Sustaining Competitive Advantage Through Innovative Activities

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SUSTAINING COMPETITIVE ADVANTAGE THROUGH INNOVATIVE ACTIVITIES:

A CASE OF NIGERIAS RETAIL BANKING.
A Dissertation by:
Udonna, Christopher Okeke.
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Submitted to
Dr. Elizabeth Alexander
In partial fulfillment of the requirement for Masters in International

Management by Bristol Business School, University of the West of England,
United Kingdom
2012
1 Sustaining Competitive Advantage through Innovative Activities: A case of Nigerias Retail
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DECLARATION
This dissertation is written in partial fulfillment of the requirement for masters degree in International
Management by Bristol Business School, University of the West of England. It is the original work of
the researcher, conducted under the topic: sustaining competitive advantage through innovative
activities: A case of Nigerias retail banking.

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Table of Contents
DECLARATION ...................................................................................................................................................2
ACKNOWLEDGEMENT ...................................................................................................................................6
ABSTRACT ............................................................................................................................................................7
KEYWORDS ..........................................................................................................................................................8
ABBREVIATIONS ...............................................................................................................................................8
LIST OF TABLES.................................................................................................................................................9
LIST OF FIGURES ............................................................................................................................................10
CHAPTER 1 .........................................................................................................................................................11
1.1
Research Background ................................................................................................................. 11
1.2
Research Aims and Objectives................................................................................................... 13
1.3
Research Structure...................................................................................................................... 13
CHAPTER 2 .........................................................................................................................................................15
LITERATURE REVIEW ..................................................................................................................................15
2.1
Introduction ................................................................................................................................ 15
2.2
Innovation................................................................................................................................... 15
2.3
The meaning of innovation ........................................................................................................ 16
2.4
Sources of Innovative Activities in Retail Banking ................................................................... 21
2.5
Overview of multiple types of innovation in the Nigerias retail banking................................ 24
2.6
The way in which the activities are organized or the value chain: ............................................ 24
2.6.1
Customer Service Improvement. 26
2.6.2
Branch and Operational Repositioning ............................................................................... 27
2.6.3
Staff Competencies ............................................................................................................. 28
2.6.4
Bank Reputation and Ethical Behavior ............................................................................... 29

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Product and Service Innovations ........................................................................................ 29
CHAPTER 3 .........................................................................................................................................................31
OVERVIEW OF NIGERIAS RETAIL BANKING INSTITUTIONS ..................................................31
3.1
Summary of Nigerias Retail Banking Activities ...................................................................... 31
3.2.
Nigerias retail banking after consolidation ............................................................................... 35
3.3
The Dimension of Performance in the financial service Organization ...................................... 38
3.4
Research Model and Hypothesis ................................................................................................ 43
CHAPTER 4 .........................................................................................................................................................47
RESEARCH METHODOLOGY .....................................................................................................................47
4.1
Introduction ................................................................................................................................ 47
4.2
Research Paradigm and Philosophy ........................................................................................... 47
4.2.1
Positivism............................................................................................................................ 48
4.2.2
Interpretivism ...................................................................................................................... 49
4.2.3
Realism ............................................................................................................................... 49
4.3
Research Approach .................................................................................................................... 50
4.4
Research Method ........................................................................................................................ 52
4.5
Research Strategy ....................................................................................................................... 53
4.6
Research Population, Sampling and Data Collection................................................................. 54
4.6.1
Self Administered Questionnaire The Quantitative Approach ........................................ 54
4.6.2
The Evaluation of the Data Collection Method .................................................................. 56
4.6.3
The Reliability of the Questionnaire ................................................................................... 56
4.6.4
The Validity of the Questionnaire....................................................................................... 57
4.6.5
The Generalisability of the Questionnaire .......................................................................... 57
4.7
The Survey Questionnaire .......................................................................................................... 58

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The Plan for Data Analysis ........................................................................................................ 58
4.8.1
Factor Analysis: .................................................................................................................. 58
4.8.2
Regression Analysis ............................................................................................................ 59
4.9
The Ethical Consideration .......................................................................................................... 59
CHAPTER 5 .........................................................................................................................................................60
THE RESEARCH FINDINGS .........................................................................................................................60
5.1
Analysis of the Research Findings ............................................................................................. 60
5.2
The Correlation Matrix for the Research Variables ................................................................... 60
5.3
KMO and Bartletts Test ............................................................................................................ 62
5.4
The Rotated Component Matrix ................................................................................................. 62
5.5
Regression Analysis for the Conceptual Model and Hypothesis ............................................... 65
5.5.1
Model Summary and ANOVA for Online Banking ........................................................... 66
CHAPTER 6 .........................................................................................................................................................71
RESEARCH DISCUSSION AND CONCLUSION .....................................................................................71
6.1
Discussion of Main Result ......................................................................................................... 71
6.2
Recommendation for further research ........................................................................................ 75
6.3
Personal reflections on the experience of undertaking this dissertation. ................................... 76
REFERENCES .................................................................................................................................... 78
APPENDIX I.......................................................................................................................................................88
APPENDIX II........................................................................................................................................92

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ACKNOWLEDGEMENT
First, I give glory go to God Almighty for the strength and wisdom to put all the research materials
together, for His faithfulness and mercies throughout the period of this research.
I am grateful to my supervisor, Dr. Elizabeth Alexander, for her contributions and advice on the best
style to put my thoughts together. To a great extent, the impact of your supervision to this research work
can never be overemphasized; thank you very much.
My special appreciation goes to my program director, Dr David Sarpong. Your encouragement and
advice throughout the period of my program added to the success of this research work. Again, I am
highly grateful to all my tutors in Bristol Business School, your teaching style added to the motivation of
this research work.
I am highly indebted to my mum, Roseline Okeke. Your continuous prayers and belief in me inspired
me never to give up in pursuing my academic dreams. I cannot adequately express my appreciation to all
my family members, especially my mentor and Godfather, Dr Ebere Okeke. Your love motivation,
encouragement, support and believe in my future dreams and interest kept me going throughout my
study period.
This part of the research will not be complete without saying thank you to my best friend, Onyinychi
Agbodike, your prayers and inspiration is well appreciated. Finally, my special thanks goes to all my
friends especially, my senior colleague in the University of the West of England, and all the people that
contributed in one way or the other to the success of this research work.
Thank you and remain blessed.

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ABSTRACT
Sustaining competitive advantage in all the areas of business operations is critical to every top
executive. This is due to continuous changing business environment both locally and globally. As
industry competitors and regulatory authorities intensify their activities, different organizations and
institutions are rapidly re-strategizing their business operations in order to remain relevant in the highly
competitive business environment.
This research aims to examine how the integration of different innovative activities within
Nigerias retail banking institution contributes to competitive advantage within their focal industry. The
research sampled customers from 12 of Nigerias retail banking institutions. Quantitative methods of
data collection were utilized and 162 responses were generated through a close-ended questionnaire that
was administered to different groups of the banks customers. With the response that was generated,
factor analysis was done to classify the critical factors; Product and services accessibility, New
Generation banks, Bank reputation, Staff Competence, and Customer service, that influences online
banking in creating competitive advantage. Using SPSS, regression analysis was carried out to find out
the level of significant between these variables that contribute to competitive advantage, which is
modeled as customer perceptions of online banking.
The results of the analysis showed that a significant relationship exist between online banking and
these factors. The research finding shows that young and working class customers use most of the
innovative services while older people resort to traditional branch network services. In addition, the
finding proves that banks that are located in the city tend to create better products and services than
banks located in the rural areas.

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KEYWORDS
Innovation
Competitive advantage
Retail banking
Processes of innovation
Sources of innovation
Types of innovation
Online banking
Products and service innovation
ABBREVIATIONS
CBN Central Bank of Nigeria
CEO Chief Executive Officer
GTB - Guaranty Trust Bank
ATM Automated Teller Machine
PC Personal Computer
SAP Structural Adjustment Program
COB Currency Outside Bank
DD Demand Deposit
RCOB Ratio of Currency outside the Banks
RDD Ratio of Demand Deposit
ROI Return on Investment
OP Operating Profit
ROA Return on Assets

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LIST OF TABLES
TABLE TITLE
Table 3.1
DESCRIPTION
Ownership structure of the Nigerias retail banks
PAGE NUMBER
32
Table 3.2
Volume of currency outside banks and total demand deposits
33
Table 3.3
The emerging banks in Nigeria and their new capital bases
36
Table 3.4
Operating profits of Nigerias retail banks
41
Table 5.1
The correlation matrix for the research variables
62
Table 5.2
KMO and Bartletts test table
63
Table 5.3
The factor loading and measures of individual variables
65
Table 5.4:
Model summary table
67
Table 5.5:
ANOVA table
68
Table 5.6
Table of Coefficients
69
Table 6.1
Summary of the result of the conceptual framework and

hypothesis testing
73

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LIST OF FIGURES
FIGURE TITLE
DESCRIPTION
PAGE NUMBER
Figure 2.1
Abernathy and Utterbacks model of Innovation life cycle
19
Figure 2.2
A simple model of the Innovation process
20
Figure 2.3
Where do innovations come from? Tidd and Bessant, 2009
22
Figure 2.4
A (stylized) value chain, extracted from Robert and Amit (2003, p.

110).
25
Figure 3.1
The Number of the Nigerias retail bank between 1970 - 2010
32
Figure 3.2
The percentage growth of the operating profits of Nigerias retail banks

between 2008 and 2010
43
Figure 3.3
Sources of Innovation in Nigeria Retail Banking
45
Figure 3.4
The conceptual framework of the relationship between different

innovative variables
46
Figure 4.1
Different research philosophical view adapted from Saunders et al.,

2008.
49
Figure 4.2
Deduction Process, adapted Bryman and Bell (2011, p. 11).
52
Figure 5.1
The conceptual framework of the research findings
67
Figure 5.2
The result of the hypotheses and the conceptual framework.
69

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CHAPTER 1
1.1
Research Background
The past global financial crises and the present euro zone economic down-turn have posed great
challenges to developed, underdeveloped and emerging economies in the world. Business organizations
are continuously evolving towards finding a better way of doing business in order to remain relevant in
the highly competitive business environment. Nigerias retail banking institutions are not an exception to
the present challenges prevailing in the global business environment.
Prior to consolidation in 2005, Nigerias retail banking institutions were known for poor customer
service delivery, uncompetitive products and services, lack of technological facilities, poor reputation
and inadequate staff competencies (Soludo, 2006). This was as a result of introduction of the Structural
Adjustment Program (SAP) in 1986 that opened the window for banking licensing between 1986 and
1993, making it possible for banks operating in Nigeria to rise from 41 to 120, as discussed in Chapter 3
below (Central Bank of Nigeria, 1995; Ehigie, 2006).
Ultimately, the introduction of the consolidation and recapitalization exercise by the Central Bank
of Nigeria in 2005, has forced most of the retail banks operating in the country to embark on different
operational and administrative strategies in order to respond continuously to market changes and
competition (Ehigie, 2006). Consistent with Porter (1996), operational efficiency is dependent upon the
strategy implementation of an organization in the continuous changing and dynamic business
environment. Drawing on Rumelt (1980, p. 361), a strategy is creating situations for economic rents and
finding ways to sustain them. This implies that the retail banks must effectively utilize their resources
and competencies to ensure that they deliver products and services that must appeal to customers.

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Also significant to banking strategies is the adoption of innovation both in products and service
design and distribution technology. According to Nelson and Winter (1982), the adoption of innovation
is dependent upon the organizational stock of strategic, operational and administrative skills. Porter
(1996) stressed that competitive strategy implies being different in integrating various activities that
make up the organizational value chain. The integration of different innovative activities has become
very significant in creating competitive advantage for different organizations especially as it concerns
retail banking institutions (Roberts and Amit, 2003).
In Nigerias retail banking institutions, studies of how different innovative activities create
sustainable competitive advantage have received minimum attention. Most of the research work has
focused on issues such as customer royalty, marketing, branding, bank privatization and performance,
and financial regulation and deregulation (Ehigie, 2006; Knox and Maklan, 2005, 2009; Beck et al.,
2005; Ezeoha, 2007; Soyibo and Adekanye, 1992; Uche and Ehikwe, 2001). The literatures within the
field of strategic management and innovation have suggested that there is link between organization
history of innovative activities and competitive advantage (Roberts and Amit, 2003; Roberts, 2001;
Damanpour, et al., 2009; Damanpour and Aravind, 2006), Porter, 1985; Bessant and Tidd, 2011), but
the nature of such relationship has not been established for retail banks in Nigeria.
In recent times, due to the need to create competitive advantage, most of Nigerias retail banks
have searched for different innovative activities within and outside the focal industry. In view of this, it
has been hypothesized that, it is the integration and adoption of these different innovative activities that
create competitive advantage for the retail banking institutions. Against this backdrop, this dissertation
reviews different relevant literatures on strategic management and innovation in order to present an
empirical study that shows how the integration of different innovative activities can create sustainable
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competitive advantage. And the measure of competitive advantage used here is that of customer
perceptions related to online banking.
1.2
Research Aims and Objectives

Different scholars in the field of strategic management and innovation are concerned about how
different organizations can rapidly compete and sustain competitive advantage within their industry of
operation, for instance in the retail banking industry. It is very significant that the role played by
innovative activities in creating sustainable competitive advantage be established.
The research question is to determine how the effects of different external and organizational
variables contribute to customers valuing innovative activities, and hence that can contribute to a
sustainable competitive advantage within the Nigerias retail banking institutions. Therefore, this
research aims to evaluate how different innovative activities in the retail banks product, operational
process and distribution technology, impact on their competitive advantage.
1.3
Research Structure
This section presents the summary of each of the following chapters of the research. The rest of this
dissertation is divided into five (5) different chapters as follows:
Chapter 2: This chapter evaluates and synthesizes relevant literatures on innovation concepts, the
meaning and process of innovation, typologies, sources and adoption of innovation within the retail
banking institutions. It also explains the main innovative activities that affect competitive strategy within
the financial institutions.
Chapter 3: This chapter presents the overview of Nigerias retail banking institutions and how they
sustain competitive advantage. It further discusses and evaluates the activity of the institutions before
and after the banking consolidation that was initiated by the Central Bank of Nigeria in 2005. Also
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presented in this chapter is a brief description of the financial performance of Nigerias retail banking
institutions. The final part looks at the innovative climate in Nigerias banking institutions and the major
sources of innovation in Nigerias retail banking institutions based on the reviewed literatures in chapter
two, the conceptual framework and the hypothesis.
Chapter 4: This chapter examines the approach and the rationale through which the research data are
collected. It discusses the epistemological and ontological issues underpinning the research
methodology. In conclusion, it evaluates the limitation and the ethical consideration underpinning the
research approach.
Chapter 5: This chapter presents the analysis of the research findings using the Statistical Package for
the Social Sciences (SPSS) to conduct factor analysis and regression analysis.
Chapter 6: The final chapter provides the discussion of the research findings, the implications of the
research findings, recommendation for further research, and a personal reflection on the experience of
undertaking this dissertation.

