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BANKING & FINANCE RESEARCH

PUBLICATION ON:

WHAT CUSTOMERS EXPERIENCED FROM THEIR BANKS IN ZAMBIA

(BANK CUSTOMER SATISFACTION RESEARCH)

Researched & Published by: Njekwa Njekwa

YEAR: 2006

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About the researcher

The researcher is a freelance Banking and Marketing consultant with over 16 years of

Retail and Corporate Banking experience up to senior level (Credit Risk Management,

Financial Services Marketing and Customer Services) and has published various

scholarly articles in Banking and Finance. He is an editor of the Banking and Finance

journal (Money matters news) and member of the publications and public relations

committee of the Zambia Institute of Banking and financial Services and appointed

chief examiner of the Banking and Finance examinations.

He is academically qualified with a Master’s degree of Science in Marketing (MSc in

Marketing) from the University of Glamorgan in Wales (United Kingdom)

He is also professionally qualified as (ACIB) Associate Chartered Institute of Bankers

(UK) and (ACIM) Associate Chartered Institute of Marketing (UK).

Njekwa Njekwa (Mr.)

MSc (UK), ACIB (UK), ACIM (UK), PGDipM (UK), PGDipMS (SA), DipBCM (SA).

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Table of contents

Foreword --------------------------------------------------------------------- 4

Introduction -------------------------------------------------------------------5-6

Banking activity --------------------------------------------------------------6

Research results --------------------------------------------------------------7

Implications of research results --------------------------------------------11

Competitive challenge ------------------------------------------------------ 11

Conclusion ------------------------------------------------------------------- 12

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Foreword

The objective of the research study was to find out how customers perceive and

position their banks in Zambia. The results are fundamental as concerned Banks will

learn the weaknesses in their banking activities, and such banks may need to re-

position their business operations in order to achieve sustainable competitive

advantage.

The effective application of the marketing concepts and theories may lead to

improved customer satisfaction, creating long term relationships with Banks. So, it is

recommended that Banks take that pro-active stance in every business sphere to

guarantee future survival.

The fact that banks are operating in an open competitive environment is a cause for

concern for those banks that have not spared the customer to be ‘KING’.

This means that, Customer Lifetime Value of that particular bank may be shortened as

customers migrate to competitor banks that offer Total Quality Satisfaction.

The results from this research project should be a wake-up call for banks, to apply

quality based competitive strategies to re-build and grow their business activities,

which will ultimately stimulate the means of achieving the financial values of sales

and profits.

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Introduction

The source of the research results is from the author’s Management Research project

conducted, for his Master’s degree of Science in Marketing (MSc) from the

University of Glamorgan in the United Kingdom, Wales.

The project was specifically chosen to help all organisations and mainly those banks,

which do not view marketing as a management function and process responsible for

identifying, anticipating and satisfying customers’ needs and wants profitably.

The author is to some extent disappointed from his research findings that some banks

in Zambia even to day do not have any Strategic Business Unit (SBU) of marketing to

coordinate the respective activities of the organisation. In plain language, they have

not taken to understand the importance of marketing in an organisation.

From the research, it was found that organisations that do not use marketing concepts

and theories are far behind and have little or not prospered at all. The converse is true;

those that have applied marketing concepts and theories have gained greater value for

themselves and for their customers and are on the roadmap to prosperity.

It was also found in a comparative study of some banks in Zambia (Multiple Case

study approach) that, those that poorly use the center of any marketing activity have a

poor market share of core deposits and those that apply quality marketing mix

ingredients as strategy satisfied their customers and resulted into improved

organisational performance as follows:

The author has data and information at his disposal, obtained from banks studied,

such as Financials, Product brochures, Newspaper publicity, Tariff guides, Annual

reports; results from questionnaires and observations (both participant and non

participant), etc and these were used in the comparative study for an insight critical

analysis.

