THE IMPACT OF AUTOMATED TELLER MACHINE (ATM) ON CUSTOMER SATISFACTION IN BANKS 

CHAPTER ONE

INTRODUCTION

1.1    Background of the Study

Automated Teller Machines (ATM) are devices used by bank customers to process account transactions. Typically, a user inserts into the ATM a special plastic card that is encoded with information on a magnetic strip. The strip contains an identification code that is transmitted to the bank’s central computer by modem. To prevent unauthorized transactions, a personal identification number (PIN) must also be used by the user using a keypad. The computer then permits the ATM to complete the transaction; most machines can dispense cash, accept deposits, transfer funds, and provide information on account balances. Banks have formed cooperative, nationwide networks so that a customer of one bank can use an ATM of another for cash access, by extension all commercial bank’s ATM in Nigeria are inter-connected (Okoh, 2010).

Globally, Automated Teller Machines (ATMs) have been adopted and are still being adopted by banks. They offer considerable benefits to both banks and their depositors. The machines can enable depositors to withdraw cash at more convenient times and places than during banking hours at branches. In addition, by automating services that were previously completed manually, ATMs reduce the costs of servicing some depositors of demand. These potential benefits are multiplied when banks share their ATMs, allowing depositor of other banks access their account through a bank’s ATM (Andrews, 2003).

Banks have become the principal deployers of ATMs. Two reason for this are that they want to increase their market share, although due to the prevalence of ATMs, it is not likely to be the primary means by which ATMs increase profitability for most banks, or/and above a certain level of operations, the cost of a single transaction performed at an ATM is potentially less than the cost of a transaction conducted from a teller, as ATMs are capable of handling more transactions per unit of time than are tellers (Laderman, 1990).

In Nigeria the deployment of ATM by banks and its use by bank customers is just gaining ground and has burgeoned in recent times. This has happened especially after the recent consolidation of banks, which has in all probability, made it possible for more banks to afford to deploy ATMS or at least become part of shared networks (Fasan, 2007).

The increased deployment of ATMs in the banking sector has made the issue of technology relevance important.  ATM services have a history that is less than ten years in Nigeria. At first, they were operated as elitist services designed for those desirous of exclusive services. Cards were rare and the process for obtaining them tortuous.

Presently, the use of ATM cards has been widely promoted. Banks no longer appear to want personal contact with their customers. Some banks have resorted to penalizing the customer as it were, for not possessing an ATM card, by debiting the account of such a customer for withdrawing below a certain amount across the counters. Agboola (2006) reported that although only a bank had an ATM in 1998, by 2004, fourteen of them had acquired the technology.

Agboola (2006) discovered that the adoption of ICT in banks has produced largely positive outcomes such as improved customer services, more accurate records, ensuring convenience in business time, prompt and fair attention, and faster services etc. Also, the banks’ image is improved creating a more competent market. Work has also been made easier, and more interesting, the competitive edge of banks, relationship with customers, and the solution of basic operational and planning problem has been improved. Fananopo (2006) stated that Nigeria’s debit card transaction rose by 93 percent over previous years owing to aggressive roll out initiatives by Nigerian banks, powered by interswitch network the number of ATM transactions through interswitch network had increased from, 1,065,972 in 2004, to 21,448,615 between January 2005 to March 2012.

This is a rise of 92.6 percent with respect to the previous years. More than 1700 ATMs have been deployed on the network, while about 12 million cards have been issued by 18 banks as at March 2012.

A recent survey conducted by Intermarc Consulting Limited revealed that ATM services provided by Nigeria by banks and non-financial institutions stood as the most popular e-business platforms in Nigeria (Intermarc Consulting Limited, 2007). The report showed that awareness for various banking services rendered by Nigerian banks is mostly limited to the traditional banking services. The findings shows that 99% of the respondents were aware of savings account, while 92 were aware of current accounts and 72 percent are aware of local money transfer services. However, among the more modern banking services such as electronic banking, internet banking, point of sales (POS) transactions, money transfer, ATMS emerged as the most popular with 96 percent awareness level ATM awareness also ranked higher than awareness level about current accounts and slightly below savings account (Omankhanlen, 2007).

Hence, there is clearly a need to study the impact of automated teller machine (ATM) on bank customer satisfaction. It is against this background that the research sees the subject-matter worthy of investigation.

1.2    Statement of Problem

The impact of Automated Teller Machine cannot be ignored if meaningful goals and objectives are expected to be achieved.

Automated teller machine is introduced into the banking system to enhance good services delivery and efficient customer satisfaction. Presently Nigeria problem in automated teller machine is the use of outdated or inappropriate technology and lack of adequate knowledge all experience about the machine being use in another problem facing automated teller machine.

The success of our present day organization on how to satisfy customer or consumer by providing a good service of economic growth this end this research preoccupied with the impact of automated teller machine on customer satisfaction in Access Bank (Nigeria) Kaduna.

1.3    Objective of the Study

The main objective of the study is to examine the impact of Automated Teller Machine on bank customer’s satisfaction. Other specific objectives are:

1.           Investigate how Automated Teller Machine enhances customer’s satisfaction in Access Bank.

2.           Examine the benefits a customer derives from using Automated Teller Machine (ATM) in Access bank.

3.           Identify the challenges militating against ATM operation in Access Bank.

4.           To highlight the advantage of automated teller machine over manual system of queue in line.

5.           To determine the level of usage of automated teller machine by the Nigeria populace and the problem they encounter.

1.4    Research Questions

In the study, the research questions below are proffered with answer:

1.      How does ATM enhance customer’s satisfaction in Access Bank?

2.      What benefits do customers derive from using Automated Teller Machine (ATM) in Access Bank?

3.      What are the challenges militating against ATM operation in Access Bank?

4.      What are the advantages of automated teller machines over manual system of queuing in line?

5.      What level of usage and problem encounter Nigeria populace on use of automated teller machines?

6.      How can the automated teller machine enhance customer satisfaction?

1.5    Significance of the Study

The study would enable banks executives and indeed the policy makers of the banks and financial institutions to be aware of Automated teller Machine as a major product of electronic commerce in Nigeria with a view to making strategic decisions. The research is equally significant because it would provide answers to factors militating against the operation of Automated Teller Machine (ATM) in Access Bank this work would also be useful to student, scholars and researchers who may wish to undertake a similar study as they will use it as springboard to their own work.

1.6    Scope of the Study

In pursuance of the objective of the study, attention shall be focused on Automated Teller Machine (ATM) among other electronic banking implementation. In order to conduct an empirical investigation into the impact of Automated Teller Machine (ATM), the researcher intend to restrict the study of the impact of Automated Teller Machine in Access Bank (Nigeria) Kaduna.