Impact Of Automated Teller Machine On Customer Satisfaction In Banks

Project and Seminar Topics with material for Banking and Finance

Impact Of Automated Teller Machine On Customer Satisfaction In Banks

Chapter One


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 United Bank of Africa.
  2. Examine the benefits a customer derives from using Automated Teller Machine (ATM) in United Bank for Africa.
  3. Identify the challenges militating against ATM operation in United Bank for Africa.

1.4 Research Questions

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

  1. How does ATM enhance customer’s satisfaction in United Bank of Africa?
  2. What benefits do customers derive from using Automated Teller Machine (ATM) in United Bank of Africa?
  3. What are the challenges militating against ATM operation in United Bank for Africa?

1.5 Statement of Hypothesis

The stated hypotheses tested in this study;

  • Ho1: Automated teller machine does not enhance bank customer satisfaction.
  • HA1: Automated teller machine enhances bank customer satisfaction.

1.6 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.

1.7 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) on Bank customer satisfaction in United Bank of Africa and will also examine the nature of Automated Teller Machine operation in United Bank for Africa from 2007 to 2011.

1.8 Definition of Terms

The Key terms below are used in this study

ATM Card:

Debit card use by banks customer in making transactions via ATM. The card is a complex circuit that process microprocessors with single chips that contain the complex Arithmetic and logic unit of computers. It provides access to customers to perform balance inquiry, mini statement and cash withdrawal as well as transfers through the use of Automated teller Machines. This Debit card can also be used for internet online and POS transactions.

Chip card:

This is a card containing one or more computer chips or integrated circuits for identification, data storage or special purpose processing used to validate personal identification numbers, authorize purchases, verify account balances and store personal records.

Electronic Data Interchange (EDI):

The transfer of information between organization machines readable form.
Electronic money:- Monetary value measured in currency units stored in electronic form on electronic device in the consumer’s possession. This electronic value can be purchase and held on the device until reduced through purchase or transfer.

Mobile Banking:

This is a product that enables the bank to offer customers to access services anywhere. Customer can make their transactions anywhere such as account balance, transaction enquires, stop checks, and other customers services instructions balance inquiry, account verification, bill payment, electronic fund transfer, account balances, updates and history, customer service via mobile, transfer between account etc.


The business receiving money from outside as deposit for safe keeping and making payment accrued which the money is due for payment and also advancing loans to those who keeps money for safe keeping as well as the public at large.


Is a period during which transactions takes at the end and in which settlement must be made


These refers to group of persons who receive money from individuals for safe keeping in the agreement that he will refund the said amount collected either on demand or at some certain date agreed upon.


It is an order written by the owner to the banker to pay on demand to the bearer of the cheque.

Dishonored Cheque:

A cheque, which the bank refused to attend to for one reason or the other e.g irregular signature, post dated cheque etc.


The amount of money that is lend out and that must be repaid within an agreed rate of interest usually for specific period of time.

Pass Book:

It supplied to the customer by the bank in which all entries are made of all deposits and withdrawals that are made.

Unpresented Cheque:

These are cheque drawn by the drawer but not yet presented for payment by the bearer.


Is usually created on a current account unlike a loan account where only periodical payments are made. An overdraw account is a running account where drawing and deposits are made. An overdraft account is a running account where drawing and deposits are made. In an overdraft account as frequently as may be needed or received in connection with the business to meet the account related.

Payment System:

A financial system that establishes that means for transferring money between suppliers and of fund, usually by exchanging debits or Credits between financial institutions.

Point Of Sale (POS) Machine:

A Point-of-Sale machine is the payment device that allows credit/debit cardholders make payments at sales/purchase outlets. It allowed customers to perform the following services Retail Payments, Cashless Payments, Cash Back Balance Inquiry, Airtime Vending, Loyalty Redemption, Printing mini statement etc.

Smart Card:

A Card with a computer chip embedded, on which financial health, educational, and security information can be stored and processed.

