marina Bank and Capital Bank

28 124,687,000

Afribank Plc. Afribank International (Merchant) Bank and Afribank of Nigeria.

29 129,140,000

Diamond Bank Diamond Bank and Lion Bank

33.25 148,065,000

EcoBank Alone 25 111,327,000

Equitorial Bank Plc.

Equatorial Trust Bank and Devcom Bank

26.5 118,007,000

First City Monument

Bank Plc.

First City Monument Bank, Cooperative Development Bank, and Nig-American Bank

30 133,593,000

Fidelity Bank Plc.

Fidelity Bank, FSB International Bank and Manny Bank

29 129,140,000

First Bank of Nigeria Plc.

First Bank, MBC International and FBN (Merchant Banker) Ltd.

44.62 198,697,000

First Inland First Atlantic Bank, Inland 28 124,687,000

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Bank Plc. Bank, IMB Bank And NUB

Guaranty Trust Bank Plc.

Alone 34 151,405,000

IBTC-Chartered Bank

Plc.

IBTC, Chartered Bank and Regent Bank

35 155,858,000

Intercontinental Bank Plc.

Intercontinental Bank, Global Bank, Gateway Bank and Equity Bank

51.7 230,225,000

Nigerian International

Bank

Alone 25 111,327,000

Oceanic Bank Plc.

Oceanic Bank International International Trust Bank

31.1 138,491,000

Platinum-Habib Bank

Plc.

Platinum Bank and Habib Bank

26 115,780,000

Skye Bank Plc. Prudent Bank, EIB, Bond Bank, Reliance Bank and Cooperative Bank

37 164,764,000

Spring Bank Plc

Citizen Bank International, ACB International, Guardian Express Bank, Omega Bank, Trans Trans International Bank and Fountain Trust

25 111,327,000

Stanbic Bank Limited

Alone 25 111,327,000

Standard Chartered Bank

Ltd

Alone 26 115,780,000

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Sterling Bank Plc.

Trust Bank, NBM Bank, Magnum Bank, NAL Bank and Indo-Nigeria Bank

25 111,327,000

United Bank for Africa Plc.

United Bank for Africa and Standard Trust Bank

50 222,655,000

Union Bank Plc.

Union Bank of Nigeria, Union Merchant Bank, Broad Bank and Universal Trust Bank

58 258,279,000

Unity Bank Plc.

Intercity Bank, First Interstate Bank, Tropical Commercial Bank, Centre Point Bank, Bank of the North, New African Bank, Societal Bancaire, Pacific Bank and New Nigerian Bank

30 133,593,000

Wema Bank Plc.

Wema Bank, Lead Bank and National Bank of Nigeria

26.2 116,671,000

Zenith Bank Plc.

Alone 38 169,217,000

Sources: Financial standard (Nigerian Weekly Newspaper) 9th and 16th January, 2006.

3.3 The Dimension of Performance in the financial service Organization In the strategic management field, performance is a critical issue that has caught the attention of

many scholars in the academic field and its importance is at the heart of every organization (for

example, Venkatraman, 1986: Campbell, 1977; Connolly, Conlon, & Deutsch, 1980). Basically due to

the acknowledgment of the implementation of new business strategies and competitive realities that

requires new dimension of measurement system (Eccles, 1991), defining the dimensions of performance

has become one of the challenges faced by different top management executives. Traditionally, research

that evolved in the past suggested that performance can only be measured in one way, namely in

financial terms (Cooper and Kleinschmidt, 1987). However, Maidique and Zirger (1985, p. 85) in their

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own point of view stated that “While financial return is one of the most easily quantifiable industrial

parameters, it is far from the only important one”. For example, in product innovation, the outcome of

the innovation may not accomplish the required financial return set by the organization, but can still be

considered successful. This is because the outcome of the product can impact the firm’s market share,

organizational competencies and creation of window of opportunity that strengthens the firm’s

competitive advantage (Cooper and Kleinschmidt, 1987).: Cooper and Kleinschmidt (1987) in their

study of 200 new product case histories in 125 industrial products firms affirms that ten different

dimensions can be used to measure performance. This leads to the question of how can performance be

measured in retail banking?

Financial performance is made up of return on investment (ROI), operating profit (OP), return on

assets (ROA) and generally meeting the stated business objectives (Cooper and Kleinschmidt, 1987).

Table 3.4 and figure 3.3 demonstrate the operating profits of Nigeria’s retail banking and the percentage

growth of the operating profits between 2008 and 2010.

As the intense of competition among retail banks continues to stiffen, some of the banks tend to

enjoy relatively high profitability over a given period of time than others. Drawing from Roberts (2001,

p. 240), “firms vary in their propensity to generate streams of valuable innovations over time, and the

firm generating valuable innovations on a more regular basis may be one displaying persistent

profitability”. As demonstrated in Model Fig 3.4, this research, however, will be limited to non-financial

performance measures.

Because of this proposed linkage between innovation and profitability, and the focus of this

dissertation on innovation in retail banking, the study adopts a measure of performance associated with

customer perceptions about one major innovation in retail banking: online banking.

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BANKS 2007 2008 2009 2010ACCESS BANK 43,354 73,207 54,614 69,393

Percentage Change of Growth 68.00% -25.40% 27.06%

DIAMOND BANK 30,675 47,732 71,873 72,790

Percentage Change of Growth 55.61 50.58% 1.28%

ECO BANK 26,988 37,573 40,764 43,008Percentage Change of Growth 33.22% 8.47% 5.50%

FIDELITY BANK 17,445 34,734 54,256 42,076Percentage Change of Growth 99.16% 56.20% -22.45%

FIRST BANK 72,806 121,938 160,978 177,923Percentage Change of Growth 67.48% 30.02% 10.53%

FIRST CITY MONUMENT BANK

19,914 43,576 53,704 40,014

Percentage Change of Growth 118.82% 23.24% -25.49%

GUARANTY TRUST BANK 35,294 61,997 120,393 120,543Percentage Change of Growth 75.66% 94.20% 0.12%

SKYE BANK 30,668 55,590 79,576 60,397Percentage Change of Growth 81.26% 43.15% -24.10%

STANBIC IBTC BANK 15,872 42,495 43,823 48,394Percentage Change of Growth 62.65% 3.12% 10.43%

UNION BANK OF NIGERIA 67,241 85,997 104,568 73,483Percentage Change of Growth 27.90% 21.60% -29.73%

UBA 80,808 128,151 181,735 138,217Percentage Change of Growth 58.59% 41.81 -23.95%

ZENITH BANK PLC 75,841 154,197 188,238 152,148Percentage Change of Growth 103.32% 22.08% -19.17%

THE PERCENTAGE OF OPERATING PROFIT OF NIGERIA'S RETAIL BANKING

Table 3.4: Operating profits of Nigeria’s retail banks Source: University of the West England E-Library Osiris

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Figure 3.2: The percentage growth of the operating profits of Nigeria’s retail banks between 2008 and 2010 Source: University of the West England E-Library Osiris

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Prior to banking consolidation, Nigeria’s retail banking industry was greatly characterized by

failures in both operational and administrative activities that threatened the fate of different banking

stakeholders (Ehigie, 2006). However, consolidation by the Central Bank of Nigeria has provided the

window for most of the retail banks to adopt innovation in product and services at same time, allowing

different banks to integrate customers and other stakeholders in the design and delivery of products and

services. The former CEO of one of Nigeria’s retail banks once stated that;

What the government did was really change the competitive market. First Bank really had the

size prior to legislation; now every major bank is about our size, so we had to craft a plan so

that we can maintain our competitive edge. We have about 350 branches and we have a plan to

reach 500 branches by 2008. (Jacobs Ajekigbe, managing director, First Bank, 2006).

