The Impact of Organizational Structure of Commercial Banks on Efficient Customer Service in Nigeria

The Impact of Organizational Structure of Commercial Banks on Efficient Customer Service in Nigeria

In doing a study of this nature, it is necessary that some critical examination has been made already of existing literature, so as to establish the necessary acquaintance  with prevailing views and ideas in the area of study. In the process of this review, it was observed that only a handful of research work has been done on this topic.

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Commercial banks, as was defined previously is the fuel tank which supplies oil that lubricates trade and industry  in order to get the wheels of economic activities in motion.

Coming to the importance of commercial banks this literature review will focus on the views of various writer on organizational structures of companies banks inclusive.

It must have to be stated here that there is no specific organizational chart that is peculiar or applicable to all banks, rather each bank or company designs its organizational chart in such a way that it will assist it in achieving its corporate goals.

On other words, there is no typical organizations and that a pattern of organization needs to be “tailor made for every bank or company. any research for a typical organizational structure for all banks or companies is in vain, each company or bank are first of all identifies its corporate goals and designs a structure or chart which will go along way in enabling it to accomplish this corporate objective.



Major commercial banks such as first bank plc, Union Bank Plc, United Bank for African Plc, African continental Bank Plc and so on have their head office located in Lagos.

While discussing the organizational structure of a typical Nigeria commercial bank Adekanye  (1986) postulated that one common feature in the organizational structure of all major banks in Nigeria, is that their head office are located in Abuja and Lagos or in state capital with area regional offices in major cities up country.

The area office have a number of brand under their control.

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As in other country, the shareholders are the owner, of the bank, the chairman and the other directors of banks are appointed by the federal and state governments which own majority of the shareholdings in nearly all the directors usually meet periodically to formulate the policies of the bank.

The managing director and the executive director are usually the top management of the bank.

There is normally are managing director assisted by 2 to 4 executive directors depending on the size of the bank. They are appointed by the federal or state government, the appointments are made by the federal ministry  of finance.

Next in command are the heads of departments who report to the appropriate executive director. (head of department are called assistant or deputy general managers in some banks) examples include the financial controller the chief inspector and so on.

Closely following the head of departments head of some specialist services units like foreign corporate finance, legal and so on, some of them report to heads of departments, while some have dual reporting relationship with the executive director. Next is the area manager under who is the branch manager. Adekanye (1986)

According to breach et al (1968). Organizational is defined as the frame work of management. It is an aspect of planning or organizing in order to attain certain objective and policy.

The substance of an organizational structure is descriptive definition of the responsibilities that are to be usful at this point to enter a warning against any search for a “typical organizational structure.

Breach et al (1968), says that there is admittedly a broad common pattern of organization to be found in companies.

A board of directors represents the owners (shareholders) and carries, a corporate responsibility for the objectives, the policy and the overall progress of the enterprise. Responsibly to the board is a chief executive (the managing Director or the general manager) called to translate policy into instructions for executive actions imitate the whole process of management and to ensure to the board for its affective operation throughout the enterprise.

This responsibility is discharged by the process of delegation and is reported back to the board through the medium of accounts reports and statistics.

Below the managing director comes the hierarchy of senior intermediate and junior managers, smaller or greater number according to the size of the enterprise and appropriately divided along varying lines according to the task to be undertaken. The reviling needs and other factors breach et al (1968) to enable these executive or managers to carry out their responsibilities effectively. They are assisted as the working level by “supervision” whose responsibilities are less, if at all concerned with planning but mainly centre to  on the over sight of operations to ensure that plan promptly reported to the responsible executives.


First Bank Nig plc operate in a dispread area and consequently adopts a geographical organization design its organizational structure embraces  many elective directors, deputy general managers and so on.

As a result of this, numerous directors are given by these executive.

Owing to this factor, branch management normally gets confused.

The consequence of this abnormally is in efficiency which comes in the form of delays, that is long waiting time being experienced by the customers of the bank.

In Nigeria commercial banks usually have their head offices located in Lagos and Abuja first bank is no exception.

Also these major commercial  banks create different parts of the country. One regional office for instance, controls a number of branch offices.

