An Investigation of the Effects of Poor Customer Service on Bank Profitability: A Case Study of Keystone Bank, Ondo State
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Background of the Study
Customer service is integral to the operational success of retail banks, influencing both customer satisfaction and overall profitability. At Keystone Bank in Ondo State, poor customer service has been identified as a significant factor that can adversely affect profitability. Inefficiencies such as long waiting times, unresponsive staff, and unresolved complaints contribute to a negative customer experience, which often leads to customer attrition and reduced revenue streams. In a competitive market, dissatisfaction with service quality can trigger a loss of market share and damage the bank’s reputation. Recent advancements in digital banking have elevated customer expectations, making efficient service delivery more critical than ever (Okoro, 2023). Moreover, poor service not only affects direct revenue from banking operations but also indirectly impacts cross-selling opportunities and customer referrals. Keystone Bank has initiated several measures to address these issues, yet persistent service failures continue to hinder its profitability. This study investigates the extent to which poor customer service affects the financial performance of Keystone Bank, examining the relationship between service deficiencies and profitability indicators, and exploring potential strategies for improving service quality to enhance overall bank performance (Chinwe, 2024; Akinola, 2025).
Statement of the Problem
Keystone Bank faces significant profitability challenges as a result of poor customer service. Inconsistent service delivery, long waiting times, and unresolved customer complaints have contributed to decreased customer loyalty and increased attrition rates. These service issues not only result in immediate revenue losses but also reduce the bank’s ability to attract new customers through positive word-of-mouth. The financial impact is compounded by the costs associated with handling complaints and compensating dissatisfied customers. Moreover, the lack of effective feedback mechanisms means that systemic issues remain unaddressed, perpetuating a cycle of poor service. The challenge lies in quantifying the direct impact of customer service failures on profitability and identifying the underlying operational deficiencies that lead to these issues. Addressing these challenges is essential for improving the bank’s overall financial health and competitive position. This study aims to analyze the correlation between customer service quality and bank profitability, identify the key service failures, and propose actionable solutions that can reduce operational inefficiencies and enhance customer satisfaction, ultimately contributing to improved financial performance.
Objectives of the Study
• To assess the impact of poor customer service on Keystone Bank’s profitability.
• To identify the primary service deficiencies that lead to customer attrition.
• To recommend strategies for improving customer service and financial performance.
Research Questions
• How does poor customer service affect profitability at Keystone Bank?
• What are the major service deficiencies contributing to customer attrition?
• What improvements can be made to enhance customer service and boost profitability?
Research Hypotheses
• H₁: Poor customer service is negatively correlated with bank profitability.
• H₂: Higher customer attrition rates due to service failures reduce overall revenue.
• H₃: Implementing effective service improvement strategies increases customer satisfaction and profitability.
Scope and Limitations of the Study
This study focuses on Keystone Bank’s retail operations in Ondo State. Limitations include potential data collection biases, regional economic factors, and difficulty isolating the impact of service issues from other profitability determinants.
Definitions of Terms
• Customer Service: The quality and efficiency of service provided by a bank to its customers.
• Bank Profitability: The financial gains achieved by a bank, measured by revenue and net income.
• Customer Attrition: The loss of customers over a period of time.
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