3.4 Research Model and Hypothesis The review of different literatures has established that a different factor triggers the adoption and

diffusion of innovation across the retail banking industry (Roberts and Amit, 2003; Sorescu et al, .2011;

Utterback and Abernathy; 1978; Tidd and Beassant, 2009). The case of the Nigeria retail banking is no

exception. Drawing from Tidd and Beassant’s (2009) proposal on the simple innovation process, the

author has deduced that several factors are responsible for innovation in the Nigeria’s retail banking

institutions (see figure 3.4).

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Figure 3.3: Sources of Innovation in Nigeria Retail Banking

Conclusively, the researcher has gained valuable insight from different strategic management and

innovation literatures. However, there is a need to conduct quantitative research to establish a link

between retail banks innovative activities and performance parameters that drive competitive advantage.

In this dissertation, customer perceptions of online banking is used as the measure of performance and

several variables have been identified by the researcher based on the reviewed literatures that might

contribute to customers having positive perceptions which are expected to lead to an improved

competitive advantage for the bank. For example, what is the relationship between the on-line banking

and staff competencies? Can customer service influence customers’ perceptions about online banking?

Can product and service accessibility have a direct relationship with online banking? How does bank

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reputation influence online banking? Can the new generation banks operational structure affect online

banking? Against this back drop, it is very pertinent that the researcher develop a conceptual framework

and hypotheses so as to ascertain the level of relationship that can exist between these variables. This is

presented in Figure 3.5

Figure 3.4: The conceptual framework of the relationship between different innovative variables

In order to evaluate and investigate this relationship between innovative activities and competitive

advantage, the following conceptual frame work and hypothesis have been established;

H1 Products and Service accessibility has a positive influence on customer perception

towards online banking

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H2 New generation banks operational strategy has a positive influence on online

Banking

H3 Bank reputation has a positive influence on customer perception towards the

Online banking.

H4 Staff competence has a positive influence on customer satisfaction towards the

Online banking.

H5 Customer Service has a positive influence on online banking.

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CHAPTER 4

RESEARCH METHODOLOGY

4.1 Introduction This section examines different research approach as to establish the best approach for data

collection. Ghuari and Gronhaug (2003) summarized that a research method is a systematic, focused and

organized way, through which data can be collected and analyzed for the purpose of solving a research

problem. This section will address the methodology necessary to answer the following research

questions:

1. What is the relationship between the on-line banking and staff competencies

2. Can customer service influence customer’s perception about online banking?

3. Does access to banks product and services be linked to the online banking?

4. How does bank reputation influence online banking?

5. Can the new generation banks operational structure affect online banking?

This section will further discuss the project plan of data analysis, limitation and the ethical consideration

underpinning the research approach.

4.2 Research Paradigm and Philosophy Different researchers in the studies of epistemology and ontological foundation have made

contributions on the approach that best explain the concept of a research paradigm (Bryman, 1988a;

Bryman and Bell 2007; Saunders et al., 2003, 2008). According to Bryman (1988a, p. 4) cited in

Bryman and Bell (2007, p. 25) “a paradigm is a ‘cluster of beliefs and dictates which for scientist in a

particular discipline influence what should be studied, how research should be done, and how results

should be interpreted”. It is a general perspective, such that the complexities of the real world are broken

down into components (Patton, 1990). Fundamentally, Saunders et al. (2008) pointed out that a research

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paradigm represents the way through which social phenomenon can be examined in order to gain an

understanding of the phenomenon. Saunders et al. (2003) further explained that there are three main

research philosophies; positivism, realism and interpretivism as shown in figure 4.1.

Figure 4.1: Different research philosophical view Source: adapted from Saunders et al., 2008.

4.2.1 Positivism The positivist epistemology suggested that the main aim of research methodology is to achieve

objective knowledge, and the understanding of impartial and unbiased results based on external view

without personal interference on the part of the researcher (Willig, 2001). Gill and Johnson (1997) cited

in Saunders et al., (2003, p. 83) noted that the researcher in a positivist epistemology will require a

highly structured methodology because of the fact that replication in the research has to be facilitated.

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4.2.2 Interpretivism This is the epistemology that critiques the positivist approach

(Bryman and Bell 2007). Interpretivism argued that “the social world of business and management are

too complex to lend itself to theorizing by the definite laws in the same way as the physical sciences”

(Saunders et al., 2003). It suggests that it is critical for a researcher to understand the fundamental

disparities between human in their role as a social actor, and the natural sciences because both subjects

require separate logical research procedures (Bryman and Bell 2007). Considering the dynamic nature

and uniqueness of business and management, the Interpretivism epistemology’s argument can be

considered valid; however, there is a question of how generalizable research can be that will capture the

complexities of a continuously changing business environment (Saunders et al., 2008).

4.2.3 Realism This is an aspect of philosophical position supporting the positivist epistemology (Bryman and

Bell, 2007). To Cameron and Price (2009), realism identified that social phenomenon can exist;

however, it can be measured only subjectively because no fact is beyond dispute and knowledge is a

social and historical product. Building on Saunders et al., (2003, p. 85), realist epistemology believes

existence of a reality that is independent of human thought and beliefs. They further stressed that, with

respect to human subjects, it appreciates the significance of understanding people’s differences, within

the context of seeking a meaning to broader social forces and structures that interferes with the nature of

people’s views and perceptions (p, 85).

Each of these epistemologies and ontology’s underpinning the research paradigms and

philosophies has received significant critique from different authors, (for example, Williams, 2000;

Saunders et al., 2003; Kincaid 1996,). Nevertheless, Grix (2010) believe that positivism, interpretivism

and realism are the key subjects that take into consideration the significant characteristics of the research

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paradigms and philosophy. In reality, it is challenging to firmly admit that a particular epistemological

and ontological position is better than the others. However, the major determinant of the best philosophy

is a function of the research questions that the researcher intends to answer (Saunders et al., 2003;

Jankowicz, 1991).

Descombe (2002, p. 14) pointed out that positivists believe that ‘there are patterns and regularities,

causes and consequences, in the social world just as there are in the natural world’. Drawing on

Saunders et al. (2008), the positivist approach considers the philosophical stance of the natural science.

This dissertation adopts a scientific approach to study the social world. Such research investigates the

relationship between different variables of innovative activities that lead to sustainable competitive

advantage in the retail banking industry. The researcher aims to study this relationship in order to

present a valid objective opinion. Since positivism seeks “objectivity" in research (Marsh and Furlong

2002, p. 18 cited Grix 2010, p. 82) it becomes very pertinent for the researcher to adopt the positivist

philosophy in answering the research questions.

4.3 Research Approach While this research investigation tends to present an objective opinion, it will examine two

different approaches that exist in business research namely; a deductive approach and an inductive

approach (Saunders et al., 2003). Landman (2000, p. 226) described the inductive approach as an

approach through which a conclusions can be drawn from direct observation of empirical evidence. That

is to say, it supports the Interpretivisim paradigm (Saunders et al., 2003). Meanwhile, deductive

approach drives conclusions through the application of reasoning to a given set of premises (Grix, 2010).

Thus, it supports the positivism paradigm (Saunders et al., 2003).

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In retrospective, the deductive approach is a dominant approach in the natural sciences because it

requires that theories be subjected to a thorough test (Saunders, et al., 2003). This implies that in the

deductive approach, it is the law that provides the bases of explanation, allows the expectation of

phenomenon, predict their occurrence and hence allow them to be controlled (Hussy and Hussy 1997, p.

52)

Significantly, Saunders et al. (2003) established that one of the major criteria of the deductive

approach is its quest to elucidate common relationships that exist between different variables. Bryman

and Bell, (2007) outlined the order through which conducting a research using the deductive approach

can follow (please see figure 4.2).

