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INTRODUCTION
1.1 Background to the study
The outbreak of the COVID-19 pandemic has brought unprecedented challenges to various sectors globally, including the banking industry. The banking sector, being a vital component of any economy, has had to swiftly adapt to the new realities imposed by the pandemic. Among the critical areas affected is customer satisfaction, a cornerstone of banking operations. Understanding how the pandemic has influenced customer satisfaction in the banking industry is crucial for devising effective strategies to mitigate its adverse effects and enhance service delivery.
Prior to the COVID-19 pandemic, customer satisfaction in the banking industry was influenced by various factors such as service quality, convenience, reliability, and personalization of services (Parasuraman et al., 1988; Sureshchandar et al., 2002). However, the onset of the pandemic introduced a new dimension to this equation, as banks had to implement unprecedented measures to ensure business continuity while safeguarding the health and safety of both customers and employees.
In Nigeria, the banking sector experienced significant disruptions due to the pandemic. Lockdown measures, social distancing protocols, and restrictions on movement imposed by the government to curb the spread of the virus forced banks to rethink their traditional modes of operation (Afolabi et al., 2020). Consequently, there was a rapid adoption of digital banking channels, such as mobile banking, internet banking, and electronic payment systems, to facilitate remote transactions and reduce physical interactions in banking halls (Ismail et al., 2021).
While these measures were essential for maintaining service delivery during the pandemic, they also introduced new challenges that could potentially affect customer satisfaction. Issues such as technical glitches in digital platforms, limited access to banking services for individuals with low digital literacy, and concerns about the security of online transactions emerged as prominent issues (Awojobi et al., 2020; Ojo et al., 2021). Moreover, the closure of some bank branches and the reduction in operating hours further compounded the challenges faced by customers, particularly those in rural areas with limited access to digital infrastructure.
Against this backdrop, it is imperative to assess the impact of the COVID-19 pandemic on customer satisfaction in the Nigerian banking industry. By understanding the factors influencing customer satisfaction during these unprecedented times, banks can tailor their strategies to meet the evolving needs and expectations of their customers, thereby fostering long-term relationships and enhancing competitiveness in the market.
1.2 Statement of the Problem
The COVID-19 pandemic has brought about significant disruptions to various sectors globally, and the banking industry in Nigeria is no exception. As banks grapple with the challenges posed by the pandemic, understanding its impact on customer satisfaction has become imperative. While prior research has extensively examined the determinants of customer satisfaction in the banking sector (Parasuraman et al., 1988; Sureshchandar et al., 2002), there is a dearth of literature addressing how the pandemic has altered the landscape of customer satisfaction in Nigerian banks.
The outbreak of COVID-19 necessitated rapid changes in banking operations, including the widespread adoption of digital channels to ensure business continuity while adhering to social distancing guidelines and other safety protocols (Afolabi et al., 2020; Ismail et al., 2021). However, these changes have introduced new challenges that may impact customer satisfaction adversely. Issues such as technical glitches in digital platforms, accessibility barriers for customers with limited digital literacy, and concerns regarding the security of online transactions have emerged as significant concerns (Awojobi et al., 2020; Ojo et al., 2021).
Moreover, the closure of bank branches and the reduction in operating hours have further complicated the banking experience for customers, particularly those residing in rural areas with limited access to digital infrastructure. Consequently, there is a pressing need to investigate how these unprecedented changes have influenced customer satisfaction levels in the Nigerian banking industry. Therefore, this study seeks to address the following research questions:
How has the COVID-19 pandemic affected customer satisfaction in the Nigerian banking industry?
By exploring these questions, this research aims to provide valuable insights into the evolving dynamics of customer satisfaction in the Nigerian banking sector amidst the COVID-19 pandemic and offer practical recommendations for banks to improve their service delivery and maintain customer loyalty in these challenging times.
