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PROJECT TOPIC- IMPACT OF NEW PRODUCT DEVELOPMENT ON THE GROWTH OF COMMERCIAL BANKING IN NIGERIA A CASE STUDY OF CITIZENS INTERNATIONAL BANK LIMITED

PROJECT TOPIC- IMPACT OF NEW PRODUCT DEVELOPMENT ON THE GROWTH OF COMMERCIAL BANKING IN NIGERIA A CASE STUDY OF CITIZENS INTERNATIONAL BANK LIMITED

ABSTRACT

The Impact of New Product Development is a continuous exercise in the banking industry. However, the regulation and supervision of commercial bank by the government through the Central Banks dictates the tunes of product innovation in the industry. However, there is serious impact on the new product welfare in the banking industry either to meet the needs of ever-increasing customer or to have a greater market share in the business of banking. This study tries to evaluate the impact of new product development in the banking industry, to point out areas of constraints and to find out solutions. The following hypotheses were formulated for the study: most of the new banks products are technologically driven, the bank new product is to increase to customer satisfaction. A survey method of data collection is used for the study. Here two sets of questionnaires were used for this study. One for the bank staff and the other for the customer. The questionnaires were distributed by hand to the respondents and collected immediately after their responses. The researchers also interviewed some of the respondents and visited libraries where books, newspapers and journals were read for the study. The Enugu State International Trade Fair 2004, provided a forum for interaction with the bankers. In analyzing the result, only correct, filled questionnaires were used for the study. For an in-depth study of this study, citizens international bank limited were used for the study.

CHAPTER ONE

1.0 INTRODUCTION

Commercial  banking activities come to the area now known as Nigeria in 1892. The second bank was not established until 1917. These two banks monopolized the industry until 1933 when the third and the first indigenous banks were established in 1959, only eight (8) banks were in operation. With the establishment of CBN, growth became rapid with four banks established in that same year.

It was the structural adjustment programme (SAP) introduced in 1986 by the Babangida administration that revolutionized the banking system in Nigeria, licensing of banks was deregulated. By 1991 the number of banks (commercial banks) has risen rapidly. If you have between N500,000.00 and N50,000.00, there are opportunities in the financial sector.

In fact, ever since the industry survived the then oil created by the unending distress of the last decade, there has been exerting pressure on financial institutions to add real value to customers lives. The survival instinct has forced the industry to shift it from arm-chair banking of the early 90s when bankers exhibited adamant attitude towards customers needs (as customers has little or no choice than to accept the fixed deposit rate).

The forces of competition in the banking industry across the world grows more intense day  by day. Nigeria banking industry has not been spared from the growing competition. This led to the banks continued quest to open up and develop more markets and the on-going conversion in the banking industry. Some of the banks like merchant banks are turning or converting to carrying commercial

banking operation, due to the universal banking currently in operation in the financial industry. These competitive pressures make it increasingly necessary for Nigerian banks to diversify their income base through increased efficiency as well as seek to grow their volume of business to which the adoption of a global outlook and product mix strategy becomes a key imperative.

The greatest innovation that has taken place in the twentieth century is in the realm of information technology, the introduction of computers and the advancement in information technology have transformed the global economic landscape and have particularly put the banking industry on an accelerated pace of development. The information revolution has led to the convergence of the computing and telecommunication technologies, impacting on creating a new order of electronic telecommunication network, converting the world through cables and satellite information super high ways.

1.1 BACKGROUND OF THE STUDY

According to Itura (1982:567), a British owned bank opened its office in Nigeria and operated under the name of Bank of British West Africa. The bank has the credit of being the first banking established to practice banking in Nigeria. At a certain time in its history, it changed its name to the Standard Bank for West African Limited. It latter incorporated in Nigeria after the company acts of 1968 as the Standard Bank of Nigeria.

The Barclay’s Banks came into the Nigerian Banking scene in 1917. It helped in cultivating banking habit among our people. The Barclay Bank DCO (Dominion Colonial and Overseas) later was incorporated as Barclay Bank of Nigeria Limited. Since, 1978 it has changed its name to Union Bank. In 1933, the National Bank of Nigeria was established by some private Nigerian Citizens and it became the first indigenous bank.

It suffered during the 1952 banking ordinance but was rescued by the Western Regional Governments by spending huge capital funds. Later, the Agbomagbe Bank Ltd came into operation. This bank thrived for some time but later collapsed. It was taken over by western government and it changed its name to Wema Bank. In 1944, came up the African continental Bank Limited, the Eastern Region Government salvaged this bank in 1950 by taking over its operation.

Between 1949 and 1952, there was over ten banks in the country. However, most of them could not survive for a long period of time due to poor management of Nigerians. Healthy development came into the Nigerian Banking Industry in 1952, when the first banking ordinance came into effect. This saved the Nigerian masses from the greedy money managers who were doing banking business.

The early seventies and eighties witnessed a progressive development in the banking sector. Commercial banks grew in leaps and bounds. Later the Citizens International Bank Limited came into being as a result of the rapid growth in banking industry. Now the bank has its branches through out the federation. Because of the intense competition by all these banks in Nigeria, the Citizen Bank Industry has come out with its diversification banking services in this areas: –

Anchor and Pioneer Accounts: Citizens International Bank Plc, right from the early days of its establishment, has exhibited high deals, innovativeness, responsiveness and excellence. Consequently, the bank in 1994 conceived two new financial products the “Anchor and Pioneer Accounts”. The products were developed as a result of the bank’s market survey, which identified the need for products that will yield income for the customers, as well as be of some benefits to their families.

Premium Reserve Account: This was targeted at corporate investors, pension funds managers, treasurers with planned need for funds and intermittent cash flow requirements and medium and high net worth individuals as well as investors seeking maximum returns on temporarily idle funds.