Figure 4.2: Deduction Process, adapted Bryman and Bell (2011, p. 11).

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Significantly, Saunders et al. (2003) stressed that the deductive approach requires highly

structured methodology that must be operationalised such that facts can easily be measured

quantitatively. Since the deductive approach involves the quantitative method of data collection Bryman

and Bell (2007), this research is based on a survey methodology to support hypothesis testing.

4.4 Research Method Grix (2010) listed two types of research method as the qualitative and quantitative methods while

Saunders et al. (2008), identified a more comprehensive method called the mixed method. According

Punch (2000b, p. 139) cited in Grix (2010, p. 117), these methods are simply the umbrella terms,

through which a wide and universe range of ‘paradigms, approaches to data, and methods for the

analysis of data’.

The quantitative method involve finding variables for concepts, operationalising the variables and

measuring them, while the qualitative methods is concerned with a researcher interpreting data in their

social and natural perspective, through the analysis of cases in order to generate theory (Grix, 2010). The

multiple methods are concerned with answering research question through the combination of

qualitative and quantitative methods to bring in new mode of thinking as it attend to paradoxes emerging

from the two methods (Rossman and Wilson, 1985; Saunders et al., 2008).

The researcher aims at conducting an independent research in order to produce an objective result

(Remenyi et al. 1998, p. 33). It will adopt the quantitative research method so as to collect data in a

highly structured methodology, which makes possible replications. Replication is necessary because the

research work is subject to verifiability that enhances legitimacy, reproducibility, reliability and

objectivity (Grix, 2010). From next section: The quantitative approach would be useful due to the fact

that it produces data that can be quantified, and compares general pattern and relationships among

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different variables that can be tested (Ragin 1994, p. 132–6). For this dissertation, the quantitative

approach will provide information through data collection and analyses of different variables to present

an objective result. Being objective in research means that the “result must be valid and not a

methodological artifact” (1976, p. 268).

4.5 Research Strategy Many authors (for example: Saunders, et al 2003, 2008; Bryman and Bell, 2007; Ghuari and

Gronhaug, 2003; Collis and Hussey, 2009) have emphasized that research strategy represent general

point of reference through which business researches are conducted. Drawing from Saunders et al.,

(2003), research strategy depicts the researcher’s clear objective that comes from the research questions,

the process and actions towards the collection and analysis of the research data and findings. Collis and

Hussey (2009) presented that in order to answer the research questions appropriately, the researcher

must choose a research strategy based on the availability of data resources, the time factor and the cost

factor.

Consequently, Saunders et al, (2003, p. 91), listed different research strategies that can be applied

by the researcher, they are: experiment, survey, case study, grounded theory, ethnography, action

research, cross-sectional and longitudinal studies and exploratory, descriptive and explanatory studies.

They further iterated that these strategies are not mutually exclusive and must be dependent upon the

research objectives and questions, the philosophical underpinnings and the extent of the existing

knowledge in the field of research (Jankowicz, 2005)

According to Jankowicz (2005), the information provided by the research data must be arranged in

such a way that uncertainty is reduced to the barest minimum. This dissertation adopts a survey strategy

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in answering the research question because it allows for the collection of a large amount of data using

the questionnaire from a significant population and is a cost-effective means (Saunders et al., 2003).

4.6 Research Population, Sampling and Data Collection Having established the different research approaches and strategies necessary for the research

process the next step is to determine the basic elements such as the research population and sampling

methods, through which the research data can be collected and can be analyzed (Ghuari and Gronhaug,

2003; Saunders et al., 2003).

The researcher’s aim is to review the relationship between different variables that leads to

sustainable competitive advantage in the Nigeria’s retail banking, looking at their recent innovative

activities in product and services. Such investigation requires substantial data in order for the researcher

to present an objective finding.

The researcher administered 226 questionnaires to a sample of the banks’ customers, that have

used the products and services of any one of the 12 banks listed in Appendix II.. 162 responses were

received, which represents about 72% responses. A larger sample is necessary in order to reduce sample

error, as suggested by Bryman and Bell (2011, p. 187), that “as sample size increases, the lesser the

sample error.

4.6.1 Self Administered Questionnaire – The Quantitative Approach The questionnaire provides a list of structured questions carefully designed by the researcher in

order to generate dependable responses from the population sample (Collis and Hussey 2009) and it is

“one of the most widely used data collection techniques within the survey strategy” (Saunders et al.,

2009, p. 361). Building on Saunders et al. (2008), different types of questionnaire includes self

administered and interview administered questionnaire.

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A self administered questionnaire allows the researcher the opportunity to administer the

questionnaire to the respondent, either by post or online using electronic means and the questionnaire

will be filled in and returned back by the respondent (Saunders et al., 2003, 2008; Maylor and

Blackmon, 2005). In the interview administered questionnaire technique, the researcher can meet one on

one with the interviewee (Saunders et al. 2008, p 363).

Generally, Saunders et al. (2008, p. 363) point out that the choice of designing both self

administered questionnaire or an interview is influenced by the importance of the respondents’ answers

not being distorted and the types of questions the researcher wishes to ask.

In view of this, the researcher designed the questionnaire using the closed ended format, allowing

the respondents’ the opportunity to answer questions using a Likert type scale with a scale of 1 to 7,

ranging from strongly disagree to strongly agree.

The questionnaire was designed into two different parts (see Appendix 1). Part one is made up of

five sections that is focused on the banks’ customer experiences in the area of relative innovative

advantage of the banks, customers’ perceptions about the service quality of the banks, relative customer

satisfaction, perceived accessibility and complexity of innovative activities and perceived reliability of

innovative activities. The statements in Part A were drawn from the prior research outlined in chapter 2

and 3. Part two is made up five questions designed to know the personal details of the respondent in

terms of gender, age distribution, location, academic qualification, and the name of the bank used by the

customer.

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4.6.2 The Evaluation of the Data Collection Method Collis and Hussey (2009) described that reliability, generalization and validity are the basic criteria

required for the effective evaluation of the research methodology. Credibility is of great importance in

business research, such that all effort must be made by the researcher to ensure that the answers to the

research questions must be sound and credible without distortion (Saunders et al., 2003).

4.6.3 The Reliability of the Questionnaire Bryman and Bell (2011, p. 157) asserts that “reliability is fundamentally concerned with the issues

of consistency of measures in quantitative and qualitative research”. That is to say, the measurement of

the data collection techniques must be valid, in terms of accuracy and in an unbiased way (Jankowicz,

2005). Robson (2002) described four threats to reliability to include; respondent/interviewer error,

respondent/interviewer bias, observer error and observer bias.

Respondent Error: Saunders et al., (2008, p. 156) noted that the researcher must know the best time to

administer the questionnaire. They further stated that, to control it, the researcher must choose a ‘a

neutral’ time when respondents may be expected to be neither on a ‘high’, looking forward to the

weekend, nor on a ‘low’ with work in front of them. The researcher ensured that this is achieved by

designing the questionnaire in a very neutral, easy to read and understand and close-end format that

could be answered at any time via an online format.

Respondent Bias: Respondents may respond to the questionnaire based on their observation or

perception of other people’s opinion Saunders et al., (2008). To avoid this error, the researcher ensured

that anonymity is achieved by mixing up the questions contained in the part A section of the

questionnaire (please see appendix 1), Using the Survey Monkey Software prohibits respondents from

responding to the questionnaire more than once, which in effect encourages unbiased responses.

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Observer error and observer bias: Avoiding these errors, as suggested by Saunders et al., (2008), the

researcher structured the questionnaire in a close-ended format such that the content of the questionnaire

will give the same meaning to different respondents.

4.6.4 The Validity of the Questionnaire According to Bryman and Bell (2011), validity is simply the level at which the conclusion derived

from the research work can be justified based on the claim of the researcher. Research validity can be

damaged as a result of poor research procedures and imprecise information, testing, instrumentation and

maturation (Robson, 2002; Collis and Hussey, 2009; Saunders et al., 2008). To avoid this error, the

researcher designed the questions in a simple and concise manner such that questions will not be

misinterpreted. Secondly, the researcher conducted a pilot test and amended the questionnaire before it

was sent out to different respondents. The error of penultimate maturation suggested by Saunders et al.

(2008), which could emanate as a result of customer previous experience with the Nigeria’s retail

banking institution, was avoided as the researcher asked respondents to focus on their current bank

rather than any historic experience

4.6.5 The Generalisability of the Questionnaire Generalisability is the level at which the research findings can be compared to other situations in a

wider perspective (Lee and Lings, 2008). In short, Saunders et al., (2008, p. 158) called it “the external

validity” of the research findings. The researcher, due to time and cost factor, sampled 12 Nigeria’s

retail banks that are the key major competitors in the Nigeria’s retail banking industry. Similarly,

generating above 162 responses from the use of deductive approach utilizing customer’s experiences is a

great effort by the researcher to ensure that the research findings can be generalized.

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4.7 The Survey Questionnaire Together with a covering email, a concise design, and the explanation of the importance of the

research work, the questionnaire was designed to be filled online through survey monkey software

(http://www.surveymonkey.com/s/66H323K), to the sample population. This survey was administered

by an email to sensitize the respondents on the need to respond to the research questionnaire. About,

three weeks later, a reminder email was made to large number of the respondent in order to increase the

response rate. Again after the sixth week, another email was sent to the respondents. The final response

rate was 71.6%, or 162 responses.

4.8 The Plan for Data Analysis The data generated through the quantitative analysis was analyzed using analytical techniques

through SPSS such as factor analysis and regression analysis. Statistical Package for the Social Sciences

(SPSS): is a statistical analytical package developed as far back as 1960 (Boslaugh, 2005; Bryman and

Bell, 2011). According to Bryman and Bell (2011), it is considered as one of the most excellent data

analysis software used in business research for the analysis of quantitative data.

4.8.1 Factor Analysis: Factor analysis is a collection of methods that is relevant for determining how an underlying

construct can be created from a number of different measured variables. One of the key functions of

factor analysis is to minimize the rate of redundancy among the variables by using a smaller number of

variables. Factor analysis assembles variables with the same characteristics. The key objective of factor

analysis can be summarized as specifying the unit of analysis, achieving data summarization and data

reduction, variable selection and using factor analysis result with other multivariate techniques (Hair et

al., 2010).

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4.8.2 Regression Analysis Is an analytical method that investigates ‘possible functional relationship’ that could exist between

different variables at a giving point in time (Chatterjee and Hadi 2006).

During the process of data collection, some issues are seen to have the potential of affecting the

outcome of the data collection. Firstly, one of the major issues has to do with time and cost constraint.

Time and cost effect made the result of the research findings to be based on cross-sectional data

collection procedure. Secondly, Problem of generalization as some respondents might not be honest in

their responses.

4.9 The Ethical Consideration Blaxter et al., (1997, p. 148) gave the description of ethical consideration in business research as

principles that controls the behavior of the researcher throughout the process of the research, with

respect to issues such as ‘confidentiality’, ‘anonymity’, ‘legality’, and ‘professionalism’. First, the

researcher pays attention to the ethical consideration, by abiding by the ethical approval of the

University of the West of England in conducting the research.

Secondly, in distributing the questionnaire to different respondents, the researcher attached a cover

letter (see appendix 1) stating the idea behind the research and the significant of the research objectives.

Thirdly, in the cover letter, were information that substantiates the importance attached to the privacy

and anonymity of the respondents.

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CHAPTER 5

THE RESEARCH FINDINGS

5.1 Analysis of the Research Findings

The previous chapter discussed the methodology through which the research data were generated.

This chapter presents the findings obtained from the survey of banks’ customers and an analysis of the

findings based on the hypotheses generated from the review of relevant literatures in chapter two and

three. The research question is to determine how the effects of different external and organizational

variables contribute to customers valuing innovative activities, and hence that can contribute to a

sustainable competitive advantage within the Nigeria’s retail banking institutions.

5.2 The Correlation Matrix for the Research Variables A correlation matrix simply defined, is a rectangular array of numbers that is represented by rows

and columns, which gives the correlation coefficients between a single variable and every other

variables in the investigation. The correlation coefficient between a variable and itself is always 1; hence

the principal diagonal of the correlation matrix contains 1s. The correlation coefficients above and below

the principal diagonal are the same. The determinant of the correlation matrix is shown at the foot of the

table 5.1 below.

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The Correlation Matrix for the research variables

Gender

Education Levels Age Lagos

New Generation

Bank Online

BankingCustomer Service

Product & Service

Accessibility Staff

Competence ReputationCustomer

Satisfaction Gender 1 -.032 -.023 -.150 .061 -.068 .084 .034 -.057 -.106 .080

.711 .788 .078 .477 .430 .323 .689 .505 .212 .349Education Levels

-.032 1 .125 -.122 -.243** .123 .091 .102 -.147 -.010 .073.711 .143 .151 .004 .150 .286 .233 .084 .904 .391

Age -.023 .125 1 .178* .095 -.077 .060 -.136 .153 -.079 .075.788 .143 .036 .267 .366 .480 .110 .072 .354 .381

Lagos -.150 -.122 .178* 1 .045 -.105 .083 -.165 .033 .024 .135.078 .151 .036 .600 .218 .334 .052 .697 .781 .114

New Generation Bank

.061 -.243** .095 .045 1 .230** .039 -.149 -.021 .160 .032

.477 .004 .267 .600

.006 .649 .080 .805 .060 .707

Online Banking -.068 .123 -.077 -.105 .230** 1 .326** .433** -.271** .383** .269**

.430 .150 .366 .218 .006 .000 .000 .001 .000 .001Customer Service

.084 .091 .060 .083 .039 .326** 1 .248** -.169* .257** .300**

.323 .286 .480 .334 .649 .000 .003 .047 .002 .000

Product/Service Accessibility

.034 .102 -.136 -.165 -.149 .433** .248** 1 -.115 .229** .330**

.689 .233 .110 .052 .080 .000 .003 .179 .007 .000

Staff Competence

-.057 -.147 .153 .033 -.021 -.271** -.169* -.115 1 -.156 -.190*

.505 .084 .072 .697 .805 .001 .047 .179 .067 .025

Reputation -.106 -.010 -.079 .024 .160 .383** .257** .229** -.156 1 .290**

.212 .904 .354 .781 .060 .000 .002 .007 .067 .001Customer Satisfaction

.080 .073 .075 .135 .032 .269** .300** .330** -.190* .290** 1

.349 .391 .381 .114 .707 .001 .000 .000 .025 .001 Row 1 = Pearson Correlation; Row 2= Sig. (2-tailed). **. Correlation is significant at the 0.01 level (2-tailed). *. Correlation is significant at the 0.05 level (2-tailed). a. Listwise N=139 Table 5.1: The Correlation Matrix for the research variables

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5.3 KMO and Bartlett’s Test The KMO and Bartlett’s test measures the sampling adequacy which should be greater than 0.5 for

a satisfactory factor analysis to proceed. From the table below, the KMO measure is 0.887. Furthermore,

the same table shows that the Bartlett's test of sphericity is significant. Meaning that, its associated

probability is 0.00, which is less than 0.05. This implies that the correlation matrix is not an identity

matrix (see University of Newcastle-on-Tyne http://www.ncl.ac.uk/ucs/statistics (visited 20 December

2010)).

