ABSTRACT
In a highly competitive environment, innovation is the essential key to a firm obtaining a dominant position as the understanding of strategic innovation management practices leads to an improved organizational performance signifying its importance. In the present era of economic instability, the banking industry has emerged as one of the major and vital service industries, which affects lives of several people all over the world which leads to the need to study the effect of innovation strategy on organizational performance of selected deposit money banks in Lagos state, Nigeria. The study in achieving this purpose explored the effect of variables of innovation strategy which include product innovation, process innovation, marketing innovation, organizational innovation on variables of organizational performance which consists of product performance, return on equity, market orientation and return on investment.
Descriptive survey research design was adopted for the study. The population of the study consists of management staffs at the strategic and operational management level from five selected deposit money banks in Lagos State giving a population of 665 which was chosen as our sample size. A structured questionnaire was administered which gave a response rate of 85.4%. The instrument was validated and the Cronbach;s Alpha reliability for the major constructs. The data gathered was analyzed through descriptive, linear and multiple regression analysis.
Findings revealed there is a positive and significant relationship between innovation strategies and organizational performance (R = 0.79.3, at p<0.05). The model R2 (coefficient of determination) was 0.629, constant value (alpha) of 4.212, the coefficient of independent variable (beta = 0.764) and F-Value yielded 626.633. Product innovation had significant effect on product performance and this effect was statistically significant at (R = 0.768, R2 = 0.589, p < 0.05). There is also a significant and positive relationship between market innovation and market orientation (R = 0.634, R2 = 0.402, p < 0.05). The effect of process innovation and return on equity shows a positive and significant relationship at (R2 = 0.751, R = 0.563, p < 0.05). A positive and significant effect was established between organizational innovation and return on investment with R2 = 0.725, R = 0.525, p < 0.05.
In conclusion, innovation strategies have a strong positive relationship on organizational performance of deposit money banks in Lagos State, Nigeria. Innovation strategies have been shown to be vital to boosts the output of organizations and the study has recommended that deposit money banks should adopt innovation strategies to increase their returns on investment, product performance, market orientation and return on equity which together will lead to their increased organizational performance.
Keywords:Innovation Strategy, Organizational Performance, Product Innovation,
Organizational Innovation, Market Innovation, Return on Equity, Market Orientation.
Word Count: 426
TABLE OF CONTENTS
Content Page
Title Page i
Certification ii
Dedication iii
Acknowledgements iv
Abstract v
Table of Contents vi
List of Tables x
List of Figures xii
Abbreviations xiii
Appendix xv
CHAPTER ONE: INTRODUCTION
1.1 Background to the Study 1
1.2 Statement of the Problem 4
1.3 Objective of the Study 6
1.4 Research Questions 7
1.5 Hypotheses 7
1.6 Scope of the Study 7
1.7 Significance of the Study 8
1.8 Operationalization of Variables 9
1.9 Operational Definition of Terms 10
1.10 Overview of History of the Selected Banks in the Study 11
Content Page
CHAPTER TWO: REVIEWOF LITERATURE 15
2.0 Introduction 15
2.1 Conceptual Review 15
2.1.1 Concepts of Innovation Strategy 15
2.1.2 Innovation Strategy (IS) 17
2.1.2.1 Determinants of Innovation 18
2.1.2.2 Three Streams of Understanding Innovation 19
2.1.2.3 Traditional Strategy versus Innovation Strategy 21
2.1.2.4 The Seven Dimensions of Innovation Strategy 21
