The subject of discovering the best performance being achieved whether in an organization by a competitor or by an industry in the 21st century strategy needed to gain competitive edge in an increasingly globalised business environment. Sequel to fierce competitions that ensued in the banking industry before recapitalization and consolidation as well as banks distress and failure, it became the preoccupation of – Central Bank of Nigeria, to sanitize and control activities of banks in a survival strategy of merger and acquisition of banks. Banks after recapitalization and consolidation are constantly in search of ways and means to improve their operational performance and profitability. This is because operational performance has a high relevance for banks and leads to increase profitability.  However it is worthy of note that in banking, significant differences with regard to operational performance can be identified since operational performance is strongly linked to processes and the way they are designed and executed. (Akingbola, 2001). An attempt at correcting inefficiencies in banks (i.e. performance gap  in comparison to the best  practice) make  for  the adoption of  two distinct ways of  closing  performance  gap ;


Firstly, the process flow that can change and design related inefficiencies in resource commitment. This means that a process can be improved upon through changing its structure and design. Secondly, intrinsic inefficiencies that can be eliminated by improving the quality of manual and automatic processing activities that can be reduced by adjusting the execution quality to a best practice level, (Akingbola, 2001). Thus, the first noticeable trend in the sector is bank’s quest for administrative structures that encourage quality service delivery, expanded marketing to winning new customers and retaining the existing ones in a lower cost and effective synergies, hence the need of banks surviving policies through benchmarking.  At this, benchmarking serves as a management’s guide to creating a competitive advantage in a highly competitive industry and environment especially in satisfying customer’s expectations and market share.

Benchmarking is an improvement tool which an organization uses to measure its performance or process against other organizations’ best practices determines how those organizations achieved their performance levels and uses this information to improve its own performance.


In effect, benchmarking when considered as a competitive edge by an organization could assist her sustainable development and growth.According to Roger (1999:203) benchmarking is not all about performance but cooperation of studied partners as well as process and practices. To him, the three types of benchmarking are metric, diagnostic and process. The  metric benchmarking provides  indications of relative performance and perhaps identifies leading competitors, but it is  unlikely to yield any ideas  on how to change, diagnostic benchmarking helps firms to identify and transfer improvement  into their operations and strategies. While process benchmarking is the most involving form of benchmarking, it is where the most substantial benefits can be found. This includes operational, functional and generic benchmarking. One thing clear about benchmarking is that it encourages competition, which leads to varieties in goods and services as well as desired standards. Following differences in circumstances in other industries, benchmarking often results in creative imitation and the adoption of new practices that overcome previous industry barrier.


To Oakland (2003), benefits in benchmarking are specially those of targets, priorities and operations that will lead to competitive advantages in products and among organizations. The efforts usually are realized in a search for best practices, those that lead to superior performance, through measuring performance, continuously implementing change and emulating the best. Similarly, benchmarking is useful for; understanding competition, ideas from proven practices, many options, superior performance market reality, objective evaluation, credible proactive, solving real problems and understanding outputs based on industry best practices. In the banking industry, benchmarking to Nwadibia (2001: ) has improved service delivery through banks.  In other words, benchmarking in banks as a process of wanting to retain confidence of customers on their deposits has been beneficial as tools to banks in improving on their benefits. Aside from this, banks are expected to regularly provide quality services using the continuous improvement cycle in the entire operating department where no body should be exempted. This study therefore accepts that benchmarking when appropriately administered promotes a climate for change by allowing employees to gain an understanding of their performance what they are achieving now and how they compare to others in order that they become aware of what they could achieve.



Development and improvement in the banking industry has been a lot of concern to the stakeholders globally. Every day, each bank try to device a better way of offering services to the public that is very unique. At the same time the competitors in the industry try to do exactly the same but in a different and betterway, this is to ensure customer retention and new customer’s attraction for the profitability and continuity of the business. This brought the issue of benchmarking. In Nigeria as it is been practiced, benchmarking had been faced with a lot of challenges that most banks and some other organization find it seriously difficult and sees it herculean task some of the challenges are as follows: