THE EFFECT OF AUTOMATED TELLER MACHINE USE ON CUSTOMER
SATISFACTION IN BANKING
A CASE STUDY OF CENTENARY RURAL DEVELOPMENT BANK, GULU BANK
BRANCH
BY
LUKWIYA BENARD OSTEEN
UNDER THE SUPERVISION OF DR. MUYINDA PAUL BIREVU OF THE
DEPARMENT OF DISTANCE AND OPEN LEARNING
A RESEARCH REPORT SUBMITED TO THE DEPARTMENT OF DISTANCE
EDUCATION, IN PARTIAL FULFILMENT OF THE AWARD OF THE DEGREE OF
BACHELOR OF COMMERCE OF MAKERERE UNIVERSITY
SEPTEMBER 2011
i
DECLARATION
I LUKWIYA BENARD OSTEEN hereby declare that I have accomplished my study and that
this is my original work and have never been submitted to any University or any other academic
institution for an award of a Degree in any field.
Signed………………………….
Date…………………….
LUKWIYA BENARD OSTEEN
i
APPROVAL
I certify that Mr. LUKWIYA BENARD OSTEEN carried out this research under my supervision
and is submitted with my approval.
Signed………………………………
Date……………………………
SUPERVISOR- DR. MUYINDA PAUL BIREVU
.
ii
DEDICATION
This work is dedicated to my late Mum Mrs. Late Martina Ogik who gave her all in seeing that I
entered and completed the course, but didn’t get the chance to live and witness the result of her
dedication.
May the almighty God welcome you into his Kingdom with abundant blessings.
iii
ACKNOWLEDGEMENT
I thank God, the Father almighty, without whom none of this would have been possible, and
through whose grace, I have come this far.
I would like to appreciate my supervisor, Dr. Paul Muyinda Birevu for his patience, advice,
guidance, mentorship, tireless efforts and supervision of this study right from its inception to the
end. Thank you so, so much. Without your encouragement and devotion, I wasn’t going to
complete this work. God bless you abundantly
I am extremely grateful to my family, my beloved Dad Mr. Severino Ogik, Sister Miss Atim Joy
Grace, Brother’s Komakech Denis Hardnan and Obwona Peter Patrick and crowning it all is My
Dearest Wife Lamunu Mavis Dorcas for their TOTAL support, complete dedication,
understanding and patience in seeing me get through with the course during this challenging
time. Thank you for being there for me throughout this time. I also thank my brother Fred, Sister
Maggie, Nephews Johnson, Mike, Ojara and finally my Niece Flo for their support, prayers and
advice during my studies.
Many thanks go to all my fellow students, friends and staff in the department of Bachelor of
Commerce, for all their guidance and moral support throughout the program.
May the LORD God bless you all abundantly.
iv
TABLE OF CONTENTS
DECLARATION………………………………………………………………………………i
APPROVAL …………………………………………………………………………………..ii
DEDICATION………………………………………………………………………………..iii
ACKNOWLEDGEMENT ......................................................................................................... iv
TABLE OF CONTENTS ............................................................................................................ v
LIST OF TABLES .................................................................................................................... vii
LIST OF FIGURES .................................................................................................................. viii
ACRONYMS ............................................................................................................................. ix
ABSTRACT ................................................................................................................................ x
CHAPTER ONE ......................................................................................................................... 1
1.0 INTRODUCTION ................................................................................................................. 1
1.1
Background to the study................................................................................................... 1
1.2
Statement of the Problem ................................................................................................. 2
1.3
Purpose of the Study ........................................................................................................ 2
1.4
The Specific Objectives of the study were: ...................................................................... 2
1.5
Research Questions .......................................................................................................... 3
1.6
Scope of the Study............................................................................................................ 3
1.6.1 Content Scope/ Variable Scope ........................................................................................ 3
1.6.2 Geographical Scope.......................................................................................................... 3
1.6.3 Time Scope....................................................................................................................... 3
1.7
Significance of the Study ................................................................................................. 3
CHAPTER TWO......................................................................................................................... 5
2.0
LITERATURE REVIEW ................................................................................................. 5
2.1
Introduction ...................................................................................................................... 5
2.2
The Concept of ATM ....................................................................................................... 5
2.2.1 Evolution of ATM ............................................................................................................ 5
2.2.2 Operation of ATM ............................................................................................................ 6
2.3
Effectiveness of ATM ...................................................................................................... 6
2.4
The Concept of Customer Satisfaction............................................................................. 7
2.4.1 Who is a Customer ............................................................................................................. 7
2.4.2 Importance of Customer satisfaction................................................................................ 7
2.4.3 The relationship between ATM use and Customer satisfaction ....................................... 8
2.5
Conclusion........................................................................................................................ 9
CHAPTER THREE ................................................................................................................... 10
3.0
RESERCH METHODOLOGY ...................................................................................... 10
3.1
Introduction .................................................................................................................... 10
3.2
Study Design .................................................................................................................. 10
3.3
Area of Study ................................................................................................................. 10
3.4
Population....................................................................................................................... 10
3.5
Sample Size and selection methods ............................................................................... 10
v
3.6
3.7
3.7.1
3.7.1
3.8
Data Collection Tools/ Methods .................................................................................... 10
Data Management .......................................................................................................... 10