2.1.3 Product Innovation 23
2.1.4 Process Innovation 25
2.1.5 Marketing Innovation 26
2.1.6 Organizational Innovation 28
2.1.7 Organizational Performance 30
2.1.7.1 Return on Assets (ROA) 31
2.1.7.2 Return on Equity (ROE) 31
2.1.7.3 Market Performance 32
2.1.7.4 Product Performance 33
2.1.8 Organizational Structure (OS) 35
2.2 Theoretical Framework 39
2.2.1 Blue Ocean Theory 35
2.2.2 Resource Based Theory (RBT) 37
Content Page
2.2.3 Knowledge-Based Theory 39
2.2.4 Social Cognitive Theory 41
2.3 Empirical Review 45
2.3.1 The Nigerian Banking Sector 46
2.3.2 Organizational Performance 47
2.3.3 Innovation Strategy and Organizational Performance 48
2.4 Summary and Gaps in the Literature 54
2.5 Conceptual Model 56
CHAPTER THREE: METHODOLOGY
3.1 Research Design 57
3.2 Population 57
3.2.1 Sampling Frame 59
3.3 Sample size and sampling Technique 59
3.4 Method of Data Collection 60
3.5 Research Instrument 60
3.6 Pilot Study 61
3.6.1 Validity of Research Instrument 62
3.6.2 Instrument 63
3.7 Method of Data Analysis 64
3.8 Research Model Specification 64
3.9 Ethical Consideration 65
Content Page
CHAPTER FOUR: DATA ANALYSIS, RESULTS
AND DISCUSSION OF FINDINGS
4.1 Data Presentation, Analysis and Interpretation 68
4.2 Demographic Data of Respondents 69
- Data analysis, Interpretation and discussion 72
4.4 Summary Table of Findings 101
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary 102
5.2 Conclusion 105
5.3 Recommendations 106
5.4 Contribution to Knowledge 107
5.5 Implication of Findings 108
5.5.1 Policy makers 108
5.5.2 Banking Sector 109
5.5.3 Society 109
5.6 Limitation of the Study 110
5.7 Suggestion for Further Studies 110
REFERENCES 112
APPENDIX 123
LIST OF TABLES
Table Page
3.1: Justification for the Selected Deposit money banks 58
3.2: Study population proportion 58
3.3: Proportionate Distribution of sample among the selected banks using the formula 60
3.3 Confirmatory Factor analysis 60
3.4: Ranking of the Likert Scale for each Variable 61
3.5: Summary of Cronbach’s Alpha Reliability Coefficients 63
3.6: Researcher’s Apriori Expectation 65
4.1 Questionnaire response rate 69
4.2: Distribution of the Respondents Age 70
4.3: Distribution of the Respondents Gender 70
4.4: Distribution of the Respondents Marital Status 71
4.5: Distribution of the Respondents Educational Status 71
4.6: Distribution of the Respondents Job Rank Status 72
4.7: Distribution of the Respondents Length of Service 72
4.8 Descriptive analysis of Product Innovation 73
4.9 Descriptive analysis of Product Performance 75
4.10 Linear Regression Analysis between product innovation and product performance 76
4.10.1: ANOVAa 77
4.10.2: Coefficientsa 77
4.11 Descriptive analysis of Market Innovation 80
4.12 Descriptive analysis of Market Orientation 81
4.13 Linear Regression Analysis between market innovation and market orientation 83
4.13.1: ANOVAa 83
4.13.2: Coefficientsa 84
4.14 Descriptive analysis of process innovation 86
Table Page
4.15 Descriptive analysis of Return on Equity 88
4.16 Linear Regression Analysis between Process Innovation and Return on Equity 89
4.16.1 – ANOVAa 89
4.16.2 – Coefficientsa 90
4.17 Descriptive analysis of Organizational Innovation 92
4.18 Descriptive analysis of Return on Investment 93
4.19 Linear Regression Analysis between Organizational Innovation and Return on Investment 95
4.19.1 – ANOVAa 95
4.19.2 – Coefficientsa 96
4.20: Multiple Regression Analysis of Innovation Strategy and Organizational Performance 98
4.20.1 – ANOVAa 98
4.20.2 – Coefficientsa 99
4.21 Summary Table of Findings 101
LIST OF FIGURES
Figure Page
2.0 Source: Researcher’s Conceptual Model 2016 56
3.1 Researcher’s Conceptual model 2016 66
ABBREVIATIONS
ROI- Return on Investment
ROA– Return on Assets
ROE– Return On Equity
PDI- Product Innovation
OS- Organizational Structure
RBT- Resource Based Theory
MI- Market Innovation
PCI- Process Innovation
OGI- Organizational Innovation
GDP– Gross Domestic Product
CBN- Central Bank of Nigeria