1.3 Objective of the study
The main objective of the study is ti examine the effect of covid-19 pandemic on customer satisfaction in the banking industry. The specific objective of the study are;
i. To assess the effect of Covid-19 pandemic and widespread on Banking sectors.
ii. To identify the extent to which customer satisfaction in the banking industry was affected by Covid-19.
iii. To investigate if Covid-19 affected banking operations.
iv. To evaluate if the Covid-19 affected the customer satisfaction
1.4 Research Question
1. What is the effect of Covid-19 pandemic and widespread on Banking sectors?
2. To what extent was customer satisfaction in the banking industry affected by Covid-19?
3. Did Covid-19 affected banking operations?
4. Were all banking services patronized during the Covid-29 restrictions and lockdown?
1.5 Hypothesis of the study
Ho: Covid-19 pandemic had no significant impact on the customer satisfaction in the banking industry
Hi: Covid-19 pandemic had a significant impact on the customer satisfaction in the banking industry
1.6 Significance Of The Study
This study on the impact of Covid-19 on Banking sectors will in doubt be of great significance to the the entire banking sectors as the study was carry out the unveil the truama banks suffered as a result of this unforeseen outbreak of Covid-19. Moreso this study will reveal suggestions on how banking contain the hit of any subsequent pandemic.
Understanding how the pandemic has reshaped customer satisfaction dynamics is crucial for Nigerian banks to adapt their strategies accordingly. By identifying the key factors influencing customer satisfaction during these unprecedented times, banks can tailor their services to meet evolving customer needs and preferences. This, in turn, can enhance customer loyalty, improve retention rates, and drive long-term profitability.
The findings of this study can inform policymakers about the challenges faced by the banking sector during the pandemic and help formulate appropriate policies to support banks in mitigating these challenges. Policy interventions aimed at improving digital infrastructure, enhancing financial literacy, and promoting consumer protection can contribute to a more resilient banking industry in Nigeria.
The study contributes to the existing body of knowledge by providing empirical evidence on the impact of the COVID-19 pandemic on customer satisfaction in the Nigerian banking industry. It fills a gap in the literature by addressing a timely and relevant research topic and offers insights into the unique challenges and opportunities facing banks in the wake of the pandemic. Researchers can build upon these findings to explore related areas further and deepen our understanding of customer behavior in crisis situations.
For customers, the study serves as a source of awareness regarding the changes in banking services brought about by the pandemic. By understanding the factors influencing their satisfaction levels, customers can make informed decisions when engaging with banks and utilize available resources more effectively. Moreover, the study may highlight areas where banks need to improve their services to better meet customer expectations, empowering customers to demand higher standards of service delivery.
1.7 Scope Of The Study
This study is limited to an investigation on the effect of covid-19 pandemic on customer satisfaction in the banking industry. Therefore the study was carried out in First Bank Nigeria Plc in Lagos state where the case of Covid-19 was more severe.
1.8 Limitation Of The Study
Time, funds and availability of materials on this research domain and validating of respondents’ responses to interviews and questionnaires were the major constraints the researcher encountered at the course of this study.
1.9 Definition Of Terms
Covid-19: Coronavirus disease 2019 (COVID-19) is a communicable respiratory disease caused by a new strain of coronavirus that causes illness in humans.
Banks: A Bank is a financial institution licensed to receive deposits and make loans. Two of the most common types of banks are commercial/retail and investment banks.
Banking Operations: Banking operations involves the practices and procedures that a bank uses to ensure that customers’ transactions are completed accurately and appropriately.
Customer Satisfaction: Customer satisfaction refers to the extent to which customers’ expectations regarding a product or service are met or exceeded. It is a subjective evaluation of a customer’s overall experience with a company or organization, encompassing factors such as product quality, service delivery, responsiveness, and value for money.
1.10 Organization Of The Study
This research work is organized in five chapters, for easy understanding, as follows. Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding. Chapter five gives summary, conclusion, and recommendations made of the study.
SUMMARY, CONCLUSIONS AND RECOMMENDATION
5.1 Introduction
This chapter summarizes the findings on the effect of covid 19 pandemic on customer satisfaction in the banking industry using First Bank PLC in Lagos State as case study. The chapter consists of summary of the study, conclusions, and recommendations.
