QUEUE EFFICIENCY IN NIGERIA BANKS.

A COMPARATIVE ANALYSIS OF OLD AND NEW GENERATION BANKS

BY

KASUM, A. S., ABDULRAHEEM, A. AND OLANIYI, T. A.

DEPARTMENT OF ACCOUNTING AND FINANCE UNIVERSITY OF ILORIN, ILORIN.

ABSTRACT Banks provides financial services to individuals and organizations. Nigeria being an essentially cash based economy, in term of transaction payment system, left the

bank with the problem of having to contend with huge volume of transaction which directly translate to long queue for services of banks. It now becomes one of the challenges for banks, to be able to manage the time spent by customers in the banking hall to remain competitive. The objective of the study is to evaluate the effect of queue efficiency on customer perception and hence, patronage of banks. Primary data were collected, through a well structured questionnaire that were administered on customers of selected banks. The data captured in the questionnaire, which are on perception of banks queue management practice and consequent effects, were analysed using percentages, mean and standard deviation, which then facilitated inferential statistical analysis using chi-square and Z scores tests. The study reveals that more time is spent in the old generation banks than it is in new generation banks. It also showed that quick service delivery could influence choice of banks by customers. Based on these, the study suggest that old banks should improves on time management practices and new ones sustain their current practice and not to take customers above their capacity.

Background to The Study Every relationship is a game and banker-customer relationship is not an exception. The corporate objective of any bank which is maximization of

shareholders wealth can only be achieved if customers are retained and satisfied. This is in line with Kotlers (1999) perception that the key to successful marketing of financial services is identification and packaging of customers needs to their satisfaction. The competition in Nigerian banking sector is getting more intense, partly due to regulatory imperatives of universal banking and also due to customers awareness of their rights. Bank customers have become increasingly demanding, as they require high quality, low priced and immediate service delivery. They want additional improvement of value from their chosen banks (Olaniyi, 2004). Service delivery in banks is personal, customers are either served immediately or join a queue (waiting line) if the system is busy. A queue occurs where facilities are limited and cannot satisfy demand made against them at a particular period. However, most customers are not comfortable with waiting or queuing (Olaniyi, 2004). The danger of keeping customers in a queue is that their waiting time may amount to or could become a cost to them (i.e. bank customers). According to Elegalam(1978), customers are prepared not to spend more cost of waiting / queuing. The time wasted on the queue would have been judiciously utilized elsewhere (the opportunity cost of time spent in queuing). Conceptual Issues A queue for the purpose of this study is the aggregation of customer awaiting a service function, it is an everyday occurrences and results when the number of calling units exceed the number of available service center (Olaniyi, 2004). These has become an integral of any service which refers to the whole time from arrival of inputs to their departure. The variants of queuing models that can be applied to address the customers needs according to Ashley (2000) include a simple system, multiple-channel system, constant service and limited population models. A simple system is a single line and a single service system which consists of items forming a single queue which is served by a single facility. Other models are one queue multi-server system, multiple queue and multi-server system and of

course multiple server single-queue system. On the other hand the constant service time model provides service to customers instead of experimental distributed times. The limited population model provides a dependent relationship between the length of the queue and the arrival rate. The Queue Structure

Fig. 1

Source ; Olaniyi, T.A.(2004) Queue Discipline This involves priority rules by which customers are served. Barry and Jay (1993) gave the following categories of queue discipline: a) Preemptive Priority: This is common in emergency situations and it allows customers that arrive at any time to replace customers that are being served e.g. in-patient treatment in hospitals. b) Non-Preemptive priority: Queue is arranged in such a way that item with the highest priority in the system is served first and there is no displacement of items in service. Such methods include: i) FIFO (First-in-First Out): This method allows the first item to enter the system to be served first. i) LIFO (Last-in-First-Out): In this type the last item on queue that enters the system is served first. A simple queue is a single channel with variables arrival following a poison distribution while service time is exponentially distributed(Olaniyi, 2002). It adopts in FIFO queue discipline with no backing or reneging.