ABC- African Banking Corporation
NDIC– Nigerian Deposit Insurance Corporation
SAP- Structural Adjustment Programme
DMB- Deposit Money Banks
OECD- Organization For Economic Co-Operation and Development
NSE- Nigerian Stock Exchange
IPO– Initial Public Offering
LSE- London Stock Exchange
FCT- Federal Capital Territory
FSA- Financial Services Authority
ETI- Eco-bank Transnational Incorporated
ECOWAS- Economic Community of West African States
AMCON-Assets Management Corporation of Nigeria
ATM- Automatic Teller Machine
POS- Point of Sales
GTB- Guarantee Trust Bank
UBA- United Bank for Africa
BFB- British and French Bank Limited
BNCI-Banque Nationale De Credit
PBT– Profit before Tax
SD- Strongly Disagree
D-Disagree
PD- Partially Disagree
PA- Partially Agree
A —Agree
SA- Strongly Agree
AVE– Average Variance Extracted
SSFL- Sum of Squared Factor Loadings
NOI- Number of Variables Indicators
SPSS- Statistical Package for Social Sciences
APPENDICES
Questionnaire
- Innovation Strategy
- Organizational Performance
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
In a highly competitive environment, innovation is the essential key to a firm obtaining a dominant position and gaining higher profits (Cerulli, 2014). Therefore, the understanding of which strategic innovation management practices lead to an improved organizational performance is important. When looking at innovation strategy, Pinoy (2015) posit that an effective strategy must correctly inform which job executor, job, and segment to target to achieve the most growth, and which unmet needs to target to help customers get the job done better. Siep (2010) states that when it comes to creating the solution, an innovation strategy is expected to impact positively on the organizational performance. It is worthy of note that some innovation strategies fail in these regards, which is why innovation success rates are perceived to be wishy-washy. Innovation in service-based industries has not been considered in details at the organizational level (Thomke, 2007). However, the banking industry is an attractive environment for innovation studies on organizations, due to its complex and important nature (Pennings & Harianto, 1992).
In the present era of economic instability, banking industry has emerged as one of the major and vital service industries, which has affected millions of lives of people all over the world. It is unique in its service, socially and economically. In 2008, many countries witnessed reformations in the state of affairs of the banking industry. These reformations are fallouts of change in technology, financial environment, and financial globalization and deregulation (Francisco & Emili, 2002).
According to Frances (2010), the banking industry has been continuously reforming with respect to market share, technology, competition and consumer demands. Frances (2010), in addition added that the vital force of this industry is the fast paced evolution of consumer requirements, wants and desires because there is a high demand by the consumers for the delivery of financial services in addition to an increased variety in investment and deposit products. Therefore, there has been a need for deposit money banks to amend their competitive strategies for products and marketing, in a wider context.
Deposit Money banks are financial institutions that consummate transactions with currency and credit, accepting deposits from the public and organizations alike, some of which are easy to withdraw on demand by cheques (Basu & Ghosh, 2016). Deposit money banks are commercial companies owned by stakeholders or investors. Their primary objective is to maximize profit by money transaction. Basu and Ghosh (2016) also state that deposit money banks are different from other banking institutions, for instance, bank of industry, insurance institutions, Microfinance banks and brokerage institutions etc. because they honor cheques drawn by the customers on demand deposit.