Data Processing .............................................................................................................. 11
Data Analysis ................................................................................................................. 11
Limitations ..................................................................................................................... 11
CHAPTER FOUR ..................................................................................................................... 12
4.0
PRESENTATION, INTERPRETATION AND DISCUSTION OF FINDINGS .......... 12
4.1
Introduction .................................................................................................................... 12
4.2
Background characteristics of the respondents. ............................................................. 12
4.3
Services offered by ATM ............................................................................................... 14
4.4
Effectiveness of ATM services ...................................................................................... 15
4.5
Relationship between ATM services and customer satisfaction. ................................... 20
CHAPT-ER FIVE ..................................................................................................................... 22
5.0 SUMMARY, RECOMMENDATIONS AND CONCLUSIONS ....................................... 22
5.1 Introduction ......................................................................................................................... 22
5.2 Summary of findings ........................................................................................................... 22
5.3 Recommendations ............................................................................................................... 23
5.4 Conclusion ........................................................................................................................... 23
REFERENCE ............................................................................................................................ 24
APENDICES ............................................................................................................................. 26
QUESTIONARE........................................................................................................................... 26
TIME SCHEDULE ................................................................................................................... 30
BUDGET ................................................................................................................................... 31
vi
LIST OF TABLES
Table 1: Percentage distribution of respondents by background characteristics. ......................... 13
Table 2.Percentage distribution of respondents by services offered by ATM. ............................. 14
Table 3. Percentage distribution of respondents by rating of the ATM services .......................... 16
Table 4. Percentage distribution of respondents by problems experienced when using the ATM.
....................................................................................................................................................... 19
Table 5. Relationship between ATM services and customer satisfaction. ................................... 20
vii
LIST OF FIGURES
Figure 1.Percentage distribution of respondents by the time they spend in the queue before
accessing the ATM services.......................................................................................................... 17
viii
ACRONYMS
CERUDEB
Centenary Rural Development Bank
ATM
Automated Teller Machine
CPU
Central Processing Unit
SSPS
Statistical Package for Social sciences
ix
ABSTRACT
This research study was carried out to obtain the impact of the use of ATM system of banking on
customer satisfaction. Research on the use of ATM system of banking customer satisfaction
remains unrepresented and is a growing area of interest.
It further offered a controversial topic that ATM holders could engage in to further make sense
of the different negative and positive effects of ATM use that exist, and how these directly
influenced responses to gendered phenomena. It was therefore elicited significant constructions
of results and hence was used as a vehicle to further add insight into the constructed nature of
awareness about the customer services offered by ATM points to account holders, effectiveness
of ATM service on account holders and the relationships between ATM services and customer
satisfaction.
This was achieved through the use of a sample of (40) ATM users of CERUDEB, Gulu branch
were selected. Through this method the information the impact of the use of ATM system of
banking on customer satisfaction.
Data was analyzed using SPSS (statistical package for social sciences). The results were
understood as largely; almost three quarters of the respondents rated the services offered by an
ATM to be effective with withdrawal as the main service offered by ATM, followed by checking
of balances, while the statement/mini statement of account came third, and Cash or cheque
deposit came last. The finding further depicts that more than half of the respondents were
satisfied by the services offered by the ATM.
This study thus shed light on the awareness of the ATM services to nature evident results in
customer satisfaction in society and as a view point for banking industry by showing how quality
services offered by ATM service points are essential and its relationship to customer satisfaction.
x
CHAPTER ONE
1.0 INTRODUCTION
Automated Teller Machine (ATM) refers to a machine that acts as a bank teller by receiving and
issuing money to and from the ATM account holders/ users. The evolution of ATM was not in
isolation, rather as a result of the general global wave in the technological revolution. This came
due to the need to respond to the challenge of the multiple bulk of daily complex information
that arises from among others; increase in competition, increased customer demand for both
service provision as well as efficiency, expansion due to the increase in demand for services etc.
The introduction and use of ATM system of banking therefore brought in efficiency in the
banking industry majorly in terms of speed, data processing and storage. Thus it saw a huge
improvement in the long queuing in most banking halls. Despite of all the merits of the ATMs,
customers still complaint of shortcomings on the use of the system like; break downs of ATMs,
long queues at ATM service points, retention of customer’s cards. Thus the researchers intends
to find out why still these cries.
1.1
Background to the study
The history of banking is that till the industrial error, banking services were rendered on manual
basis characterized by; ledger keepers at back office, cashiers providing front desk service,
ledger cards, cash registers among others. This is not only tedious, but also strenuous and slow
besides providing inaccurate and unreliable information on a regular basis because of the human
error. The limitations of manual banking highlighted above in most cases results to customer
complaints, slowness in service provision, long queue and high operational costs etc. These
limitations reduce reliability of financial services as regards to accuracy and completeness.
Relying on such information results into managers making decisions that leads to costs and
administration problems as evident by the closure of banks like; Green land bank, Co-operative
bank, International Credit bank and Trans-African bank. This is because manual records had
been altered by back staff to defraud it.