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CHAPTER 2
LITERATURE REVIEW
2.1
Introduction
The concern of every value-oriented organization is to develop a unique competitive strategy that
will sustain its competitive advantage and, at the same time, maximize profit and shareholders equity.
Multiple schools of thought in strategic management and innovation have emerged to review and
explain how different firms in the service industry, for example retail banking institutions, sustain their
competitive advantage through innovative activities (Porter 1985; Cooper and Kleinschmidt, 1987;
Roberts, 2001; Roberts and Amit, 2003). The first part of this chapter will evaluate and synthesize
relevant literatures on innovation concepts: the meaning and processes of innovation, typologies,
sources, and adoption of innovation within the retail banking institutions. The second part will explain
the main factors affecting competitive strategy in financial service institutions, especially with an
emphasis on the Nigerias retail banking institutions. To buttress the review of how the Nigerias retail
banking institutions sustain their competitive advantage, the third part will evaluate their activities
before and after the consolidation in 2005 initiated by the Central bank of Nigeria. The final part will
assess different performance measurements applicable to the retail banking industry.
2.2
Innovation
The concept of innovation is an area of extreme interest in the field of strategic management. Its
impact cannot be overemphasized because of the role it has played in the consistent growth and
sustainable competitive advantage in the business environment (Doz, Santos, and Williamson, 2001).
Afuah (2003) described innovation as the use of new knowledge to offer new products or services that
satisfy customers needs and wants, while meeting the organizational business objectives. Such
knowledge can be technological or market related (Drucker, 1991). Technological knowledge is the
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knowledge of components, linkage between components, methods, process and techniques that go into a
product or services, while the market knowledge is knowledge of distribution channels, product
applications, customer expectations, preferences and needs (Afuah, 2003).
The adoption of innovation by service organizations is a means of adaptation and change aimed at
achieving the organizations performance objectives, especially with respect to highly competitive and
changing business environments, scarce resources, and customers continuous demand for high quality,
plus better products and services (Boyne et al., 2003; Jansen et al., 2006; Roberts and Amit, 2003).
Drawing from Jansen et al. (2006), the means of adaptation of innovation varies among different
organizational units and industries. For instance, Cardinals (2001) research in the pharmaceutical
industry shows that innovation in the area of drug enhancement is achieved through centralization of
operational activities. In the financial service industry, the decision authority is required to be
decentralized in order to execute tasks and generate ideas for innovation of products and services
(Kirkman and Rosen, 1999). Essentially, providing an insight into the innovation concept will require an
understanding of the meaning and process of innovation.
2.3
The meaning of innovation

A central aspect of innovation is that it is widely considered as the life blood of corporate
survival and growth Zahra and Covin (1994, p. 183). Early definition of innovation by Thompson
(1965, p.2), described innovation as the generation, acceptance and implementation of new ideas,
process and products or services. Innovations represent change in the products and services which an
organization offers, and the changes in the way they are created and delivered (Tidd and Beassant,
2009). However, Kimberly (1981, p. 108) looked at innovation from various forms. He stated that
There are three stages of innovation: innovation as a process, innovation as a discrete item including,

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products, programs or services; and innovation as an attribute of organizations. A recent definition by

Damanpour (1996, p. 694) gave an in depth definition of innovation,
As a means of changing an organization, either as a response to changes in the external
environment or as a pre-emptive action to influence the environment. Hence, innovation is here
broadly defined to encompass a range of types, including new product or service, new process
technology, new organization structure or administrative systems, or new plans or program
pertaining to organization members.
Baregheh et al. (2009, 1334) in his argument about the multidisciplinary definition of innovation
noted that the meaning of innovation has continued to be inconclusive, underdeveloped and inconsistent
as a result of numerous definitions of innovation. His research therefore suggested that Innovation is
the multi-stage process whereby organizations transform ideas into new/improved products, service or
processes, in order to advance, compete and differentiate themselves successfully in their marketplace.
Innovation is driven by the ability to forecast business connections, to spot opportunities and to
take advantage of them. Essentially, this is traceable to the early work of Schumpeter (1934, p. 208 cited
in Roberts, 2001) who stated that firms that enjoy a higher return on investment are those that by nature
and programming are continually engaged in doing new things and are really nothing but forms for
continual new enterprises. Literally, The process of innovation cannot be separated from a firms
strategic and competitive context (Porter 1990, p. 780), so that the foundation of innovation is based on
the level of impact it creates for the firms competencies and capabilities (Afuah, 2003).

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Different theoretical research on innovation processes are emerging. For example, the process of
innovation and the diffusion of innovations (Robertson, 1967); dynamic process of innovation
(Utterback and Abernathy, 1978); towards the sixth generation research and development management
process (Nobelius, 2004); new service development process (Menor and Roth, 2007); and the simplified
model of innovation process (Tidd and Beassant, 2009). The following section discusses innovation
processes.
Utterback and Abernathy (1978) put forward that three processes of innovation can evolve within
an industry: the fluid phase, the transitional phase and the specific phase (see figure 2.1). In the fluid
phase, technology is in a state of flux because of market uncertainty, flexibility and lack of clear
objectives. In the transitional phase, through the producer-customer interactions, a dominant design
emerges as a result of integration and standardization of components (Afuah, 2003, p. 33). The specific
phase is the stage at which specialization is achieved; here products and services are highly
differentiated (Afuah, 2003). Utterback and Abernathy (1978), suggested that the effectiveness of
developing and implementing innovation processes will involve three distinct factors; the characteristics
of the firms business environment, internal competencies and capabilities of the firm, and the flow
between the firm and its environment.

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Figure 2.1: Abernathy and Utterbacks model of Innovation life cycle

On the other hand, Nobelius (2004) notes that the viewpoint on managing innovation processes
has changed from a technology centered model to a more interaction focused model over the years.
In the service industry, Tidd and Beassant (2009) believed that the innovation process should involve the
integration of technological, internal competencies and market change (see figure 2.2).

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Figure 2.2: A simple model of the Innovation process

In the model shown in Figure 2.2, Tidd and Beassant (2009) discussed four stages of a simple
model of innovation process these are the search, select, implement and capture phases. In the search
phase, organizations are faced with significant change and signals that could be threats or opportunities
to innovate new products and services. The selecting phase requires the organization to make a decision
based on its competencies and capabilities, about which threat or signals to respond to. At the
implementing phase, organizations begin to plan how best to launch the innovation into the market
based on the signal received about change (Tidd and Bessant, 2009). The capture phase emerges as
organizations tend to sustain adoption and the diffusion process. Most importantly, at this stage,
organizations must ensure that learning, as the innovation progresses, must be sustained so that the
organization can build its knowledge base and improve the ways in which the process is managed (Tidd
and Bessant 2009, p. 54).

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Although the process of innovation varies within industry and organizations, Menor and Roth
(2007, p. 828) concluded that innovation focused organization will always search for innovation and at
the same time possess a systematic means of transforming an idea into an offering. Hence, firms must
be aware of the sources of innovation confronting them.
2.4
Sources of Innovative Activities in Retail Banking

In recent times, retail banks were faced with the different challenges brought about as a result of
dynamic changes in business environment. Devlin (1995, p. 19) described these changes as supply and
demand side of the market which includes factors such as changes in regulatory policies, changes in
technology, and changes in market structure as a result of new entrants in the market. Also included in
the change factors are changes in consumer taste, preferences and expectations, bringing in changes in
what he called the Modus Operandi of the financial service. Responding to these changes has become
the desire of top management executives of different Nigeria retail banks. For example, a statement
made by the former CEO of one of the sampled banks in this research (Guaranty Trust Bank, Plc.)
reveals:
Some of our competitors have even managed to do things better than we have. Somewhere
along the linearound the late 1990s we took our eyes off the ball and underestimated our
competitors and they had a surge in growth. But I will say that over the last three or four years
we have regrouped and we are re-strategizing. We are still one of the top banks. We believe one
of our challenges is to continually redefine things and reinvent ourselves. We dont think other
people will do it for us; we are notand have never beena follower. Part of our mission is to
continuously seek new ways of doing things for others to copy and follow (innovation). . . . (A
speech by Tayo Aderinokun, cofounder and former managing director, Lagos, March 2004).
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Similarly, understanding the sources and the signal processes of innovation is very critical for
every organization because it shapes the structure of the organization (Yam et al., 2011). Roberts and
Amit, (2003), in their research about innovation and competitive advantage in the Australian retail
banks, believed that most of the innovative activities found with the retail banks were based on the
ideas sourced from outside focal firm. In short, they generalized that, sources of innovation for the
retail banks were generated from the external environment and innovation tended to diffuse very quickly
among competitors within the same industry. On the other hand, Bessant and Tidd (2011) in their view
summarized that innovation can come from many different directions. They proposed that, there are
different motivations of innovation (see figure 2.3), two of which they identified as the knowledge push
and need pull.
Figure 2.3 where do innovations come from?

Source: Bessant and Tidd (2011, p. 205).
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Knowledge push innovation is a source of innovation resulting from the need to develop research
and development on a particular need arising in an organization or an industry as whole. A systematic
activity of organizing research and development that is targeted at solving an identified problem in an
organization which have the tendencies of leading to gradual breakthrough that set the platform for
incremental innovative activities (Bessant and Tidd, 2011).
Different innovation scholars are of the opinion that the need pull innovation is the type of
innovation that is driven by the need of the user of the innovative activities (Chau and Tam, 2000). In
collaboration with Bessant and Tidd (2011, p. 208), it is simply described with the phrase necessity is
the mother of innovation. That is to say, it is an innovation that evolves as result of perceived or real
need for change in an organization. For example, the quantum leap experienced in the pattern of
customers service delivery in most of Nigerias retail banks was as a result of investment in training
and development of management staff and the restructuring of the network operations (Maklan and
Knox, 2009) and this is credited to one of the sampled banks revolutions, which thus stated that:
When we opened our doors; it created a revolution in Nigerian banking. We cashed checks in 5
to 10 minutes . . . imagine the impact upon people. Our branches were beautiful; we took down
the cages and made it open plan. This told people that we trust them, we respect them . . . their
time is important to us. Customers were greeted at the door. People who had previously sent
underlings to the banks now wanted to come themselves and see what we had done. There was
nothing remotely like it in Nigeria at the time. (Joke Giwa, Assistant General Manager,
Guaranty Trust Bank, UK, November 2003).
Need Pull innovation portrays commercial success of innovative activities and is more ubiquitous
in the financial industry because retail banks tend to be involved in innovating products and services
suitable for the perceived needs of the customers.
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Perhaps, this type of innovation is synonymous with the invention of Automated Teller Machine
and Online banking. Consoli (2008) emphasized that the automaton of retail banking services is
significant in providing easy and accessible payment system for customers at every giving point in time.
Furthermore, Young (2001) found that internet banking at a point has become the major distribution
channel through which banks products and services are delivered to their customers in different
locations and at all points in time.
2.5
Overview of multiple types of innovation in the Nigerias retail banking

Authors such as Roberts and Amit (2003) and Damanpour et al. (2009) have argued that achieving
high performance cannot be attributed to one particular type of innovation activity, rather from the
combination of different types. Engaging in different types of innovation facilitate the development of
competencies and capabilities that delivers on business objectives, providing better business
performance and not only that, it encourages the first movers advantage in the banking competitions and
boosts the banks chances of gaining substantial competitive advantage over a giving period of time
(Cohen and Levinthal, 1990; Roberts and Amit, 2003).
Roberts and Amit (2003, p. 118) pointed out that in the retail banking industry, firms history of
innovative activity in products and services play a significant role in measuring their financial
performance. Drawing from Sorescu et al. (2011, S3) proposal on retail business innovation model,
innovation in the retail banking can be observed from different points; the way in which the activities
are organized or the value chain. A brief look at different scholarly literatures shows how different
Nigerias retail banks explore value chain in creating innovation.
2.6
The way in which the activities are organized or the value chain:
Value chain represents the logical organization of the activities of the retail banks designed to
create values for customers and appropriate value for the banks (Sorescu et al, .2011). Barnett and
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Robert (1996) described value chain as the strategic innovative activities which combine together to
provide valuable products and services for customers. Porter (1985, p. 33) referred to it as the stylized
value chain of activities which disaggregates a firm into its strategically relevant activities in order to
understand the behavior of costs plus the existing and potential sources of differentiation. It is
represented in Figure 2. 4 below.
Figure 2.4: A (stylized) value chain, extracted from Robert and Amit (2003, p. 110).
According to Robert and Amit (2003), the stylized value chain above reveal that the retail banks
have a variety of processes that take inputs and transform such inputs into valuable products and
services for the customers. More so, with specific products and services, each of the retail banks have a
very organized administrative framework that delivers on each of the activities found within the value
chain.