A multi-server has all the features of simple queue and in addition assumed no limit to the permissible length of the queue, while one they serves assumed to perform at the same rate. Banks are generally defined by the functions they perform. However, for example Imala (2003) defined bank by identifying the basic functions of banks in an economy, this function which includes the acceptance of deposits, advancing banks, credit creation, financing foreign trade, agency services to allocate available resources by mobilizing fund from non-productive channels to finance investment activities in productive sectors. A cross observation of Nigerian banks adopt a multi-channel system but practically the performance of the servers are not the same. As laudable as these functions are, they cannot be provided without high level customers base as this provide the basis to measuring the level of patronage or otherwise of banks. This customers patronage could be describe as the backbone of a highly liquid Financial institutions. Hart (1981) defined banking as the business of receiving money and collecting drafts for customers, subject to the obligation of borrowing cheque drawn upon them from time to time by the customers, to the extent of the amount available in their current account. Essang and Olayide (1974) defined a commercial bank as a monetary institution owned by either government or private businessmen for the purpose of profit. Profit maximization objective may not be easy to achieve in banking, without a good level of customer base, as this customer base enhances the effectiveness and efficiency of the services rendered to the customers. In order words, the faster they get attended to, the more the customer would be encouraged to keep their money with a bank. Methodology Primary data were used for the study. They were collected from the selected bank through a questionnaire structured along the inverted funnel method, which was administered on the customers of the banks. This implies that, the customers of the bank are the sources of our data. Questions there in ranges from personal data to general observation about happenings in the banks, which actually are the relevant data for the study. Our samples are simple random selection of arriving and willing customers. to the banks. A total of about six hundred and five(605)

respondent returned our questionnaire in old generation banks while five hundred and ninety eight (598) did in new generation banks. This is out of a total no of six hundred and forty (640) and six hundred and thirty (630) administered respectively. Originally, questionnaires were distributed in a total of six banks, three in new generation and three in old generation banks. Before the conclusion of the study one of the new generation banks cease operation, as it could not meet the N25b shareholders fund requirement of Central bank of Nigeria. For the analysis to be balanced, it was decided that one of the old generation banks should also give way. The old generation bank that has been technically taken over by another bank was dropped. To ensure further equity, the minimum number of questionnaire returned from one of the banks one hundred and ninety five(195) was taken as the bench mark for all the banks. Hence a total of three hundred and ninety (390) responses were used for each of the generations. Simple percentages were used to represent all our data for easy statistical analysis and interpretation. Means and standard deviations were also computed where they could add to explanations of data generated. For analysis of data that are useful for hypotheses testing, however, two tools of inferential statistical analysis were used. Z score was used to analyse data that are relevant to hypothesis one while chi-square was used for hypothesis two. Responses to question 10 and 12 were the data used for testing hypotheses one and two respectively. Z is given as XI X2 SE Where XI = Mean of sample set 1 XI = Mean of sample set 2 SE = Standard errors of the difference of means. While, Chi-square (X2) is given as X2 = (E O)2

E Where E = Expected frequency O = Observed frequency Statement of hypotheses Hypothesis 1 H0 There is no statistically significant difference between the mean of time spent on the queue in old generation banks and new generation banks. There is statistically significant difference between the mean of time spent on the queue in old generation banks and new generation banks.

HI

Hypothesis 2 H0 HI There is no statistically significant relationship between the age grouping of banks and queue efficiency of Nigerian banks. There is a statistically significant relationship between the age grouping of banks and queue efficiency of Nigerian banks.

Decision rules The null hypothesis is accepted in any case where the calculated value is greater than table value and we fail to accept null where the reverse is the case.