The above manual unreliable service provision gave rise to technological means of efficient and
fast way of serving customers given the rise in demand for banking services. This saw the
emergency and use of the ATM among many other inventions like; telephone banking, internet
1
banking etc. ATM is the abbreviation of Automated Teller Machine which acts as a teller in a
bank who takes and gives money over the counter. ATMs are placed not only near or inside the
premises of banks, but also in locations such as shopping centers/malls, airports, grocery stores,
petrol/gas stations, restaurants, or any place where large numbers of people may gather. ATM
services includes function such as cash withdrawal, balance enquiry, bill payment, cash and
cheque deposit, saving and credit account on a 24 hr basis. Thus with the appearance of ATMs,
some limitation of time and geographic location has been resolved.
These innovations embraced by the Government of Uganda coupled with the hard work of the
players in the financial sector, Centenary Rural Development Bank (CERUDEB) inclusive has
seen an increase in the enrolment of the banks ATM users as evident by the long queue at most
banks ATM service points referred by different names such as; Cente point for CERUDEB,
Orient express card for Orient bank etc.
1.2
Statement of the Problem
The introduction and use of ATM system of banking has received different perceptions. One of
the views is that, it may not have really created customer satisfaction for bank clients, and the
other is that, it may have. Despite of all the merits of the ATMs, customers still complaint of
shortfalls on the use of the system such as; break downs of ATMs, long queues at ATM service
points, retention of customers cards, limited knowledge on the use of ATM cards, fraudulent
transactions and its operation in just a few languages.
It’s therefore against this background that the researcher was prompted to investigate and find
out the effect of ATM system of banking in enhancing customer satisfaction in CERUDEB, Gulu
branch.
1.3
Purpose of the Study
The purpose of the study was to obtain the impact of the use of ATM system of banking on
customer satisfaction.
1.4
The Specific Objectives of the study were:
i.
To find out customer services offered by ATM points to account holders
2
1.5
1.6
ii.
To establish the effectiveness of ATM service on account holders.
iii.
To establish relationships between ATM services and customer satisfaction
Research Questions
i.
What are the services offered by ATM?
ii.
How effective are the services provided by ATM to account holders?
iii.
What are the relationships between ATM services and customer satisfaction?
Scope of the Study
1.6.1 Content Scope/ Variable Scope
The topic of the study is the effect of Automated Teller machine (ATM) in enhancing customer
satisfaction. Here the effect of ATM is the independent variable where as customer satisfaction is
the dependent variable. The effectiveness of the ATM services on customer’s service shall be
measured using variables like; reliability, speed and efficiency of ATM services in solving the
queuing problems of banks clients. While customer satisfaction shall be measured by variable
like; less or no customer complaints about ATM services offered.
1.6.2 Geographical Scope
The study was conducted at CERUDEB, Gulu branch and its ATM service point located within
the same District. The researcher decided to Cary out the study in the branch because of the ever
long queue at the banks ATM service point day in day out but worst at the end and beginning of
the month.
1.6.3 Time Scope
The study looked at how the ATM system of banking has been providing quality services in
relation to customer’s expectations from the period 2004 to 2010.
1.7
Significance of the Study
i.
The findings of the study can help the CERUDEB as well as the banking industry
by showing how quality services offered by ATM service points are essential and
its relationship to customer satisfaction.
3
ii.
The conclusions and recommendations of the study can to help the banking
industry in the identification of the weaknesses in the use of ATM system of
banking on the ways of improving its services
iii.
This study can also to be of great importance to future scholars who will pursue
research in fields related to ATM system of banking and service satisfaction.
4
CHAPTER TWO
2.0
LITERATURE REVIEW
2.1
Introduction
This chapter reviewed the available literatures written on this topic and in other related areas in
this chapter. This was made possible by the identification, collection and review of these
literatures from various sources such as text books, journals, reports and the internet.
2.2
The Concept of ATM
ATM is typically made up of the CPU for controlling the user interface and transaction devices,
magnetic or Chip card reader for identifying the customer, display which is used by the customer
for performing the transaction, function buttons usually close to the display or a Touch screen
used to select the various aspects of the transaction and a record printer which provides the
customer with a record of a transaction (Cronin and Mary, 1997).
Most ATMs are connected to inter bank networks, enabling people to withdraw and deposit
money from machines not belonging to the bank where they have their account or in the country
where their accounts are held thus enabling cash withdrawals in local currency (Maxwell, 1990).
They are often identified by signs above them indicating the name of the bank owning them.
2.2.1 Evolution of ATM
ATM is said to have evolved from early cash dispenser and is said to have first been introduced
in the early 1970’s. The dispensers were operated by a token inform of a punch card. This
enables a customer to withdraw as sachets of suitable values of bank notes. These sachets
processes and then return the card to the customers. Another source has it that ATM concept was
started around 1967, and that it was first installed in Endfield town, on the London Borough of
Endfield by Barclays Bank. Thomas (1996). This is said to have been accredited to John
Shepherded Baron, although George Simon registered patent in New York and Don Wetzel and
two other Engineers from Docatel Company also registered patent in June/ April 1973. Brendan
(1996). This in the second generation was improved to the extent that made it possible to count
proved money.
5
2.2.2 Operation of ATM
ATMs typically connect directly to their ATM Controller via either a dial-up modem over a
telephone line or directly via a leased line. Leased lines are preferable because they require less
time to establish a connection. Musiime and Biyaki, (2010). It is observed that, 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. Security is provided by the
customer entering a personal identification number (PIN). For one to access ATM service, he/
she (the card holder) has to insert the card (magnetic strip card) into the machine (ATM), which
then reads the strip and makes contact with the central computer to confirm the genuity of the
card which is either accepted rejected depending on whether it is valid or not. When accepted,
the customer then punches his/ her PIN number which is then verified according to its
compatibility with the information stored in the card. After which it then perform the service
requested of like (issuing cash, accepting cash/ cheque deposit, balance enquiry, mini-statement)
etc, and finally ejects the card.
2.3
Effectiveness of ATM
Without usage of technology the banking sector cannot provide customers with effective services
(Patricio et al., 2003). Effective service delivery is a new or significantly improved service
concept that is taken into practice (Drake, 2001). Customer expectations concerning service
encounter experiences and service delivery mechanisms as well as the entire concept of what
constitutes quality service are therefore key issues that need to be considered prior to the
implementation of any structural change. Patricio et al. (2003). Effective service delivery is a
service product or service process that is based on some technology or systematic method. It can
be a new customer interaction channel, a distribution system or a technological concept or a
combination of them. (Kelley et al. 1990). Kumbhar (2011). Observed that effectiveness of
service provision have a significant relationship with overall customer satisfaction. Effective
service delivery is positively related to customer satisfaction in that, when a customer perceives
that the delivery mode of the transactions that the bank is supposed to offer is quite good, the
more the customers will be satisfied with the bank services.
6
2.4
The Concept of Customer Satisfaction
Cacioppo (2000) defines Customer satisfaction as the state of mind that customers have about a
company when their expectations have been met or exceeded over the lifetime of the product or
service as quoted by MALCOLM (2008). Increased customer expectations have created a
competitive climate whereby the quality of the relationship between the customer and bank has
taken on a greater significance in some cases than the product itself. (Musiime and Biyaki,
2010). Krishnan et al (1999). Point out that, the banking industry strives to succeed by putting
the topic of rapid and changing customers needs to their agenda. This can be achieved through
good customer care and offering attractive services or products that other competitors may not
offer. Therefore, customer satisfaction is seen as a key performance indicator within business.
The concept of customer satisfaction occupies a central position in marketing and practice
(Cardozo, 1965). Customer satisfaction is a person’s feelings of pleasure or disappointment
resulting from comparing a product’s perceived performance or outcome in relation to his or her
expectations. (Musiime and Biyaki, 2010).
In summary, Customer Satisfaction is the actual meeting of customer’s expectation after he or
she has completed consuming a product or service.
2.4.1 Who is a Customer
A customer is the most important visitor on our premises. He is not dependent on us. He is not an
interruption to our work. He is the purpose for it. He is not an outsider on our business rather he
is part of it, we are not doing him favor by serving him rather he is doing us favor by giving us
an opportunity to do so. Wasswa, (2003). Pg 35. He further described a customer as one that
enables the organization exists. They are the purpose of our business.
In my own view, I believe that, customers are the heart, the life and the soul of our businesses,
without whom we can’t hold even for a second to exist in business. Hence they should be
accorded utmost respect and care when rendering service to them.
2.4.2 Importance of Customer satisfaction
Khirallah (2005) defines customer satisfaction as; a customer's perception that his or her needs,
wishes, expectations, or desires with regard to products and service have been fulfilled.
Consumer satisfaction in short can therefore be defined as an evaluative process that contrasts
pre-purchase expectations with the actual perceptions of performance during and after
7
consumption experience. In summary, Customer Satisfaction is the meeting or even exceeding of
a customer’s expectation after the use product. The outcomes of satisfying a customer are:Customer loyalty- LOYAL customers are those who have the enthusiasm about the brands or
products they use. The more enthusiastic a customer is, the higher the profit contributed to the
brand. (MALCOLM 2008).
Musiime and Biyaki,(2010). Loyalty is a combination of intentional repurchase behavior and
psychological attachments of a customer to a particular service provider. The fundamental
assumption of all the loyalty models is that keeping existing customers is less expensive than
acquiring new ones. In summary, Loyalty is customer’s demonstration of faithful adherence to
an institution despite the occasional errors. Thus satisfying a customer is very paramount to
organizations existence.
Customer retention- Customer Retention is the ability to hold on to customers over time.
Joseph and Stone (2003). Customer retention is the activity that the selling organization
undertakes to reduce customer account defections. It can also be described as a series of actions
that the selling organization undertakes to reduce defections. Musiime and Biyaki, (2010).
Ganesh et al., (2000)., observed that, long-term, customers become less costly to serve due to the
bank’s greater knowledge of the existing customer and to decrease serving costs. They also tend
to be less sensitive to comparative marketing activities (Czepiel, 1990). Loosing customers not
only leads to opportunity costs because the reduced sales, but also to an increased need for
attracting new customers which is five to six times more expensive than customer retention
(Joseph and Stone, 2003).