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The value chain creates innovation through managements ability to view it as an integrated flow
rather ordinary means of transforming raw materials into finished products and services (Hansen, 2007).
By and large, some of Nigerias retail banks have focused on integrating customer service improvement,
branch and operational repositioning, online banking, staff competencies and bank reputation in their
operations (Maklan & Knox 2005). Drawing on Maklan and Knox (2005), retail banks can achieve
strategic position and sustain competitive advantage by having a unique organizational value proposition
that embraces the integration of different ideas within and across the organizational unit. They explained
that, such integration for example, have enabled Guaranty Trust Bank and Zenith Bank to grow rapidly
to become parts of the leading Nigerias retail banks that were both highly profitable and the first Fitch
AA-rated banks in the country (Maklan and Knox 2009; Zenith Bank, 2006).
2.6.1
Customer Service Improvement

In the retail banking institutions, one of the key issues of discuss is customer service improvement.
This is because most of the retail banks executives appreciate the fact that, standing out in the highly
competitive business environment implies creating better and sustainable customer service.
Customer service has become one of the important processes that can lead to competitive
advantage in todays business environment (Lee and Xon, 1996). Based on this fact, retail banks are in
perhaps in search of knowing how best to adopt innovations that can translate to a better customer
service improvement. Szymigin and Carrigan (2001) put forward that the scope of good customer
services encompasses innovating based on the needs of the customers and designing effective
operational and administrative activities that delivers the product and services on time. Furthermore,
Szymigin and Carrigan (2001) emphasized that continues customer development shows retail banks
commitment to fulfilling the value proposal promised to customers beyond and above the banks
competitors.
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Different studies (for example Mols, 1999; Jun and Cai, 2001) have shown that customer service
improvement in the retail banking is achieved through innovation in the online banking and product and
services. With respect to online banking, Jun and Cai (2001, p. 283) stated that customer service
improvement refers to the concept that, provide the customer with enhanced quality services and meet
their constantly changing needs. Thus innovation in online banking should always enhance the quality
levels of the banks products and services and online systems.
2.6.2
Branch and Operational Repositioning

In Nigerias retail banking, branch networks before now have served as the main distribution
channel for the delivery of the retail banking products and services. (Miles, 2001; Devlin, 1995).
Drawing from Devlin (1995), the branch network is the most situated way through which transaction are
being carried out because the branch network provides opportunities for customers to be part of the
service creation and distribution process. Delvin (1995) further stated that, branch network was the
perfect platform for establishing maximum relationship, loyalty and trust between the banks and its
customers.
One of the issues with branch networks has to do with delay in service delivery due to too many
operational processes that most times result in long queues before customers can perform their
transactions (Ehigie, 2006). With the need to continuously improve customers service, there is a
significant increase in the level of competition between different Nigerias retail banks. Subsequently,
this has introduced change in the distribution strategy of different retail banks such that as the level of
competition increases, the need for effective innovative activities to sustain each of the banks
competitive advantage has also escalated.
Apparently, this intense competition has strained the banks to re-evaluate their branch networks
and the level of functional and operational activities being carried out by the branches (Devlin, 1995).
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The advent of different technologies such as Automated Teller Machine (ATM), online banking, point
of sale, credit, debit card and PC banking had a considerable effect on the distribution system of the
retail banking product and services in Nigeria. They have become very significant in facilitating how
customers now have access to their funds without experiencing delay. For instance Devlin (1995)
highlighted that different banks now install their ATM machines or cash points in different super
markets, shopping malls and strategic locations. This has made available to their customers the benefit
of having access to their funds and as well reduced the amount of contact they have with the branch
staff.
2.6.3
Staff Competencies
Early research by Duchesneau et al. (1979) established that staff competencies and capabilities
have a significant influence on innovation. According to Chisea et al. (1996) innovations within the
retail banking institutions require that organizational resources are harnessed to ensure that the
integration of functional and operational systems is achieved. Chisea et al. (1996) also stated that
innovations have continued to alter different work performed by banks staff, and, as a result, attention
must be paid to staff competencies so as to develop key skills required for the management of
innovation. Different authors (for example Carroll 1967; Becker and Stafford, 1967; Nejad, 1997) have
argued that organizations with highly educated staff, technical skills and more diverse knowledge are
more receptive to the adoption of innovation. This is because through their knowledge depth, they make
different suggestions on how best to utilize innovative activities within and across organizational units.
Consequently, staff competency is critical in the innovation process, because it keeps staff aware of the
banks operational direction and encourages innovation (Chisea et al., 1996). For example, Maklan and
Knox (2005, p. 743) highlighted that;

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In order for Guaranty Trust Bank Plc, to ensure the bank delivered the highest levels of
customer service and professionalism, the founders recruited and personally trained all
management-level people for the first five years of the banks operations. Each new manager
was provided with extensive training in both areas of professional competence and the banks
vision and values. In this way, the founders embedded their revolutionary zeal into all managers
and created a true sense of community and purpose.......
2.6.4
Bank Reputation and Ethical Behavior

At present, there are different conceptual definitions of organisational reputation (Gotsi and
Wilson, 2001; Berens and Van Riel, 2004; Chun, 2005; Barnett et al. 2006). Building on Barnett et al.
(2006: 33), organizational reputation consists of an overall, generalized assessment of the organizations
favourability, including esteem, regard in which the firm is held, and how attractive the firm is. Herbig
and Milewicz (1993) assert that organizational reputation is an estimation of the level of consistency in
the tribute of an organization, towards delivering on its business value propositions to different
customers. Essentially, reputation is a characteristic of an organization that exists in customers
perceptions and has a significant role to play in creating sustainable competitive advantage in retail
banking institutions (Bontis and Booker, 2007).
2.6.5
Product and Service Innovations

Vargo and Lusch (2004, p. 2) define services as the application of specialized competences
(knowledge and skills) through deeds, processes, and performances for the benefit of another entity or
the entity itself. On the other hand, Barras (1986) gave the definition of a product to be goods or
services that are offered to customers by an organization. Product and service innovations therefore, are
made up of internal and external foci as they are generally determined by the market requirements and
the impacts to the organizations business objectives (Abernathy and Utterback, 1978).
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Prior to the retail banking consolidation in Nigeria, most of the retail banks were traditionally
known for poor customer service, lack of corporate governance, low quality product and services that
were targeted to only high net worth individuals (Maklan and Knox, 2009). Matthews and Shulman
(2005) hinted that what determines the level of product and service innovation in retail banking can be
ascribed to customers and the continuous rational decisions of the retail banking executive to make
superior profits, and increase the shareholders return. Therefore, retail banks predominantly engage in
innovative activities in terms of product and services that must satisfy the needs of the customers.
Appendix 2 shows different products and services of the sampled Nigerias retail banks beginning from
2004. For example, most of the retail banks now have account products for different segments such as
children, graduate, special current and savings account for different categories of customers.

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CHAPTER 3
OVERVIEW OF NIGERIAS RETAIL BANKING INSTITUTIONS
3.1
Summary of Nigerias Retail Banking Activities

Generally, Nigerias retail banking industry has experienced tremendous growth in different areas
in terms of size and structure. Remarkable changes have also been noticed in the regulatory and
operational activities, growth in the number of bank branches, and increases in the amount of depositors
money in the banks. This growth occurred as a result of technological innovation and adoption,
deregulation of financial industry, and globalization of operations of the banking industry (Beck et al,
2005; Soludo, 2006; Ezeoha, 2007). Reflecting on the history of Nigerias retail banking, several authors
(Inanga and Soyibo, 1989; Ezeoha, 2007) used different phases to represent the era of changes that have
occurred in Nigerias banking system since 1894 to 1989, which are:
1. The era of relatively stable banking environment (1894-1952);
2. The first banking boom era (1952-59);
3. The era of regulation (1959-86);
4. The era of deregulation (1986 2004);
5. The era of recapitalization (Post 2004).
From the contextual perspective, from 1894 to 1952 was the period of the free banking era in
Nigeria. The beginning of the era saw the banks that were foreign-owned such as the Bank of British
West Africa, Barclays Bank, and the British and French Bank, operating with no legal framework from
the regulatory authority, while there were only two operated by the Nigerians, the National Bank of
Nigeria and the African Continental Bank (Ezeoha, 2007). Following this period, the Central Bank of
Nigeria was established on the 1st of July, 1959 to regulate the activities of the industry. As
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strengthening of the industry became pertinent, and the need to exercise direct control of the industry
through ownership, interest rate and credit control, the Central Bank introduced stronger entry barriers in
1970 (Beck et al., 2005). Consequently, Ayadi et al. (2008) note that in the 1980s, due to economic
crises and financial crises that led to the collapse of the Nigerian currency and external debt repayment
issues, the Federal government of Nigeria introduced the Structural Adjustment Program (SAP) in 1986,
which led to the de-regulation of the Nigeria banking industry. Predominantly, such an initiative created
an open window for the issue of retail banking licenses, as well as widespread economic liberalization,
hence, increasing the number of retail banks operating in Nigeria as shown in figure 3.1 below (Ezeoha,
2007). Critically, between 1980 and 1990, the number of banks operating in Nigeria increased from 20
to 58 representing a substantial increment of about 190% percentage point. Furthermore, the number
continually increased to about 13.80% points between 1990 and 1993.
Figure 3.1: The number of Nigerias retail bank from 1970 2010
Sources: Central Bank of Nigeria (various dates) CBN Statistical Bulletin.
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However, due to distress experienced by some of the banks that were mostly owned by individuals
(see table 3.1) that wholly depended on private sector deposit; there was consistent fluctuation in the
number of retail banks operating in Nigeria between 1997 and 2004. Despite the fact that the number of
retail banks continued to fluctuate, there was a corresponding increase in the number of branch
networks. For instance, as at 1970, the industry recorded about 273 branches nationwide which further
rose to 1,394 in 1986, 2,013 in 1990, and 2,391 in 1992 and finally rose to 3,300 which indicate a
significant percentage point increase of about 44%, 18.8% and 38.02% respectively (Beck et al, 2005;
Ezeoha, 2005, 2007).
Table 3.1 Ownership structure of the Nigerias retail banks
Status
2000
2001
2002
2003
2004
Private
76
77
78
77
77
Government
Foreign
10
11
11
11
11
Total
89
89
90
89
89
Source: Central Bank of Nigeria.