Thus, Adekanye, (1986). Writes that one common feature in the organizational structure of all major banks in Nigeria is the fact that their head offices have located in Lagos or Abuja that is state capital with area or regional offices in major cities up country.

These area offices have a number of branches under their control.

Hicks et al, (1981) while expressing their views on organizational structure, postulate that if an organization operates in a wider read area, it might decide to adopt a geographical departmentalization would be the diving of all company activities into territories with a manager designated to supervise them.

Typically, a home office group of executive co-ordinates the activities of these geographical units.



The shareholders of first bank Nig plc are its owners.

At the apex of the chart are members of the board of directors to whom the committee of the board is accountable.

This directors use to meet at specific periods to formulate the policy of the bank. They are the sole policy makes of the bank.

They discuses management reports approve changes in top management personnel, approval of budgets including large loans and finally, they discuss other problems and policies with the management of the bank.

The managing director, who is also a to whom all the executive directors in turn accountable to the committee of the board.

The managing directors and executives director are usually the top management of the bank. They are all-time day affairs of the bank. There is one managing director assisted by five executive.

Next are heads of department, that is deputy general mangers, (1) GM) who are accountable to the appropriate executive director some heads of departments like the chief inspector, deputy general manager (controls) and the company secretary/ deputy general (legal) are directly accountable to executive director (states banking operation).

Coming next is the branch management which comprise the branch manager, the account out supervisors and other staff.





It is the responsibility of this department to prepare monthly profit and loss account and the balance sheet for the bank, quarterly half yearly and annual report accounts are also prepared.

The external auditor comes in once or twice in a year to audit the books of the bank and the draft accounts prepared by the department.

In most banks, the department is responsible for asset and liability managements, financial analysis, banqueting and planning.

In most banks, the head of this department is designed “Deputy” or Assistant General Manager finance).



This department is meat to as certain the authenticity of requests  made by the various department in first bank, regarding the use say, furniture and fitting etc every request made by each department should be investigated by this department before it is granted and issue made.


This department is concerned with the recruitment, training and development of staff.


This department inspects branches periodically to ensure that they company with the instructions laid down by the head office.

This is in a bid to safeguard the banks assets.


All advances exceeding the delegated authority of a branch manager and area manager are sent to the credit Administrator manager (Advance or Assistant general manager (Advances) for approval or for concurrence and subsequent approval by higher authority.





This department came into being following the introduction of electronic date processing system into the banks operations in order to enhance efficiency.

Head of operations Administration. Department.

This department includes branches administration  operations and control, branch expansion, stationery supplies, and purchasing, maintenance and security, the operation department ensures that branches operation  practices, principles and the Nigeria law.



The service offered by all commercial banks are almost the same. There include. Various

A       Deposit Accounts kept, ranging from

  1. Savings deposit account
  2. Current Account

iii.      Fixed and short deposit Account

  1. Foreign current Domiciliary account
  2. Security account
  3. Minor account.

SAVING ACCOUNT: This type of account which earns interest and repayable on demand, is subjected to a maximum withdrawal of three times per month.

Previously it was N 1,000, but from 14 February 2000, it became N 3000

CURRENT ACCOUNT: Withdrawal on current accounts is usually by cheques and no interest is usually paid on this account.

Currently, it is N 10000 but a balance of N 1000 must always be left on withdraw to keep the account operative


Currently, in the year 2000 it is N50,000


The minimum deposit demented in dollar is $ 2000 while the minimum deposit demanded in pound striving is £ 2000.




The nature of the facility given to the customer determines the minimum deposit.

MINOR ACCOUNT: This type of account is being operate by the parent or guardian until the minor come at age which is 18 years.

Two passport photographs of the minor, and two passport photographs of the parent or guardian and the completion of the banks specimen signature card by the authorized signatory.

Since 1990 to data (2001) the various savings and current accounts are being opened as follows specimen.


  1. Telegraphic Or Telex Transfer: In this case, a customer is able to transfer funds to another party resident in another country through his bank.
  2. Standing Orders: Here, customers who make regular transfer of money to any establishment or individuals may give banks standing instruction to effect such payment as and when due.

Iii      Bank Draft: This is a cheque drawn by a branch of a bank on another branch of the same bank.    