Exclusive Gold Club: This was developed because the bank realized that the banking needs of high net worth individuals are different from those of the low income earners. And finally, the introduction of the computers and use of Automated Teller Machine and Smart Cards, introduction of Magnetic Ink Character Recognition (MICR) which is an automated system for sorting cheques and other payment instruments, etc.

PROJECT TOPIC- IMPACT OF NEW PRODUCT DEVELOPMENT ON THE GROWTH OF COMMERCIAL BANKING IN NIGERIA A CASE STUDY OF CITIZENS INTERNATIONAL BANK LIMITED

1.2 STATEMENT OF THE PROBLEMS

The banking industry today appears to be truly at cross roads. With the impact of new technology aiding globalization and integration of the world’s financial markets, there has been quantum jump in the expectations of customers for newer products and alternative delivery channels. Consequently, banks are under increasing pressure to offer today what customers would be expecting tomorrow.

For the individual, the information revolution has crated greater choice, flexibility both at home and in the world place and has improved his communication and access to goods and services globally. This has affected the level of sophistication. The consequent impact is a new paradigm for service delivery of mostly products that are growing in number day to day, recognizing changing customer needs, increasing

customers sophistication, new and non-traditional competition challenge to traditional markets and increasing pressure as a result of the follow-up deregulation process. This has established the need to develop new products and better delivery channels by the banking industry, which gave a good impact to the customers.

Loopholes that these development created that must be solved include improved certain socio-economic infrastructure, such as power supply and telephone system, automation in bank services delivery and man power development in the area of computer literacy simply put.

  1. Does the bank have qualified manpower for its operations?
  2. Have our banks started in a very fast pole on technological highways?
  3. Have we enlightened our citizenry on the need for banking culture?
  4. Do we have the enabling socio-cultural and political environment for the banking industry to thrive in Nigeria?
  5. How far has the bank gone in introducing new products?

1.3 PURPOSE OF THE STUDY

There is a need for bankers to significantly look into only inwards but also outwards to exploit opportunities available in terms of impacting on new product development and delivery. The now need to start thinking of launching some sort of counter offensive products to adequately bring about greater and more fulfilling regards to their customers. It is interesting that with the recent development in Africa and

more specifically, the return of democracy in Nigeria, foreign investors are beginning to look towards Nigeria for exciting and richly rewarding investment opportunities. In spite of the high risks, it does appear that many of these world wide investors are still willing to bet on the continent, and indeed on Nigeria hoping for rapid positive change in the business environment in the immediate future.

Banks are planning to meet these challenges by adopting new product and better service delivery. Which brings an impact on the Banking Industry.  Also, banks are planning to follow foreign investors into Nigeria or are already acting as forerunners to them. The Nigeria citizens are not standing aloof to the spate of new technological development in the world. they do not want to be left out in this era of technology.

Computer literacy is harped now and often in our schools. As a result, people are availing themselves of the opportunities of high technologies on ground to carry on business transactions with banks. Besides, Nigerian people are subscribing to the new culture of banking at the expense of old traditional ways. This behaviour banks to consciously offer a wider and more competitive range of products to meet the yearning of their now-more-aware customers.

Conclusively, the purpose of this piece of work is to look at product development in the banking sector (commercial banks) constraints, solution and challenges.

1.4 OBJECTIVES OF THE STUDY

The objectives of this research study are viz:

  1. To evaluate or make an impact in new product development in the banking industry.
  2. To point out areas of constraints.
  3. To educate people about the new product development.
  4. To proffer some recommendations necessary for better performance.
  5. To state clearly diversification of banking service.

1.5 HYPOTHESES OF THE STUDY

To carry out this research thoroughly, the following hypothetical statements are formulated to give us direction, that is, the researcher wishes to make the following propositions: –

Ho: The introduction of new products in banks increase customers satisfaction.

Hi: The introduction of new products in banks does not increase customer’s satisfaction.

Ho: Most of the new products are technologically driven.

Hi:  Most of the new products are not technologically driven.

Ho: Poor banking habits among Nigeria populace constitute a threat to banking business.

Hi: Poor banking habits among Nigeria populace does not constitute a threat to banking business.

1.6 SIGNIFICANCE OF THE STUDY

The study highlights that significant improvement has been recorded in the use and deployment of technology in the banking industry over the last decade.

  1. It will create a new confidence in the minds of our people when their confidence have been crowded in the banking business as a result of cock and bull story of the distress.
  2. It reveals now improved service delivery available in the banking industry.
  3. More importantly, it provides a show case of new products available in the banking industry.
  4. Finally, this study will sell the banking business to prospective foreign and local investors.

PROJECT TOPIC- IMPACT OF NEW PRODUCT DEVELOPMENT ON THE GROWTH OF COMMERCIAL BANKING IN NIGERIA A CASE STUDY OF CITIZENS INTERNATIONAL BANK LIMITED

 1.7 LIMITATION OF THE STUDY

The researcher selected only few commercial banks for the study. It is impossible to use all banks in Nigeria because of logistics problem of finance, easy transportation and poor telecommunication network. Also, most of the banks are not friendly enough for statistical record of their business operation. This makes it imperative for the researcher to rely heavily on oral interview and any other piece of

information from secondary documents of newspaper publications, seminar papers, etc. Despite all the difficulties, the researcher still got some materials, information for this study. Like, Enugu International Trade Fair held in 2004 provides good information. Thus, the researcher would have found it difficult to carry out this study to a successful end, but the trade fair helped with some information that is relevant for this study.

PROJECT TOPIC- IMPACT OF NEW PRODUCT DEVELOPMENT ON THE GROWTH OF COMMERCIAL BANKING IN NIGERIA A CASE STUDY OF CITIZENS INTERNATIONAL BANK LIMITED

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