THE EFFECT OF AUTOMATED TELLER MACHINE ON CUSTOMER SATISFACTION IN NIGERIN BANKS

CHAPTER ONE

INTRODUCTION

Background of the Study: Automated Teller Machines, sometimes known as ATMs, are machines that allow clients of banks to do financial transactions. Typically, a user will insert a specific plastic card that is encoded with information on a magnetic strip into the ATM. This card may be used to withdraw cash. The strip has an identifying code on it, and that code is modem-sent to the main computer at the bank (Adams, 2021). The user is required to enter a personal identification number (PIN) using a keypad in addition to the PIN in order to prevent illegal transactions (Agboola, 2021). The computer then gives the authorization for the automated teller machine to finish the operation; most machines have the capability to dispense cash, receive deposits, transfer money, and offer information on account balances. A customer of one bank may use an automated teller machine (ATM) of another bank for cash access since banks have developed cooperative, countrywide networks; hence, all commercial banks' ATMs in Nigeria are inter-connected (Okoh, 2010).

Banks all across the world have implemented Automated Teller Machines (also known as ATMs), and this trend is expected to continue. They provide significant advantages, not just to banks but also to the people who deposit money with them. Depositors are able to withdraw cash from the machines at times and locations more convenient to them than those offered by bank branches during regular business hours. In addition, because ATMs are capable of automating activities that were formerly carried out manually, they are able to cut the expenses associated with serving certain demand depositors. These potential benefits are amplified when banks share their automated teller machines (ATMs), which allows depositors of other banks to access their accounts through an ATM belonging to a certain bank (Andrews, 2003).

The majority of automated teller machines (ATMs) are now being placed by banks. Two of the reasons for this are that they want to increase their market share, despite the fact that due to the prevalence of ATMs, this 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 usage of automated teller machines (ATMs) by bank clients and the deployment of ATMs by banks themselves are only getting off the ground but have experienced explosive growth in recent years. This is especially true following the recent wave of bank consolidation, which, in all likelihood, made it feasible for more banks to afford to deploy ATMs or, at the very least, become part of shared networks. This development came about as a direct result of the recent financial crisis (Fasan, 2007). The problem of the relevance of technology has become increasingly essential in the banking sector as a result of the rising deployment of ATMs. In Nigeria, automated teller machine services have a history that is significantly less than 10 years. In the beginning, they were run as elitist services that were created for those who were interested in exclusive services. Cards were difficult to get, and the procedure for doing so was time-consuming (Adoki, 2021).

At the moment, there is a significant push toward using bank cards and ATMs. It would appear that banks are no longer interested in maintaining personal relationships with their clientele. Some financial institutions have taken to "penalizing" customers, in a sense, for their lack of ability to obtain an ATM card by deducting money from their accounts if the consumer withdraws less than a certain amount at a traditional teller machine. According to Agboola (2006), there was just one bank that possessed an ATM in the year 1998, but by the year 2004, fourteen of them had obtained the technology.

According to the findings of Agboola (2006), the implementation of ICT in banks has resulted in a variety of beneficial effects, including the enhancement of customer service, the maintenance of more accurate records, the promotion of convenience during business hours, the provision of prompt and fair attention, and the acceleration of service times, amongst other things. Additionally, the image of the banks is enhanced, resulting in a market that is more competent. Work has become not only simpler but also more exciting, and as a result, banks' competitive edge, relationships with clients, and the ability to solve fundamental operational and planning problems have all been enhanced. According to Fananopo (2006), aggressive roll out activities by Nigerian banks, driven by interswitch network, contributed to a 93% increase in the number of debit card transactions conducted in Nigeria over the course of the preceding years. The amount of transactions carried out by automated teller machines (ATMs) over the interswitch network rose from 1,065,972 in 2004 to 21,448,615 between January 2005 and March 2012.

This is an increase of 92.6 percent in comparison to the years prior to this one. More than 1700 automated teller machines have been installed on the network, and as of March 2012, around 12 million cards have been issued by 18 different banks.

According to the findings of a recent survey that was carried out by Intermarc Consulting Limited, the most popular platform for conducting business online in Nigeria is ATM services, which are offered by both financial and non-financial organizations in Nigeria (Intermarc Consulting Limited, 2007). According to the findings of the research, customer knowledge of the numerous financial services that may be obtained from Nigerian banks is mostly restricted to the traditional banking services. According to the data, there was a familiarity with savings accounts among 99 percent of the respondents, familiarity with current accounts around 92 percent, and familiarity with local money transfer services among 72 percent. However, among the more modern banking services such as electronic banking, internet banking, point of sales (POS) transactions, and money transfer, ATMs have emerged as the most popular with a 96 percent awareness level. Awareness of ATMs also ranked higher than awareness level about current accounts and slightly below awareness level about savings account (Omankhanlen, 2007).

Because of this, it is abundantly evident that research on the influence of automated teller machines (ATMs) on the level of pleasure experienced by bank customers is required. In light of all of this, the researchers believe that the subject topic is important enough to warrant further inquiry.

1.2 Statement of Problem

Customers of banks in Nigeria have recently begun to expect services that are not only efficient, quick, and easy but also emphasize the importance of ensuring the security of their cash and increasing the return on their investments. Customers desire a financial institution that will provide them with services that cater to their unique requirements and help them achieve their professional objectives at any time, including outside of normal business hours. The usage of ATMs is required in order to accomplish all of these goals.

Despite the positive effects that ATMs have on bank customers, many of them still choose not to use them. This is due to the fact that many ATM users have voiced their dissatisfaction with the service, citing issues that have arisen as a result of the fraudulent activities of ATM fraudsters as well as more common issues, such as telecommunication breakdowns and the fact that most ATM machines in Nigeria are so old that they rely on generators, UPS, and inverters for power. Because of this, there is skepticism over the effect that Automated Teller Machines (ATMs) have on the level of pleasure that bank customers feel. In light of this, the researcher focused their attention on the influence that ATMs have on the level of customer satisfaction at the Magadishu Branch of the UBA.

 

1.3 Objective of the Study       

The main objective of the study is to examine the effect of Automated Teller Machine on customer’s satisfaction in Nigerian banks. Other specific objective include to:-

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. Research Questions

In the study the research question below is proferred with answers;

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 United Bank for Africa 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.  

Banking: 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.

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

Banker: 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.

Cheque: 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.

Loan: 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.

Overdraft: 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 ministatement 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

ICT: Acronym for Information and communication technology.

ATM: Acronym for Automated Teller Machine

MIS: Acronym for management information system

Online-real-time: Electronic banking through internet and computer network