The Impact of Bank Service Innovation on Customer Satisfaction: A Study of First Bank, Abuja
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Background of the Study
Service innovation is a key determinant of competitive advantage in retail banking, influencing customer satisfaction and loyalty. First Bank in Abuja has embraced technological and process innovations to enhance its service delivery, streamline operations, and improve the overall customer experience. Innovations such as mobile banking applications, automated teller machines (ATMs) with advanced functionalities, and integrated digital platforms have redefined customer interactions with the bank. These advancements have reduced transaction times, increased transparency, and provided customers with personalized services that cater to their financial needs (Okoro, 2023).
The bank’s focus on service innovation reflects the broader industry trend towards digitization, where continuous improvement in service delivery is essential for retaining customer loyalty in an increasingly competitive market. First Bank’s initiatives also include customer feedback mechanisms and real-time data analytics, which enable the bank to promptly address issues and refine its service offerings. However, while innovation generally leads to improved satisfaction, challenges such as system downtimes, security concerns, and the digital divide among customers can offset these gains. This study explores how service innovations at First Bank impact customer satisfaction, identifying the strengths and weaknesses of the current approach and providing insights into how innovative practices can be optimized to enhance the overall customer experience (Chinwe, 2024; Akinola, 2025).
Statement of the Problem
Despite substantial investments in service innovation, First Bank encounters difficulties in consistently achieving high levels of customer satisfaction. Customers have reported experiencing occasional technical glitches, prolonged downtime during system upgrades, and concerns over data security in digital platforms. These issues undermine the benefits of service innovations and may lead to customer frustration and attrition. Moreover, while some innovative solutions have been well received, others have not adequately addressed the specific needs of diverse customer segments, particularly those with lower digital literacy. This misalignment between innovative offerings and customer expectations creates a gap that negatively impacts overall satisfaction. Furthermore, the rapid pace of technological change necessitates constant adaptation, and the bank’s current systems may not always keep pace with evolving customer demands. As a result, despite a strong focus on innovation, customer satisfaction levels remain inconsistent. This study seeks to investigate the challenges associated with implementing service innovations at First Bank and to assess their overall impact on customer satisfaction, with the aim of identifying areas for improvement and recommending strategies to bridge the service gap.
Objectives of the Study
- To evaluate the impact of service innovation on customer satisfaction at First Bank.
- To identify challenges and gaps in the current innovative service delivery.
- To propose strategies for enhancing service innovation to improve customer satisfaction.
Research Questions
- How do service innovations affect customer satisfaction at First Bank?
- What challenges hinder the effectiveness of these innovations?
- What strategies can be employed to better align innovations with customer expectations?
Research Hypotheses
- H₁: Effective service innovations significantly enhance customer satisfaction.
- H₂: Technical issues and security concerns negatively impact satisfaction levels.
- H₃: Continuous customer feedback integration improves service innovation outcomes.
Scope and Limitations of the Study
This study focuses on First Bank’s innovative service initiatives in Abuja. Limitations include rapid technological evolution, varying customer digital literacy, and potential biases in self-reported satisfaction data.
Definitions of Terms
- Service Innovation: The development and implementation of new methods to improve banking services.
- Customer Satisfaction: The degree to which customer expectations are met or exceeded by banking services.
- Digital Divide: The gap between those who have ready access to digital technologies and those who do not.
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