Olafemi Ayopo Olotu and Micheal Olorunsomo Olopete

Department of Marketing,Rufus Giwa Polytechnic, Owo,Ondo State, Nigeria



In a highly competitive environment of the banking service sector, customer loyalty is a must for the banks in order to maintain their market share.  This provided the impetus for the study reported.  Data analyses revealed  that bank’s cleanliness, friendly staff and bank proximity are part of the factors that attract customers to the banks and customer’s loyalty is enhanced by the marketing strategy of the banks, which eventually improved their performance.  It was therefore concluded that banks must invest more in financial service marketing strategies that would help to keep their customers. We thus, recommended that service points at the bank be well trained and disciplined in order to build good relationship with customers, and introduce new technologies that would build confidence in the customers.

Keywords: Loyalty, performance, competition, financial services




In recent years, the banking industry in Nigeria has grown more competitively, as such the banks recognised the need to remain in business through innovations. It is becoming increasingly necessary that marketing policies should be inculcated in offering banking services (Adekanye, 1986; Goacher, 1986 and Orji, 1989). Although Nigeria is a developing country, there is sufficient evidence to show an increasing awareness of the importance of efficiency in delivery of banking services. This awareness has amounted in a general appreciation in the delivery of such services, however a good number of commercial banks are still un-informed about the changing environment in the banking industry as to what is now an acceptable standard of service and as such resulted in eroding customer’s confidence in them.


Ndubuisi (2004: 103) argued that the relationship between the banker and his customer is a personal one which is based on trust that valuables will be kept safely. Therefore efficiency in banking should be of a higher degree than that of manufacturing. It is important to recognize the two fundamentally different functions which banks must perform: it must’ attract deposit on one hand and attract borrowers of loanable funds and users of services on the other (CBN, 1993:32). This dual nature of banking business makes it more complex than other business ventures such as manufacturing.


Frazer and Peter (1984) posits that customers demand for banking services is usually a contributing factor to the profitability of the banks.  Therefore, the package and effective delivery of these services that make the satisfied customers crave for more is the responsibility of top management of the bank.  Poor marketing strategies may eventually affect the bank service in the long run and also have adverse effects on customer loyalty.  It is therefore, our intentions in this study to investigate the relationship between marketing of financial services and customer loyalty in the banking services.



Marketing in the banking industry

Banking as an industry, functions as a financial intermediary which takes it finds from the public, principally as deposit and which are payable on demand or at short notice.  These deposits are employed to make advances by overdrafts and loans by discounting bills and holding other financial assets as marketing securities. Essentially, The Finance and Banking World (1998) argued that, the banking industry is a money transmission system.  Because of this peculiar nature of the industry, it looks onto its environment to source its raw materials and consumers for its products.  However, the banking environment all over the world is changing every day because of the dynamics of the market, new economic and social realities, new technology, increase competition and most importantly, because the customers have change in taste with tremendous growth in people’s standard of living (Ajayi, 1978 and Umoh, 1990).  The Nigerian banking environment had in recent time been facing unstable policies with consequences of competition, though, Adam smith, in his pioneering work, believed that competition unrestricted by state or any other agency was the first condition of economic expansion and therefore ultimately of an increase in the satisfaction of members of the community.


The study was guided by the following hypotheses;


Ho1: There is no significant relationship between effective marketing of financial services and customer’s loyalty.

Ho2: There is no significant relationship between customer loyalty and increased business performance.

Ho3: Effective marketing strategies do not impact quality   financial services.

Research methodology

Research design

The survey design is adopted in order to assess the relationship between marketing of financial services and customer loyalty in the Nigerian banking services. The population of this study covers all banks in the sector, but attention was limited to maximum of 24 banks one each from the CBN approved banks operating in Nigeria. However, using simple random   sampling technique, a size of 250 personnel which among others include top management staff, change champion and middle level staff of the selected banks. This action was intended to enhance the generalizability of the findings of this study to the entire banking industry.

The main research instrument employed in this study was the questionnaire which was administered by direct contact to ensure objective acquisition of realistic inferences. Personal interview was equally conducted on members of staff as well as, observations to elicit fundamental inferences from behaviors and manners of the respondents which are highly complex and intuitive.

