TABLE OF CONTENTS
Page
Title Page i
Certification ii
Approval Page iii
Dedication iv
Acknowledgement v
Table of Contents vi
List of Tables xi
List of Figures xii
Abstract xiii
CHAPTER ONE: INTRODUCTION
- Background of the Study 1
- Statement of the Problem 4
- Objectives of the Study 6
- Research Questions 7
- Research Hypotheses 7
- Significance of the Study 8
- Scope of the Study 9
- Area of the Study 9
- Limitations of the Study 9
- Profile of the Selected Commercial Banks
Studied in Southern Nigeria. 10
- Definition of Terms 14
- Organization of the study 15
References
CHAPTER TWO: REVIEW OF RELATED LITERATURE
2.1 Introduction 18
2.2 Historical Background of Business Process Management 18
2.3 Conceptual Framework 19
2.3.1 Business Process Definitions 19
2.3.2 Business Process Properties and Models 21
2.4 Business Process Management 22
2.4.1 Process Management Defined 22
2.4.2 Concepts of Business Process Management 23
2.4.3 Business Process Management Principles and Practices 24
2.5 Business Process Management Life Cycle. 26
2.5.1 Design and Analysis 27
2.5.2 Configuration 27
2.5.3 Enactment 28
2.5.4 Evaluation 28
2.6 The Concept of Organizational Performance 29
2.6.1 Measuring Organizational Performance 30
2.6.2 Factors that Affect Organizational Performance 30
2.7 The Concept of Business Process Re-engineering 31
2.8 The Concept of Total Quality Management 33
2.9 Comparative Analysis between Total Quality
Management and Business Process Reengineering 36
2.10 The key Characteristics that Differentiate Business Process
Management from Business Process Re-engineering. 37
2.11 The Concept of Banking 38
2.11.1 Meaning of Banks and Why Do Banks Exist 38
2.12 Theoretical Framework 40
2.13 Business Process Management Maturity Model 50
2.14 Implementing Business Process Management in a Bank 57
2.14.1 Important Drivers for BPM in Banks. 58
2.14.2 Where BPM can be implemented in a Bank 59
2.14.3 When to implement BPM in a Bank 62
2.14.4 Criteria preparing for BPM 62
2.15 The critical success and failure factors of BPM 63
2.15.1 Critical Success factors of BPM 63
2.15.2 Critical failure factors of BPM 64
2.16 Implementing Business Process Management (BPM) 64
2.16.1 The Critical Business Process Steps to the Success of a
BPM Initiative 65
2.16.2 Technology Planning, Selection and Rollout Steps 67
2.17 Evolution of Banking Industry in Nigeria. 71
2.18 Basic Theories of Bank Management 76
2.18.1 The Commercial Loan Theory 77
2.18.2 The Shift Ability Theory 77
2.18.3 The Pool-Of Funds Approach Theory 78
2.18.4 The Anticipated Income Theory 78
2.18.5 Conversion of funds Approach Theory 79
2.18.6 The Modern Approach (Gap Analysis) Theory 79
2.18.7 Theory of Distress 80
2.19 Determinants of Commercial Banks Performance in
an Economy 80
2.19.1 Leading Rate 81
2.19.2 Depositors Rate 81
2.19.3 Ownership and Control 82
2.19.4 Management Effects 82
2.19.5 Market Structure 82
2.20 Regulatory Institutions in the Nigeria Banking Industry. 83
2.20.1 Central Bank of Nigeria 83
2.20.2 Nigeria Deposit Insurance Corporation (NDIC) 84
2.21 Theories of Competition 85
2.21.1 Theory of the perfect competitive market 85
2.21.2 Theory of the monopolistic competitive market. 85
2.21.3 Game Theory 86
2.22 Environment Defined 86
2.22.1 The Task Environment 86
2.22.2 The General or Macro Environment 87
2.22.3 The International Environment 87
2.23 Environmental Scanning 88
2.24Environmental Factors Influencing Banks Marketing Activities 89
2.24.1 The Micro – Environment 90
2.24.2 The Macro- Environment 91
2.25 Model Modification 92
2.25.1 Adaptation of The System’s Cybernetic Model 93
2.25.2 Adaptation of PEST Model 95
2.26 Summary of the Review of Related Literature 97
References
CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Introduction 112
3.2 Research Design 112
3.3 Sources of Data 112
3.3.1 Primary Data 112
3.3.2 Secondary Data 113
3.4 Population of Study 113
3.4.1 Sample Size Determination 113
3.4.2 Stratified Sample Distribution 114
3.4.3 Description of the Research Instrument 115
3.5 Data Presentation and Analysis 116
3.6 Data Presentation Tools 116
3.6.1 The Chi Square 116
3.6.2 Decision Rule 117
3.6.3 Spearman Rank Correlation 117
3.6.4 The Z-test Statistic 117
3.7 Reliability and Validity of The Research Instrument 118
3.7.1 Reliability of Instrument 118
3.7.2 Validity of Instrument 119
Reference
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS, MODEL SOLUTION AND DISCUSSION OF RESULTS
4.1 Introduction 121
4.2 Analysis of Data 121
4.3 Data Presentation 122
4.4 Percentage Analysis 130
4.5 Analysis using Relative frequencies 132
4.6 Correlation Analysis 136
4.7 Analysis using Z test 137
4.8 Cross-tabulated Analysis 139
4.9 Theoretical Analysis 140
4.10 Hypotheses Testing 140
4.11 Model Solution 142
