The effect of branch network expansion on market share in banking: a case study of Co-operative Bank of Nigeria
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Background of the Study
Branch network expansion plays a critical role in increasing a bank’s market share by providing widespread physical access to banking services. Co-operative Bank of Nigeria has strategically expanded its branch network over recent years to tap into untapped markets, particularly in rural and semi-urban areas where financial inclusion has historically been low (Ibrahim, 2023). This expansion is aimed at increasing customer convenience, driving deposit growth, and enhancing overall competitive positioning in a fragmented market. A broader branch network not only improves service accessibility but also serves as a tangible representation of the bank’s commitment to community development. In addition, enhanced branch presence supports the bank’s multi-channel approach, where physical outlets complement digital platforms to provide a holistic customer experience (Adebola, 2024). The bank’s initiatives include the opening of new branches in strategic locations, the renovation of existing facilities, and the integration of advanced technologies in branch operations. These measures are expected to drive customer acquisition, improve brand recognition, and ultimately lead to a greater market share. Recent studies have shown that banks with an extensive branch network tend to enjoy higher customer trust and loyalty, which are key factors in sustaining market competitiveness (Chinwe, 2023). However, branch expansion also requires substantial capital investment and operational restructuring. The effectiveness of such expansion in translating into increased market share depends on several factors including local infrastructure, regulatory support, and the bank’s ability to maintain consistent service quality across all locations (Olawale, 2024). This study will evaluate the impact of branch network expansion on the market share of Co-operative Bank of Nigeria by analyzing customer growth trends, regional performance metrics, and competitive benchmarks. The insights gained will help determine whether expansion strategies are effectively aligned with the bank’s long-term growth objectives.
Statement of the Problem
Despite significant investments in branch network expansion, Co-operative Bank of Nigeria has not consistently achieved the anticipated increase in market share. Variability in regional economic conditions, differences in local infrastructure, and inconsistent service quality across newly established branches have all contributed to this challenge (Ibrahim, 2023). Moreover, the integration between the expanded branch network and digital banking channels is still evolving, which may limit the expected synergistic benefits. Customer feedback has indicated that while branch accessibility has improved, there remain gaps in service delivery that hinder customer satisfaction and loyalty (Adebola, 2024). Additionally, competitive pressures from both traditional banks and fintech firms have further complicated the landscape, making it difficult for Co-operative Bank to translate physical expansion into a significant competitive advantage (Chinwe, 2023). The absence of a standardized performance evaluation framework for branch expansion initiatives further exacerbates the challenge, as management struggles to quantify the direct impact on market share. This study, therefore, seeks to identify the factors that impede the full realization of market share growth through branch expansion, and to propose strategies that can help harmonize physical and digital channels for a more unified service delivery.
Objectives of the Study:
1. To assess the impact of branch network expansion on market share at Co-operative Bank of Nigeria.
2. To identify regional and operational factors that affect expansion outcomes.
3. To recommend strategies for optimizing branch expansion for increased market share.
Research Questions:
1. How does branch network expansion influence market share growth?
2. What operational and regional factors limit the effectiveness of branch expansion?
3. What measures can improve the integration of physical and digital channels?
Research Hypotheses:
1. Branch network expansion is positively correlated with market share growth.
2. Inconsistent service quality across branches negatively affects market share.
3. Integrated digital and physical channel strategies enhance market penetration.
Scope and Limitations of the Study:
The study focuses on Co-operative Bank of Nigeria’s branch expansion initiatives, using regional performance data and customer surveys. Limitations include regional infrastructural differences and external economic fluctuations.
Definitions of Terms:
• Branch Network Expansion: The process of opening new branches and enhancing existing ones.
• Market Share: The proportion of total customers or deposits held by the bank in the market.
• Service Integration: The coordination between physical branches and digital platforms.
• Financial Inclusion: Access to financial services by underserved populations.
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