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..........................................................................................................ivTABLE OF CONTENTS.............................................................................................................vLIST OF TABLES.....................................................................................................................viiLIST OF FIGURES..................................................................................................................viiiACRONYMS..............................................................................................................................ixABSTRACT.................................................................................................................................x

CHAPTER ONE..........................................................................................................................11.0 INTRODUCTION..................................................................................................................11.1 Background to the study...................................................................................................11.2 Statement of the Problem..................................................................................................21.3 Purpose of the Study.........................................................................................................21.4 The Specific Objectives of the study were:......................................................................21.5 Research Questions...........................................................................................................31.6 Scope of the Study............................................................................................................31.6.1 Content Scope/ Variable Scope.........................................................................................31.6.2 Geographical Scope..........................................................................................................31.6.3 Time Scope.......................................................................................................................31.7 Significance of the Study..................................................................................................3

CHAPTER TWO.........................................................................................................................52.0 LITERATURE REVIEW.................................................................................................52.1 Introduction.......................................................................................................................52.2 The Concept of ATM........................................................................................................52.2.1 Evolution of ATM.............................................................................................................52.2.2 Operation of ATM............................................................................................................62.3 Effectiveness of ATM.......................................................................................................62.4 The Concept of Customer Satisfaction.............................................................................72.4.1 Who is a Customer..............................................................................................................72.4.2 Importance of Customer satisfaction................................................................................72.4.3 The relationship between ATM use and Customer satisfaction.......................................82.5 Conclusion........................................................................................................................9

CHAPTER THREE....................................................................................................................103.0 RESERCH METHODOLOGY.......................................................................................103.1 Introduction.....................................................................................................................103.2 Study Design...................................................................................................................103.3 Area of Study..................................................................................................................103.4 Population.......................................................................................................................103.5 Sample Size and selection methods................................................................................10

v

3.6 Data Collection Tools/ Methods.....................................................................................103.7 Data Management...........................................................................................................103.7.1 Data Processing...............................................................................................................113.7.1 Data Analysis..................................................................................................................113.8 Limitations......................................................................................................................11

CHAPTER FOUR......................................................................................................................124.0 PRESENTATION, INTERPRETATION AND DISCUSTION OF FINDINGS...........124.1 Introduction.....................................................................................................................124.2 Background characteristics of the respondents...............................................................124.3 Services offered by ATM................................................................................................144.4 Effectiveness of ATM services.......................................................................................154.5 Relationship between ATM services and customer satisfaction.....................................20

CHAPT-ER FIVE......................................................................................................................225.0 SUMMARY, RECOMMENDATIONS AND CONCLUSIONS........................................225.1 Introduction..........................................................................................................................225.2 Summary of findings............................................................................................................225.3 Recommendations................................................................................................................235.4 Conclusion............................................................................................................................23REFERENCE.............................................................................................................................24APENDICES..............................................................................................................................26

QUESTIONARE...........................................................................................................................26

TIME SCHEDULE....................................................................................................................30BUDGET....................................................................................................................................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

ii. To establish the effectiveness of ATM service on account holders.

iii. To establish relationships between ATM services and customer satisfaction

1.5 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?

1.6 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

practice. Musiime and Biyaki,(2010). According to, Patricio et al. (2003) customers will use 8

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

Percen

t

Male 20 50

Female 20 50

Total 40 100

Occupation    

Employed 12 30

Business 8 20

Student 12 30

None 8 20

Total 40 100

Do you have an account with Centenary Rural Development

Bank?    

Yes 40 100

No 0 0

Total 100 100

If yes, are you aware of ATM banking?    

Yes 40 100

No 0 0

Total 40 100

If yes, do you possess an ATM card?    

Yes 40 100

No 0 0

Total 40 100

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

Are the services offered enough?    