Deposit money banks offer financial services and products that empower individuals and organizations to be a part of a broader economy. They offer possibilities for investment of savings, risk management and extension of credit. These banks support the modern capitalistic society. While the vital functions performed by these banks have remained relatively constant over the years, the structure of the industry has been dramatically transformed. This change has been a result of independent domestic regulation, intense international competition, innovations witnessed within financial instruments, and an exponential growth in information technology. With the use of new financial regulations, the global economy is more interconnected, technology use is more crucial for banking operations, thus, bringing a suffocating pressure on managers and the institute workers (Tidd & Hull, 2003).
According to Cainelli, Evangelista and Savona, (2004) employment of survival measures have become vital for the banks due to growing competition. Innovation is the need of the hour in banking industry, as there has been a spur brought about by the rapid change particularly with respect to new distribution channel systems, such as internet and mobile banking (Cainelli, 2004). Being that these banks provide more convenient ways for their customers to access their accounts, it has generated significant additional operational costs to generate revenue. With the incremental cost element as a result of the added distribution channels and renewed efforts towards making all the possible cuts in the back office, banks have discovered that the secret of gaining profit is revenue enhancement (Aliber, 2007).
Deposit money banks are currently being forced to consider new ways to be on a competitive advantage (Werner, 2014). One way to ensure it is by increasing customer’s transaction fees on credit facilities and transaction interests. The speedy improvement of primary revenue-enhancement innovations is embedded in platform automation processes for the branch and offices’ employees, and in the latest channel technology systems, internet and mobile banking. While these technological innovations may have some similarities, they meet different needs in the distribution strategy of deposit banks (Mansury & Love, 2008). It’s because such banks deal principally with the services like innovation of products and improvement of existing ones, and are consequently required to remain relevant even as the business environment experience changes (Porter, 2008).
Deposit money banks play a vital role in business and entrepreneurial growth, and it’s essential for organizations to understand its processes of innovation in order to be able to compete in the challenging environment. An imperative factor in developing and sustaining competitive advantage is based on the ability of an organization to innovate (Tidd, 2003). Now, doing novel things in a better way is more important than just doing things better. A lot of prominence has been put on building of creative organizations and the management of the innovative processes, as essential elements of organizational survival (Brown, 1997). McAdam (2000) suggests that an effective innovation must incorporate all areas of an organization that possess the potential to affect every discipline and process. Innovation may be transformational, far-reaching or increment reliant on the nature and the effect of the change.
One way of achieving growth and sustaining performance is to provide an atmosphere which encourages and appreciates creativity within an organization. Certainly, there must be a level of cooperation and commitment from the senior management to expedite an innovative working environment. Tidd, Bessan and Pavitt (1997) defined innovation as a process of utilizing opportunity by turning it into new ideas, and placing these ideas in areas of wider use. Afuah, (1998) proposed that innovation is the usage of novel administrative and technical knowledge to provide a new product or service to customers. The present study intends to examine how deposit money banks generate innovative ideas for new products and services; strategically apply creative strategies to the performance of their organization to bring about change.
1.2 Statement of the Problem
The inability of the banking sector to cope with challenges is reflected in its dismal performance over the years and performance indicators for the sector are negative (Sana, Mohammad, Hassan, & Momina, 2011).Innovation comes with its challenges and uncertainties and many banks approaches towards innovation for increasing product performances have not yielded the desired returns (Siam, 2006). Uncertainties have affected the orientation of organizations towards innovation and its activities making innovation not being implemented leading to reducing organizational returns on investment, equity and performance generally (Abdi, 2014).
Product innovation in banks involves means such as the introduction of new credit, deposit, insurance, leasing, hire purchase, derivatives and other financial products such as e-banking, investment and retail banking have been largely neglected and this have caused a reduction in the banks income as they mostly depend on customers deposit which have been on the decrease making it hard for banks to operate efficiently (Adams, 2014).
Larsen, Markides and Gary (2002) asserted that strategic innovation centers on changing strategy on organizational level over time, to pinpoint untapped position in the industry ahead of competing organizations. Its inability to bring capital growth in market by differentiating competences that provide coherence, thus, enabling the organization to promote increased revenue growth is a major bottleneck affecting the profitability of banks. The decrease in overall productivity, global competitiveness therefore minimizes the organization’s value. The impacts of these strategic innovations are absent in most banks as they are streamlined to their conventional approaches to tasks hence their not being able to perform optimally (Larsen, Markides & Gary, 2002).