Each value on the diagonal of the anti-image correlation matrix shows the measure of sampling

adequacy for the respective variables is above 0.5, which therefore means that all variables can be

retained for the factor analysis.

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .887

Bartlett's Test of Sphericity Approx. Chi-Square 2108.771

df 300

Sig. .000

Table 5.2: KMO and Bartlett’s Test

5.4 The Rotated Component Matrix The rotated component matrix was done by the researcher to reduce the number factors on which

the variables under investigation have high loadings. The tables 5.3 below shows how each of the

variables are loaded with respect to each of the questions contained in the data collection method.

Drawing on the reviewed literatures, a conceptual framework was developed to identify the factors

arising from the factor analysis. These are labeled Product and services accessibility, New Generation

banks, Bank reputation, Staff Competence, and Customer service.

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Items from Questionnaire

Factor names, loading and measures of individual research variables

Online Banking

Customer Service

Access to Products and Services

Staff Competent

Customer Satisfaction

Reputation

A1: Enjoy bank’s internet banking .769 .076 .090 .148 .061 .173 A2: Friendly staff .361 .284 .014 .557 .292 .115 A3: Attention to customer’s need .231 .349 .226 .714 .066 .112 A4: Essay access to online banking .697 .043 .199 .399 -.111 .067 A5: The bank have skilled staff .204 .126 .242 .720 .146 .191 B1: Phone confirmation -.003 .040 .057 .173 .102 .860 B2: Good reputation .377 .063 .220 .220 .364 .502 B3: Quality service .457 .213 .417 .137 .157 .376 B4: Future service .382 .215 .448 .026 .065 .497 B5: Answer anytime .411 .605 .210 .204 .084 .224 C1: Use ATM in other banks .011 .080 .117 .049 .816 .093 C2: Encourage others to use the bank .390 .095 .276 .211 .588 .139 C3: Maximum satisfaction .393 .339 .375 .221 .512 .160 C4: Safe premises .343 .297 .514 -.215 .122 .272 C5: Saturday banking -.007 .732 .293 .163 .129 -.191 D1: Free ATM services .294 .559 .047 .057 .234 .244 D2: Improves online banking .742 .355 .100 .078 .169 .009 D3: Enjoy innovation .774 .297 .215 -.044 .106 .094 D4: Faster services .720 .274 -.037 .136 .234 .147 D5: No technology failure .267 .750 .024 .227 -.014 .119 E1: Online access .701 .018 .185 .326 .085 .017

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Extraction method: Principle Component Analysis Rotation Method: Varimax with Kaizer Normalization A Rotation converged in 6 iteration Table 5.3: The factor loading and measures of individual variables

E2: Best bank in Nigeria .558 .239 .308 .207 .322 .022 E3: Customer’s are informed .227 .207 .568 .294 .347 .162 E4: Understand Products .246 .246 .679 .152 .024 .157 E5: Confidentiality -.019 -.049 .712 .227 .197 -.041

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The table above shows that certain numbers of individual factors (the highlighted items) are more

than 0.5 while some are less than 0.5. Factors that are greater than 0.5 are chosen to create the dependent

variable (online banking) and the independent variables for this study: Online Banking – A1, A4, D2,

D3, D4, E1, and E2; Customer Service – B5, D1, and D5; Access to Product and services – C4, E3, E4,

and E5; Staff Competent – A2 and A3; Customer Satisfaction – C1, C2, and C3; Bank Reputation – B1

and B2 to be the major variables for the regression analysis

Several variables, age, gender, location of customer residence, education level and the name of the

bank used by the each of the respondents, were collected in the survey for use as control and explanatory

variables in the research. Based on data from chapter three, each bank was classified as being either a

traditional or a new generation bank and this ‘dummy’ variable is used in the regression model.

5.5 Regression Analysis for the Conceptual Model and Hypothesis Regression analysis is one of the statistical tools used to forecast the level of relationship between

dependent and independent variables. Based on the findings from the reviewed literatures in chapter two

and three, a conceptual framework and hypothesis was developed to test the level of significance in the

relationship between the dependent and the independent variables. A regression analysis was done to

examine the relationship between the dependent variable Online banking, and the independent variables

Customer service, Product and Service accessibility, Staff competence and Bank reputation. The model

tested is that set out in chapter three and reproduced below for clarity along.

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Figure 5.1: The conceptual framework for the hypothesis

5.5.1 Model Summary and ANOVA for Online Banking The model shows the R value of 0.645 (see table 5.4) which stands for the correlation coefficient

of the dependent and independent variables. The ANOVA table is used to test the significance of the

overall model for the linear relationship between dependent and independent variables. As shown in

table 5.5, the F value of 10.207 is highly significant with p<0.000, indicating a linear relationship

between the dependent and independent variables.

Table 5.4: Model Summary

Model R R Square Adjusted R Square

Std. Error of the

Estimate

1 .645a .416 .375 .79772271

a. Predictors: (Constant), Gender, Product & Service Accessibility, Education Levels, Staff Competence, Lagos, Reputation, New Generation Bank, Customer Service, Customer Satisfaction

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Table 5.5: ANOVAb

Model Sum of Squares Df Mean Square F Sig. 1 Regression 58.457 9 6.495 10.207 .000a

Residual 82.091 129 .636 Total 140.548 138

a. Predictors: (Constant), Gender, Product & Service Accessibility, Education Levels, Staff Competence, Lagos, Reputation, New Generation Bank, Customer Service, Customer Satisfaction b. Dependent Variable: Online Banking

The ANOVA table above indicated that the factors influencing the online banking are significant

with a P-value of 0.00. This means p < 0.001, so we can be 99% certain of the linear relationship

between the variables. The coefficients of the variables are shown in table 5.6, with the collinearity

statistics. Within the collinearity statistics, the Variance Inflation Factor (VIF) is a test to show that the

variables are not highly correlated with each other.

Coefficientsa

Model

Unstandardized Coefficients

Standardized Coefficients

t Sig.

Collinearity Statistics

B Std. Error Beta Tolerance VIF (Constant) -.350 .372 -.939 .349

Customer Service .161 .076 .156 2.120 .036 .832 1.202Product & Service Accessibility

.360 .079 .346 4.544 .000 .779 1.283

Staff Competence -.158 .072 -.154 -2.192

.030 .921 1.086

Reputation .176 .076 .174 2.327 .022 .810 1.234Customer Satisfaction .033 .076 .033 .430 .668 .761 1.315New Generation Bank .616 .154 .289 4.008 .000 .869 1.150Lagos -.190 .144 -.094 -

1.317.190 .882 1.134

Education Levels .145 .097 .106 1.495 .137 .897 1.115

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Gender -.261 .149 -.124 -1.757

.081 .915 1.093

a. Dependent Variable: Online Banking Table 5.6: Table of Coefficientsa

The table above shows that customer attitudes towards online banking are influenced by the bank’s

reputation, staff competence, product and service accessibility, customer service and whether the bank is

a new generation bank, and to a lesser extent gender. This demonstrates that these factors are significant

determining drivers with respect to how customers perceive retail banks’ innovation in online banking

Figure 5.2 shows the conceptual framework for the research hypothesis and their various

significant results.

Figure 5.2: The result of the hypotheses and the conceptual framework.

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H1 Products and Service accessibility has a positive influence on customer perception

towards online banking

The results show that customers encourage innovation in online banking from the retail banks that

have easy access to product and services. The factor is highly significant (p<0.000) with a positive

coefficient of 0.360. The result supports H1 that Products and Service accessibility has a positive

influence on customer perception towards online banking.

