The Impact of Automated Teller Machines on the Cost of Efficiency of Banks in Nigeria
Chapter One
Purpose of the Study
The purpose of the study was to assess the impact of ATM use on the cost of efficiency in banking.
Specific Objectives of the study:
The study was guided by the following research objectives:
- Examine the cost of efficiency in the use of ATM in Stanbic Bank Ikeja
- Identify the challenges in the use of ATMs in Stanbic Bank Ikeja
- Suggest strategies for strengthening customer satisfaction at the ATM point of Stanbic Bank of Ikeja
CHAPTER TWO
LITERATURE REVIEW
Introduction
This chapter presents the theories and the existing related literature on the evaluation of ATM system use on the cost of efficiency. Literature is reviewed from various sources such as journals, reports and the accessible information on internet.
Theoretical Foundation
This section outlines the theories that this study is grounded to underpin the foundation of Automatic Teller Machine and customer satisfaction. These theories include Diffusion of Innovation Theory, innovation Diffusion Theory, Dissonance Theory and combined Level Theory.
A Theory is a plausible or scientifically acceptable general principle or body of principles offered to explain phenomena (Cheltel, 1998). Theory explains how some aspect of human behavior or performance is organized. It is through understanding the theory behind banking that led to implementation of ATM to influence customer satisfaction. The study concentrates on ATM theory and Customer satisfaction theory.
Automated Teller Machine is a computerized telecommunications device that provides the customers of a financial institution with access to financial transactions in a public space without the need for a human clerk or bank teller. On most modern ATMs, the customer is identified by inserting a plastic ATM card with a magnetic stripe or a plastic smartcard with a chip that contains a unique card number and some security information, such as an expiration date.
When it was first introduced, the ATM was meant to reduce the unnecessary traffic in the banking hall, make customers have a quick access to their money and make life convenient to a certain level. However, according to Ayo et al., (2010) the situation today has changed drastically; it has become a source of worry to users and providers (banks), because the function it was meant to provide has been seriously eroded.
It has become a money spinner for fraudsters, who have found new heaven in compromising innocent people‟s personal identification numbers (PIN).
Cacioppo (2000) argued that use of Automated Teller Machine system of banking brought efficiency in the banking industry majorly in terms of speed, data processing and storage which is anticipated to induce customer satisfaction through instant cash withdrawal, balance enquiry, bill payment, cash and cheque deposit, saving and credit account on a 24 hours basis (Patricio & Cunha, 2011).
Donell (2003) viewed electronic banking service as a service that consumers can access, by using Network framework or an Internet service to a bank‟s computer center, to perform banking tasks, receive and pay bills, and so forth. Many other financial services can be gained access through the Internet. To most people, electronic banking service means 24- hour access to cash through an ATM or paychecks deposited directly into checking or savings accounts (Hillier, 2002).
Rose (2010) cited by Abor, describes ATMs as follows: “an ATM combines a computer terminal, record-keeping system and cash vault in one unit, permitting customers to enter the bank‟s book keeping system with a plastic card containing a Personal Identification Number (PIN) or by punching a special code number into the computer terminal linked to the bank‟s computerized records 24 hours a day”. Once access is gained, it offers several retail banking services to customers.
CHAPTER THREE
RESEARCH METHODOLOGY
Introduction
This chapter presents the details in which the study was executed. It shows the research design, the study area, population, the sampling design, data collection methods, instruments and analytical technique.
Research Design
The study adopted a quantitative survey design, non-experimental and cross sectional in nature. The unit of analysis was bank customers found within the bank vicinity. Quantitative research design was adopted because it describes the study phenomena in terms of numbers and non- experimental design which allows analysis using statistical methods to generate descriptive statistics (Creswell, 2009). Nelly (2010) defined quantitative design as an approach which quantifies responses in numbers instead of explanations. The design was considered appropriate for the study due to the need to collect data from the larger sample to establish the impact of ATM use on the cost of efficiency.
The study population and sample
Study population
A population in statistics is the specific parameter about which information is desired and it may include a set of people, services, elements, and events, group of things or households that are being investigated (Kothari, 2009). The study population was 250 customers weekly on average specifically those who visit Stanbic Ikeja Branch in Ikeja, western Nigeria (Customer Inquiry officer, 2016).
CHAPTER FOUR
PRESENTATION, INTERPRETATION AND ANALYSIS OF FINDINGS
Introduction
This chapter presents description of the results of data analysis in narrative and tabulated manner to assess the impact of ATM use on the cost of efficiency in Stanbic bank Ikeja Branch, Nigeria using descriptive statistics including frequency distributions/mode, mean, and standard deviation for easy interpretation.
CHAPTER FIVE
DICUSSION, CONCLUSIONS AND RECOMMENDATIONS
Introduction
This chapter presents the discussions of each research question, conclusions and policy recommendations and area for further research.
Discussions
The first question was to establish the the cost of efficiency in the use of ATM in Stanbic bank Ikeja Branch Nigeria.
