IMPACT OF THE AGENCY BANKING ON CUSTOMERS SATISFACTION IN RURAL AREAS OF NIGERIA (A CASE STUDY OF FIRST MONIE AGENTS AND CUSTOMERS IN ITU LGA OF AKWA IBOM STATE

 

ABSTRACT

Agency banking is a rising pattern in the Banking sector where the financial Institution and the board go into contracts with chosen agents to give banking services for a commission. This makes the researcher to direct this investigation on the impact of the agency banking on customers' satisfaction in rural areas of Nigeria by using FirstMonie agents and customers in Itu Local Government area of AkwaIbom State as a case study. The sample size determined for this study was Fifty-four (54) residents in ituIga of Akwesi state. The study concludes that in as much as agency banking has played and continues to play a key role in enhancing financial deepening and inclusion in the countries where it has been adopted, the model is still bedeviled with some challenges which if not handled could reverse the gains made. Banks must, therefore, address the challenges that are posed by agency banking in order to maximize on the benefits of having this channel of banking.

 

 

 

CHAPTER ONE

INTRODUCTION

1.1              Background to the Study

Every organisation is concerned with the goal of meeting the needs and the requirements of its stakeholders which will not only ensure the survival of the organisation but also allow gives room for its growth. Clients are one of the most significant partners in any organisation on the grounds that without them, organisations are not prone to succeed. Thus, marketers emphasize on research in the area of consumer conduct and especially social expectation. Information on consumer behaviour will go far in guaranteeing viable promoting approaches towards the interest of customers which in the long run encourages positive customer attitudes towards the organisation. Most especially, since a customer behavioural intention is a solid sign of his real cbehaviour, (Adeoye, 2007).

Agency banking refers to the conveyance of monetary administrations outside ordinary bank offices, frequently utilizing non-bank retail outlets that depend on technologies, for example, point-of sale (POS) cell phones for real time transaction processing (Modupe, 2010). Globally, retailers and post workplaces are progressively being used as significant distribution channels for financial organnisations. The purposes of administration extend from post offices in the Outback of Australia where customers from all banks can direct their transactions, to rural France where the bank Credit Agricole utilizes corner stores to offer money related services, to little lottery outlets in Brazil where customers get their social payments and access their bank accounts (Kumar et al, 2006).

In Malaysia, as at 2012, during the pilot run of agency banking, more than one million exchanges worth more than Malaysian Ringgit (RM) 190 million had been led through 2,322 agency banking outlets. In India, under the Business Correspondent model, banks are qualified to engage intermediaries to dispense little value credits, recuperate principal and interest payments, gather little value deposits, sell micro insurance  or pension products and get or convey little value remittances. In Bangladesh, the Central Bank has given 10 licenses to banks to offer the full scope of versatile monetary services. In Africa, up to 11% of the customers who use banking services, do not have accounts with the financial organizations and rather use agency banking machineries to execute their payment services (Kumar, 2006). 

As per National Banking and Securities Commission (CNBV) of Mexico and the Alliance for Financial Inclusion (2012), the organization banking model is one in which banks offer financial services through nonbank agents, for example, supermarkets, retail outlets, post workplaces, drug stores, or lottery outlets. This model permits banks to extend administrations into areas where they do not have adequate motivating force or ability to set up a conventional branch, which is especially valid in rural and poor territories where thus a high level of individuals are unbanked.

Because of financial sector liberalization in Nigeria during the 1980s, the banking sector encountered a boom. Low section necessities by the administrative authority and the high premiums that could be earned through remote foreign trade exchange prompted the snappy passage by new players into the profitable banking sector. Between the time of 1985 and 1993 the numbers of authorized banks rose drastically from 41 to 120. This prompted the expansion of the sector’s commitment to GDP and employment. Given that banks are significant constituents of the industry, it can in this way be contended that banks in Nigeria have contributed a noteworthy level of the nation's GDP in the years past (Adeoye, 2007).

Attributable to the accomplishments of agency banking in Brazil, in Africa, agency banking is utilized to improve more performance throughout the continent. Agency banking was actualized in South Africa in 2005 after change of the Bank Act giving banks the green light to contract nonbank outsiders to gather stores, cash because of the bank or applications for loans or advances, or to make payments to such customers for the banks' benefit (Beck, 2011).