As a result of these developments, the ratio of individual currency outside the banking system was
higher than the currency in the banking system showing high level of incompetence in the operation of
various branches (see table 3.2 for amount of currency outside the bank between 1992 to 2003).
Table 3.2 Volume of currency outside banks and total demand deposits
Year
1992
Currency
outside
banks (COB)
(N Million)
36,756
Demand deposits
(DD) (N
Million)
Narrow money
(M1) (N
Million)
Ratio of
COB to
M1 (%)
Ratio of
DD to
M (%)
39,215
75,970
48
52

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1993
57,845
60,908
118,753
49
51
1994
90,601
78,791
169,392
53
47
1995
106,843
94,571
201,415
53
47
1996
116,121
111,343
227,464
51
49
1997
130,668
137,955
268,623
49
51
1998
156,716
161,860
318,576
49
51
1999
186,456
206,663
393,079
47
53
2000
274,011
363,721
637,731
43
57
2001
338,671
478,037
816,708
41
59
2002
386,942
559,311
946,253
41
59
2003
412,155
813,404
1,225,559
34
66
Average
191,149
258,815
449,960
47
53
Source: Central Bank Statistical Bulletin (various issues) referenced in Ezeoha (2007).
One of the major characteristics of the industry after 1986 was the fact that competition among
all the retail banks was of the same kind. Consequently, key activities were buying and selling of foreign
exchange, government treasury bills and marketing of the same kind of products and services. They used
the same distribution strategy, operational patterns and marketing strategy. The products include but are
not limited to issuing of open letters of credit, Electronic Fund Transfer (ETF) and high net worth type
of accounts (Roberts and Amit, 2003; Uche and Ehikwe, 2001; Soludo 2006).
Currency outside banks (COB): Currency outside banks comprises of all banknotes and coins in the national currency held by economic subjects 56
Demand deposits (DD): An account from which deposited funds can be withdrawn at any time without any notice to the depository institution 46.
Narrow money: This is highly liquid of money. It includes currency, bank note, coins and over nigh deposit 42

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Meanwhile, according to Soludo (2006, p. 2) the small size of the most of the Nigerian banks
operating with very expensive headquarters, heavy fixed cost and operating expenses and with too many
branches located in less strategic business environment, has necessitated a high cost of intermediation
and, as well, subjected most of the individually owned banks into unnecessary pressure to embark in
sharp practices as a means of survival. For instance about 26 banks were liquidated in 1998 due to
financial insolvency (Soludo, 2004; Uche and Ehikwe, 2001). With these shortcomings, strengthening
the Nigeria retail banking became a worrisome issue for the Central Bank of Nigeria, hence the need for
consolidation through mergers and acquisition (Soludo, 2006).
3.2.
Nigerias retail banking after consolidation

The idea of consolidating the Nigeria retail banking was an attempt by the Central Bank of Nigeria
(CBN) to strategically reposition and intensify the operation of the retail banking system in order to
meet and compete with the global financial institutions. The ailing position of most of Nigerias retail
banks called for urgent attention in repositioning their operations. One assessment shows that while the
overall health of Nigerias retail banking system could be described as generally satisfactory, the state of
some banks was less cheering. Specifically, as at end-March, 2004, the CBNs ratings of all the banks,
classified 62 as sound/satisfactory, 14 as marginal and 11 as unsound, while 2 of the banks did not
render any returns during the period (Soludo, former CBN Governor, 2006).
Ezeoha (2007) believed that consolidation through mergers and acquisition has become the unique
strategic approach adopted in the repositioning of banking all over the world, and examples abound in
America, Europe, Asia and some parts of Africa. In the case of Nigeria, different authors (Soludo, 2006;
Ezeoha, 2007; Maklan and Knox, 2009) believed it was necessary because it would encourage the
achievement of economies of scale among banks and establish best-practice corporate governance,
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improve self-regulation, and enhance the capital base. Furthermore, consolidation instituted an IT-driven
culture and positioned banks to be competitive among global financial institutions in the areas of
product and service innovation, distribution channel technology, back office operations and
administrative innovations. Table 3.3 represents the list of banks that attained the recapitalization
exercise mandated by CBN in 2005.
Table 3.3 The emerging banks in Nigeria and their new capital bases
Name of
Banks
Consolidating institutions
New capital base

in
billions of Naira
New capital base in

millions of Pounds
(At 1=N224) as at 2005
Access Bank
Plc
Access Bank, Marina Bank

and Capital Bank
28
124,687,000
Afribank Plc.
Afribank International
(Merchant) Bank and
Afribank of Nigeria.
29
129,140,000
33.25
148,065,000
25
111,327,000
Diamond Bank
Diamond Bank and Lion

Bank
EcoBank
Alone
Equitorial
Bank Plc.
Equatorial Trust Bank and

Devcom Bank
26.5
118,007,000
First City
Monument
Bank Plc.
First City Monument Bank,

Cooperative Development
Bank, and Nig-American
Bank
Fidelity Bank, FSB
International Bank and
Manny Bank
30
133,593,000
29
129,140,000
First
Bank,
MBC
International
and
FBN
(Merchant Banker) Ltd.
44.62
198,697,000
28
124,687,000
Fidelity Bank
Plc.
First Bank of
Nigeria Plc.
First Inland
First Atlantic Bank, Inland

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Bank Plc.
Guaranty Trust
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Bank, IMB Bank And NUB
Alone
IBTC, Chartered Bank and

IBTCChartered Bank Regent Bank
Plc.
Intercontinental Intercontinental Bank,
Global Bank, Gateway Bank
Bank Plc.
and Equity Bank
Nigerian
International
Bank
Alone
34
151,405,000
35
155,858,000
51.7
230,225,000
25
111,327,000
Oceanic Bank
Plc.
Oceanic Bank International

International Trust Bank
31.1
138,491,000
PlatinumHabib Bank
Plc.
Platinum Bank and Habib

Bank
26
115,780,000
Skye Bank Plc.
Prudent Bank, EIB, Bond

Bank, Reliance Bank and
Cooperative Bank
37
164,764,000
Spring Bank
Plc
Citizen Bank International,

ACB
International,
Guardian Express Bank,
Omega Bank, Trans
Trans International Bank
and
Fountain Trust
25
111,327,000
Stanbic Bank
Limited
Alone
25
111,327,000
Standard
Alone
Chartered Bank
Ltd
26
115,780,000

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Sterling Bank
Plc.
Trust Bank, NBM Bank,

Magnum Bank, NAL Bank
and Indo-Nigeria Bank
25
111,327,000
United Bank
for Africa Plc.
United Bank for Africa and

Standard Trust Bank
50
222,655,000
Union Bank
Plc.
Union Bank of Nigeria,

Union Merchant Bank,
Broad Bank and Universal
Trust Bank
Intercity
Bank,
First
Interstate Bank, Tropical
Commercial Bank, Centre
Point Bank, Bank of the
North, New African Bank,
Societal Bancaire, Pacific
Bank and New Nigerian
Bank
Wema Bank, Lead Bank and
National Bank of Nigeria
58
258,279,000
30
133,593,000
26.2
116,671,000
38
169,217,000
Unity Bank
Plc.
Wema Bank
Plc.
Zenith Bank
Plc.
Alone
Sources: Financial standard (Nigerian Weekly Newspaper) 9th and 16th January, 2006.
3.3
The Dimension of Performance in the financial service Organization

In the strategic management field, performance is a critical issue that has caught the attention of
many scholars in the academic field and its importance is at the heart of every organization (for
example, Venkatraman, 1986: Campbell, 1977; Connolly, Conlon, & Deutsch, 1980). Basically due to
the acknowledgment of the implementation of new business strategies and competitive realities that
requires new dimension of measurement system (Eccles, 1991), defining the dimensions of performance
has become one of the challenges faced by different top management executives. Traditionally, research
that evolved in the past suggested that performance can only be measured in one way, namely in
financial terms (Cooper and Kleinschmidt, 1987). However, Maidique and Zirger (1985, p. 85) in their
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own point of view stated that While financial return is one of the most easily quantifiable industrial
parameters, it is far from the only important one. For example, in product innovation, the outcome of
the innovation may not accomplish the required financial return set by the organization, but can still be
considered successful. This is because the outcome of the product can impact the firms market share,
organizational competencies and creation of window of opportunity that strengthens the firms
competitive advantage (Cooper and Kleinschmidt, 1987).: Cooper and Kleinschmidt (1987) in their
study of 200 new product case histories in 125 industrial products firms affirms that ten different
dimensions can be used to measure performance. This leads to the question of how can performance be
measured in retail banking?
Financial performance is made up of return on investment (ROI), operating profit (OP), return on
assets (ROA) and generally meeting the stated business objectives (Cooper and Kleinschmidt, 1987).
Table 3.4 and figure 3.3 demonstrate the operating profits of Nigerias retail banking and the percentage
growth of the operating profits between 2008 and 2010.
As the intense of competition among retail banks continues to stiffen, some of the banks tend to
enjoy relatively high profitability over a given period of time than others. Drawing from Roberts (2001,
p. 240), firms vary in their propensity to generate streams of valuable innovations over time, and the
firm generating valuable innovations on a more regular basis may be one displaying persistent
profitability. As demonstrated in Model Fig 3.4, this research, however, will be limited to non-financial
performance measures.
Because of this proposed linkage between innovation and profitability, and the focus of this
dissertation on innovation in retail banking, the study adopts a measure of performance associated with
customer perceptions about one major innovation in retail banking: online banking.
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THE PERCENTAGE OF OPERATING PROFIT OF NIGERIA'S RETAIL BANKING

BANKS
2007
2008
2009
2010
ACCESS BANK
43,354
73,207
54,614
69,393
Percentage Change of Growth
68.00%
-25.40%
27.06%
DIAMOND BANK
30,675
47,732
71,873
72,790
55.61
50.58%
1.28%

ECO BANK
26,988
37,573
33.22%
40,764
8.47%
43,008
5.50%
FIDELITY BANK
17,445
34,734
99.16%
54,256
56.20%
42,076
-22.45%
FIRST BANK
72,806
121,938
67.48%
160,978
30.02%
177,923
10.53%
FIRST CITY MONUMENT

BANK
19,914
43,576
53,704
40,014
118.82%
23.24%
-25.49%
GUARANTY TRUST BANK

35,294
61,997
75.66%
120,393
94.20%
120,543
0.12%
SKYE BANK
30,668
55,590
81.26%
79,576
43.15%
60,397
-24.10%
STANBIC IBTC BANK

15,872
42,495
62.65%
43,823
3.12%
48,394
10.43%
UNION BANK OF NIGERIA

67,241
85,997
27.90%
104,568
21.60%
73,483
-29.73%
UBA
80,808
128,151
58.59%
181,735
41.81
138,217
-23.95%
ZENITH BANK PLC

75,841
154,197
103.32%
188,238
22.08%
152,148
-19.17%
Table 3.4: Operating profits of Nigerias retail banks
Source: University of the West England E-Library Osiris

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Figure 3.2: The percentage growth of the operating profits of Nigerias retail banks between 2008 and 2010
Source: University of the West England E-Library Osiris

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Prior to banking consolidation, Nigerias retail banking industry was greatly characterized by
failures in both operational and administrative activities that threatened the fate of different banking
stakeholders (Ehigie, 2006). However, consolidation by the Central Bank of Nigeria has provided the
window for most of the retail banks to adopt innovation in product and services at same time, allowing
different banks to integrate customers and other stakeholders in the design and delivery of products and
services. The former CEO of one of Nigerias retail banks once stated that;
What the government did was really change the competitive market. First Bank really had the
size prior to legislation; now every major bank is about our size, so we had to craft a plan so
that we can maintain our competitive edge. We have about 350 branches and we have a plan to
reach 500 branches by 2008. (Jacobs Ajekigbe, managing director, First Bank, 2006).
3.4
Research Model and Hypothesis

The review of different literatures has established that a different factor triggers the adoption and
diffusion of innovation across the retail banking industry (Roberts and Amit, 2003; Sorescu et al, .2011;
Utterback and Abernathy; 1978; Tidd and Beassant, 2009). The case of the Nigeria retail banking is no
exception. Drawing from Tidd and Beassants (2009) proposal on the simple innovation process, the
author has deduced that several factors are responsible for innovation in the Nigerias retail banking
institutions (see figure 3.4).

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Figure 3.3: Sources of Innovation in Nigeria Retail Banking

Conclusively, the researcher has gained valuable insight from different strategic management and
innovation literatures. However, there is a need to conduct quantitative research to establish a link
between retail banks innovative activities and performance parameters that drive competitive advantage.
In this dissertation, customer perceptions of online banking is used as the measure of performance and
several variables have been identified by the researcher based on the reviewed literatures that might
contribute to customers having positive perceptions which are expected to lead to an improved
competitive advantage for the bank. For example, what is the relationship between the on-line banking
and staff competencies? Can customer service influence customers perceptions about online banking?
Can product and service accessibility have a direct relationship with online banking? How does bank

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reputation influence online banking? Can the new generation banks operational structure affect online
banking? Against this back drop, it is very pertinent that the researcher develop a conceptual framework
and hypotheses so as to ascertain the level of relationship that can exist between these variables. This is
presented in Figure 3.5
Figure 3.4: The conceptual framework of the relationship between different innovative variables
In order to evaluate and investigate this relationship between innovative activities and competitive
advantage, the following conceptual frame work and hypothesis have been established;
H1
Products and Service accessibility has a positive influence on customer perception
towards online banking

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New generation banks operational strategy has a positive influence on online

Banking
H3
Bank reputation has a positive influence on customer perception towards the
Online banking.
H4
Staff competence has a positive influence on customer satisfaction towards the
Online banking.
H5
Customer Service has a positive influence on online banking.

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CHAPTER 4
RESEARCH METHODOLOGY
4.1
Introduction
This section examines different research approach as to establish the best approach for data
collection. Ghuari and Gronhaug (2003) summarized that a research method is a systematic, focused and
organized way, through which data can be collected and analyzed for the purpose of solving a research
problem. This section will address the methodology necessary to answer the following research
questions:
1.
What is the relationship between the on-line banking and staff competencies
2.
Can customer service influence customers perception about online banking?
3.
Does access to banks product and services be linked to the online banking?
4.
How does bank reputation influence online banking?
5.
Can the new generation banks operational structure affect online banking?
This section will further discuss the project plan of data analysis, limitation and the ethical consideration
underpinning the research approach.
4.2
Research Paradigm and Philosophy

Different researchers in the studies of epistemology and ontological foundation have made
contributions on the approach that best explain the concept of a research paradigm (Bryman, 1988a;
Bryman and Bell 2007; Saunders et al., 2003, 2008). According to Bryman (1988a, p. 4) cited in
Bryman and Bell (2007, p. 25) a paradigm is a cluster of beliefs and dictates which for scientist in a
particular discipline influence what should be studied, how research should be done, and how results
should be interpreted. It is a general perspective, such that the complexities of the real world are broken
down into components (Patton, 1990). Fundamentally, Saunders et al. (2008) pointed out that a research
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paradigm represents the way through which social phenomenon can be examined in order to gain an
understanding of the phenomenon. Saunders et al. (2003) further explained that there are three main
research philosophies; positivism, realism and interpretivism as shown in figure 4.1.
Figure 4.1: Different research philosophical view

Source: adapted from Saunders et al., 2008.
4.2.1
Positivism
The positivist epistemology suggested that the main aim of research methodology is to achieve
objective knowledge, and the understanding of impartial and unbiased results based on external view
without personal interference on the part of the researcher (Willig, 2001). Gill and Johnson (1997) cited
in Saunders et al., (2003, p. 83) noted that the researcher in a positivist epistemology will require a
highly structured methodology because of the fact that replication in the research has to be facilitated.