H2 New generation banks operational strategy has a positive influence on online

banking

The result indicates that customers are more supportive of innovation in online banking from those

banks that are classed as ‘New Generation’ rather than traditional banks. The coefficient is positive

0.616 and is highly significant (p<0.000). This finding supports H2 that New Generation banks’

operational strategy has a positive influence on customer satisfaction with innovation in online banking.

H3 Bank reputation has a positive influence on customer perception towards the

Online banking.

The research findings has established that there is a significant relationship between the factor

bank reputation and online banking with a P-value of 0.022 (< 0.05) with a positive coefficient of 0.176.

This finding means that H3, Bank reputation has a positive influence on customer perception towards

the online banking, can therefore be accepted.

H4 Staff competence has a positive influence on customer satisfaction towards the

Online banking

Interestingly, customer views about the competence of staff appear to be negatively related to their

perceptions about online banking. The coefficient is -0.158 and significant at the 3% level,

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(P=0.03<0.05). This finding is contrary to hypothesis H4 which states: Staff competence has a positive

influence on customer satisfaction towards the online banking. The result from the simple linear

regression has shown that there is significant but negative contribution between online banking and staff

competence.

H5 Customer Service has a positive influence on online banking.

The research findings have shown that customer opinions about the services provided by the retail

banks is significantly related to online banking with P value of 0.036 which is less than 0.05. The

regression analysis indicated that customer service has a positive coefficient (0.161); hence it supports

H5 which stated that, Customer Service has a positive influence on online banking.

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CHAPTER 6

RESEARCH DISCUSSION AND CONCLUSION

The analysis of the research findings has clearly established that the integration of different

innovative activities by retail banks create sustainable competitive advantage within Nigeria’s retail

banking institutions as measured by customer perceptions. This is consistent with the review of relevant

literatures in chapter two and three (Roberts and Amit, 2003; Roberts, 2001; Porter, 1990; Tidd and

Bessant, 2009; Tidd et al., 2001).

6.1 Discussion of Main Result Based on the analysis, four hypotheses (H1, H2, H3, and H5) have positive coefficients except H4,

which has a negative coefficient. Among the independent variables, product and services accessibility

and new generation bank has the top predicator of customer’s perception with respect to online banking.

Table 6.1 below shows the summary of the result of the conceptual framework and hypothesis testing.

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The summary of the result of the conceptual framework and hypothesis testing

Hypothesis P Value (P<0.05)

Coefficient Value Result Supporting Literature

H1 - Products and Service accessibility

has a positive influence on customer

perception towards online banking

0.000 0.360 Support Devlin (1995); Mols (1999);

Ehigie (2006)

H2-New generation banks operational

strategy has a positive influence on

Online banking.

0.000 0. 616 Support Maklan and Knox (2005)

H3 - Bank reputation has a positive

influence on customer perception

towards the Online banking.

0.022 0.176 Support Wang et al. (2003); Goode

and Harris (2007);

Standifird et al. (1999)

H4- Staff competence has a positive

influence on customer satisfaction

towards the Online banking

0.030 -0.158 Not Support Ritter and Gemunden (2003);

Mols (1999)

H5 - Customer Service has a positive

influence on online banking.

0.036 0.161 Support Devlin (1995); Mols (1999);

Katz and Aspden (1997)

Table 6.1: Summary of the result of the conceptual framework and Hypothesis testing

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The purpose of the first hypothesis was to establish possible casual relationships between product

and services accessibility and online banking. Drawing from the reviewed literatures, Devlin (1995)

maintained that customers now have access to banks’ products and service through wider distribution

channels such as Automated Teller Machine (ATM), credit and debit card, point of sale, and telephone

banking. Mols’ (1999) position on internet banking supports the research findings. His research

demonstrated that online banking creates a new distribution channel that has reduced the waiting time

and creates convenience in banking transactions. Furthermore, this significant relationship confirms

Ehigie’s (2006) point of view that banks can sustain high profitability by providing products and service

that meets customer requirements through online distribution.

Secondly, inferring from the literature review, the consolidation of the Nigeria’s retail banking

industry brought in the rebirth of the new generation banks. The result from the research findings

upholds that the operational activities and structures of new generation banks drive the adoption and

innovation online banking Maklan and Knox (2005). More so, Maklan and Knox (2005) maintained that

one of the new generation banks in Nigeria, Guarantee Trust Bank, was the pioneer in offering call-

centre facilities and services, which was introduced as a means sustaining the services provided by

online banking.

Consistent with the finding is Wang et al. (2003) opinion that reputation is a medium through

which the outcome of the success of retail banks distribution channel process can be ascertained.

Reputation is also an important medium through which the potential of service firms in satisfying

customer’s requirement can be established. Goode and Harris (2007) proposal on reputation and online

customer are directly and positively related to determining the behavior and perceptions of the customer.

Other relevant literatures have also supported this research finding. Standifird et al. (1999) concluded

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that when compared with online and branch products and services, the reputation of the online services

is substantially more important to customers than the branch products and services.

Furthermore, the research findings support the opinion of Ritter and Gemunden (2003) which

stated that there is a degree of relationship between staff competence and technological innovation.

Their empirical research on organizational competencies concluded that, the coordination and

collaboration innovation of staff activities could be achieved when staff with different competencies

synchronized their activities to be in harmony with each other. More so is Mols’ (1999) assertion on the

importance of staff competence and online banking that is upheld by this research finding. He

established that, to sustain innovation in the retail banking, the bank staff must continuously build new

competencies and maintain efficiency in managing the banks internet services. However, based on this

findings, it can be established that negative coefficient could be as a result of the fact that customers that

perform online banking do not interact with staff except where there is a technical problem. Hence, they

only interact in negative situations.

Consequently, these findings support recent research on customer service and online banking

(Delvin, 1995; Mols, 1998). Drawing on Mols (1998) research findings, online customers are more

satisfied with the services provided by their banks than the customers that physically visit the bank on a

regular basis. A customer who uses online banking has tendencies of advertising and maintaining

services provided by the banks. Other research maintains the same position with this significant

relationship between customer service and online banking. Katz and Aspden (1997, p.173) research

survey in the USA about customer service and internet banking, maintained that about 17% of the

respondents affirms that internet banking is a convenient ways to do banking.

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The research findings show that banks that adopt these innovations primarily attract young

customer’s use most of the innovative activities while older people resort to the traditional branch

network services. In addition, the finding proves that banks that are located in the city tend to create

better and most efficient products and services than banks located in the rural areas.

This research reinforces the opinion that product and services accessibility, new generation banks

operational structure, bank reputation, and customer service have an important role to play in creating

sustainable competitive advantage in Nigeria’s retail banking institutions.

Interestingly, the research has established that online banking is one of the factors that influences

the adoption and diffusion of innovation in the retail banking institutions. Again, the study has

recognized that new generation banks have emerged as a result of external pressure, such as changes in

the regulatory policies and continuous changes in customers taste and preferences, and industry

competitive orientation. Also, the internal pressure leading to the arrival of new generation banks

include; need pull, management and staff training and development, inspiration and exploring alternative

futures and opening up different possibilities.

6.2 Recommendation for further research The researcher believes that research in strategic management and innovation is still evolving. In

the course of reviewing relevant literatures, it was observed that certain type of online banking activities

such as “point of sale cash back” are yet to be explored by Nigeria’s retail banking institution. Although

most of these retail banks have installed cash machine and point of sale terminals in some supermarkets

and other strategic locations, some of them are yet to implement the system that generate point of sale

cash back. The researcher believes that research should be done in this context to establish what effect

point of sale cash back can have on gaining customer royalty and creating competitive advantage.

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More so, another important issue evolving from the reviewed literatures is that recapitalizations of

Nigeria banking institutions have generally exposed Nigeria’s retail operational structures, but no

comprehensive research has been carried out about their operations post recapitalization. Research

should be done in this area to know if their operations strategy can compete with the strategy of the retail

banks operating in the emerging economies.