  1. These Includes: Status Enquire: In this case, the customers bank gives detailed information to a supplier about the financial standing of customers.
  2. Business Advisory Services: The aim is to assist small business, customers to develop their business so that they can attract bank finance.

iii.      Commercial banks buy and sell securities for their customers(engaging in brokerage services)

D       Foreign Service: These Are Itemized (1) Below: foreign currency: foreign currency notes, especially the pound sterling and us Dollars are available.

Limited quantities from all banks in Nigeria.

Ii.      Bills For Negotiation: there, a customer (that is an exporter) who is in direct need of the proceeds of a business deal, requests his banker to pay the bank, the bank will claim from the customer.

iii.      Document Or Credits: This is a means whereby the importer instructs his bankers to open a letter of credit in favour of the exporter.

E       Credit facilities: this include loan which is a facility granted to a customer which is repayable at fixed installment plus interest usually within a year.

An overdraft:  This is generally granted to business customer.


The impacts of organizational structure of commercial banks  on banks services could be viewed from two angles.

Positive and negative.

The positive impacts of organizational structure are thus:

  1. It ensure uniformity of services
  2. It makes control easier
  3. It helps to reduce mistakes and fraud.
  4. it leads to effective and efficient services.

The negative effects/impacts are

  1. It leads to administrative bottleneck.
  2. Time consuming
  3. It nag rates personnel ignition and implementation of idea.

Uniformity of services

The organizational structure of first bank makes it compulsory that any guidelines that will effect the operations of the bank will come from the head office.


  1. Commercial banks accept and keep deposits on behalf of their customers.

This function dates bank to the 18th century when in England people needed to keep their cash in safe places. In return for the safe-keep in of their cash, the goldsmiths received some commission.

With the gradual development of a modern economy and that of “paper money” people felt the need to keep unused cash somewhere. The goldsmiths soon turned them self into limited liability companies in form of commercial banks to accept deposits for safe keeping.

Today’s of deposit. These are:

  1. Savings deposit.
    1. Current or demand deposit.
    2. Time deposit.

SAVINGS DEPOSIT: are deposits of individuals who wants to save small amounts on regular basis. The savings deposit account is operated with the use of passbooks.

Commercial banks usually set a limit to the number of times withdrawal can be made from the savings deposit account.

Savings deposits attract interest but interest is usually paid on the fluctuating balance in the passbook.

CURRENT DEPOSITS:  are deposits that are operated with the use of cheques. The deposits payable on demand so that customers don’t have to give notice of withdrawal. The deposit do not earn interest instead owners of such account are charged some commission by the bank to enable it cover the expenses of operating the account.

TIME DEPOSIT: Are deposits made for specific period of time usually they are large deposits and are owned by firm, governments and initiations.

Time deposits earn a rate of interest

  1. Commercial banks also make credit available to their customers. This function again can be traced to the 18th century. The goldsmith started accepting deposits than they realized that not all the deposits were withdrawn at the same time. They relished that they could lend out that part of the deposits not withdrawn and thereby make profit.

Commercial banks know that not all deposits are withdrawn at the same time and that  some people need money for investment etc. they then position themselves between lenders and borrowers.

They make profit from the difference between the interest changed the borrowers. And the interest paid to depositors.

  1. Another important functions of commercial banks is the provision of facilities both within the country and internationally. within the country, an individual can transfer money through his bank by issuing cheques drawn on their banks, by giving a standing order to his bank to make regular payments on his behalf, and by giving direct deposit to anybody whom hw wants paid regularly the person who receive the mandate sends it to bank for payment.

Commercial banks can also assist in transferring money outside the country by selling, on behalf of the central banks travelers cheques to their customers.

This way the customers can meet foreign obligations to make payment either for travel or business.

  1. Bank also provide facilities for the safe keeping of valuables like Jewelry, documents etc
  1. Finally, commercial banks give financial advice to their customers.

They give advice on the use and management of fund and on how to manage their business.


To safe guard the deposits of customers and to prevent bank failures commercial banks are required by law to keep a certain percentage of their deposit with them.

The current deposits which they hold is the base on which the evict their ability to create money.     

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