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Interpretivism
This
is
the
epistemology
that
critiques
the
positivist
approach
(Bryman and Bell 2007). Interpretivism argued that the social world of business and management are
too complex to lend itself to theorizing by the definite laws in the same way as the physical sciences
(Saunders et al., 2003). It suggests that it is critical for a researcher to understand the fundamental
disparities between human in their role as a social actor, and the natural sciences because both subjects
require separate logical research procedures (Bryman and Bell 2007). Considering the dynamic nature
and uniqueness of business and management, the Interpretivism epistemologys argument can be
considered valid; however, there is a question of how generalizable research can be that will capture the
complexities of a continuously changing business environment (Saunders et al., 2008).
4.2.3
Realism
This is an aspect of philosophical position supporting the positivist epistemology (Bryman and
Bell, 2007). To Cameron and Price (2009), realism identified that social phenomenon can exist;
however, it can be measured only subjectively because no fact is beyond dispute and knowledge is a
social and historical product. Building on Saunders et al., (2003, p. 85), realist epistemology believes
existence of a reality that is independent of human thought and beliefs. They further stressed that, with
respect to human subjects, it appreciates the significance of understanding peoples differences, within
the context of seeking a meaning to broader social forces and structures that interferes with the nature of
peoples views and perceptions (p, 85).
Each of these epistemologies and ontologys underpinning the research paradigms and
philosophies has received significant critique from different authors, (for example, Williams, 2000;
Saunders et al., 2003; Kincaid 1996,). Nevertheless, Grix (2010) believe that positivism, interpretivism
and realism are the key subjects that take into consideration the significant characteristics of the research
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paradigms and philosophy. In reality, it is challenging to firmly admit that a particular epistemological
and ontological position is better than the others. However, the major determinant of the best philosophy
is a function of the research questions that the researcher intends to answer (Saunders et al., 2003;
Jankowicz, 1991).
Descombe (2002, p. 14) pointed out that positivists believe that there are patterns and regularities,
causes and consequences, in the social world just as there are in the natural world. Drawing on
Saunders et al. (2008), the positivist approach considers the philosophical stance of the natural science.
This dissertation adopts a scientific approach to study the social world. Such research investigates the
relationship between different variables of innovative activities that lead to sustainable competitive
advantage in the retail banking industry. The researcher aims to study this relationship in order to
present a valid objective opinion. Since positivism seeks objectivity" in research (Marsh and Furlong
2002, p. 18 cited Grix 2010, p. 82) it becomes very pertinent for the researcher to adopt the positivist
philosophy in answering the research questions.
4.3
Research Approach
While this research investigation tends to present an objective opinion, it will examine two
different approaches that exist in business research namely; a deductive approach and an inductive
approach (Saunders et al., 2003). Landman (2000, p. 226) described the inductive approach as an
approach through which a conclusions can be drawn from direct observation of empirical evidence. That
is to say, it supports the Interpretivisim paradigm (Saunders et al., 2003). Meanwhile, deductive
approach drives conclusions through the application of reasoning to a given set of premises (Grix, 2010).
Thus, it supports the positivism paradigm (Saunders et al., 2003).

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In retrospective, the deductive approach is a dominant approach in the natural sciences because it
requires that theories be subjected to a thorough test (Saunders, et al., 2003). This implies that in the
deductive approach, it is the law that provides the bases of explanation, allows the expectation of
phenomenon, predict their occurrence and hence allow them to be controlled (Hussy and Hussy 1997, p.
52)
Significantly, Saunders et al. (2003) established that one of the major criteria of the deductive
approach is its quest to elucidate common relationships that exist between different variables. Bryman
and Bell, (2007) outlined the order through which conducting a research using the deductive approach
can follow (please see figure 4.2).
Figure 4.2: Deduction Process, adapted Bryman and Bell (2011, p. 11).

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Significantly, Saunders et al. (2003) stressed that the deductive approach requires highly
structured methodology that must be operationalised such that facts can easily be measured
quantitatively. Since the deductive approach involves the quantitative method of data collection Bryman
and Bell (2007), this research is based on a survey methodology to support hypothesis testing.
4.4
Research Method
Grix (2010) listed two types of research method as the qualitative and quantitative methods while
Saunders et al. (2008), identified a more comprehensive method called the mixed method. According
Punch (2000b, p. 139) cited in Grix (2010, p. 117), these methods are simply the umbrella terms,
through which a wide and universe range of paradigms, approaches to data, and methods for the
analysis of data.
The quantitative method involve finding variables for concepts, operationalising the variables and
measuring them, while the qualitative methods is concerned with a researcher interpreting data in their
social and natural perspective, through the analysis of cases in order to generate theory (Grix, 2010). The
multiple methods are concerned with answering research question through the combination of
qualitative and quantitative methods to bring in new mode of thinking as it attend to paradoxes emerging
from the two methods (Rossman and Wilson, 1985; Saunders et al., 2008).
The researcher aims at conducting an independent research in order to produce an objective result
(Remenyi et al. 1998, p. 33). It will adopt the quantitative research method so as to collect data in a
highly structured methodology, which makes possible replications. Replication is necessary because the
research work is subject to verifiability that enhances legitimacy, reproducibility, reliability and
objectivity (Grix, 2010). From next section: The quantitative approach would be useful due to the fact
that it produces data that can be quantified, and compares general pattern and relationships among

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different variables that can be tested (Ragin 1994, p. 1326). For this dissertation, the quantitative
approach will provide information through data collection and analyses of different variables to present
an objective result. Being objective in research means that the result must be valid and not a
methodological artifact (1976, p. 268).
4.5
Research Strategy
Many authors (for example: Saunders, et al 2003, 2008; Bryman and Bell, 2007; Ghuari and
Gronhaug, 2003; Collis and Hussey, 2009) have emphasized that research strategy represent general
point of reference through which business researches are conducted. Drawing from Saunders et al.,
(2003), research strategy depicts the researchers clear objective that comes from the research questions,
the process and actions towards the collection and analysis of the research data and findings. Collis and
Hussey (2009) presented that in order to answer the research questions appropriately, the researcher
must choose a research strategy based on the availability of data resources, the time factor and the cost
factor.
Consequently, Saunders et al, (2003, p. 91), listed different research strategies that can be applied
by the researcher, they are: experiment, survey, case study, grounded theory, ethnography, action
research, cross-sectional and longitudinal studies and exploratory, descriptive and explanatory studies.
They further iterated that these strategies are not mutually exclusive and must be dependent upon the
research objectives and questions, the philosophical underpinnings and the extent of the existing
knowledge in the field of research (Jankowicz, 2005)
According to Jankowicz (2005), the information provided by the research data must be arranged in
such a way that uncertainty is reduced to the barest minimum. This dissertation adopts a survey strategy

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in answering the research question because it allows for the collection of a large amount of data using
the questionnaire from a significant population and is a cost-effective means (Saunders et al., 2003).
4.6
Research Population, Sampling and Data Collection

Having established the different research approaches and strategies necessary for the research
process the next step is to determine the basic elements such as the research population and sampling
methods, through which the research data can be collected and can be analyzed (Ghuari and Gronhaug,
2003; Saunders et al., 2003).
The researchers aim is to review the relationship between different variables that leads to
sustainable competitive advantage in the Nigerias retail banking, looking at their recent innovative
activities in product and services. Such investigation requires substantial data in order for the researcher
to present an objective finding.
The researcher administered 226 questionnaires to a sample of the banks customers, that have
used the products and services of any one of the 12 banks listed in Appendix II.. 162 responses were
received, which represents about 72% responses. A larger sample is necessary in order to reduce sample
error, as suggested by Bryman and Bell (2011, p. 187), that as sample size increases, the lesser the
sample error.
4.6.1
Self Administered Questionnaire The Quantitative Approach

The questionnaire provides a list of structured questions carefully designed by the researcher in
order to generate dependable responses from the population sample (Collis and Hussey 2009) and it is
one of the most widely used data collection techniques within the survey strategy (Saunders et al.,
2009, p. 361). Building on Saunders et al. (2008), different types of questionnaire includes self
administered and interview administered questionnaire.
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A self administered questionnaire allows the researcher the opportunity to administer the
questionnaire to the respondent, either by post or online using electronic means and the questionnaire
will be filled in and returned back by the respondent (Saunders et al., 2003, 2008; Maylor and
Blackmon, 2005). In the interview administered questionnaire technique, the researcher can meet one on
one with the interviewee (Saunders et al. 2008, p 363).
Generally, Saunders et al. (2008, p. 363) point out that the choice of designing both self
administered questionnaire or an interview is influenced by the importance of the respondents answers
not being distorted and the types of questions the researcher wishes to ask.
In view of this, the researcher designed the questionnaire using the closed ended format, allowing
the respondents the opportunity to answer questions using a Likert type scale with a scale of 1 to 7,
ranging from strongly disagree to strongly agree.
The questionnaire was designed into two different parts (see Appendix 1). Part one is made up of
five sections that is focused on the banks customer experiences in the area of relative innovative
advantage of the banks, customers perceptions about the service quality of the banks, relative customer
satisfaction, perceived accessibility and complexity of innovative activities and perceived reliability of
innovative activities. The statements in Part A were drawn from the prior research outlined in chapter 2
and 3. Part two is made up five questions designed to know the personal details of the respondent in
terms of gender, age distribution, location, academic qualification, and the name of the bank used by the
customer.

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The Evaluation of the Data Collection Method

Collis and Hussey (2009) described that reliability, generalization and validity are the basic criteria
required for the effective evaluation of the research methodology. Credibility is of great importance in
business research, such that all effort must be made by the researcher to ensure that the answers to the
research questions must be sound and credible without distortion (Saunders et al., 2003).
4.6.3
The Reliability of the Questionnaire

Bryman and Bell (2011, p. 157) asserts that reliability is fundamentally concerned with the issues
of consistency of measures in quantitative and qualitative research. That is to say, the measurement of
the data collection techniques must be valid, in terms of accuracy and in an unbiased way (Jankowicz,
2005). Robson (2002) described four threats to reliability to include; respondent/interviewer error,
respondent/interviewer bias, observer error and observer bias.
Respondent Error: Saunders et al., (2008, p. 156) noted that the researcher must know the best time to
administer the questionnaire. They further stated that, to control it, the researcher must choose a a
neutral time when respondents may be expected to be neither on a high, looking forward to the
weekend, nor on a low with work in front of them. The researcher ensured that this is achieved by
designing the questionnaire in a very neutral, easy to read and understand and close-end format that
could be answered at any time via an online format.
Respondent Bias: Respondents may respond to the questionnaire based on their observation or
perception of other peoples opinion Saunders et al., (2008). To avoid this error, the researcher ensured
that anonymity is achieved by mixing up the questions contained in the part A section of the
questionnaire (please see appendix 1), Using the Survey Monkey Software prohibits respondents from
responding to the questionnaire more than once, which in effect encourages unbiased responses.
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Observer error and observer bias: Avoiding these errors, as suggested by Saunders et al., (2008), the
researcher structured the questionnaire in a close-ended format such that the content of the questionnaire
will give the same meaning to different respondents.
4.6.4
The Validity of the Questionnaire

According to Bryman and Bell (2011), validity is simply the level at which the conclusion derived
from the research work can be justified based on the claim of the researcher. Research validity can be
damaged as a result of poor research procedures and imprecise information, testing, instrumentation and
maturation (Robson, 2002; Collis and Hussey, 2009; Saunders et al., 2008). To avoid this error, the
researcher designed the questions in a simple and concise manner such that questions will not be
misinterpreted. Secondly, the researcher conducted a pilot test and amended the questionnaire before it
was sent out to different respondents. The error of penultimate maturation suggested by Saunders et al.
(2008), which could emanate as a result of customer previous experience with the Nigerias retail
banking institution, was avoided as the researcher asked respondents to focus on their current bank
rather than any historic experience
4.6.5
The Generalisability of the Questionnaire

Generalisability is the level at which the research findings can be compared to other situations in a
wider perspective (Lee and Lings, 2008). In short, Saunders et al., (2008, p. 158) called it the external
validity of the research findings. The researcher, due to time and cost factor, sampled 12 Nigerias
retail banks that are the key major competitors in the Nigerias retail banking industry. Similarly,
generating above 162 responses from the use of deductive approach utilizing customers experiences is a
great effort by the researcher to ensure that the research findings can be generalized.