4.12 Discussion of the Result on the Impact of BPM on the
Performance of Some Commercial Banks in Southern Nigeria. 145
4.13 Discussion of Result on Whether the Implementation
Of BPM Improves Effective and Efficient Customer
Service Delivery. 146
4.14 Discussion of Result on Whether the Implementation of BPM
Will Offer theCommercial Banks Studied the
Opportunity to Outperform Competitors. 147
4.15 Discussion of the Result on the Challenges posed by
BPM that would lead to Poor Performance of the Commercial
Banks studied. 148
4.16 Discussion of the Result on the Prospects of the Commercial
Banks Studied if the Challenges are Properly Handled. 149
4.17 Discussion of the Result on the Components of the
Business Process to be Managed. 149
4.18 Findings Related to the Theory of Business Life Cycle. 149
References
CHAPTER FIVE: SUMMARY OF MAJOR FINDINGS, CONCLUSION, RECOMMENDATIONS, CONTRIBUTION TO KNOWLEDGE AND AREA FOR FURTHER STUDY
5.1 Summary of Major Findings 152
5.2 Conclusion 153
5.3 Recommendations 154
5.4 Contribution to Knowledge 154
5.5 Area for further Study 155
References
Bibliography
Appendix: i
Appendix: ii
Appendix: iii
Appendix: iv
Appendix: v
Appendix: vi
Appendix: vii
LIST OF TABLES
2.1 Business Process Principles and Practices 25
2.2 Comparison between TQM and BPR 36
2.3 Differences between BPM and BPR 34
2.4 The Types of Business Processes in an Organization 61
2.5 A framework for Assessing Environmental uncertainty 96
2.5.1 PEST Analysis of the Business Environment 97
3.1 Sample Numbers of the Study 115
3.2 The Reliability Analysis 118
4.1. The Response Rate of the Questionnaire Administered. 122
4.2 The Summary of the Personal Data of the 370 Respondents 123
4.3 The Summary of the Duration Worked in Years and the Statues of the Respondents 128
4.4 The Analysis of some likert scale statements. 130
4.5 The analysis of other likert scale statements. 134
4.6 The analysis of the impact of BPM on the performance of some commercial banks in Southern Nigeria. 136
4.7 The analysis of some likert scale statement using Z test. 137
4.8 The analysis of the challenges posed by BPM that could lead to the poor performance of the commercial banks studied. 138
4.9 The prospects of the commercial Banks studied if the challenges are properly handled. 139
4.10 The computational details of hypotheses numbered 1 to 4 and 6 139
4.11 Shows the computational details of the fifth hypothesis. 142
4.12 The analysis of the components of Business process to be managed to improve the performance of the four commercial studied in Southern Nigeria. 142
4.13. The computational detail of the sixth hypothesis. 143
4.14 The analysis of the responses of the dichotomous (Yes or No) questions for implementing the system’s cybernetic model of transform of BPM. 143
4.15 The analysis of the responses from the oral interview for implementing the Pest Model. 144
LIST OF FIGURES
2.1 Business Process Life Cycle 26
2.2 Business Process Management Maturity Model. 50
2.3 Comparison of low and High Maturity and the five Maturity Stages. 51
2.4 Shows the Primary Business Process Steps 65
2.5 Technology Planning, Selection and Rollout Steps. 67
2.6 The Systems Cybernetic model with Business Process as the Transform. 94
4.1 The Simple Bar Chart of the Data on the Sex of the 370 Respondents. 124
4.2 The Simple Bar Chart of the Marital Statuses of the 370 Respondents. 125
4.3 The Histogram of the Data on the ages of the 370 Respondents. 125
4.4 The Pie Chart of the Data on the Highest Educational Qualifications of the 370 Respondents. 127
4.5 The Histogram of the Data on the Durations Worked by the
370 Respondents. 129
4.6 The Simple Bar Chart of the Data on the Statuses of the
370 Respondents. 130
ABSTRACT
This study is on Business Process Management in Nigerian Commercial Banks: Challenges and Prospects. Business Process Management (BPM) has continued to be relevant in the operations of the Commercial Banks in Nigeria from 1892 till date. It is a holistic management approach that promotes business effectiveness and efficiency while striving for innovation, flexibility and integration with technology to improve performance. The challenges bordered on the lack of impact of BPM on the performance of some Commercial Banks in Southern Nigeria, poor implementation of BPM in the Commercial Banks studied that hamper effective and efficient customer service delivery, poor implementation of BPM that will not offer the Commercial Banks studied the opportunity to outperform competitors, challenges posed by BPM that could lead to poor performance of Commercial Banks studied, bad prospects, if the challenges are not properly handled and inept handling of the components of the Business Process that could hamper the performance of the