In spite of the implication of innovation in translating organizational performance in banks, the impact is yet to be understood because of the vague understanding of the aim of innovation. Its impact on the performance of a bank remains a key ingredient of research (Mabrouk & Mamoghli, 2010). The process of innovation can integrate incremental and radical changes. Incremental changes produce small continuous improvements within organizations (Bessant & Caffyn, 1997). The need for innovation is like the lifeline for deposit money bank operating in an uncertain and competitive environment.
The survival and success of Deposit money banks in this present competitive global financial environment demands the incorporation of innovation by producing a regular stream of innovative processes in order to gain competitive advantage (Robbins &Coulter, 1999). Many banks at some point have undertaken some form of incremental innovation initiatives. Some of these banks consider that a cumulative gain in efficiency is greater overtime than that, which comes from occasional radical changes (Raymond, 1998). However, many of these short and medium term profits quickly vanish and get absorbed into the industry standard and as such cannot be relied upon as a prerequisite for its growth and survival (Unger, 2005).
Huynh & Lin (2013) stated that in today’s business environment, business organizations are facing a fierce competition in domestic and global markets and a primary factor causing this is lack of innovative strategies. To survive and develop, they must implement innovative strategies in order to increase their competitiveness and get more advantages which will lead to increasing performance but they don’t possess this leading to their business failure. Doyle (1994) stated that some banks adapt to these environmental changes and adopt new ideas and business methods which guarantee the survival and a competitive advantage. Some of the change agents that pushed financial institutions to be more creative include an intense competition, regulation, and technological advancement. Deposit money banks operating in Nigeria operate in a much regulated environment requiring a certain degree of uniformity in disclosing critical information. Continuous change, intense competition, demographic changes and customer needs affects these abilities of banks to build adaptability competency for their survival and organizational performance fostering.
Due to lack of organizational innovativeness, many organizations spend most of their time realizing and reacting to ill expected changes and problems instead of anticipating and preparing for them. Organizations caught off guard may spend a great deal of time and energy playing catch up. They use up their energy coping with inundate problems with little energy left to anticipate and prepare for the next challenges and this vicious cycle locks many organizations into a reactive posture and stifle their performance (Akinyele & Fasogbon, 2010). Innovative strategy is practiced for survival as well as sustenance (Aliber, 1987). Prior studies have not focused directly on the effect of innovation strategy, an all-inclusive perspective of innovation for enhancing organizational performance. Similarly, such study on Nigeria’s deposit banks has never been done before either. Some researchers are of the opinion that innovation strategy has a very significant contribution in the enhanced performance of any organization others are the opinion that it does not contribute the performance of an organization. These uncertainties forced the need for a research study in this area taking Nigerian perspective as a case-study in order to explore the impact of strategic innovation on the performance of Deposit money banks in Lagos State.
Organizational performance involves the recurring activities to establish organizational goals, monitor progress toward the goals, and make adjustments to achieve those goals more effectively and efficiently and most banks have not been able to remain viable and relevant to its stakeholders over time thereby they requiring change though innovative practices (Njagi & Kombo, 2014).
Most banks do not realize the impact of properly managing its processes and therefore leave policies in the hands of line managers and board of directors who are non-experts to implement or enforce strategies, policies, processes, programmes and practices and hence the values that would have accrued to such banks by properly managing their processes are lost in such banks (Soomro Gilal & Jatoi, 2011). Uncertainties as regards innovation strategy and organizational performance forced the need for a research study in this area taking Nigerian perspective as a case-study in order to explore the impact of strategic innovation on the performance of Deposit money banks in Lagos State.