Data presentation and analysis

The data analysis started with the distribution and retrieval of questionnaire using percentage and table see table 4.1 below for details










Table 1: Administration and retrieval of questionnaire


No of Questionnaire Administered


No Retrieved

% of Retrieval









Source: Survey Data, 2006


Table 4.1 was drawn to show the distribution and retrieval of questionnaire for the study.  A total of 240 questionnaire was administered to the customers of the 24 bank branches under study.  A total of 196 of the questionnaire were retrieved and this represents 81%. This figure was found to be valid for this study. 





Hypotheses testing

Ho1:     There is no significant relationship between effective marketing of financial service and customer loyalty.


X2 Calculated   =          57.77

Df                    =          4

Critical X2                    =          9.488



The calculated X2 = 57.77 is greater than the critical X2 = 9.488 as such we reject the null hypothesis i.e, there is a significant relationship between effective marketing of financial services and customer loyalty.       


Ho2:     effective marketing strategies does not impact the quality of financial services rendered.

X2 Calculated   =          74.14

Df                    =          4

Critical X2                    =          9.488





The calculated X2 at a df of 4 = 74.14, while the critical X2 = 9.488. In view of this, the null hypothesis is rejected, this implied that effective marketing strategies impact positively the quality of financial services rendered.

Ho3:     There is no significant relationship between customer loyalty and bank’s performance.


X2 Calculated   =          66.66

Df                    =          4

Critical X2                    =          9.488


The calculated X2 =66.66 is > X2 critical= 9.488, as such we reject the null hypothesis, i.e there is a significant relationship between customer loyalty and bank’s performance.


Findings and discusions

The summary of our findings in this research are as follows:

1)                  The most efficient service relationships of the receptions is that of good courtesy and politeness to their customers at the counter and customer relationship section of the banks; (2) The longest time it takes the customer to be served at the bank is thirty minutes (30 mins) sometimes five minutes and rarely ten minutes (10 mins); (3) As a result of the customers loyalty due to the financial services offered, customers the bank’s performance as good, while customer’s loyalty was found to influence bank’s performance to a large extent; (4)we also discovered that some of the services enjoyed by the bank’s customers include good account operations, new banking technologies, quality products and quality safe keeping among others.

The validation of hypothesis one tested in this study is a testimony that this may always be the truth, that effective marketing of financial services has great impact on customer loyalty, this is line with what the findings of Orji, (1989) and CBN Brief (1993).


The result of the third hypothesis validated the position that customers experience inefficiency in service delivery in the bank; this means that there is need for performance improvement of the bank services rendition.  It is also observed that customer’s loyalty to the bank had been greatly influenced by consideration for age long experience of the bank within the industry and also, of importance is the availability of branch networks.


The promotional efforts of the bank were acknowledged and comprised of both formal and informal methods but the advertisement and publicity of the formal promotional strategies are not strong enough to arouse and sustain customers’ patronage. However, a positive correction exists between the bank’s expenditure on promotion and the corresponding annual profit before tax as revealed by spearman’s ranks correlation co-efficient. 


Conclusions and recommendations

The banking industry plays a vital role in the nation’s economy, partly because of this pivotal role, the industry should be highly efficient.  Besides the vital role it plays, the industry has grown rapidly over the past few years and therefore become more competitive. Competition brings about choice making and the deciding factor will be its effectiveness and level of efficiency in delivery of bank services.


Conclusively, commercial banks in Nigeria have shown that to improve efficiency, the service points should be effective through improvement in the marketing strategy with the use of modern facilities. In the light of our discussions and analysis, we therefore recommended that; the bank should strive for discipline in its delivery system. It should adopt the first come, first served rule to achieve service discipline and customer loyalty.


The bank should ensure that the service points are fast and effective because they are directly linked to the overall efficiency of the bank. The bank should also employ highly skilled and qualified manpower. When, all the above recommendations are followed and introduced into the bank it will bring about a definite improvement in the efficiency of the delivery of banking services which in turn will result in customer loyalty and eventually, bank’s performance.



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