Implementation of Tqm as a Tool for Service Delivery in the Nigerian Banking Industry

Background to the Study

It is no longer news that business Organizations World over, being it service or manufacturing are coming to terms with the stack reality that customers are kings and they are the main reason why organizations do exist. As such, customer focus and satisfaction through quality service delivery now forms part and parcel of the aims and objectives of any global competitive economic environment (Lemo, 2002).

In the light of the above thinking, the Nigerian banking industry as a vital service organization in the Nigerian economy is not left out. And this is because the banking industry is the bedrock of any developed or developing economy like ours. The pace of economic development depends on the volume and direction of investment provided by the savings of the banks. The ability and propensity of the banks, more than any other segment of the financial system, to mobilize savings and channel these funds towards investment needs of the economy, therefore mark them out as critical agents of the economic growth and development. Without banks and other financial institutions, arrangement of savings and investment will not only be inefficient, but more importantly may lead to less than optimum resources allocation (Nwachukwu, 1998). And owing to the stiff competitive business environment and the pivotal needs to meet and surpass customers’ expectations, banks have adopted the implementation of a strategic management ideology called total quality management (TQM) as a tool for its service delivery (Newman & cowling, 1996).

Nigerian commercial banks in particular have adopted TQM to improve the efficiency and effectiveness of service delivery that is offered to customers via improved business process as well as enhanced managerial decision making and work group collaboration. Suffice to say that TQM is the order of the day in all Nigerian banks and this has brought about innovations like automated teller machines (ATM) which can offer quicker services to their numerous customers even outside the banking hall inclusive of on non-working hours or days of the banks. Furthermore, services like online real-time banking offers to customers the ample opportunity to carryout different transactions on their account(s) at any branch in Nigeria and beyond. Internet banking, mobile banking, SMS and e-mail alerts are among the creation of TQM as a service delivery tool in the banking industry beside the general increase in deployment of information communication technology (ICT) in banking industry (Nwachukwu, 1998).

What then is total quality management if one may ask? It is a strategic management ideology that is concern with managing in totality, entirely or all ramifications the quality of their products/services offered to the customers in a competitive market. The management thinking here is that all eyes should be on the customer in terms of eliciting his expectations and striving to not only meet but surpass them. This is because the customer is the fulcrum around whom all things pertaining to the concept of total quality management revolve.

The concept of customer is indeed the first principle of TQM from which all other principles are derived. And because of the overwhelming importance of the customer, the organization’s goals and values must be establish through his eyes (Akpa, 2014).

In order words, TQM refers to a philosophy and set of guiding principles that represent the foundation of an excellent organization and ensure survival of organization in the competitive economy of today (Besterfield, 1999). TQM is a technique that underscores the continuous improvement of products and services quality to satisfy customers and enhance productivity. The emergence of TQM has been one of the most significant developments even in the United States management Practice. The focus on the development of TQM systems in the US appears to have begun around 1980 in response to global competition and stiff rivalry in the US manufacturing sub-section arising from Japan (Easton and Jarrel, 1998). But in the last three decades TQM has become pervasive and widely accepted in services, government, healthcare, manufacturing and banking sub-sectors of the economics (Fotoponlan and Psomes, 2009).

Arora, (2006) assert that continuous attention has been given to TQM in the industrialized countries. Researchers have investigated quality practice in the developing countries in the last ten years and according to Moballeghi and Moghaddam, (2011) there is a growing awareness that a well designed and well executed TQM process is one of the most effective routes to increase products and services quality, productivity and profitability in banking industry.

TQM in whichever way it is viewed, aims at providing quality products and services that meet or exceed the customer’s needs and expectations. It entails a management philosophy and company practice that is aimed at harnessing the human and material resources of an organization in the most effective way to achieve the objectives of organization which may include customer satisfaction, business objective such as growth/profit or market positioning and of course provision of services to the community.

From the foregoing, and in line with the new management thinking, this study therefore, seeks to examine the implementation of TQM as a tool for service delivery in the Nigeria banking industry.

Statement of Problem

The Nigerian economy as a whole has experienced serious economic problems like persistent inflation, falling profit, wide spread business risk and bank failures in particular; hence, the necessity for banks and corporate organizations to adopt effective and efficient total quality management (TQM) strategies that will invariably reduce cost, enhance quality services and improve its overall total performance all for the purpose of satisfying the customers profitably.

Presently, the Nigerian banks are benchmarked and ranked based on size of capital, deposit, branch network, volume of credit, turnover and profit. All these are quantitative financial indices which do not in any way show light on the effect or impact of customer’s satisfaction and the quality service delivery by the banks. Today, what underline the competitive advantage is the ability of banks to provide products and services that meet and exceed the needs of the customer. This implies that to survive, organizations must device new management systems based on the tenets of TQM and by delivering quality service to customers. Unfortunately, some of the banks in Nigeria have not given the fully desired attention to this new thinking and thus, their poor performances and service delivery failures in the industry (Beny. et al., 1990).