Finally, from the reviewed literatures, the researcher identified that the location of the retail banks

seems to have implication on how customers would perceive banks product and services and bank’s

performance. Therefore, it is important that should be conducted to know how location factor can

influence banks performance and competitive advantage.

6.3 Personal reflections on the experience of undertaking this dissertation.

In conclusion, conducting research in the field of strategic management and innovation was a

memorable one for me. Initially, I was scared when I was informed by my program director about the

word count. My fears was based on the fact that the method of conducting and writing a research work

at the master’s level is exceptionally different from that of the undergraduate level. On the contrary, I

was consoled by the fact that there are parallels between my home country’s (Nigeria) academic system

and the UK academic system.

Thank God for the opportunity to present a proposal for the research work because at the

beginning of my program, I had the idea of what I wanted my research to be based on, however, giving

it a name and structuring it was a total nightmare for me. In fact, my ability to persevere and complete

this research is as a result of the encouragement and support from the people around me.

During the period of the research, one of the interesting experiences I cannot forget was the

structuring of my questionnaire. My supervisor, not only read and corrected the questions, she ensured

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that all the questions were sourced from the reviewed literatures, this made me put in more effort in

searching for journals beyond what I expected. Another outstanding experience was the feedback for the

first draft of my literature review. My supervisor scrutinized every part of the research content and

ensured that the references were structured to meet the university standard. I once missed a particular

page number in my referencing and she said “where is the page number for this reference? If you do not

have the authors book, come I can give you a copy”

Furthermore, data collection and interpretation was also challenging for me. Initially, I thought

that all I had to do was to administer the questionnaire and people will respond immediately. I got the

first shock when after two weeks of administering the questionnaire online, only about forty three (43)

people had responded. Apparently, this was a learning process in disguise because it taught me how to

follow people up with emails to get what I wanted.

In the course of conducting this research I had the opportunity to read widely and know more

about the key authors and researchers in the field of strategic management, innovation, banking

operation processes and the importance of online banking from the customer perspective. This research

work took a lot out of me, however, all I can say in summary is that the research area is a very

interesting one and I am very delighted that I went into it.

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APPENDIX 1 Self Administered Questionnaire

This is M.Sc dissertation survey being carried out for the purpose of investigating the Nigeria’s retail

banking industry and their various innovative activities between 2005 and 2010. Please answer the

questions freely. The questionnaire should take you about five minutes to complete and the questions

asks you about your view on using your bank. Please answer the questions by thinking about your

personal experiences and views of your current bank in which you undertake the majority of your

personal banking. You cannot be identified by the information you provided and information about your

personal data will not be used for any other purpose other than for academic purpose.

The survey consists of two sections. Section A and section B contain sets of statements that you are

asked to rate from strongly agree to strongly disagree. Some of the questions may look same, please do

not ignore them as your answers provide essential and accurate view of a range of opinions.

PART A

Instructions: Please read each statement carefully. Using the given scale 1 – 7, mark the number that

indicates how much you agree or disagree with each of the statement. Please read each statement below

carefully with which you agree or disagree. Keep in mind that there is no right or wrong answers.

1 2 3 4 5 6 7

Strongly Disagree Disagree

Slightly Disagree

Neither agree nor disagree

Slightly Agree Agree Strongly Agree

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Strongly disagree Strongly agree

1 I enjoy the bank’s internet banking 1 2 3 4 5 6 7

2 The bank staff are very friendly 1 2 3 4 5 6 7

3 The bank pays attention to customers’ need 1 2 3 4 5 6 7

4 I can easily access the bank’s online banking 1 2 3 4 5 6 7

5 The bank members of staff have the required banking skills 1 2 3 4 5 6 7


1 I always receive a confirmation on my phone after transactions 1 2 3 4 5 6 7

2 The bank has a good reputation 1 2 3 4 5 6 7

3 The bank’s product and service are of good quality 1 2 3 4 5 6 7

4 The bank will continue to provide better services 1 2 3 4 5 6 7

5 I can call the bank anytime of the day or night and get an answer to my question

1 2 3 4 5 6 7


1 I can use the bank’s ATM card in another bank’s ATM machine.

1 2 3 4 5 6 7

2 I will encourage others to use the bank 1 2 3 4 5 6 7

3 I derive maximum satisfaction from the bank’s services 1 2 3 4 5 6 7

4 I feel safe when I visit the bank’s premises 1 2 3 4 5 6 7

5 The bank has Saturday banking services 1 2 3 4 5 6 7

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1 The bank’s ATM services are free of charge. 1 2 3 4 5 6 7

2 The bank constantly improve its on-line banking products 1 2 3 4 5 6 7

3 I enjoy the bank’s technological innovations 1 2 3 4 5 6 7

4 The bank’s technology provides faster services 1 2 3 4 5 6 7

5 I have not experienced technical breakdown using the bank’s ATM machines

1 2 3 4 5 6 7


1 I can check my account balance online anytime. 1 2 3 4 5 6 7

2 The bank is the best retail bank in Nigeria 1 2 3 4 5 6 7

3 The bank keeps customers’ informed 1 2 3 4 5 6 7

4 I have a good understanding of the bank’s products 1 2 3 4 5 6 7

5 The bank maintains confidentiality of transactions 1 2 3 4 5 6 7

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PART B:

Personal Data

Sex: Male [ ] Female [ ]

Age classification:

Above 18 [ ] 24 - 30 [ ] 31 - 37 [ ] 38 – 4 [ ] 43 – 50 [ ]50 & above [ ]

Which of the following educational qualification do you possess?

Primary School Certificate Level [ ] Secondary School Certificate Level [ ]

University Graduate [ ] Post Graduates degree [ ] Doctorate Degree [ ]

State of Residence in Nigeria:

Abuja [ ] Bayelsa [ ] Benin [ ] Calabar [ ] Enugu [ ] Ibadan [ ] Kaduna [ ]

Lagos [ ] Owerri [ ] Portharcourt [ ]

In which of the following Nigeria’s retail banks do you have an account?

Access Bank plc [ ] Diamond Bank Plc [ ] Eco Bank Plc [ ] Fidelity Bank Plc [ ] First Bank of Nigeria Plc [ ] First City Monument Bank plc [ ] Guarantee Trust Bank Plc [ ] Skye Bank Plc [ ] Stanbic IBTC Bank [ ] Union Bank of Nigeria Plc. [ ] United Bank for Africa (UBA group) [ ] Zenith Bank plc [ ]

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Appendix 2 Different account products of all the sampled banks post consolidation

ACCESS BANK PLC. DIAMOND BANK PLC.

TYPES OF ACCOUNT DESCRIPTION TYPES OF ACCOUNT DESCRIPTION

Standard Current Account

Designed for their discerning customers

Diamond Personal Current Account

An account that gives customers all the benefits of a current account combined

with the choice of enjoying free banking services

Access Premier Account A high-yield type of current account for individuals with investment benefits designed to meet their financial needs

Diamond BusinessXpress Account Basically created to add value to micro, small or medium scale enterprise

(MSME). The account aims to help customer’s grow your MSME business

till it graduates to the upper level market.

Access Advantage Account A savings type of account that gives customers the benefits of a

current account

DiamondXclusive Account This is a current account that promises exclusive service to its customers. It

gives a high level of preferential treatment to customers in order to make

customers experience unique

Standard Savings Account An account that helps customers save for the future financial needs

Diamond SavingsXtra account An interest-yielding savings account, that allows the deposit of both cash and third

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party cheques.

Solo Account An account created for students between the ages 16 and 18 years.