5.2 Summary of the Study
In this study, our focus was on the effect of covid-19 pandemic on customer satisfaction in the banking industry using First Bank PLC in Lagos State as case study. The study is was specifically focused on assessing the effect of Covid-19 pandemic and widespread on Banking sectors , identifying the extent to which customer satisfaction in the banking industry was affected by Covid-19 and investigating if Covid-19 affected banking operations.
The study adopted the survey research design and randomly enrolled participants in the study. A total of 100 responses were validated from the enrolled participants where all respondent are staff of First Bank Nigeria PLC, Lagos State.
5.3 Conclusions
With respect to the analysis and the findings of this study, the following conclusions emerged;
First, firms that have stopped working miss out on revenues, and therefore might not be able to repay loans. Similarly, households with members who have lost their jobs or are furloughed have less income, and therefore might not be able to repay their loans. This will result not only in lost revenue but also in losses (if repayment capacity is permanently impaired), negatively affecting profits and bank capital. And as a swift recovery becomes less likely, banks can expect further losses, resulting in the need for additional provisions, further undermining their profitability and capital position.
Second, banks are negatively affected as bonds and other traded financial instruments have lost value, resulting in further losses for banks. There might also be losses from open derivative positions that have moved in unexpected directions due to the crisis.
Third, banks face increasing demand for credit, as especially firms require additional cash flow to meet their costs even in times of no or reduced revenues. In some cases, this higher demand has presented itself in the drawdown of credit lines by borrowers.
Fourth, banks face lower non-interest revenues, as there is lower demand for their different services. For example, there are fewer payments and transactions to be done with lower economic activity, and fewer security issues by corporates reduce fee income for investment banks.
Losses and lower capital buffers in banks can have negative spillover effects, which might make banks’ solvency position even worse and might also undermine the broader economy. Banks might sell bonds and other traded financial instruments to improve their liquidity position or to make up for losses, with prices of these instruments falling as a consequence and negatively affecting other banks that hold them.
Banks might reduce credit provision to the economy, thus negatively affecting firms relying on such buffers, undermining their survival. We saw similar spillover effects during the 2008/09 global financial crisis. This could make the economic shock even worse.
5.4 Recommendation
Based on the findings the researcher recommends that;
These different supervisory and fiscal policy measures have helped to avoid any bank failures over recent months. They have also helped to support the banking sector in its critical function of keeping the economy running.
But they will not avoid the losses that will result from the failure of some businesses, the necessary restructuring of balance sheets of others (implying write-down of some debt) and the inability of some households to serve their loan repayments. The critical question is who will bear these losses. In some cases, and to a certain extent, these losses might be covered by the government guarantees discussed above. In other cases, banks might incur these losses directly.
As banks will have a critical role not only during the pandemic containment phase but also during the economic recovery phase, sufficient capitalisation will be important as economies will have to reallocate resources across sectors from ‘losers’ to ‘winners’.
For example, sectors that rely heavily on physical provider-client contact will decline in their importance, while sectors focusing on remote and/or digital service delivery will grow. Banks will have an important role funding the expansion of the winner sectors, but they can only do so if losses incurred on loans to shrinking sectors does not impair their lending capacity.
Once economies have returned to a ‘new normal’ and it has become clear which firms (and thus borrowers) are viable and which are not, it is important that non-viable firms are liquidated quickly, loan losses recognised swiftly and banks recapitalised where necessary, be it by private investors or with government support.
Title: Effect Of Covid 19 Pandemic On Customer Satisfaction In The Banking Industry.
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Effect Of Covid 19 Pandemic On Customer Satisfaction In The Banking Industry. (n.d.). UniProjects. https://uniprojects.net/project-materials/effect-of-covid-19-pandemic-on-customer-satisfaction-in-the-banking-industry/
“Effect Of Covid 19 Pandemic On Customer Satisfaction In The Banking Industry.” UniProjects, https://uniprojects.net/project-materials/effect-of-covid-19-pandemic-on-customer-satisfaction-in-the-banking-industry/. Accessed 21 September 2024.
“Effect Of Covid 19 Pandemic On Customer Satisfaction In The Banking Industry.” UniProjects, Accessed September 21, 2024. https://uniprojects.net/project-materials/effect-of-covid-19-pandemic-on-customer-satisfaction-in-the-banking-industry/
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