The Relevance of Marketing in Post-Consolidation Banking in Nigeria: an Illustrative Approach

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The purpose of this article is to assess the relevance of marketing in post-consolidation banking in Nigeria. The study highlighted the fact that prior to the consolidations in 2004, majority of the banks paid little or no attention to marketing. However, with successful consolidation exercise in 2005, came the challenge of judiciously utilising the high capital base at the disposal of the emerged 25 banks. They needed to generate superior returns to their shareholders and marketing became an important competitive tool to achieve this. They, in varying degree, employed the marketing tools of marketing research, branding, new product development, pricing, distribution, marketing communications and so on. The study concluded that Nigerian banks and their teeming customers are really in new world – the world of marketing, where the rule of the game is continuous value creation, communication and delivery to ‘the king’, consumers. Therefore, the relevance of marketing in post-consolidation banking in Nigeria cannot be overemphasised.

Keywords: Marketing, Consolidations, Capitalisation, Bank, Customers/Consumers, Competitive Advantage.

The word bank is derived from the Italian banca meaning 'bench', the table at which a dealer in money worked. From this, Jhingan (1997) defines “bank” from the perspective of a commercial bank. A bank refers to a bench for keeping, lending and exchanging of money or coins in the market place by moneylenders and moneychangers. However, he is of the opinion that modern commercial banks carry out more important activities critical to national development. Consequently, he remarks that many scholars have identified the banking sector, as one driving most economies of the world. Banks, all over the world, are important and central to the empowerment of individuals, groups, institutions, and government to engender a country’s economic growth and development. Nigerian Banks are not exception. Fundamentally, Nigeria’s banks engage in funds intermediation and this view is canvassed by Umoh (2002) who argues that the core activity of a bank is funds intermediation, which entails mobilizing of funds from the surplus units and channelling such funds to the deficit units. This facilitates capital formation and generates growth in the economy. Sustainable economic growth engenders economic development. Unfortunately, during the pre-consolidation era, Nigerian banking industry was structurally defective to make a meaningful and progressive contribution to the industrial growth of the country. This stemmed from the following challenges: low capitalization, deregulation, competition and economic recession. Other challenges were political instability, escalating inflation, infrastructural decay and frequent reversal in monetary policy. These and other challenges made a holistic reform of the banking sector inevitable. Consequently, the Central Bank Governor, Professor Charles Chukwuma Soludo, in July, 2004 directed all the eight-nine banks in the country to embark on a consolidation exercise within an 18-month period. Consolidation is a term used by the central bank of Nigeria (CBN) to describe the coming together of some banks within the country to become one bank and be able to meet CBN’s requirements for capitalisation to a minimum of N25 billion. An enlarged capitalisation is expected to improve services rendered by the banks and make them customer-centric. Prior to the consolidations, majority of the banks paid little or no attention to marketing (an act of identifying and satisfying consumer needs through the creation and delivery of superior value to customers). They operated largely a sellers’ market, where customers hardly count because they were regarded as...
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