Chikodila, (2010) asserts that Situations abound where account holders of banks attempt unsuccessfully to withdraw cash via ATM due to poor network service or system failures, yet their account are debited. There are also some ugly incidences of existing hidden charges not explicitly documented on account or loan products which are often implemented without the customers’ consent when such accounts are finally opened or such loans are administered. Other challenging issues has to do with long queues in banks, where it takes hours for customers to get their transactions done in banks either due to bank’s network service failures or inadequate personnel to promptly serve the numerous customers, power failures, arbitrary deductions on customers’ account in the name of account maintenance fees, SMS or e-mail alert charges, ATM maintenance fee and COT. Others are poor or lack of conducive banking hall settings with no or inadequate sites for customers to sit and wait for their transactions, poor or no air conditioners or fans for customers to cool off their heat, no portable water and toilets facilities for customers to ease themselves when pressed, very low interest rate on customer’s savings but high interest rate on loans, and so on.

These and more are some of the evidences of poor service delivery that often leads to customer’s dissatisfaction, disagreement and conflict with their banks (Ebiringa, 2010). It’s against this back drop that this study seeks to examine the implementation of TQM as a tool for service delivery in the Nigerian banking industry.

Objectives of Study

The main thrust of this study is to examine the implementation of TQM as a tool for service delivery in the Nigerian banking industry. However, the study seeks to achieve the following specific objectives:

i. To examine the effect of the implementation of TQM on customers satisfaction in the Nigerian banking industry.

ii. To examine the effect of the implementation of TQM on enhanced quality service delivery in the Nigerian banking industry.

iii. To examine how the implementation of TQM has improved the performance of the Nigerian banking industry.

Research Questions

i. What effect has the implementation of TQM on customers’ satisfaction in the Nigerian banking industry?

ii. Has the implementation of TQM enhanced quality service delivery in the Nigerian banking industry?

iii. Has the implementation of TQM improved the performance of the Nigerian banking industry?

Statement of Hypotheses

For this study, the following hypotheses are formulated in their null form:

i. Ho: The implementation of TQM has no significant effect on customers’ satisfaction in the Nigerian banking industry.

ii. Ho: The implementation of TQM has not significantly enhanced the quality of service delivery in the Nigerian banking industry.

iii. Ho: The implementation of TQM has not significantly improved the performance of the Nigerian banking industry

Study Justification

The main objective of any business organization is to satisfy the customers profitably. This objective has given rise to the adoption of TQM by business organizations that are desirous of surviving in the today’s global competitive market. The significance of this study lies in the fact that the study will be useful to both the banking industry and the Nigerian economy at large. This is because the banks house the bulk of the money in the economy and the pace of economic development depends on the volume and direction of investment provided by the savings of the banks. And as such the knowledge of the implementation of TQM will bring about prudent management of resources by the banks which will in turn result to:

Enhanced customer satisfaction
Enhanced quality service delivery in the banking industry.
Improved performance in the Nigerian banking industry.

From the aforementioned, it is pertinent to state here that the significance of the study of TQM implementation in the Nigerian banking industry cannot be over emphasized as findings from this research work will also help even management of other organizations to know that TQM is a carefully managed process that allows every employee to be involved in its implementation so as to deliver quality products and services to customers via continuous innovations and improvement of process.

Another significance of this study lies in the fact that it will contribute to the body of knowledge and provide an invaluable reservoir of information to guide organizations to roll out quality products and services for their customer’s needs and satisfaction leading to profitable financial earnings and growth as a return.

Scope of Study

Total quality management as a subject matter is very wide, though relatively new concept especially in service industries in Nigeria. For the purpose of this research, the study is restricted to four (4) selected banks in Makurdi, the Benue state capital, namely: First bank plc, United bank for Africa Plc, Eco bank plc and Union Bank PLC. The choice of these banks lies in the fact that they have multiple branch networks within the state capital Makurdi. That is, all the selected banks have three (3) branches each respectively in Makurdi, the Benue state capital which was examined from 2005 to 2015.

The four (4) banks selected represent both the tagged new generational banks and the old generational banks. The respondents are both members of staff and customers of these selected banks respectively.

Definition of Operational Terms

Benchmarking: This refers to analyzing what the best competitor or leading companies in the industry are doing to satisfy customer’s needs so as to follow suit.
Communication: This entails a process of transmitting meaningful information from one source to another.
Customer focus: It entails that all eyes should be fixed on the customer in terms of eliciting his expectations and striving not to only meet but surpass them.
Customer satisfaction: This refers to the degree of the customer’s positive or negative feelings about the value received from using a firm’s products/services.
Customers: These are the greatest asset of any organization; they are the reasons why organizations exist for operation. We have internal and external customers. Internal customers refer to staff members that work in the organization. While external customers refers to the people outside the organization that patronize and transact business with organizations and needs to be satisfied at all times by the organization in order to remain in business profitably.
Quality: The quality of a product or service is the totality of attributes possessed by that product or services. These attributes are the unique functional or ornamental features that differentiate one product from the other in market place.
Strategic management: This term is all about self assessment in terms of internal strength and weakness, critical assessment of environmental forces in terms of external opportunities and threat that are capable of shaping the organization’s fortunes.
Technology: This entails the sum total of knowledge or ways of doing things.
Total quality: This term entails that the entire firm must be brought to a point of top quality in order to deliver the type of quality that will excite the customers which is usually introduced in bits in an innovative manner and on a continuous basis.
Total quality management (TQM): In the context of the foregoing, TQM is a strategic approach to management that focuses on the system or integrated methodology and insist on continuous innovative improvement in the quality of product /service on offer (Akpa, 2014).

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