Commercial Banks studied. The objectives of the study were to: find out the impact of Business Process Management on the performance of some Commercial Banks in Southern Nigeria, discover if the implementation of Business Process Management in the commercial banks studied will improve effective and efficient customer service delivery, know whether the implementation of Business Process Management will offer the commercial banks studied the opportunity to outperform competitors, ascertain the challenges posed by Business Process Management that could lead to poor performance of the commercial banks studied, determine the prospects of the commercial banks studied in terms of growth, profitability and maximization of shareholder’s wealth. The banks selected were First Bank Nigeria Plc., Union Bank Nigeria Plc., Oceanic Bank Nigeria Plc., and Zenith Bank Nigeria Plc. The Research Design was a combination of survey, oral interview and model modification. Both primary and secondary data were used. A population size made up of all the senior and junior staff of the 4 selected (four) Commercial Banks totaling 6,000 was reduced using Taro Yamane’s formula to get a sample size of 375. The data presentation tools were tables, simple bar-charts, histograms and pie chart. The data analysis tools were theoretical , correlation and Z test. Six hypotheses were tested using Spearman’s Rank Correlation Coefficient, Z test and Chi-Squared Test. The test re-test reliability of the instrument measure was done and content validity was done. It was found among others that Business Process Management had a positive impact on the performance of the Commercial Banks studied. It was concluded that BPM had a positive impact on the performance of the Commercial Banks studied which implied that the act of aligning the Business Process with organizational goals meant that this concept was good, and useful in making the Commercial Banks studied to achieve their organizational aims in both the shorter and long terms. It was found from the System’s Cybernetic Model that it needed the inputs of man, materials, money, time, energy and knowledge to transform the BPM to the output of improvement in the performance of the commercial banks studied with feedback and control. It was recommended that the managers of the BPM should use it to improve performance in their organizations and this should be backed by policy.
CHAPTER ONE
INTRODUCTION
- BACKGROUND OF THE STUDY
Right from the early influences Business Process Management at the informal level has continued to exist even in the trade by barter era. There was a situation where goods were being exchanged without the use of money system, management was relevant because of group relationships that were aimed at making exchanges. The goods were the resources, the processes were not developed as it is today. There were instruments for counting but not the type of machine we have today;method has continued to exist (Anyanwu, 2000:58).
Maintenance was not well developed, the process consisted of machine, method, maintenance; there are always the way of doing things. Part of the early influences was the role of gold smiths; they were custodian of silver, gold coins, which were the inputs of the system then. Business Process Management continues to develop; the Total Quality Management was the fore runner of Business Process Management (O’brien,2000:40).
Quality is concerned with fitness for use and meeting the expectations of both internal and external customers so that they do not come back to complain. The internal customers are the workers in the different departments and their managers; the external customers are shareholders and others like stakeholders, capital providers, suppliers, the regulatory agent and the public at large (Bounds, 1994: 20).
The Japan Miracles have been attributed to use of quality circles. Business Process Management as a holistic concept has drawn from Total Quality Management.It involves the continual improvement in quality that is company wide involving every staff from the chairman of the Board of Directors to the least workers in the shop floor (Ross,1995:23).
Business Process Management (BPM) involves the alignment of organizational goals and objectives to ensure improvement in the performance of commercial Banks. Goals are long term aims at a point in the organization missions while objectives are short-term aim at a point in the organization missions (Smith and Fingar, 2007:73). There are two ways of looking at performance.Performance is the extent to which the organizational objectives are been achieved. Secondly, performance is the extent to which an organization is fulfilling the promises made to stakeholders (Yomere and Osaze, 2007:32).