It is also interesting to notice that despite aggressive marketing strategies, some banks

instead have a decline in share of deposits (mainly due to promotion on wrong targets

and unprofitable segments). However, this may be a question mark on the face of it,

but in real life, it is not guaranteed that heavy promotional spend can gain you a

competitive edge even when you are operating in a growing market. It is the

application of the marketing mix elements that will be discussed later in this article

Customer

satisfaction

Improved

organisational

performance

Quality marketing mix

application

Quality marketing mix

Quality marketing mix

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that is of significance to achieve financial objectives, and in this case, improved

deposit growth/sales.

Banking Activity

To come up with strategies and tactics required to improve deposit growth, we need to

first of all understand the business of banking and the importance of deposits,

commonly referred to as raw materials.

Banking activity remains critical to national development and scholars have identified

the banking sector as one, driving most economies of the world.

The core activity of a bank is funds inter-mediation, which entails mobilizing of funds

from the surplus units and channeling such funds to the deficit units. This facilitates

capital formation and generates growth in the economy.

Banks in order to execute the inter-mediation function ought to be adequately

equipped in human, financial and material resources and must demonstrate high

degree of integrity in order to muster the necessary confidence for the function.

Banks therefore need to evolve strategies for productive deposit mobilization in order

to meet the increased demand for credit finance from sectors across the economy. It is

true to say that Banks rely on deposits to fund loans and also, deposits can be invested

by banks on the money and capital markets for a better return.

Commercial Banks in Zambia therefore as engines of economic development must

mobilize adequate deposits, which are essential raw materials, used to achieve their

ultimate corporate objective: to earn returns at least equal to the cost of capital and as

a contribution to economic growth as already stated.

For organisations like banks to achieve their deposit growth objective, they must

effectively apply the center of any marketing activity, the “Marketing Mix variables”

commonly known as the 7Ps, (Product, Promotion, Price, Place, Process, Physical

environment and People) as a strategy. These must not only be memorised and known

in theory, but it is its application that banks need to understand, and how exactly the

marketing mix must be used for a maximum yield.

It is the combination of the marketing mix variables, which may yield better business

results, but surprisingly, many organisations do not do this and only apply part of the

tools and even wrongly. This has raised a cause for concern to the author who is an

experienced Chartered Banker (ACIB) and Chartered Marketer (ACIM) to see such

things taking place. Marketing concepts must be seriously upheld for a quick

recovery, failure to which planned organisational growth may be squeezed. This is

justified by one of the banks studied, whose deposit market share in the past 4 years

only increased, by 0.77% on average. The author has strongly argued that this was not

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the Bank’s corporate objective to expand cautiously considering that, it spread

viciously in the country by opening many Bank branches. What quickly came to the

minds of the author was ‘Quantity versus Quality” marketing strategies in the absence

of the marketing mix variables (the 7 Ps of Marketing).

It may not be acceptable, in a growing market such as Zambia and may indicate poor

application of the Marketing Mix ingredients, as a strategic and alternative corner

stone of marketing. The marketing tools have been researched and written for us by

marketing Gurus, but are not fully put into practice, perhaps for lack of appreciation

of the wonders marketing can perform if utilised effectively.

I have some literature review from some banks in Zambia and developed countries on

how they have effectively applied the mix elements and good results achieved. Why

can’t we benchmark such activities in Zambia?

The key issue therefore remains on how banks can effectively apply the marketing

mix elements to achieve the deposit growth objective.

The author can be contacted, on how banks and organisations at large may apply the

marketing mix as strategy to achieve deposit/sales growth within the time framework.

However, it is pleasing to note that some banks in Zambia are already applying the

marketing mix effectively, though have greater room to exceed.

The research findings below definitely need Quality application of the Marketing mix

corner stone, but it is the manner of application required to reverse the findings to

normality

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Research results: What customers experienced from their banks.