2.4.3 The relationship between ATM use and Customer satisfaction
Earlier research by Brownlie (1989) has recommended that some consumers have positive
attitudes towards ATMs based on dominant perceptions of convenience/accessibility/ease of
use. As observed by Malcolm (2008). On the other hand, Reichheld and Sasser (1990) have
recognized the benefits that customer satisfaction delivers to a bank. For instance, the longer a
customer stays with a bank the more utility the customer generates. This is a result of a number
of factors relating to the time the customer spends with a bank. Without usage of technology the
banking sector cannot provide customers with a satisfactory service (Patricio et al., 2003).
Effective service delivery is a new or significantly improved service concept that is taken into
8
practice. Musiime and Biyaki,(2010). According to, Patricio et al. (2003) customers will use
different service delivery systems dependent on their assessment of each channel and how it
contributes to the overall service offering. Hence service satisfaction will not merely be based on
isolated service encounters and experiences but rather on the overall feelings of satisfaction.
With automated teller machines networks already in place in most of the urban areas, the drive is
now focused towards the rural areas where the use of automated teller machines is still
uncommon. Musiime and Biyaki,(2010).
2.5
Conclusion
From the review of literature, it can be observed that the operation and use of ATM services in
the financial sector, has contributed a lot in changing the way in which financial services and
products are being delivered to the banks clients. As the say goes that, for every step forward
(development), a lot of challenges must have been faced, fought and overcome. Thus the
development of ATM saw the emergency of some challenges for the industry as customers keep
demanding for better service, while the financial institutions are very busy searching for the most
efficient way by which they can improve on their service provision.
9
CHAPTER THREE
3.0
RESERCH METHODOLOGY
3.1
Introduction
This chapter explored the methods used in data collection and their justifications as well as the
problems that were encountered at the time the research was carried out.
3.2
Study Design
The research was descriptive and analytical in nature. However in order to find out the role of
ATM in the satisfaction of customers, quantitative and qualitative methods were used.
3.3
Area of Study
The study was carried out in CERUDEB, Gulu branch in Gulu District, Northern Uganda.
3.4
Population
The study only targeted ATM users (customers of CERUDEB, Gulu branch). A random
sampling system was used in the study.
3.5
Sample Size and selection methods
A sample of (40) ATM user’s of CERUDEB, Gulu branch were selected. The selection was
achieved through random sampling methods. This is because the sample study was relatively
small spitted in to a portion of 20 women respondents and 20 male respondents.
3.6
Data Collection Tools/ Methods
The researcher applied the use of self administered questionnaires.
3.7
Data Management
The data was assembled through the means of self administered questionnaire (Primary data) as
well as reading the different materials such as text books, the internet sources, journals etc
(Secondary data).
10
3.7.1 Data Processing
Data was processed with the help of the Statistical Package for Social sciences SSPS soft ware
application.
3.7.1 Data Analysis
After the collection of data, the researcher edited and coded the questionnaires. This was done to
determine the response rate, qualitative and quantitative form of analysis shall be administered.
The data was generated, calculated and converted into frequency table tables and bars.
3.8
Limitations
i.
Convincing the respondents to respond to the questionnaire was not easy. This
however was overcome through hard effort by the interviewer to convince them
that the outcome of the study will go a head to help their bank to improve on its
efficiency which would in turn be of benefit for them.
ii.
The time allocated for the final submission of the proposal was squeezing. This
means working under pressure. This was overcome through concentration and
dedication on the part of the researcher coupled with the willingness on the
supervisor who is always there to play his role too diligently.
iii.
There was financial difficulty. This constraint was remedied through doing all the
secretarial work my self as well as down loading information’s and reading them
from friend’s computers except for printing.
11
CHAPTER FOUR
4.0
PRESENTATION, INTERPRETATION AND DISCUSTION OF FINDINGS
4.1
Introduction
This chapter presents findings on the background characteristics of the selected respondents,
services offered by the ATM, effectiveness of the ATM services and the relationship between
ATM services and customer/respondent satisfaction.
4.2
Background characteristics of the respondents.
In order to come out with gender, occupational status as well as the knowledge of respondents
about the ATM services, the respondents were asked to state their age, occupation, whether
respondent had an account with CERUDEB or not, awareness of ATM banking and whether the
respondents possessed an ATM card.
The result can be seen as presented in the table below.
12
Table 1: Percentage distribution of respondents by background characteristics.
Sex
Total
Percent
Male
20
50
Female
20
50
Total
40
100
Employed
12
30
Business
8
20
Student
12
30
None
8
20
Total
40
100
Yes
40
100
No
0
0
Total
100
100
Yes
40
100
No
0
0
Total
40
100
Yes
40
100
No
0
0
Total
40
100
Occupation
Do you have an account with Centenary Rural Development
Bank?
If yes, are you aware of ATM banking?
If yes, do you possess an ATM card?