In Nigeria, more than 60,000 outlets are right now selected as bank agents. This has permitted bank branches to manage littler pools of high total assets customers from whom they can pick the cash-rich operations activities they have to reveal the agency banking model. A few banks, similar to Co-operative, have selected to partner together with money rich Savings and Credit Cooperative Societies so as to roll out their products effectively. Agency banking is a rising pattern in the Banking sector where the financial Institution and the board go into contracts with chosen agents to give banking services for a commission. In AkwaIbom State, Nigeria, most financial establishments have embraced agency banking to give basic financial administrations to clients. Be that as it may, attributable to the brief time frame inside which the agency banking model has existed, the degree to which the model can profit banks, satisfy their customers and provide growth for the economy of the country remains generally unstudied. This made the researcher to direct this investigation on the impact of the agency banking on customers’ satisfaction in rural areas of Nigeria by using FirstMonie agents and customers in Itu Local Government area of AkwaIbom State as a case study.

1.2              Statement of the Problem

Right now, the way toward searching for clients for an organization is being chosen by how they are being dealt with or by how they notice it, obviously, with the goal of performance (speed, validity, unwavering quality and wellbeing) being for all time got together with the nature of treatment. The best approach to gauge, the level of satisfaction and expectations produced depends greatly on the basic idea of how quality is characterized by the client. To encourage the comprehension (NOVAES, 2005) of the client's needs it is fundamental, there exists a procedure of consistent observing and finding out about the clients' needs and expectations (must envision conquering the client, overruling the contenders).

Given that the contemporary consumers are more informed than before, (LeBoeuf, 2007) revealed that meeting their expectation is progressively getting seriously troublesome. They need to get the value of their money as they see it. Moreover, banks customers are disappointed with the nature of services given by banks now (Woldie, 2003). Satisfaction is the client's assessment of a product or services as far as whether that product or services has lived up to their necessities and expectations. Upbeat and satisfied clients act in a positive way. Customer satisfaction is gotten generally from the quality and dependability of your product and services.

The client is yet the duty of the Banks and the same has not been appointed to the organization. Service is a colossal test for the banks as they have to prepare and retrain the agents in order to keep up significant levels of customer care. Be that as it may, almost every Nigerian bank experiences comparable issues in meeting clients' expectations for their services. It is on this foundation that this study sets to investigate the impact of the agency banking on customers’ satisfaction in rural areas of Nigeria by using FirstMonie agents and customers in Itu Local Government area of Akwa Ibom State as a case study.

1.3       Research objectives

The objective of this study is to investigate the impact of the agency banking on customers’ satisfaction in rural areas of Nigeria by using FirstMonie agents and customers in Itu Local Government area of Akwa Ibom State as a case study. However, the specific objectives are:

        i.            To determine the relationship between agency banking and on time delivery of customer banks services.

      ii.            To determine the extent to which customers utilize and perceive agency banking services.

    iii.            To find out the relationship between agency banking and customer service quality assurance.

    iv.            To determine the reliability of agency banking on customer satisfaction.

      v.            To determine the level of customer confidence in agency banking services.

1.4       Research Questions

The followings are the research questions in which this study intends to answer:

        i.            What is the relationship between agency banking and on time delivery of customer banks services?

      ii.            To what extent do customers utilize and perceive agency banking services?

    iii.            What is the relationship between agency banking and customer service quality assurance?

    iv.            How reliable is the agency banking on customer satisfaction?

      v.            What is of the level customer confidence in agency banking services?

1.5       Research Hypothesis

The following hypotheses were formulated in the course of this study:

i)                   There is no significant relationship between agency banking and on time delivery of customer banks service

ii)                 There is a significant correlation between agency banking and customer satisfaction

iii)               There is a significant influence of customer confidence on agency banking service

1.6       Significance of the Study

The study aimed at analyzing the importance of attending to customers and ensuring they have a positive experience with the agency banking services. It will also justify whether the banks will be able to retain the customers as well as helping to ease the problem of unbanked population. The findings of this study will be useful to different cohorts of the population. Moreover, the findings of this study can be used by the banking institution to improve or expand their services in a way geared to economic empowerment and customer satisfaction to all involved. Finally, the findings may be used as secondary data for other studies.

1.7       The Scope of the Study

The study focuses on the impact of the agency banking on customers’ satisfaction in rural areas of Nigeria. It was carried out among FirstMonie agents and customers in Itu Local Government area of Akwa Ibom State.

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