1.3 Objective of the Study
The main objective of this study is to evaluate the effect of innovative strategies on the performance of selected deposit money banks in Lagos State, Nigeria. The specific objectives are to:
1.5 Hypotheses
H01– Product innovation has no significant effect on the organizational performance of the banks in Lagos state.
H02 – Market innovation has no significant effect on the performance of the deposit money banks selected in Lagos state.
H03 – Process innovation has no significant effect on the organizational performance of the deposit money banks in Lagos state.
H04 – Organizational innovation has a non-significant effect on the organizational performance of the selected deposit money banks in Lagos state.
1.6 Scope of the Study
This research focused on the effect of innovation strategies on performance of selected deposit money banks in Lagos State of Nigeria which were selected based on their assets, profit before tax and customer deposit in the financial year of 2014 (2014 Nigerian Stock Exchange Financial Report). The selected banks were ranked among the top 10 banks of Nigeria post banking recapitalization in 2014 (Oleka & Mgbodile, 2014). The financial reports of all these banks were reported by the Nigerian Stock Exchange. The five banks selected for the purpose of this study are Zenith Bank, Guaranty Trust Bank, Eco Bank, Skye Bank, and United Bank for Africa. The study is intended to focus on employees in five different departments across each of these banks. The departments that was the focus of the study were Corporate Strategy, Human Resources, Business Process re-engineering, Strategic Management, and e-Channels, employing a total of 665 workers. This total population of employees in the various departments and units served as the sample size for this study. Due to time and financial constraints, this research was only limited to the head offices of these banks that are located in Lagos State, Nigeria and because decisions affecting the organizations are usually made at the headquarters. Lagos state was chosen as the area of focus for the study because it is known to be the commercial nerve center of Nigeria, as the deposit money banks have their head offices situated.
1.7 Significance of the Study
This study would prove to be beneficial and important for the banking sector in Nigeria, and other similar stakeholders/institutions as highlighted below.
The Management of Deposit money banks: This research would provide the bank management and financial organizations with more insight on the influence and the importance of the use of innovation strategy, not only on the economy but also on the performance of banks. It would show intelligent ways to penetrate new markets effectively with new products and innovative strategies.
Industry: The findings of the current study can further be used by decision makers in industries in the field of innovation, strategy and organization performance. Strategic innovations are viewed as a way to improve financial inclusion to achieve economic development for the attainment of vision 2020 in Nigeria. The industry and its regulators can use the research findings to design policies to encourage strategic innovation but at the same time instill an effective regulatory environment.
Government: Government policy makers would find the findings of this study useful while devising new policies that would help to create an enabling environment, thus, ensuring supportive strategic innovation in products, process markets and organization in the government.
Academics: This study would provide additional knowledge on the concept of innovation strategy and give more empirical findings on its effect on organizational performance. This would provide more valuable material to scholars, students and future researchers. This study could also be used as a basis for further research and also academically in the field of strategic innovation.
1.8 Operationalization of Variables
The following two variables are being considered for this research:
X = Independent Variable
Y = Dependent Variable
Y = f(X)
Where: X = Innovation Strategy
Y = Organizational Performance
X = (x1, x2, x3, x4)
x1 = Product Innovation (PDI)
x2 = Market Innovation (MI)
x3 = Process Innovation (PCI)
x4 = Organizational Innovation (OGI)
In regression:
Y = f(x1)……….……………………………………… Equation 1
Y = f(x2)……….……………………………………… Equation 2
Y = f(x3)……….……………………………………… Equation 3
Y = f(x4)……….……………………………………… Equation 4
H01: Y = α0 + β1x1 + µi ……………………………… Equation 1
H02: Y = α0 + β2x2+ µi ……………………………… Equation 2
H03: Y = α0 + β3x3+ µi ……………………………… Equation 3
H04: Y = α0 + β4x4+ µi ……………………………… Equation 4
Y = α0 + β1x1 + β1x2 + β1x3 + β1x4 + µi ……………….. Equation 5
1.9 Operational Definition of Terms
Deposit money bank: An institution that renders financial services to its customers or public, like accepting deposits, granting loans, and providing basic investment products.