Results presented in table 4.1 above show an equal distribution of gender. This was largely due
to an equal distribution between the respondents with accounts in Centenary Rural Development
Bank. The table further shows that most of the respondents (ATM users) were either students or
the employed, followed by the business class and the non-employed lied bottom. This can be
attributed to the salaries that are mostly now being paid through the bank for the employed
classes and for the case of students, school fees as well as pocket money being sent or toped
13
through bank accounts this can be the justification for the high numbers. About holding an
account with CERUDEB, awareness of ATM banking and possessing of the ATM, all the
respondents were aware of the existence of ATM banking, all held an account with CERUDEB
and all of possessed ATM cards. All these can be attributed to the convenience that ATM
services offer in comparison to lining in the banking hall which is always so tedious. This tends
to be in agreement with the earlier point raised by Brownlie (1989) who recommended that some
consumers have positive attitudes towards ATMs based on dominant perceptions of convenience,
accessibility and ease of use.
In conclusion, it can be said that all sexes now hold an Account to near equal terms, are aware of
the existence of ATM services as well as all possesses an ATM card and uses it.
4.3
Services offered by ATM
This section presents the percentage distribution of respondents according to the services offered
by the ATM and tries to find out whether these services are satisfactory to the respondent or not.
The result can be seen as presented in the table below.
Table 2.Percentage distribution of respondents by services offered by ATM.
Services offered by ATM
Total
Percent
Withdrawal
22
55
Cash/Cheque deposit
4
10
Statement/Mini statement of account
8
20
Balances
6
15
Total
40
100
Enough
27
67.5
Not enough
13
32.5
Total
40
100
Are the services offered enough?
With reference to table 4.2 above, most of the respondents identified withdrawal as the main
service offered by ATM, followed by statement/mini statement of account, checking of balances
and cash/cheque deposit came last as a result of the awareness test. The table further depicts that
more than half of the respondents were satisfied by the services offered by the ATM visa vee
those that said the services weren’t enough. The result above can be that the respondents aren’t
14
so aware of the different services offered by the ATM other than withdrawal. This calls for the
bank to do more awareness creation about the other different services offered by the ATM. On
whether the services offered were enough or not, the result can be that the banks clients are quite
satisfied by the services offered by ATM against the minority who were against. This is also in
agreement with Kumbhar (2011). Who observed that effectiveness of service provision have a
significant relationship with overall customer satisfaction. He went on to say effective service
delivery is positively related to customer satisfaction in that, when a customer perceives that the
delivery mode of the transactions that the bank is supposed to offer is quite good, the more the
customers will be satisfied with the bank services. This seems to be a direct result of the finding
here. It can therefore be concluded that, the respondents are to a good extent aware of the
services offered by ATM and also that those services are satisfactorily enough for their
requirements with only a few saying they aren’t enough.
4.4
Effectiveness of ATM services
This section presents the percentage distribution of respondents by how they rated the ATM
services in terms of available functions/services offered, costs associated with deposit and
withdrawal, security of the respondent’s money and the time. Other variables the researcher
considered included the time the respondent takes in the queue before accessing the ATM
services, whether the respondent experienced any problems while using the ATM and if yes, then
what kind of problems and how often do the respondents experience such problems. Also the
researcher tried to find out whether the bank had done anything to avert the problem/s and if yes,
then were all the respondent’s problems solved or not.
15
Table 3. Percentage distribution of respondents by rating of the ATM services
Available services/functions offered by the ATM
Total
Percent
Effective
27
67.5
Very effective
8
20
In effective
2
5
Very in effective
3
7.5
Total
40
100
Costly
10
25
Very costly
5
12.5
Cheap
19
47.5
Very cheap
6
15
Total
40
100
Secure
22
55
Very secure
15
37.5
Insecure
1
2.5
Very insecure
2
5
Total
40
100
Effective
31
77.5
Very effective
7
17.5
In effective
1
2.5
Very ineffective
1
2.5
Total
40
100
Costs associated with deposit and withdrawal
Security of your money
Time
According to Table 4.3 above, there is a high support by about three quarter of the respondents
rating the services offered by ATM to be effective. Withdrawal and depositing of money through
the ATM being cheap also got more support. The table further depicts that the majority of the
respondents felt their money was secure and more than three quarters agree that the time spent in
a queue was effective. (It is further elaborated in figure 1 below). This can be that first of all
16
ATM offers them (respondents) all/most they require of it and to their expectation as per
Khirallah (2005) definition of a customer satisfaction as; a customer's perception that his or her
needs, wishes, expectations, or desires with regard to products and service have been fulfilled.
About the security of their money, can be the reason that ATM offers secrete PIN codes which
makes it easy to protect ones money safely. This is in agreement with the explanation in chapter
2.2.2 Operation of ATM line five that stated; security is provided by the customer entering a
personal identification number (PIN). Then lastly about convenience of time spent in the line,
can be in comparison with the time they are to take in the line over the counter. That of ATM
seems to be more satisfactory. Conclusively, all is well with effectiveness of ATM services as
there has been agreement with all questions raised. However more improvement needs to be
done so as to satisfy the few others who were not in agreement so as to retain them.
Figure 1.Percentage distribution of respondents by the time they spend in the queue before
accessing the ATM services.
40
35
30
25
20
15
10
5
0
0-5 minutes
6-10 minutes
11-15 minutes
17
16 minutes
17+ minutes
1.
0-5 minutes
34.1%
2.
6-10 minutes
26.6%
3.