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The Survey Questionnaire

Together with a covering email, a concise design, and the explanation of the importance of the
research work, the questionnaire was designed to be filled online through survey monkey software
(http://www.surveymonkey.com/s/66H323K), to the sample population. This survey was administered
by an email to sensitize the respondents on the need to respond to the research questionnaire. About,
three weeks later, a reminder email was made to large number of the respondent in order to increase the
response rate. Again after the sixth week, another email was sent to the respondents. The final response
rate was 71.6%, or 162 responses.
4.8
The Plan for Data Analysis

The data generated through the quantitative analysis was analyzed using analytical techniques
through SPSS such as factor analysis and regression analysis. Statistical Package for the Social Sciences
(SPSS): is a statistical analytical package developed as far back as 1960 (Boslaugh, 2005; Bryman and
Bell, 2011). According to Bryman and Bell (2011), it is considered as one of the most excellent data
analysis software used in business research for the analysis of quantitative data.
4.8.1
Factor Analysis:
Factor analysis is a collection of methods that is relevant for determining how an underlying
construct can be created from a number of different measured variables. One of the key functions of
factor analysis is to minimize the rate of redundancy among the variables by using a smaller number of
variables. Factor analysis assembles variables with the same characteristics. The key objective of factor
analysis can be summarized as specifying the unit of analysis, achieving data summarization and data
reduction, variable selection and using factor analysis result with other multivariate techniques (Hair et
al., 2010).

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Regression Analysis
Is an analytical method that investigates possible functional relationship that could exist between
different variables at a giving point in time (Chatterjee and Hadi 2006).

During the process of data collection, some issues are seen to have the potential of affecting the
outcome of the data collection. Firstly, one of the major issues has to do with time and cost constraint.
Time and cost effect made the result of the research findings to be based on cross-sectional data
collection procedure. Secondly, Problem of generalization as some respondents might not be honest in
their responses.
4.9
The Ethical Consideration

Blaxter et al., (1997, p. 148) gave the description of ethical consideration in business research as
principles that controls the behavior of the researcher throughout the process of the research, with
respect to issues such as confidentiality, anonymity, legality, and professionalism. First, the
researcher pays attention to the ethical consideration, by abiding by the ethical approval of the
University of the West of England in conducting the research.
Secondly, in distributing the questionnaire to different respondents, the researcher attached a cover
letter (see appendix 1) stating the idea behind the research and the significant of the research objectives.
Thirdly, in the cover letter, were information that substantiates the importance attached to the privacy
and anonymity of the respondents.

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CHAPTER 5
THE RESEARCH FINDINGS
5.1
Analysis of the Research Findings

The previous chapter discussed the methodology through which the research data were generated.
This chapter presents the findings obtained from the survey of banks customers and an analysis of the
findings based on the hypotheses generated from the review of relevant literatures in chapter two and
three. The research question is to determine how the effects of different external and organizational
variables contribute to customers valuing innovative activities, and hence that can contribute to a
sustainable competitive advantage within the Nigerias retail banking institutions.
5.2
The Correlation Matrix for the Research Variables

A correlation matrix simply defined, is a rectangular array of numbers that is represented by rows
and columns, which gives the correlation coefficients between a single variable and every other
variables in the investigation. The correlation coefficient between a variable and itself is always 1; hence
the principal diagonal of the correlation matrix contains 1s. The correlation coefficients above and below
the principal diagonal are the same. The determinant of the correlation matrix is shown at the foot of the
table 5.1 below.

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The Correlation Matrix for the research variables
Gender
Education
Levels
Age
Education
Gender
Levels
1
-.032
.711
-.032
1
.711
Age
-.023
.788
.125
.143
Lagos
-.150
.078
-.122
.151
.178*
.036
1
-.023
.788
-.150
.078
.061
.477
.125
.143
-.122
.151
-.243**
.004
.178*
.036
.095
.267
-.068
.430
.084
.323
.123
.150
.091
.286
-.077
.366
.060
.480
.034
.689
.102
.233
Staff
Competence
-.057
.505
Reputation
-.106
.212
.080
.349
Lagos
New
Generation
Bank
Online Banking
Customer
Service
Product/Service
Accessibility
Customer
Satisfaction
New
Product &
Generation Online Customer
Service
Bank
Banking
Service
Accessibility
.061
-.068
.084
.034
.477
.430
.323
.689
-.243**
.123
.091
.102
.004
.150
.286
.233
Staff
Competence Reputation
-.057
-.106
.505
.212
-.147
-.010
.084
.904
Customer
Satisfaction
.080
.349
.073
.391
.095
.267
.045
.600
1
-.077
.366
-.105
.218
.230**
.006
.060
.480
.083
.334
.039
.649
-.136
.110
-.165
.052
-.149
.080
.153
.072
.033
.697
-.021
.805
-.079
.354
.024
.781
.160
.060
.075
.381
.135
.114
.032
.707
-.105
.218
.083
.334
.230**
.006
.039
.649
1
.326**
.000
.326**
.000
1
.433**
.000
.248**
.003
-.271**
.001
-.169*
.047
.383**
.000
.257**
.002
.269**
.001
.300**
.000
-.136
.110
-.165
.052
-.149
.080
.433**
.000
.248**
.003
-.115
.179
.229**
.007
.330**
.000
-.147
.084
.153
.072
.033
.697
-.021
.805
-.271**
.001
-.169*
.047
-.115
.179
-.156
.067
-.190*
.025
-.010
.904
.073
.391
-.079
.354
.075
.381
.024
.781
.135
.114
.160
.060
.032
.707
.383**
.000
.269**
.001
.257**
.002
.300**
.000
.229**
.007
.330**
.000
-.156
.067
-.190*
.025
.290**
.001
1
.045
.600
.290**
.001
Row 1 = Pearson Correlation; Row 2= Sig. (2-tailed). **. Correlation is significant at the 0.01 level (2-tailed). *. Correlation is significant at the 0.05 level (2-tailed). a. Listwise
N=139
Table 5.1: The Correlation Matrix for the research variables

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KMO and Bartletts Test

The KMO and Bartletts test measures the sampling adequacy which should be greater than 0.5 for
a satisfactory factor analysis to proceed. From the table below, the KMO measure is 0.887. Furthermore,
the same table shows that the Bartlett's test of sphericity is significant. Meaning that, its associated
probability is 0.00, which is less than 0.05. This implies that the correlation matrix is not an identity
matrix (see University of Newcastle-on-Tyne http://www.ncl.ac.uk/ucs/statistics (visited 20 December
2010)).
Each value on the diagonal of the anti-image correlation matrix shows the measure of sampling
adequacy for the respective variables is above 0.5, which therefore means that all variables can be
retained for the factor analysis.
KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy.
Bartlett's Test of Sphericity
Approx. Chi-Square
.887
2108.771
df
300
Sig.
.000
Table 5.2: KMO and Bartletts Test

5.4
The Rotated Component Matrix

The rotated component matrix was done by the researcher to reduce the number factors on which
the variables under investigation have high loadings. The tables 5.3 below shows how each of the
variables are loaded with respect to each of the questions contained in the data collection method.
Drawing on the reviewed literatures, a conceptual framework was developed to identify the factors
arising from the factor analysis. These are labeled Product and services accessibility, New Generation
banks, Bank reputation, Staff Competence, and Customer service.

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Factor names, loading and measures of individual research variables

Online
Banking
Customer
Service
Items from Questionnaire

A1: Enjoy banks internet banking
Staff
Competent
Customer
Satisfaction
Reputation
.076
.090
.148
.061
.173
A2: Friendly staff
.769
.361
.284
.014
.292
.115
A3: Attention to customers need
.231
.349
.226
.557
.714
.066
.112
A4: Essay access to online banking
.043
.199
.399
-.111
.067
A5: The bank have skilled staff
.697
.204
.126
.242
.146
.191
B1: Phone confirmation
-.003
.040
.057
.720
.173
.102
.860
B2: Good reputation
.377
.063
.220
.220
.364
B3: Quality service
.457
.213
.417
.137
.157
.502
.376
B4: Future service
.382
.215
.448
.026
.065
.497
B5: Answer anytime
.411
.210
.204
.084
.224
C1: Use ATM in other banks
.011
.605
.080
.117
.049
.816
.093
C2: Encourage others to use the bank
.390
.095
.276
.211
.588
.139
C3: Maximum satisfaction
.393
.339
.375
.221
.160
C4: Safe premises
.343
.297
-.215
C5: Saturday banking
-.007
.732
.514
.293
.512
.122
.163
.129
-.191
D1: Free ATM services
.294
.047
.057
.234
.244
D2: Improves online banking
.742
.559
.355
.100
.078
.169
.009
D3: Enjoy innovation
.774
.297
.215
-.044
.106
.094
D4: Faster services
.720
.267
.274
-.037
.136
.234
.147
.024
.227
.750
E1: Online access
.701
.018
.185
.326
Sustaining
Competitive
Advantage
through
Innovative
Activities:
A
case
of
Nigerias
Retail
63
Banking
-.014
.119
.085
.017
D5: No technology failure
Access to
Products and
Services
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.239
.308
.207
.322
.022
E3: Customers are informed
.558
.227
.207
.568
.294
.347
.162
E4: Understand Products
.246
.246
.679
.152
.024
.157
E5: Confidentiality
-.019
-.049
.712
.227
.197
-.041
Extraction method: Principle Component Analysis Rotation Method: Varimax with Kaizer Normalization
A Rotation converged in 6 iteration
Table 5.3: The factor loading and measures of individual variables

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The table above shows that certain numbers of individual factors (the highlighted items) are more
than 0.5 while some are less than 0.5. Factors that are greater than 0.5 are chosen to create the dependent
variable (online banking) and the independent variables for this study: Online Banking A1, A4, D2,
D3, D4, E1, and E2; Customer Service B5, D1, and D5; Access to Product and services C4, E3, E4,
and E5; Staff Competent A2 and A3; Customer Satisfaction C1, C2, and C3; Bank Reputation B1
and B2 to be the major variables for the regression analysis
Several variables, age, gender, location of customer residence, education level and the name of the
bank used by the each of the respondents, were collected in the survey for use as control and explanatory
variables in the research. Based on data from chapter three, each bank was classified as being either a
traditional or a new generation bank and this dummy variable is used in the regression model.
5.5
Regression Analysis for the Conceptual Model and Hypothesis

Regression analysis is one of the statistical tools used to forecast the level of relationship between
dependent and independent variables. Based on the findings from the reviewed literatures in chapter two
and three, a conceptual framework and hypothesis was developed to test the level of significance in the
relationship between the dependent and the independent variables. A regression analysis was done to
examine the relationship between the dependent variable Online banking, and the independent variables
Customer service, Product and Service accessibility, Staff competence and Bank reputation. The model
tested is that set out in chapter three and reproduced below for clarity along.

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Figure 5.1: The conceptual framework for the hypothesis

5.5.1
Model Summary and ANOVA for Online Banking

The model shows the R value of 0.645 (see table 5.4) which stands for the correlation coefficient
of the dependent and independent variables. The ANOVA table is used to test the significance of the
overall model for the linear relationship between dependent and independent variables. As shown in
table 5.5, the F value of 10.207 is highly significant with p<0.000, indicating a linear relationship
between the dependent and independent variables.
Table 5.4: Model Summary
Std. Error of the
Model
R Square
Adjusted R Square
Estimate
.645
.416
.375
.79772271
a. Predictors: (Constant), Gender, Product & Service Accessibility,
Education Levels, Staff Competence, Lagos, Reputation, New
Generation Bank, Customer Service, Customer Satisfaction
1

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Table 5.5: ANOVAb
Sum of Squares
Df
Mean Square
58.457
9
6.495
Residual
82.091
129
Sig.
10.207
.000a
.636
Total
140.548
138
a. Predictors: (Constant), Gender, Product & Service Accessibility, Education Levels,
Staff Competence, Lagos, Reputation, New Generation Bank, Customer Service,
Customer Satisfaction
b. Dependent Variable: Online Banking
The ANOVA table above indicated that the factors influencing the online banking are significant
with a P-value of 0.00. This means p < 0.001, so we can be 99% certain of the linear relationship
between the variables. The coefficients of the variables are shown in table 5.6, with the collinearity
statistics. Within the collinearity statistics, the Variance Inflation Factor (VIF) is a test to show that the
variables are not highly correlated with each other.
Coefficientsa
Unstandardized
Standardized
Coefficients
Coefficients
Model
(Constant)
Std. Error
Beta
Collinearity Statistics
t
Sig.
Tolerance
-.350
.372
-.939
.349
Customer Service
.161
.076
.156 2.120
.036
.832
1.202
Product & Service

Accessibility
.360
.079
.346 4.544
.000
.779
1.283
Staff Competence
-.158
.072
-.154
.030
.921
1.086
Reputation
.176
.076
2.192
.174 2.327
.810
1.234
Customer Satisfaction
.033
.076
.033
.022
.668
.761
1.315
New Generation Bank
.616
.154
.289 4.008
.869
1.150
-.190
.144
.000
.190
.882
1.134
.145
.097
.137
.897
1.115
Lagos
Education Levels
-.094
.430
1.317
.106 1.495

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-.261
.149
-.124
1.757
.081
.915
1.093
a. Dependent Variable: Online Banking

Table 5.6: Table of Coefficientsa
The table above shows that customer attitudes towards online banking are influenced by the banks
reputation, staff competence, product and service accessibility, customer service and whether the bank is
a new generation bank, and to a lesser extent gender. This demonstrates that these factors are significant
determining drivers with respect to how customers perceive retail banks innovation in online banking
Figure 5.2 shows the conceptual framework for the research hypothesis and their various
significant results.
Figure 5.2: The result of the hypotheses and the conceptual framework.