BPM has continued to be relevant to the performance of the Commercial Banking in Nigeria. The ideas of Commercial Banking in Nigeria started in 1890 when the monetization of the Nigeria economy was growing side by side with barter trading. By then, the use of cash had grown sufficiently throughout WestAfrican(Aremu and Saka, 2006: 141).
The modern Banking in Nigeria dates back to 1892, with the establishment of the Africa Banking Corporation in Lagos. In 1893,a merchant named Sir Alfred a shipping magnate in Liverpool, England, took the initiative for the establishment of bank in the Lagos office of Elder Demester Company.In addition, with the support of the colonial government, the formation of the British Bank of West Africa (BBWA) was announced in May 1893 and started operation on March 31st 1894,which later metamorphosized toStandard Bank of Nigeria and presentlyFirst Bank of Nigeria Plc,while Barclays Bank Nigeria becamethe present Union Bank of Nigeria (Aderinto, 2007:11).
There were lots of attempts in the 1930s to established indigenous commercial Banks, unfortunatelymost of the banks failed because of inept management and lack of adequate capital.However three indigenous commercial banks survived namely: National Bank of Nigeria, Agbormagbe Bank and African Continental Bank of Nigeria (Nwankwo, 2008: 52).
In 1946 the first colonial Development planning was introduced by the British government.It was aimed at getting primarily raw material from colonybetween 1960-1985.There were four post-independent development plans of which non of them had the objective of developing commercial banks in Nigeria. Between 1958 and 1959, the Central Bank of Nigeria (CBN) was established to regulate Banking in Nigeria (Anyanwu, 2000:37).
There were indigenous Decrees in 1972 and 1977. In 1977 the Federal Government of Nigeria took 40% shares in some major commercial Banks.In 1988 the Nigeria Deposit Corporation was established to insure the deposit of some commercial banks in Nigeria. On 1st July 2004, CBN came up with a directive stipulating that the commercial banks in Nigeria should increasetheir capital base in terms of shareholder funds from less than N3billion to N25billion within one half year ending 31st December 2005. The method used for the recapitalization exercise included: margin, consolidation, acquisition, internal public offer, deposit, equity, use of internal and external investors; at the end of day the number of banks reduced from 89 to 25 banks. The IBTC/Stanbic merger reduced the number to 24, the re-insuring of the license of Savanah Bank Plc has also brought the number back to 25 banks (CBN, 2010:10).
From 2005, the commercial bankshave continued to face a lot of challenges such as downsize, salary cutting, insider abuse, the need for further re-capitalization of the banks increase in the regulations, by CBN, Nigeria Deposit Insurance Company (NDIC).There was the removal and trail in court of the Chief Executive Officers of some commercial banks in Nigeria by the Federal Government (CBN,2010:27).
Obamuji (2010:34) posits that the changing dynamics of commercial banking in Nigeria due to the challenges posed by deregulation of the financial sector, globalization operation, technological innovation and prudential requirements such as consolidation and re-capitalization exercise of 1st July 2004 in the banking sector force players at all levels to re-engineer their entire business organizations. The banking operations and functions which are intended to meet the emerging challenges call for innovative banking practices through BPM.This is to enable Nigerian commercial banks to incorporate strategic innovative customer schemes, in order to bridge the service gap inherent in Nigerianbanks since 1892 to improve performance and out perform competitors.
Leopold, Harris and Watson (2005:231) states that BPM is a field of Management focused on aligningorganization such as Commercial Banks with wants and needs of clients. It is a holistic Management approach that promote business effectiviness and efficiency while striving for innovation, flexibility and integration with technology to improve performance.
Zairi (1997:73) agree that BPM is abest practice management principle that will help banks seeking to improve operational efficiencies, meet customer demands more quickly and leverage existing technology investment.
Smith and Fingar (2003:126) agree and posit that BPM is a structured method of understanding, documenting, modeling, analysing, simulating, executing, and continuously changing end-to-end business processes and all relevant resources in relation to Bank’s ability to add value to the business.While McAdam (1996:98) posits that BPM covers the entire business process lifecycle and consolidates methodologies and techniques from a number of previous approaches including Business Process Re-engineering (BPR), Process Innovation , Kaizen, Lean Management, Total Quality Management and Constraint theory . BPM utilizes current technology to provide organizations like commercial banks with the ability to map and re-model their business process, deploy processes as applications that are integrated with existing systems and provide managers of the banks with the functionality to the monitor, analyze, control and improve the execution of those process in real time.
Nwankwo (2008:60) affirms that the challenges have brought BPM to the fore. The formal BPM was developed in the 2000s. It is now a very important business enabler of the bank that it has impacted positively on the performance of the banks, and have helped to out- perform the competitors and increase efficient service delivery among others.
1.2 STATEMENT OF THE PROBLEM