Transaction Alert:

Our customers carry out debit/credit transactions on their accounts and the need to keep track of these transactions prompted the creation of the alert system by the Bank to notify customers of those transactions. The alert system also serves as notification system to reach out to customers when necessary information need to be communicated.

Western Union Money Transfer (WUMT):

Western union Money transfer is a product that allowed people with relatives in Diaspora who may be remitting money home for family up-keep, Project financing, School fees etc. Nigerian Communities known for having their siblings gainfully employed in other parts of the world are idle markets


Acronym for Information and communication technology.


Acronym for Automated Teller Machine


Acronym for management information system


Electronic banking through internet and computer network

Chapter Five

Summary, Conclusion and Recommendation

5.1 Summary

The study examines the impact of automated teller Machine on bank customer satisfaction. To this end the following research questions guided the study: What is the effect of Automated Teller Machine on bank customer satisfaction? What benefit does customer derives from using Automated Teller Machine? What are the challenges militating against Automated Teller Machine?

The survey study design was utilize and the questionnaire constitute the instrument of data collection. The data obtained from the field were analyzed with the statistical mean scores and presented in a five likert table. The finding of the research indicates that Automated Teller Machine enhances customer satisfaction by giving customers the opportunity to make withdrawals after banking hours and any other time. ATM also reduces queue in banking Hall, facilitates quick money transfer and online payment. As such ATM saves customers time and troubles of joining endless queues before withdrawal or deposit of funds, ATM also saves bank customers from carrying large sums of money when traveling, thereby reducing the danger of losing money to rubbers on the high way.

The challenges militating against Automated Teller Machine operations in banks ranges from the problems of activities of fraudsters who defraud bank customers of large sums to the challenges of running Automated Teller Machine on generator due to constant power outage which increases operational cost and the inability of some bank customer to use Automated Teller Machine due to their inability use Automated Teller Machine or fear of being defrauded by fraudsters. Other problems include operational errors due to lack of proper maintenance.

5.2 Conclusion

Based on the research finding it clear that in spite of some constraint militating against the use and operation of Automated Teller Machine, it enhances customer satisfaction in no small way.

1.7 Limitations of the Study

In view of the technicalities involved, it would be unrealistic to assume that all necessary facts have been gathered in the process of the study. Information gathered is limited to those accesses and made available by the respondents and also those gathered from end users. However, the impact of this limitation will be reduced to the barest minimum.

5.3 Recommendations

The following recommendations are made base on the research findings so as to facilitate the possibility of improving the operation and the use of Automated Teller Machine in order increase customer satisfaction and consequently retention:

  1. In order to check the activities of Automated Teller Machine fraudsters whose activities are discouraging the use of Automated Teller Machine in no small measure. Automated Teller Machine should be covered by mechanical shutters to prevent tampering with mechanism when they are not in use. Alarm sensors should be placed insider the Automated Teller Machine and in Automated Teller Machine servicing area to alert their operators when doors have been opened by unauthorized personnel who often take advantage of their position to defraud customers through manipulations of Automated Teller Machine.
  2. Cameras and security guide should be positioned in every Automated Teller Machine to help in detecting fraudsters.
  3. Bank customers should avoid using Automated Teller Machine that are not within banking premises. This is in order to avoid bugs used by Automated Teller Machine fraudster to record personal Automated Teller Machine code of people who uses such bugged Automated Teller Machine. This is often done outside bank premises where there is no security guide.
  4. Bank customers should also endeavour to check money withdrawn through Automated Teller Machine. This is because improper money checking can cause the possibility of a customer receiving counterfeit bank notes from an Automated Teller Machine.
  5. In order to prevent criminals from shoulder surfing the customer’s PIN, banks should draw privacy areas on the floor in order to prevent intruders from viewing customers transaction.
  6. In order to stop card cloning should be developed by banks , in particular by the use of smart cards which cannot easily be copied or sported by unauthenticated devices, and by attempting to make the outside of their Automated Teller Machine tamper evident. As such the use of French Carte Bleue, Visa cash, mondex, should be change into the most actively developed forms of smart card security such as master card EMV 200, EMV 4.x etc .

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