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Products and Service accessibility has a positive influence on customer perception

towards online banking
The results show that customers encourage innovation in online banking from the retail banks that
have easy access to product and services. The factor is highly significant (p<0.000) with a positive
coefficient of 0.360. The result supports H1 that Products and Service accessibility has a positive
influence on customer perception
H2
towards online banking.
New generation banks operational strategy has a positive influence on online

banking
The result indicates that customers are more supportive of innovation in online banking from those
banks that are classed as New Generation rather than traditional banks. The coefficient is positive
0.616 and is highly significant (p<0.000). This finding supports H2 that
New
Generation
banks
operational strategy has a positive influence on customer satisfaction with innovation in online banking.
H3
Bank reputation has a positive influence on customer perception towards the

Online banking.
The research findings has established that there is a significant relationship between the factor
bank reputation and online banking with a P-value of 0.022 (< 0.05) with a positive coefficient of 0.176.
This finding means that H3, Bank reputation has a positive influence on customer perception towards
the online banking, can therefore be accepted.
H4
Staff competence has a positive influence on customer satisfaction towards the

Online banking
Interestingly, customer views about the competence of staff appear to be negatively related to their
perceptions about online banking. The coefficient is -0.158 and significant at the 3% level,
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(P=0.03<0.05). This finding is contrary to hypothesis H4 which states: Staff competence has a positive
influence on customer satisfaction towards the online banking. The result from the simple linear
regression has shown that there is significant but negative contribution between online banking and staff
competence.
H5
Customer Service has a positive influence on online banking.

The research findings have shown that customer opinions about the services provided by the retail
banks is significantly related to online banking with P value of 0.036 which is less than 0.05. The
regression analysis indicated that customer service has a positive coefficient (0.161); hence it supports
H5 which stated that, Customer Service has a positive influence on online banking.

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CHAPTER 6
RESEARCH DISCUSSION AND CONCLUSION
The analysis of the research findings has clearly established that the integration of different
innovative activities by retail banks create sustainable competitive advantage within Nigerias retail
banking institutions as measured by customer perceptions. This is consistent with the review of relevant
literatures in chapter two and three (Roberts and Amit, 2003; Roberts, 2001; Porter, 1990; Tidd and
Bessant, 2009; Tidd et al., 2001).
6.1
Discussion of Main Result

Based on the analysis, four hypotheses (H1, H2, H3, and H5) have positive coefficients except H4,
which has a negative coefficient. Among the independent variables, product and services accessibility
and new generation bank has the top predicator of customers perception with respect to online banking.
Table 6.1 below shows the summary of the result of the conceptual framework and hypothesis testing.

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The summary of the result of the conceptual framework and hypothesis testing
Hypothesis
H1 - Products and Service accessibility
P Value
(P<0.05)
Coefficient Value
Result
Supporting Literature
0.000
0.360
Support
Devlin (1995); Mols (1999);

Ehigie (2006)
has a positive influence on customer

perception towards online banking
H2-New generation banks operational
0.000
0. 616
Support
Maklan and Knox (2005)
0.022
0.176
Support
Wang et al. (2003); Goode
strategy has a positive influence on

Online banking.
H3 - Bank reputation has a positive
influence on customer perception
and Harris (2007);
towards the Online banking.
Standifird et al. (1999)
H4- Staff competence has a positive
0.030
-0.158
Not Support
Ritter and Gemunden (2003);

Mols (1999)
influence on customer satisfaction

towards the Online banking
H5 - Customer Service has a positive
0.036
0.161
influence on online banking.

Table 6.1: Summary of the result of the conceptual framework and Hypothesis testing

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The purpose of the first hypothesis was to establish possible casual relationships between product
and services accessibility and online banking. Drawing from the reviewed literatures, Devlin (1995)
maintained that customers now have access to banks products and service through wider distribution
channels such as Automated Teller Machine (ATM), credit and debit card, point of sale, and telephone
banking.
Mols (1999) position on internet banking supports the research findings. His research
demonstrated that online banking creates a new distribution channel that has reduced the waiting time
and creates convenience in banking transactions. Furthermore, this significant relationship confirms
Ehigies (2006) point of view that banks can sustain high profitability by providing products and service
that meets customer requirements through online distribution.
Secondly, inferring from the literature review, the consolidation of the Nigerias retail banking
industry brought in the rebirth of the new generation banks. The result from the research findings
upholds that the operational activities and structures of new generation banks drive the adoption and
innovation online banking Maklan and Knox (2005). More so, Maklan and Knox (2005) maintained that
one of the new generation banks in Nigeria, Guarantee Trust Bank, was the pioneer in offering callcentre facilities and services, which was introduced as a means sustaining the services provided by
online banking.
Consistent with the finding is Wang et al. (2003) opinion that reputation is a medium through
which the outcome of the success of retail banks distribution channel process can be ascertained.
Reputation is also an important medium through which the potential of service firms in satisfying
customers requirement can be established. Goode and Harris (2007) proposal on reputation and online
customer are directly and positively related to determining the behavior and perceptions of the customer.
Other relevant literatures have also supported this research finding. Standifird et al. (1999) concluded
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that when compared with online and branch products and services, the reputation of the online services
is substantially more important to customers than the branch products and services.
Furthermore, the research findings support the opinion of Ritter and Gemunden (2003) which
stated that there is a degree of relationship between staff competence and technological innovation.
Their empirical research on organizational competencies concluded that, the coordination and
collaboration innovation of staff activities could be achieved when staff with different competencies
synchronized their activities to be in harmony with each other. More so is Mols (1999) assertion on the
importance of staff competence and online banking that is upheld by this research finding. He
established that, to sustain innovation in the retail banking, the bank staff must continuously build new
competencies and maintain efficiency in managing the banks internet services. However, based on this
findings, it can be established that negative coefficient could be as a result of the fact that customers that
perform online banking do not interact with staff except where there is a technical problem. Hence, they
only interact in negative situations.
Consequently, these findings support recent research on customer service and online banking
(Delvin, 1995; Mols, 1998). Drawing on Mols (1998) research findings, online customers are more
satisfied with the services provided by their banks than the customers that physically visit the bank on a
regular basis. A customer who uses online banking has tendencies of advertising and maintaining
services provided by the banks. Other research maintains the same position with this significant
relationship between customer service and online banking. Katz and Aspden (1997, p.173) research
survey in the USA about customer service and internet banking, maintained that about 17% of the
respondents affirms that internet banking is a convenient ways to do banking.

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The research findings show that banks that adopt these innovations primarily attract young
customers use most of the innovative activities while older people resort to the traditional branch
network services. In addition, the finding proves that banks that are located in the city tend to create
better and most efficient products and services than banks located in the rural areas.
This research reinforces the opinion that product and services accessibility, new generation banks
operational structure, bank reputation, and customer service have an important role to play in creating
sustainable competitive advantage in Nigerias retail banking institutions.
Interestingly, the research has established that online banking is one of the factors that influences
the adoption and diffusion of innovation in the retail banking institutions. Again, the study has
recognized that new generation banks have emerged as a result of external pressure, such as changes in
the regulatory policies and continuous changes in customers taste and preferences, and industry
competitive orientation. Also, the internal pressure leading to the arrival of new generation banks
include; need pull, management and staff training and development, inspiration and exploring alternative
futures and opening up different possibilities.
6.2
Recommendation for further research

The researcher believes that research in strategic management and innovation is still evolving. In
the course of reviewing relevant literatures, it was observed that certain type of online banking activities
such as point of sale cash back are yet to be explored by Nigerias retail banking institution. Although
most of these retail banks have installed cash machine and point of sale terminals in some supermarkets
and other strategic locations, some of them are yet to implement the system that generate point of sale
cash back. The researcher believes that research should be done in this context to establish what effect
point of sale cash back can have on gaining customer royalty and creating competitive advantage.
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More so, another important issue evolving from the reviewed literatures is that recapitalizations of
Nigeria banking institutions have generally exposed Nigerias retail operational structures, but no
comprehensive research has been carried out about their operations post recapitalization. Research
should be done in this area to know if their operations strategy can compete with the strategy of the retail
banks operating in the emerging economies.
Finally, from the reviewed literatures, the researcher identified that the location of the retail banks
seems to have implication on how customers would perceive banks product and services and banks
performance. Therefore, it is important that should be conducted to know how location factor can
influence banks performance and competitive advantage.
6.3
Personal reflections on the experience of undertaking this dissertation.

In conclusion, conducting research in the field of strategic management and innovation was a
memorable one for me. Initially, I was scared when I was informed by my program director about the
word count. My fears was based on the fact that the method of conducting and writing a research work
at the masters level is exceptionally different from that of the undergraduate level. On the contrary, I
was consoled by the fact that there are parallels between my home countrys (Nigeria) academic system
and the UK academic system.
Thank God for the opportunity to present a proposal for the research work because at the
beginning of my program, I had the idea of what I wanted my research to be based on, however, giving
it a name and structuring it was a total nightmare for me. In fact, my ability to persevere and complete
this research is as a result of the encouragement and support from the people around me.
During the period of the research, one of the interesting experiences I cannot forget was the
structuring of my questionnaire. My supervisor, not only read and corrected the questions, she ensured
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that all the questions were sourced from the reviewed literatures, this made me put in more effort in
searching for journals beyond what I expected. Another outstanding experience was the feedback for the
first draft of my literature review. My supervisor scrutinized every part of the research content and
ensured that the references were structured to meet the university standard. I once missed a particular
page number in my referencing and she said where is the page number for this reference? If you do not
have the authors book, come I can give you a copy
Furthermore, data collection and interpretation was also challenging for me. Initially, I thought
that all I had to do was to administer the questionnaire and people will respond immediately. I got the
first shock when after two weeks of administering the questionnaire online, only about forty three (43)
people had responded. Apparently, this was a learning process in disguise because it taught me how to
follow people up with emails to get what I wanted.
In the course of conducting this research I had the opportunity to read widely and know more
about the key authors and researchers in the field of strategic management, innovation, banking
operation processes and the importance of online banking from the customer perspective. This research
work took a lot out of me, however, all I can say in summary is that the research area is a very
interesting one and I am very delighted that I went into it.

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APPENDIX 1
Self Administered Questionnaire
This is M.Sc dissertation survey being carried out for the purpose of investigating the Nigerias retail
banking industry and their various innovative activities between 2005 and 2010. Please answer the
questions freely. The questionnaire should take you about five minutes to complete and the questions
asks you about your view on using your bank. Please answer the questions by thinking about your
personal experiences and views of your current bank in which you undertake the majority of your
personal banking. You cannot be identified by the information you provided and information about your
personal data will not be used for any other purpose other than for academic purpose.
The survey consists of two sections. Section A and section B contain sets of statements that you are
asked to rate from strongly agree to strongly disagree. Some of the questions may look same, please do
not ignore them as your answers provide essential and accurate view of a range of opinions.
PART A
Instructions: Please read each statement carefully. Using the given scale 1 7, mark the number that
indicates how much you agree or disagree with each of the statement. Please read each statement below
carefully with which you agree or disagree. Keep in mind that there is no right or wrong answers.
StronglyDisagree
Disagree
SlightlyDisagree
Neitheragreenor
disagree
SlightlyAgree
Agree
StronglyAgree

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StronglydisagreeStronglyagree
I enjoy the banks internet banking
1234567
The bank staff are very friendly
1234567
The bank pays attention to customers need
1234567
I can easily access the banks online banking
1234567
The bank members of staff have the required banking skills
1234567
I always receive a confirmation on my phone after transactions
1234567
The bank has a good reputation
1234567
The banks product and service are of good quality
1234567
The bank will continue to provide better services
1234567
I can call the bank anytime of the day or night and get an 1234567
answer to my question
I can use the banks ATM card in another banks ATM 1234567
machine.
I will encourage others to use the bank
1234567
I derive maximum satisfaction from the banks services
1234567
I feel safe when I visit the banks premises
1234567
The bank has Saturday banking services
1234567

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The banks ATM services are free of charge.
1234567
The bank constantly improve its on-line banking products
1234567
I enjoy the banks technological innovations
1234567
The banks technology provides faster services
1234567
I have not experienced technical breakdown using the banks 1234567

ATM machines
I can check my account balance online anytime.
1234567
The bank is the best retail bank in Nigeria
1234567
The bank keeps customers informed
1234567
I have a good understanding of the banks products
1234567
The bank maintains confidentiality of transactions
1234567

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PART B:
Personal Data
Sex:
Male [ ]
Female [ ]
Age classification:
Above 18 [ ]
24 - 30 [ ]
31 - 37 [ ]
38 4 [ ]
43 50
[ ]50 & above [ ]
Which of the following educational qualification do you possess?

Primary School Certificate Level [ ]
University Graduate [ ]
Secondary School Certificate Level [ ]
Post Graduates degree [ ]
Doctorate Degree [ ]
State of Residence in Nigeria:

Abuja [ ]
Bayelsa [ ]
Benin [ ]
Calabar [ ]
Lagos [ ]
Owerri [ ]
Portharcourt [ ]
Enugu [ ]
Ibadan [ ]
Kaduna [ ]
In which of the following Nigerias retail banks do you have an account?