11-15 minutes
12.2%
4.
16 minutes
4.9%
5.
17+ minutes
22.2%
Figure 1 above, presents contrasting scenario with more than a quarter of the respondents saying
they spend few minutes before accessing the ATM services. Those next to few minutes follows
but with those saying they takes quite long in the queue before accessing their money coming
third. This is an indicator that TM services are quite fast, rather the challenge can be that the
ATM points are few that sometimes results in to congestion causing the delay as observed above.
18
Table 4. Percentage distribution of respondents by problems experienced when using the ATM.
Do you experience problems when using the ATM?
Total
Percent
Yes
28
70
No
12
30
Total
40
100
Network/machine breakdown
21
52.5
Complication
6
15
Limited amount of money to be withdrawn
5
12.5
Card retention
7
17.5
Other
1
2.5
Total
40
100
Very often
2
7.1
Often
11
39.3
Less often
15
53.6
Total
28
100.0
Yes
26
92.9
No
2
7.1
Total
28
100
Yes
23
88.5
No
3
11.5
Total
26
100
If yes, what type of problems do you face?
How often do you experience such problems?
Has your bank done anything to avert such problems?
If yes, did it solve all the problems encountered or not?
Table 4 above, put respondents who experienced problems while using the ATM at about three
quarter with the commonest problem encountered being machine/network breakdown, followed
by card retention with other problems coming last. The table also indicates that the respondents
experienced such problems less often. It further put the majority of the respondents as saying the
bank has tried to put an end to these problems with more than three quarter saying all the
19
problems encountered have been resolved by the bank completely. This clearly shows that
despite the occurrences of the problem with the ATM, it is not too rampant and it also indicates
that the bank has keen interest in trying to solve the problem/s as and when they occur. In
conclusion therefore, ATM service still has some shortcomings though it appears not so much
with the bank coming in to try and solve/avert the situation.
4.5
Relationship between ATM services and customer satisfaction.
This section shows the relationship between the ATM services and customer satisfaction. The
variable considered by the researcher under ATM services was the location of ATM points and
under customer satisfaction was whether the services offered by the ATM were enough.
The outcomes are presented in the table below.
Table 5. Relationship between ATM services and customer satisfaction.
Satisfaction
Location
Convenient
Very convenient
Inconvenient
Very inconvenient
Total
Enough
Not enough
Total
12
4
16
75
25
100
13
3
16
81.2
18.8
100
2
3
5
33.3
66.7
100
1
2
3
25
75
100
28
12
40
72.9
27.0
100
Pearson chi2 (2) = 3.0 Pr = 0.2
According to Table 5 above, three quarter of the respondents in agreement with the location of
the ATMs were also satisfied by the ATM services. Also more than three quarter of the
respondents who were too much in agreement with the location of the ATMs were too satisfied
by the ATM services. More than a quarter of the respondents who said the location of the ATMs
was inconvenient further went on to say their services were not satisfactory and about half of the
20
respondents who said the services were very inconvenient also said the services were
unsatisfactory. From the table above, there was no significant relationship between the location
of the ATMs and the respondent’s satisfaction because the p-value (0.2) was greater than 0.05.
21
CHAPT-ER FIVE
5.0 SUMMARY, RECOMMENDATIONS AND CONCLUSIONS
5.1 Introduction
This chapter presents a summary of findings, recommendations and conclusions. Findings from
this study are based on analysis in the previous chapter and in reference to the research questions
in chapter one.
5.2 Summary of findings
The Univariate analysis revealed that there was an equal distribution in the respondents majority
of whom were either employed or students. All the respondents held accounts with Centenary
Rural Development Bank, knew about ATM banking and also all of them owned ATM cards.
More than a quarter of the respondents identified withdrawal of money to be the major service
identified by the ATM, followed by checking of balances on one’s account. Most of the
respondents said that the services offered by the ATM were satisfactory or enough.
Most of the respondents rated the services/functions of the ATM as effective, the cost of using
the ATM was rated cheap and the timing of the ATM was rated effective. More than half of the
respondents felt that their money was secure and also most of the respondents said that on
average they spent about 0-5 minutes in the queue before accessing the ATM services.
More than three quarters of the respondents said that they experienced problems while using the
ATM and the commonest problem identified was network/machine breakdown but the
respondents said that they experienced such problems less often. They also said that the bank had
taken some precautionary measure to avert the problems and more than three quarters of the
respondents said that all their problems had been solved once reported to the bank.
Pearson chi square statistic was used to test the hypotheses. It was found out that there was no
significant relationship between customer satisfaction and the location of the ATMs.
22
5.3 Recommendations
In order to increase the effectiveness of the ATM;
CERUDEB must sensitize its customer’s about the availability of the ATM and the different
services it offers.
The ATMs should be located in so many places especially busy places for proximity purposes
and for reducing the amount of time spent in the queue before accessing the ATM services.
CERUDEB should make sure that the cost of using the ATM is kept as minimum as possible and
this will encourage more people to use these services and this helps to reduce congestion in the
banks.
Constant and consistent checkups must be done on these ATM machines in order to avoid
network/machine break downs and any other possible problems that may inconvenience the
users.