Innovation: innovations refers to a critical way in which an organizations respond to either technological or market challenges using new and creative ideas and techniques.
Innovation Strategy: are strategies designed by an organization in identifying current and future plans which the organization can employ to maintain and improve their market share.
Market Innovation: It is the usage of new techniques in marketing that focus on identifying and meeting the stated or hidden needs or wants of customers through its product mix.
Organizational Innovation: A new organizational method in business practices, workplace organization or external relation, which are discontinuous from previous practice, and. provide new pathways to creating public value.
Process Innovation: Process innovation means the implementation of a new or significantly improved production or delivery method (including significant changes in techniques, equipment and/or software).
Product innovation: Product innovation is the creation and subsequent introduction of a good or service that is either new, or an improved version of previous goods or services.
Organizational Performance: is an analysis of a company’s performance as compared to their goals and objectives.
Return on Asset: provides an idea about how efficient management is at using its assets to generate earnings
Return on Equity: is defined as net income divided by stockholders equity and measures an organization’s profitability by revealing how much profit a company generates with the money invested by shareholders
Market Orientation: It is the systematic management of marketing resources and processes to achieve measurable gain as a result of investment in a business and efficiency, while maintaining quality in customer experience
Product Performance: This is the capacity of a system to meet demands for deliveries or performance. Product availability and deliverability can be used to express product performance.
1.10 Overview of History of the Selected Banks in the Study
1.10.1 Zenith Bank
Established in May 1990, Zenith Bank Plc. started its operations in July of the same year as a commercial bank. It became a public limited company on June 17, 2004 and on October 21, 2004, was listed on the Nigerian Stock Exchange (NSE) following a highly successful Initial Public Offering (IPO). Zenith Bank Plc. currently has a shareholder base of about one million and is Nigeria’s biggest bank by tier-1 capital. In 2013, the Bank listed $850 million worth of its shares at $6.80 each on the London Stock Exchange (LSE) (Okeke, 2012).
Headquartered in Lagos, Nigeria, Zenith Bank Plc. has over 500 branches and business offices in prime commercial centers in all states of the federation and the Federal Capital Territory (FCT). The Bank was licensed by the Financial Services Authority (FSA) of the United Kingdom in March 2007, to establish Zenith Bank (UK) Limited as the United Kingdom subsidiary of Zenith Bank Plc. Zenith Bank also has subsidiaries in: Ghana, Zenith Bank (Ghana) Limited; Sierra Leone, Zenith Bank (Sierra Leone) Limited; Gambia, Zenith Bank (Gambia) Limited. Representative offices of the bank are also present in South Africa and The People’s Republic of China. The customer base of the bank consists of corporate entities mainly, many of which are subsidiaries of multinational corporations and large indigenous companies. The lending strategy of the bank stresses rational procedures and transparency. As a result, the Bank’s credit portfolio has the best asset quality in the Nigerian banking industry. Zenith Bank’s customer base, cuts across the following sectors: Oil and Gas, Power and Infrastructure, ICT and Telecommunications, Real Estate, Building and Construction, Transport, Shipping and Aviation, Commodities and General Commerce, Entertainment (Zenith Bank, 2017).
1.10.2 Guaranty Trust Bank
Guaranty Trust Bank plc. is a financial institution with expanded business outlays spanning West Africa, East Africa and the United Kingdom. The Bank presently has an asset base of over 2.54 Trillion Naira, shareholders’ funds of over 385 Billion Naira and employs over 10,000 people in Nigeria, Cote d’Ivoire, Gambia, Ghana, Kenya, Liberia, Rwanda, Sierra Leone, Uganda and the United Kingdom. Since its inception in 1990 it has a strong service culture that has enabled it to record a year to year growth in clientele base and major financial indices. Guaranty Trust Bank is recognized as one of the most profitable and well managed financial institutions in Africa. It provides quality service, ethics, professionalism, integrity, innovation and internationally accepted corporate governance standards (Guaranty Trust Bank, 2017).