Diamond Kiddies account An account that enables customers to start saving on behalf of their children aged under 18 years with a minimum

deposit of N5, 000

Access Early Savers Account

Designed to meet the financial savings needs of children

Diamond High Interest Deposit Account (HIDA)

Account designed for our premium customers who can maintain a minimum

balance of N100, 000, whilst still allowing you easy access to your money

whenever you want it.

Call Deposit Account An account that allows you to save your funds while maintaining

liquidity and earning interest

ECO BANK PLC. FIDELITY BANK PLC.

TYPE OF ACCOUNT DESCRIPTION TYPE OF ACCOUNT DESCRIPTION

Ecobank Current Account

Value added accounts available in both local and foreign currency

Fidelity Current Account (FCA A facility account designed for individuals and business owners seeking

dependable and convenient banking services.

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Ecobank Savings Account

The secure, convenient and reliable savings account.

Fidelity Current Account PLUS A special current account designed for individuals and business owners who

keep high balances.

EasiSave (ESUSU) A savings account designed for traders and small business owners with easy

access to banking services

FPSS – Fidelity Personal Savings Scheme

A hybrid account designed for customers who need a savings account with the

flexibility of a checking account.

Fidelity FLEX

A hybrid savings account with the FLEXibility of a checking account,

designed for students in tertiary institutions of learning and Youth

Corpers, who are seeking reliable and convenient banking services

FIRST BANK OF NIGERIA PLC. FRST CITY MONUMENT BANK PLC.


First Hi-Fi (Children) Account

This is a special account designed for children from age 0 – 18 years

Classic Current Account Classic Current Account is designed to give customer’s Convenience and

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to sensitize and cultivate savings culture within this age bracket and

to help parents plan towards the future of their children and wards.

Flexibility while meeting all your

banking needs.

First Current Plus (Zero COT Account)

Withdrawal is limited to five (5) times in a month, where a

customer exceeds the number of withdrawals, the account will

default to N5.00/mille COT on the total customer induced

transactions for that month

Gold Current Account

It is a premium Current account with zero COT, designed to meet the needs of Affluent and High Networth Individuals, and incentivize them for their high current account balances.

First Savings Plus Account

It is a hybrid savings account that runs on a savings platform with

current account features for customer’s convenience.

Minus To Plus Account

The Minus to Plus account is a Zero COT Current Account that pays Fixed Deposit returns. It is an auto-save current account that allows you to earn interest on idle funds while having the flexibility to issue clearing cheques.

First Dom Plus

An account that encourages customers to save foreign currency while still giving the customer’s the opportunity to earn higher interest on account balances.

Foreign Currency Accounts

This is an array of Foreign Currency denominated accounts with benefits such as currency flexibility, convenience and ease in account operations. The product array is comprised of a Foreign Currency Current Account and a Foreign Currency

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Fixed Deposit Account.

All-In-One Savings Account

The All In One Account lets you enjoy the benefits of Savings, Current and Fixed Deposit Accounts all at once. You enjoy the zero COT charge of a Savings Account; the flexibility and convenience of Current Account features, attractive Fixed Deposit returns and extras like no other

The FCMB Millionaire Savings

Certificate

The Savings Certificate pays you interest on your funds and also qualifies you to win exciting prizes in our monthly draws

Classic Saver Plus Account A flexibility of a current account and also earn interest" With the Saver Plus account, customers can draw on their savings whenever the need arises

GUARANTY TRUST BANK PLC. SKYE BANK PLC.


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GTB Current Account Checking accounts that allows customers to carry out routine banking transactions with third parties and allows them enjoy easy access to their money from any of our branches nationwide on an on-line real time platform

Skye Select current Account This product is targeted at the discerning high end individual, who requires personalized account management

services and can maintain a minimum credit balance of N100,000.00 at all

times.

Domiciliary Account Account allows customers to maintain accounts in foreign currencies and can be funded

through travelers cheques, lodgment of foreign currency

cheques, cash inflows and cash deposits. Account Holders can

withdraw cash or make transfers to their accounts or other accounts

offshore.

Enterprise Select Account Skye Enterprise Select is an account that combines the features of both savings and

current account for the discerning ENTREPRENEUR

Smart Kids Save (SKS) It's a savings account designed to create banking awareness in

children and encourage a savings culture from an early age.

Skye Rainbow Account Skye Rainbow account is a children's savings account. It is designed with special features that benefit parents seeking to save for their children's

education and other needs

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MaxAdvance This is designed to facilitate personal loans to staff of select

corporate and government organizations whose staff salary

accounts reside with the bank

Skye Wise - Save and Earn This savings product offers the individual the benefits of both the savings and

current account benefits with the use of non-clearing cheque book.

GTSave - Savings Account Guaranty Trust Bank savings account offers you a savings

account with attractive interest on customer’s daily balance.

Skye Save Skye Save Account is a standard savings a/c designed to meet the savings needs of all individual adults (male & female) and

professionals of 18 years and above.

GTCrea8 A high interest-bearing savings account that enables students of tertiary institutions cultivates savings habit while pursuing academic goals and aspirations

Skye Treasure Account An account designed to cater for the needs of the customers in the middle and

lower classes.

Skye Wise Classic account Skye wise Classic is a savings account with Current account features. It is targeted at Cooperative Societies, Clubs, and Associations. It is a non COT account that allows customers the use of third party cheques.

STANBIC IBTC BANK PLC. UNION BANK OF NIGERIA PLC.

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TYPES OF ACCOUNT DESCRIPTION TYPES OF ACCOUNT DESCRIPTION

Current Account An account that allows cheque lodgements and withdrawals by third parties through the use of a cheque.

Union Elite Standard Account This is a savings account with some features and characteristics of a current

account.

High Yield Current Account

The High Yield Current Account (HYCA) is an account that gives you the benefits of a current and savings account all in one and also provides you with a high

yield on your savings.

Union Elite Premium

Account

A current account based product with all features of a regular current account,

savings account, fixed deposits and more

Personal Savings Account An account that helps customers to accumulate extra income and

build up your cash reserves

Union Kiddies Savings Account A special savings account targeted at children between ages of 0 - 12 years.

call account An interest bearing account to which funds can be deposited and

called back on demand

Union Kiddies Term Account A special savings account targeted at children in secondary/high schools whose

ages range between 13 - 19 years

CHESS Savings Account A special savings product developed to support customers in meeting cash flow needs for their

Union Graduate Account A savings account designed for students in tertiary institutions, but divided into

three parts as follows:

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children’s education

UBA PLC. ZENITH BANK PLC.


NRN Current Account This is a feature rich current account product for Nigerians living abroad that enables unlimited number of transactions both via U-direct and UBA branches

ZECA ZECA - Zenith Children's Account is a special deposit product geared towards

your children/ward's education and bright future.

UBA Professional Account The UBA professional account is a current account for effective

salary/pay roll administration for the organization. It is designed for employees in private and public

sector.

UBA Current Account This is a Demand Deposit Account (DDA) in which funds

deposited are payable on demand either in person or by presentation

of a cheque/ bank draft, direct debit, electronic fund transfer etc.

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Sustaining Competitive Advantage through Innovative Activities: A case of Nigeria’s Retail Banking

Freedom Savings Account Freedom savings account is a convenient saving plan which

allows opening of account without fund, but the account must be

funded with minimum of N500 within 30days

Patriots Savings Account Patriot Savings is designed for serving Armed Forces, Police & Para-military officers to plan for the future as they are constantly exposed to life threatening risk during the course of their duty

U-Care Savings Account It is an education-specific savings account for Parents/Guardians to support the education of their child/wards through primary & secondary schools

Sources: The Banks Corporate website and annual reports (2004 – 2010)

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Sustaining Competitive Advantage through Innovative Activities: A case of Nigeria’s Retail Banking

Sustaining Competitive Advantage Through Innovative Activities

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