Access Bank plc [ ]
Diamond Bank Plc [ ]
Eco Bank Plc [ ]
First Bank of Nigeria Plc [ ] First City Monument Bank plc [ ]

Skye Bank Plc [ ]
Stanbic IBTC Bank [ ]
United Bank for Africa (UBA group)
[ ]
Fidelity Bank Plc [ ]
Guarantee Trust Bank Plc [ ]
Union Bank of Nigeria Plc. [ ]

Zenith Bank plc [ ]

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Appendix 2
Different account products of all the sampled banks post consolidation
ACCESS BANK PLC.

TYPES OF ACCOUNT
DESCRIPTION
DIAMOND BANK PLC.

TYPES OF ACCOUNT
DESCRIPTION
Standard Current
Account
Designed for their discerning

customers
Diamond Personal Current

Account
An account that gives customers all the

benefits of a current account combined
with the choice of enjoying free banking
services
Access Premier Account
A high-yield type of current

account for individuals with
investment benefits designed to
meet their financial needs
Diamond BusinessXpress Account
Basically created to add value to micro,

small or medium scale enterprise
(MSME). The account aims to help
customers grow your MSME business
till it graduates to the upper level market.
Access Advantage Account
A savings type of account that

gives customers the benefits of a
current account
DiamondXclusive Account
This is a current account that promises

exclusive service to its customers. It
gives a high level of preferential
treatment to customers in order to make
customers experience unique
Standard Savings Account
An account that helps customers

save for the future financial needs
Diamond SavingsXtra account
An interest-yielding savings account, that

allows the deposit of both cash and third

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party cheques.
Solo Account
An account created for students

between the ages 16 and 18 years.
Diamond Kiddies account
An account that enables customers to

start saving on behalf of their children
aged under 18 years with a minimum
deposit of N5, 000
Access Early Savers

Account
Designed to meet the financial

savings needs of children
Diamond High Interest Deposit

Account (HIDA)
Account designed for our premium

customers who can maintain a minimum
balance of N100, 000, whilst still
allowing you easy access to your money
whenever you want it.
Call Deposit Account
An account that allows you to

save your funds while maintaining
liquidity and earning interest
ECO BANK PLC.
FIDELITY BANK PLC.
TYPE OF ACCOUNT
DESCRIPTION
TYPE OF ACCOUNT
DESCRIPTION
Ecobank Current Account
Value added accounts available in

both local and foreign currency
Fidelity Current Account (FCA
A facility account designed for

individuals and business owners seeking
dependable and convenient banking
services.

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Ecobank Savings Account
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The secure, convenient and

reliable savings account.
FIRST BANK OF NIGERIA PLC.

TYPE OF ACCOUNT
First Hi-Fi (Children)
Account
DESCRIPTION
This is a special account designed
for children from age 0 18 years
Fidelity Current Account PLUS
A special current account designed for

individuals and business owners who
keep high balances.
EasiSave (ESUSU)
A savings account designed for traders

and small business owners with easy
access to banking services
FPSS Fidelity Personal Savings

Scheme
A hybrid account designed for customers

who need a savings account with the
flexibility of a checking account.
Fidelity FLEX
A hybrid savings account with the

FLEXibility of a checking account,
designed for students in tertiary
institutions of learning and Youth
Corpers, who are seeking reliable and
convenient banking services
FRST CITY MONUMENT BANK PLC.

TYPE OF ACCOUNT
Classic Current Account

Banking
DESCRIPTION
Classic Current Account is designed to
give customers Convenience and
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to sensitize and cultivate savings
culture within this age bracket and
to help parents plan towards the
future of their children and wards.
Flexibility while meeting all your

banking needs.
First Current Plus (Zero

COT Account)
Withdrawal is limited to five (5)

Gold Current Account
times in a month, where a
customer exceeds the number of
withdrawals, the account will
default to N5.00/mille COT on the
total customer induced
transactions for that month
It is a premium Current account with zero

COT, designed to meet the needs of
Affluent and High Networth Individuals,
and incentivize them for their high
current account balances.
First Savings Plus Account
It is a hybrid savings account that

runs on a savings platform with
current account features for
customers convenience.
The Minus to Plus account is a Zero COT

Current Account that pays Fixed Deposit
returns. It is an auto-save current account
that allows you to earn interest on idle
funds while having the flexibility to issue
clearing cheques.
First Dom Plus
An account that encourages

Foreign Currency Accounts
customers to save foreign
currency while still giving the
customers the opportunity to earn
higher interest on account
balances.
Minus To Plus Account

Banking
This is an array of Foreign Currency

denominated accounts with benefits such
as currency flexibility, convenience and
ease in account operations. The product
array is comprised of a Foreign Currency
Current Account and a Foreign Currency
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Fixed Deposit Account.
The All In One Account lets you enjoy

the benefits of Savings, Current and
Fixed Deposit Accounts all at once. You
enjoy the zero COT charge of a Savings
Account; the flexibility and convenience
of Current Account features, attractive
Fixed Deposit returns and extras like no
other
All-In-One Savings Account
The FCMB Millionaire Savings

Certificate
A flexibility of a current account and also

earn interest" With the Saver Plus
account, customers can draw on their
savings whenever the need arises
Classic Saver Plus Account
GUARANTY TRUST BANK PLC.

TYPE OF ACCOUNT
DESCRIPTION
SKYE BANK PLC.

TYPE OF ACCOUNT

Banking
The Savings Certificate pays you interest

on your funds and also qualifies you to
win exciting prizes in our monthly draws
DESCRIPTION
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GTB Current Account
Checking accounts that allows Skye Select current Account

customers to carry out routine
banking transactions with third
parties and allows them enjoy
easy access to their money from
any of our branches nationwide on
an on-line real time platform
This product is targeted at the discerning

high end individual, who requires
personalized account management
services and can maintain a minimum
credit balance of N100,000.00 at all
times.
Domiciliary Account
Account allows customers to

Enterprise Select Account
maintain accounts in foreign
currencies and can be funded
through travelers cheques,
lodgment of foreign currency
cheques, cash inflows and cash
deposits. Account Holders can
withdraw cash or make transfers
to their accounts or other accounts
offshore.
Skye Enterprise Select is an account that

combines the features of both savings and
current account for the discerning
ENTREPRENEUR
Smart Kids Save (SKS)
It's a savings account designed to

create banking awareness in
children and encourage a savings
culture from an early age.
Skye Rainbow Account

Banking
Skye Rainbow account is a children's

savings account. It is designed with
special features that benefit parents
seeking to save for their children's
education and other needs
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This is designed to facilitate
personal loans to staff of select
corporate and government
organizations whose staff salary
accounts reside with the bank
MaxAdvance
GTSave - Savings Account
GTCrea8
Guaranty Trust Bank savings

account offers you a savings
account with attractive interest on
customers daily balance.
Skye Wise - Save and Earn
This savings product offers the individual

the benefits of both the savings and
current account benefits with the use of
non-clearing cheque book.
Skye Save
Skye Save Account is a standard savings

a/c designed to meet the savings needs of
all individual adults (male & female) and
professionals of 18 years and above.
A high interest-bearing savings

Skye Treasure Account
account that enables students of
tertiary institutions cultivates
savings habit while pursuing
academic goals and aspirations
Skye Wise Classic account
STANBIC IBTC BANK PLC.
Skye wise Classic is a savings account

with Current account features. It is
targeted at Cooperative Societies, Clubs,
and Associations. It is a non COT
account that allows customers the use of
third party cheques.
UNION BANK OF NIGERIA PLC.

Banking
An account designed to cater for the

needs of the customers in the middle and
lower classes.
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TYPES OF ACCOUNT
Current Account
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DESCRIPTION
TYPES OF ACCOUNT
An account that allows cheque Union Elite Standard Account

lodgements and withdrawals by
third parties through the use of a
cheque.
High Yield Current

Account
The High Yield Current Account

(HYCA) is an account that gives
you the benefits of a current and
savings account all in one and
also provides you with a high
yield on your savings.
Union
Personal Savings Account
An account that helps customers

to accumulate extra income and
build up your cash reserves
Union Kiddies Savings Account
call account
An interest bearing account to

which funds can be deposited and
called back on demand
Union Kiddies Term Account
CHESS Savings Account
A special savings product

developed to support customers in
meeting cash flow needs for their
Elite
Premium
Account
Union Graduate Account

Banking
DESCRIPTION
This is a savings account with some
features and characteristics of a current
account.
A current account based product with all

features of a regular current account,
savings account, fixed deposits and more
A special savings account targeted at

children between ages of 0 - 12 years.
A special savings account targeted at

children in secondary/high schools whose
ages range between 13 - 19 years
A savings account designed for students

in tertiary institutions, but divided into
three parts as follows:
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childrens education
UBA PLC.
TYPE OF ACCOUNT
ZENITH BANK PLC.

DESCRIPTION
TYPE OF ACCOUNT
NRN Current Account
This is a feature rich current ZECA

account product for Nigerians
living abroad that enables
unlimited number of transactions
both via U-direct and UBA
branches
UBA Professional Account
The UBA professional account is

a current account for effective
salary/pay roll administration for
the organization. It is designed for
employees in private and public
sector.
UBA Current Account
This is a Demand Deposit

Account (DDA) in which funds
deposited are payable on demand
either in person or by presentation
of a cheque/ bank draft, direct
debit, electronic fund transfer etc.

Banking
DESCRIPTION
ZECA - Zenith Children's Account is a
special deposit product geared towards
your children/ward's education and bright
future.
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Freedom Savings Account
Freedom savings account is a

convenient saving plan which
allows opening of account without
fund, but the account must be
funded with minimum of N500
within 30days
Patriots Savings Account
Patriot Savings is designed for

serving Armed Forces, Police &
Para-military officers to plan for
the future as they are constantly
exposed to life threatening risk
during the course of their duty
U-Care Savings Account
It is an education-specific savings
account for Parents/Guardians to
support the education of their
child/wards through primary &
secondary schools
Sources: The Banks Corporate website and annual reports (2004 2010)
0 Banking
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SUSTAINING COMPETITIVE ADVANTAGE THROUGH INNOVATIVE ACTIVITIES:

In partial fulfillment of the requirement for Masters in International

2 Sustaining Competitive Advantage through Innovative Activities: A case of Nigerias Retail

Research Background ................................................................................................................. 11

Research Aims and Objectives................................................................................................... 13

The meaning of innovation ........................................................................................................ 16

Sources of Innovative Activities in Retail Banking ................................................................... 21

Overview of multiple types of innovation in the Nigerias retail banking................................ 24

Customer Service Improvement. 26

Branch and Operational Repositioning ............................................................................... 27

Staff Competencies ............................................................................................................. 28

Bank Reputation and Ethical Behavior ............................................................................... 29

3 Sustaining Competitive Advantage through Innovative Activities: A case of Nigerias Retail

Product and Service Innovations ........................................................................................ 29

Summary of Nigerias Retail Banking Activities ...................................................................... 31

Nigerias retail banking after consolidation ............................................................................... 35

The Dimension of Performance in the financial service Organization ...................................... 38

Research Model and Hypothesis ................................................................................................ 43

Research Paradigm and Philosophy ........................................................................................... 47

Research Approach .................................................................................................................... 50

Research Method ........................................................................................................................ 52

Research Strategy ....................................................................................................................... 53

Research Population, Sampling and Data Collection................................................................. 54

Self Administered Questionnaire The Quantitative Approach ........................................ 54

The Evaluation of the Data Collection Method .................................................................. 56

The Reliability of the Questionnaire ................................................................................... 56

The Validity of the Questionnaire....................................................................................... 57

The Generalisability of the Questionnaire .......................................................................... 57

The Survey Questionnaire .......................................................................................................... 58

4 Sustaining Competitive Advantage through Innovative Activities: A case of Nigerias Retail

The Plan for Data Analysis ........................................................................................................ 58

Factor Analysis: .................................................................................................................. 58

Regression Analysis ............................................................................................................ 59

The Ethical Consideration .......................................................................................................... 59

Analysis of the Research Findings ............................................................................................. 60

The Correlation Matrix for the Research Variables ................................................................... 60

KMO and Bartletts Test ............................................................................................................ 62

The Rotated Component Matrix ................................................................................................. 62

Regression Analysis for the Conceptual Model and Hypothesis ............................................... 65

Model Summary and ANOVA for Online Banking ........................................................... 66

Discussion of Main Result ......................................................................................................... 71

Recommendation for further research ........................................................................................ 75

Personal reflections on the experience of undertaking this dissertation. ................................... 76

5 Sustaining Competitive Advantage through Innovative Activities: A case of Nigerias Retail

6 Sustaining Competitive Advantage through Innovative Activities: A case of Nigerias Retail

7 Sustaining Competitive Advantage through Innovative Activities: A case of Nigerias Retail

8 Sustaining Competitive Advantage through Innovative Activities: A case of Nigerias Retail

Volume of currency outside banks and total demand deposits

The emerging banks in Nigeria and their new capital bases

Operating profits of Nigerias retail banks

The correlation matrix for the research variables

KMO and Bartletts test table

The factor loading and measures of individual variables

Model summary table

Summary of the result of the conceptual framework and

9 Sustaining Competitive Advantage through Innovative Activities: A case of Nigerias Retail

Abernathy and Utterbacks model of Innovation life cycle

A simple model of the Innovation process

Where do innovations come from? Tidd and Bessant, 2009

A (stylized) value chain, extracted from Robert and Amit (2003, p.

The Number of the Nigerias retail bank between 1970 - 2010