Findings on availability of ATM services in 24/7 days for use to customers indicate a mean of 3.8278 and insignificant standard deviation of 0.0280. Majority of the respondents agreed to this form of customer satisfaction since ATM is located outside banking hall and accessible 24 hours throughout the week. In addition, 24/7 access to account make customers to fill satisfied and become loyal which make the business to survive since a single unsatisfied customer can send away more clients from the bank and current ITC is the base line to induce customer satisfaction which the Stanbic achieve through the use of ATM to offer 24/7 service to induce customer satisfaction and retention. This agreed with Anderson and Sullivan (2007) who argued that ATM facilitate 24/7 deposits and withdraws of cash by customers account to transact induce customer satisfaction.
Finding whether cash deposit is easily made via ATM point at Stanbic Bank Ikeja Branch Nigeria results indicate mean of 2.0903 and standard deviation of 0.5053. Majority of the participants disagreed to this form of customer satisfaction, which implying that cash deposit is not easily made via ATM. This disagreement is supported by Diniz (2011) who conjure that cash deposit via ATM point is not as effective as cash withdraws since deposit of cash does not update the account automatically in developing countries.
Finding whether cash withdraw is cheap to make via ATM at Stanbic Bank Ikeja Branch Nigeria results indicate mean of 4.5931 and standard deviation of 0.3498. Majority of the participants agreed to this form of customer satisfaction that cash withdraw is cheap via ATM by inserting the debit card and request for cash within the bank withdraw daily transaction limits and below the amount available on the account. This agreed with Okior (2015) who argued that cheap cash withdraw of funds enables customers to meet their immediate needs which attract customer satisfaction since a single satisfied customer in today‟s dynamic corporate environment will obviously convince other customers through reference to the business and satisfaction greatly influences customers‟ repurchase intensions whereas dissatisfaction has been seen as a primary reason for customers intentions to switch to other dealers in banking industry.
Finding whether making financial transaction is secure via ATM at Stanbic Bank Ikeja Branch Nigeria results indicate mean of 3.8097 and standard deviation of 0.1801. Majority of the participants agreed to this form of customer satisfaction that making financial transaction like withdraws and deposits is secure via ATM. Currently, ATM is the easiest way of making cash financial withdraws any time anywhere as long as a customer has accessed the system. This agreed with Evans and Lindsay (2010) who stated that secure accurate ATM financial transactions stimulate customer satisfaction which creates a good opportunity to convert them into loyal customers who regularly use ATM services.
Finding whether cash balance inquiry is effective via ATM at Stanbic Bank Ikeja, Branch Nigeria results indicate mean of 3.9944 and standard deviation of 0.5945. Majority of the participants agreed to this form of customer satisfaction that ATM provides an effective cash balance inquiry accompanied with financial transaction summary print upon the user‟s request.
ATM provides a summary of most recent financial transaction of the account holder to facilitate the users with track of records on their accounts which accelerates customer satisfaction. This agreed with Liao and Cheung (2012) who argued that expectation of security and effective cash balance inquiry is essential in shaping customers‟ perception of service quality.
Finding whether ATM is located near to customers at Stanbic Bank Ikeja Branch Nigeria results indicate mean of 4.2153 and standard deviation of 0.5041. Majority of the participants agreed this form of customer satisfaction that ATM is located near to customers, which ease accessibility to financial services. Proximity of the ATM point to customers ease accessibility to accelerate customer satisfaction. This agreed with Mcandrews (2011) who argued that secure and convenient location, adequate number of ATM, user-friendly system and functionality of ATM play important role in customers‟ satisfaction. Further, Joseph and Stone (2013) mentioned that adequate number of ATMs, convenient and secure location, user-friendly system, speed, minimum errors, high uptime, cash back-up, cost and service coverage are essential service quality aspects of ATM.
Finding whether ATM facilitates ease transfer of cash transactions results indicate mean of 2.8472 and standard deviation of .9917. Majority of the participants were non-committal about this form of customer satisfaction, which probably implies that they rarely transfer cash transaction using ATM.
Policy Recommendations Recommendation 1:
Stanbic Bank Ikeja branch Nigeria should sensitize customers on the proper use of ATM using local media like radio west and television west, churches, mosques and the like to strengthen customer satisfaction.
Recommendation 2:
Stanbic Bank Ikeja branch Nigeria should provide support desk officers to educate customers by giving them proper instructions about the use of ATM card to strengthen customer satisfaction.
Recommendation 3:
Stanbic Bank Nigeria should procure modern technology to strengthen network signal to quick processing of ATM transactions in order to arouse customer satisfaction.
Recommendation 4:
Stanbic Bank Nigeria should re-design the ATM user inter-face to have self-direction arrows for customers to follow in order to ease its use.
Recommendation 5:
Stanbic Bank Nigeria should reduce on ATM financial transaction charges to accelerate the customer satisfaction. For example from the current financial transaction withdraws charge of N 1000 to Ush 500.
Recommendation 6:
Stanbic Bank Nigeria should improve on the ATM card securities to completely block unauthorized users in case, it get lost or stolen.
Recommendation 7:
Stanbic Bank Nigeria should re-engineer a system to integrate a voice self-direction manual than read only manual (mere words).
REFERENCE
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