5.4 Conclusion
Poor use and low effectiveness of ATM services leads to problems like congestion inside the
banks, spending much time in the queues before accessing the ATM services by the users and it
also discourages people to open up accounts with CERUDEB due to such problems as machine
breakdown that manifests into poor services offered.
From the study it can be realized that in order to improve the effectiveness of the ATM services,
all potential barriers to its effectiveness must be considered. An expanded view that takes into
account factors that lead to the low/poor effectiveness of the ATMs must be considered.
23
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http://www.qualitydigest.com/sept00/html/satisfaction.html.
Cardozo, R. (1965). An experimental study of customer effort, expectation and satisfaction.
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Ganesh, J., Arnold, J., & Reynolds, K.E. (2000). Understanding the customer base of service
providers: An examination of the differences between switchers and stayers. Journal of
Marketing, 64(3), 65-87.
Joseph, M., and Stone, G., (2003). An empirical evaluation of US bank customer perceptions
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Kathleen, Khirallah (2005). Customer Loyalty in Retail Banks: Time to Move Beyond Simple
Programs or a Product Orientation. View point Issue 127. Tower Group.
Krishnan, M.S., Ramaswamy, V., Meyer, C.M, & Damien, P. (1999). Customer Satisfaction
for Financial Services: the role of products, services, and Information Technology.
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Kumbhar (2011) The factors affecting on customers’ satisfaction: an empirical investigation
of ATM service. The IJBEMR Volume 2, Issue 3 ISSN 2229‐4848 factors affecting on
customers’ satisfaction: an empirical investigation of ATM service retrieved from
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Malcolm, A. Brimpong. (2008). The effect of Customer satisfaction on loyalty.
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25
APENDICES
MAKERERE UNIVERSITY
QUESTIONARE
Sir/ Madam;
I
am
Mr.………………………………………………………………..,
from
Makerere
University. May I take this opportune moment to inform you that this is an Academic research,
and that all the information’s you will fill in here or answer in here, shall be treated with
maximum confidentiality. It’s therefore my humble plea that you kindly pare for me a few
minutes of your limited time to answer for me the below questions.
Part I
Bio Data
Please tick applicable option appropriately.
1.
What is your gender?
Male
2.
What is your occupation?
Employed
Business
Student
None
Part II
3.
Female
Background Information
Do you hold an Account with Centenary Rural Development Bank?
Yes
4.
No
If yes, are you aware of the existence of ATM banking?
Yes
No
26
5.
If yes, do you posses an ATM card?
Yes
No
Part III
6.
7.
Services offered by ATM
What are the services offered by ATM?
Withdrawal
Cash/ Cheque deposit
Statement/ Mini-statement of account
Balances
Are the services offered enough for you or still lacking?
Enough
8.
If not, what other services would you like to see added?
i.
……………………………………………………………………..
ii.
…………………………………………………………………….
iii.
…………………………………………………………………….
Part IV
9.
Not enough
Effectiveness of ATM Services
How do you rate ATM services in terms of:a. Its available functions/ services offered?
Effective
Very effective
In effective
Very ineffective
b. Costs associated with deposit and withdrawal?
Costly
Very costly
27
Cheap
Very cheap
c. Security of your money?
Secure
Very secure
In secure
Very insecure
d. Time
10.
11.
Effective
Very effective
In effective
Very ineffective
How long do you often take in the queue before accessing the service (ATM)?
0-5 Minutes
6-10 Minutes
11-15 Minutes
16+ Minutes
Do you experience problem/s using ATM?
Yes
12.
No
If yes, what type of problem/s do you face?
Network/ Machine breakdown
Complication
Limited amount of money to be withdrawn
Card retention
Any other (Specify):………………………………………………………..
13.
14.
How often do you experience such problem?
Very often
Often
Less often
Not at all
Has your bank done any thing to avert such problem/s above?
Yes
No
28
15.
If yes, did it solve all the problem/s encountered or not?
Yes
16.
No
If no in 14 and 15 above, what would you suggest your bank should do in order to avoid
re-occurrences of such problems in future?
i.
…………………………………………………………………………………
ii.
…………………………………………………………………………………
iii.
…………………………………………………………………………………
PART V
17.
18.
Relationship between ATM services and customer satisfaction
What is your take on the location of ATM points?
Convenient
Very convenient
Inconvenient
Very inconvenient
Is/ are the ATM service points enough or you desire more branch/es be opened?
Yes
19.
No
If yes, why do you desire more branch/es be created?
i)
……………………………………………………………………………………
ii)
…………………………………………………………………………………….
iii)
……………………………………………………………………………………
29
TIME SCHEDULE
The researcher had estimated the time available to accomplish the proposal to be a period of
about four of six weeks. This time frame is estimated for until the final approval of the proposal.
By the end of this time frame, the researcher expects to submit to the Supervisor a complete
proposal.
30
BUDGET
The researcher has estimated the resources able to facilitate the process of completing the
compilation of this proposal in financial term to be in the range of between one hundred
thousand shillings (UGX 100,000) to one hundred and fifty thousand shillings only (UGX
150,000). This will help facilitate transport, access to the internet, library fees, typing, and
printing.
31