Before highlighting the strategies and tactics to improve deposit growth, I would like

first to detail my findings on the customer satisfaction levels in their banks. It is up to

the concerned bank to take it up from there and find exactly from the

author/researcher what bank customers really expected and what they actually

received from their respective banks - (Research findings are Not edited):

Did you know that this is what your customers said about your bank?

1. There is need to secure more chairs for customers, as the one which is there is not

enough.

2. Your services are horrible:

- Bank tellers are too slow and a nuisance to customers, yet they are using

computers

- Customer relations is very poor

- Don’t be surprised if you start loosing customers

3. Tell your workers to work on PR

4. You should put more chairs for your customers. We are sick and tired of standing.

Some of your customers will fall.

5. You should improve in the following:

- Why does it take longer than usual to withdraw from an account with Chipata

Branch? I have been waiting for 45 minutes. Your services are always off-line.

you should improve.

6. Since I have noticed a lot of your customers wait for longer period standing, I

don’t

Know whether they think are petrol powered. Increase on your waiting seats. Only

two, to cover more than ten customers.

7. The guard is there to safe guard our interests and not to increase intimidation on

already tired customers. Teach them some important customer relations.

8. You are requested to improve on the service because you are very slow.

Concerned customer.

9. Made to wait for more than an hour to check for money transfer. The person

authorised to sign takes too long and services are too slow.

10. Suggestion from customer: Please, provide some seats and drinking water for

customers. I thank you in anticipation, yours, customer.

11. There are delays in us receiving the transfer copies after funds have been remitted.

We require these copies immediately after our account has been debited so that we

are able to follow up with foreign suppliers in order to have goods delivered to us

in time.

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12. We appreciate your bank, for introducing the facility of ‘on line deposit of cash

and cheques at various centers in Zambia’, but at the same time, there is a long

delay in crediting our accounts at Lusaka for the on-line deposits made in Ndola. I

feel definitely there is a scope for you to improve in this area.

13. The Bank looks good but the plant in the middle is too big. It overshadows the

customers’ heads. Please move it near the water tank. Worried customer.

14. Tell people who work around this building to attend to customers immediately

and reduce the situation where the customers are waiting when they are just

chatting.

15. You should provide more chairs and the time taken to provide your services

should be reduced (improve effectiveness and efficiency).

16. We receive wrong bank charges in a month, bad attitude by tellers, and poor

customer service.

17. Improve on services provided such as respect to clients. Give customers the right

bank charges instead of overcharging.

18. Provide medical insurance for the clients

19. Your bank services are rated “ Bad”

20. There are some unexplained debits on the account and several hidden charges.

21. Long queues when seeing personal bankers or depositing cash/cheques.

22. Long queues at month ends

23. Why all new cashiers?

24. Should offer better rates

25. Assign one or two counters for paying salaries at month end.

26. Provide Night safe, Agriculture loans.

27. The bank itself is not spacious to cater for a large number of people. They are

inefficient and no proper procedure of giving out salaries/other bank services.

28. Improve in procedure of serving customers

29. I have had no problem with my bank for the past 12 months.

30. The service is very good – timely and efficient. The bank is on-line with all other

branches through out the country.

31. High interest rate when borrowing

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32. Long waiting time (Queues) during peak periods.

33. The bank should provide individual long-term capital loans like mortgages, motor

vehicle and equipment loans

34. Book balance is too high

35. Services are very poor, interest is too high and they don’t update customers with

bank statements and instead, the customer pays for it if he needs one.

36. They should put up two counters to service customers within given time, one for

corporate customers and the other one for individual people.

37. Customers should be allowed to withdraw big balances without notices.

38. People with cheques should have there own counters

39. Poor ATM services and poor customer relations

40. The minimum balance for savings account holders is low and affordable

41. Poor customer service, sometimes tellers are rude to customers/late processing of

salaries i.e. education.

42. ATM- machines not very reliable, sometimes, balance advice slip after

withdrawing money is not printed.