1.10.3 Eco-bank Transnational Incorporated (ETI)
Eco-bank Transnational Incorporated was established as a bank holding company in 1985 under a private sector initiative by the Federation of West African Chambers of Commerce and Industry with the support of ECOWAS. During the early 1980’s the banking industry in West Africa was dominated by state-owned and foreign banks. In West Africa, there was hardly any Deposit money bank owned and managed by the African private sector. Eco-bank Transnational Incorporated was established to fill this vacuum. The Federation of West African Chambers of Commerce initiated and promoted a project for the establishment of a private regional bank in West Africa. Eco-promotions S.A. was incorporated in 1984. Its founding shareholders raised the seed capital and the promotional activities leading to the creation of Eco-bank Transnational Incorporated which had an authorized capital of 100 million US Dollars in October 1985. In 1985, a Headquarters’ Agreement was signed with the government of Togo which granted the status of an international organization to Eco-bank Transnational Incorporated, with the rights and privileges necessary for it to operate as a regional institution, including the status of a non-resident financial institution (Eco-Bank, 2017).
1.10.4 Skye Bank Plc
Skye Bank Plc is one of Nigeria’s leading retail and Deposit money bank, having over 400 branches and cash centers across Nigeria, offers premium financial services, with subsidiaries in Sierra Leone, The Gambia and Guinea. The bank started its operations in 2006, becoming one of the most important financial institutions in the banking industry of Nigeria. It has played a pivotal role in many businesses, created wealth and promoted entrepreneurship. Skye Bank has earned a reputation for its exceptional customer service. The bank invested significantly in acquiring and deploying Information Technology for a better customer experience across its multiple service delivery platforms which includes mobile banking, ATMs, POS and online platforms. Skye Bank won the bid to acquire 100 per cent ownership stake of Asset Management Corporation of Nigeria (AMCON) in 2011; a deal that placed the bank as one of the top four banks in Nigeria in terms of customer reach, balance sheet size and profitability (Skye Bank, 2017).
1.10.5 United Bank for Africa (UBA)
United Bank for Africa has been functional for more than 65 years, providing uninterrupted banking operations. It dates back to the year 1948 when the British and French Bank Limited (BFB) started business in Nigeria. BFB was a subsidiary of Banque Nationale de Crédit (BNCI), Paris, which turned its London branch into a separate subsidiary known as the British and French Bank. Banque Nationale de Crédit and two British investment organizations, S.G. Warburg and Company and Robert Benson and Company also held it shares. A year later, BFB opened its offices in Nigeria, making it the 3rd British bank in Nigeria along with the two existing British owned banks operating in Nigeria. Right after Nigeria’s independence from Britain, United Bank of Africa was assimilated on 23, February 1961 to take over the business of British and French Bank. In 1970, it became the first Nigerian bank to subsequently undertake an Initial Public Offering (IPO) and it eventually listed its shares on the Nigerian Stock Exchange (NSE).
United Bank of Africa opened its New York Office (USA) in 1984 to offer banking services to Africans living there. The present United Bank of Africa came into existence as a result of a merger of the Standard Trust Bank, incorporated in 1990 and United Bank of Africa, one of the biggest and oldest banks in Nigeria. The merger was completed on August 1, 2005. United Bank of Africa eventually went on to acquire Continental Trust Bank in the same year, to further expand the United Bank of Africa brand. United Bank of Africa subsequently acquired Trade Bank in 2006 as well. The shareholders of United Bank of Africa unanimously voted for the bank to be restructured into a Monoline Commercial Banking Model on 13 December 2012 in order to make it compliant with the new Central Bank of Nigeria guidelines for Deposit money banks in Nigeria. Now the United Bank of Africa Group is working in the forefront of the African economy and is functional as a one-stop financial services institution, with an ever growing reputation in Africa (United Bank for Africa, 2017).
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