THE DATA Detail 1 Gender: Male Old Banks Resp. % 177 213 45.38 54.62 New Banks Resp. % 216 174 55.38 44.62

3 4

Female Age: Below 30 31 40 41 & above Marital Status: Single Married Level of Education Non-formal Primary Secondary Post secondary Professional Occupation: Civil Servant Business / Trading Artesian Others Income range per month: Less than N7,500 N7,500 N15,000 N15,000 N22,500 N22,500 and above Years with the Bank: Less than 2 years 2 5 years 6 10 years above 10 years Frequency of transaction with the bank: Daily Weekly For thoughtly Monthly & above Determinant of the frequency: Payment of salary Nature of Business Commitment Others

102 243 45 75 315 6 36 300 48 192 195 3 18 39 151 192 27 30 240 93

26.15 62.31 11.54 19.23 80.77

101 165 114 132 258 3 15 12 240 72 120 228 24 18 27 87 174 102 78 111 201 -

25.89 42.31 29.23 33.85 66.15 0.78 3.85 3.08 61.54 18.46 30.77 58.46 6.15 4.62

1.54 9.74 76.92 12.30 49.23 50% 0.77 4.62 10 38.71 49.32 6.92 7.69 61.54 23.85

6.92 22.31 44.62 26.15 20 28.46 51.54 -

80 75 80 155

20.51 19.23 20.51 39.75

105 104 66 115

26.92 29.49 26.67 16.92

142 132 60 54

36.40 15.4 33.85 13.85

123 114 102 51

30.04 26.15 29.23 13.08

10

11

12

13

14

15

Time spent on each transaction: 0 10min 11 20min 21 30min 31 60min 1hr and above Perceived Determinant of the time spent: Number of customers Nature of transaction Staff efficiency Availability of Materials Others Customers rating of the bank: Efficient Moderate Not efficient Efficiency affects queuing paid: Yes No Would you prefer a bank with shorter que: Yes No In what area do you feel efficiency should be improved: No of customer Nature of transaction Staff efficiency Availability or mat Others

3 9 111 189 78

0.77 2.31 28.46 48.46 20

78 186 78 36 12

20 47.69 20 9.74 3.08

198 87 84 21 -

50.77 22.31 21.54 5.38 -

99 141 114 36

25.38 36.15 29.23 9.74

72 181 137

18.46 46.41 35.13

162 213 15

41.54 54.62 3.85

192 198

49.32 50.68

186 204

47.69 52.31

336 54

86.15 13.85

186 204

47.69 52.31

81 75 219 15 -

20.77 19.23 56.15 3.85 -

99 150 84 57`

25.38 38.46 21.54 14.62

Source: Field survey 2005

Result Our respondents under the two categories fairly represent all the interest personal variable. Male and females, fairly educated to well educated, various occupations and also income brackets. 23.85% has been banking with the old generation banks for more than 10 years while the remainder are for less than that. All our respondents for new generation banks have been banking for less than 10 years. More of our respondents banks on monthly basis in both categories. Daily and weekly banking is more in new generation banks than in old generation banks. Nature of business and payment of salaries are the more prominent reasons for going to banks. While customers at old generation bank opined that number of customer and staff efficiency mostly determine time spent in Banks, nature of service requires is what is added to staff efficiency as most determinant of time spent in new generation banks. For that purpose Z score was calculated giving 24.46 at 95% confidence limit. This is greater than table value of 1.96. This suggests that the alternative hypothesis could be accepted. The meaning is that there exists statistically significant difference between times spent in the two categories of banks. On close examination of data presented, it would be seen that more time is spent in old generation banks than in new generation banks. Chi-square calculated is related to hypothesis two. The result is 11.62 which is greater than 5.991 obtainable on X2 table at the degree of freedom of 1 and level of significance of 5%. This suggests the acceptance of the alternative hypothesis also and means that statistically significant relationship exists between generational grouping and efficiency in Nigerian banks. On the table where data were presented, 35.13% of old generation customers scores their bank inefficient, while only 3.85% did the same in the new generation banks. Conclusion As evidenced by the result of our analysed data, this study concludes as follows; that time spent on queue for services in old generation bank is in aggregate longer than in the new generation

that new generation bank are more efficient in timely service delivery than the old generation banks. and, that timely service delivery could be an attraction to bank customers. Based on our conclusions, the study suggest that old banks should improves on their service delivery to customer especially in relation to timely service delivery to reduce the probability of losing them (customers) to new generation banks. And to new generation banks, the study recommends that they strive to sustain their timely delivery of services by not taking more customer from old banks than their capacity. The two categories should also strive to maximize the benefits offered by information communication technology (ICT) to deliver timely services to their customers.

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