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BANK PERFORMANCE: WITH SPECIAL REFERENCE TO COMMERCIAL BANKS IN NIGERIA
Abstract
The Banking and Financial Environment in Nigeria has witnessed so many regulatory changes and competitive dynamics. This has made segmentation practices an imperative determinant in their service offering and development to its complex customers.
Approach: This study assessed the use and impact of market segmentation patterns and practices on the performance of selected banks in Nigeria, post consolidation period of 2012 to date. The methods applied were both primary and secondary while the design was mainly exploratory, relating basic market segmentation variables like market share, geographical location and pricing to bank performance. Statistical test using Herfindal Hirchman Index (HHI) was designed to test for market concentration against bank’s performance.
Objective: The idea behind this research was to assist managers, business students, and banking workers to understand the concept and impacts of marketing segmentation patterns and practices on banks performance.
Results: Findings from the study indicate that, segmentation practices have immensely impacted on the performance of the selected banks in Nigeria. The study exposed that the banks have used segmentation practices to lower their overall operation unit cost, expand their market shares, retain their customers, better their communications, increase profitability and focus on their company. They are well positioned in capital strength and they are the best capitalized banks in Nigeria, thanks to their segmentation strategy called data-informed strategy.
Conclusion: The study however concluded that there is a threshold point (37.2%) in which any further commitment of funds into market segmentation practice can lead to negative result.
Recommendation: It was recommended that less dominated banks can adopt acceptable corporate image, simple and flexible account opening formalities, just-in-time service delivery, employee-customer management, and effective and efficient use of referrals to win customer loyalty which tend to retain old customers and win new customers as well.
Keywords: Tier-1 capital ratio; Market segmentation; Commercial banks; Bank performance; Customer retention ability