43. It is not easy to get a bank statement and statements should be available when

needed

44. I have chosen this bank because it is reliable; there is a good customer relation.

45. Tellers are very slow, bank too small. There is always one teller to pay out

salaries. They should improve on customer service.

46. The bank should look into the issue of attending to clients without them having to

wait in queues for a long time.

47. The bank has become very inefficient. You give them an instruction; they do not

do it until you go back at least 10 times. All they do is blame one another.

48. They should use as many counters as possible

49. Service charges are too high

50. They don’t update customers with bank statements and instead, the customer pays

for it if he needs one.

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Implications of research results

From the above customer complaints and few praises, the implications on all banks

are that, they need to re-position the way they carry out the business of banking, in

order to satisfy the needs and wants of customers. This may result into customer

retention, loyalty and creation of long term relationship, giving birth to profits and

future survival.

Customers have challenged banks, and to create Customer Lifetime Value (CLV),

customer orientation is the answer. It is advised therefore that alternative strategic

choices may level the playing field, failure to which the deposit growth objective may

be a nightmare.

Banks must not easily allow competitive forces to have a look-in, making in-roads in

the core business of banking where they have a competitive edge, but instead, must

build and hold on to their market share strategies cultivated, and the yield may be

better deposit/sales.

Competitive challenge

Increased competition in the financial services sector is the force that has driven more

organisations to seek out marketing. Banks are receiving more competitive threats

from the internal environment and mainly, from competitors sharing same segments.

It is therefore a challenge to offer what customers expect, and envisage what the

future direction of the organisation should be. Banks must also go an extra mile to

offer actual and augmented service product benefits to differentiate the offerings in

order to create the basis of competitive advantage. Differentiation strategies are key

and the use of the marketing mix tools is one strong case to increase the market share

of deposits.

The researcher is happy to see some banks in Zambia offering augmented customer

benefits like, prestige car park, tea and coffee, cold drinking water and bank staff

going round inside the banking hall in search of customers depositing cheques, and

they do it for them to reduce on bank waiting lines. Some banks are already offering

queuing discipline facilities like television programs, entertaining and refreshing tired

customers in waiting lines with news papers.

The researcher would not be surprised to see bank staff during this rainy season

escorting their valued customers to the car parks in umbrellas with bank logo, adding

value to the core service products, exceeding customer perceptions and expectations.

There is need therefore, for banks to be constantly alert to potential benefits they can

offer to their customers, especially those benefits which are hard to copy by

competitors, not based on “ what we do” but “ how we do it”.

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Conclusion

Banks should always use the marketing mix toolbox as a strategy in their operations

to achieve total customer satisfaction, and all the highlighted customer complaints,

worries, negative perception and service underrating may be minimised.

I am challenging banks and other institutions to prove me wrong and if in doubt on

how you can apply the marketing mix ingredients, then “Let me do it for you” and

you will prove me correct. All I am asking institutions is for the quality application of

the cornerstone of marketing -: Product, Price, Place, Promotion, Physical evidence,

Process and People (7Ps) to achieve unmatched sustainable competitive advantage.

These elements may be already applied by your organisation, but are they being

applied in the correct way and combination? Is the market share of your deposits/sales

declining or experiencing a hardcore growth? Have you exhausted all your

deposit/sales growth strategies? Do you just need help on competitive strategies and

advice on how to set up an effective marketing unit or to carry out marketing research

to develop your business? Do you need perhaps to formulate a service product

guarantee scheme for enhanced TQM? Or you just need the insight of customer care

and relationship Management?

Then contact:

Njekwa Njekwa

MSc, ACIM, ACIB, PGDipM, PGDipMS, DipBCM

Tel: +27 76 127 9770

Email: njekwa.njekwa@gmail.com

A detailed copy of the research project for +- 20,000 words with marketing mix

strategies and literature reviewed may be requested from the researcher –

Njekwa Njekwa.