Enough 27 67.5

Not enough 13 32.5

Total 40 100

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

Costs associated with deposit and withdrawal    

Costly 10 25

Very costly 5 12.5

Cheap 19 47.5

Very cheap 6 15

Total 40 100

Security of your money    

Secure 22  55

Very secure 15 37.5

Insecure 1 2.5

Very insecure 2 5

Total 40 100

Time    

Effective 31 77.5

Very effective 7 17.5

In effective 1 2.5

Very ineffective 1 2.5

Total 40 100

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

ATM offers them (respondents) all/most they require of it and to their expectation as per

16

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.

0-5 minutes 6-10 minutes 11-15 minutes 16 minutes 17+ minutes0

5

10

15

20

25

30

35

40

1. 0-5 minutes 34.1%

17

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.

Table 4. Percentage distribution of respondents by problems experienced when using the ATM.

18

Do you experience problems when using the ATM? Total Percent

Yes 28 70

No 12 30

Total 40 100

If yes, what type of problems do you face?    

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

How often do you experience such problems?    

Very often 2 7.1

Often 11 39.3

Less often 15 53.6

Total 28 100.0

Has your bank done anything to avert such problems?    

Yes 26 92.9

No 2 7.1

Total 28 100

If yes, did it solve all the problems encountered or not?    

Yes 23 88.5

No 3 11.5

Total 26 100

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

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

19

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 Enough Not enough Total

Convenient

12

75

4

25

16

100

Very convenient

13

81.2

3

18.8

16

100

Inconvenient

2

33.3

3

66.7

5

100

Very inconvenient

1

25

2

75

3

100

Total

28

72.9

12

27.0

40

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

respondents who said the services were very inconvenient also said the services were

20

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

REFERENCE

Balunywa, W. J. (2003). A hand book of business management. The business publishing

group.

Brownlie, J, Clarke, M C & Howard, C J. (1989). The failure of the cytopathogenic biotype

of bovine virus diarrhoea virus to induce tolerance. Immunobiology 4:151.

Cacioppo, Kevin. (2000). Measuring and Managing Customer Satisfaction. Quality Digest

http://www.qualitydigest.com/sept00/html/satisfaction.html.

Cardozo, R. (1965). An experimental study of customer effort, expectation and satisfaction.

Journal of Marketing Research, Vol. 2 pg 224-9.

Cronin, Mary J. (1997). Banking and Finance on the Internet

Czepiel, J., (1990). Managing relationship with customers: a differentiating philosophy of

making, in service management effectiveness. Bowen, D., and Case, R, San Francisco: Jossy-

Base Publisher.

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

of the impact of technology in service delivery in the banking sector. International Journal of

Retail & Distribution Management 31 (4), 190-202.

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.

Management Science, 45(9), 1194-1209.

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

http://www.scribd.com/doc/47721244/customer-satisfaction-with-regard-to-ATM-services

Lucy, M. Mboma. ATM and customer satisfaction. A case study of the banking Industry in

Tanzania. Retrieved on 15th April 2011 from

http://www.skirec.com/images/download/ijbemr/IJBEMR-march-2011/IJBEMR%2012.pdf. 24

Malcolm, A. Brimpong. (2008). The effect of Customer satisfaction on loyalty.

Maxwell (1990) Resolution of banking Disputes

Musiime, A. and Biyaki, F. (2010). Banks perception of Info Tech usage, service delivery

and customer satisfaction: Reflections on Uganda’s banking sector. Retrieved on 15th April

2011 from www.bankperceptions.co.ug

Patricio, L, Fisk, R, Cunha, J. (2003). Improving satisfaction with bank service offerings:

Measuring the contribution of each delivery channels, Managing Service Quality, Vol. 13

No.6, Pg 471-82.

Reichheld, F. and Sasser, W. (1990). Zero defects: quality comes to services, Harvard

Business Review, Sept- Oct, 1990, pp 105-111.

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 Female

2. What is your occupation?

Employed Business

Student None

Part II Background Information

3. Do you hold an Account with Centenary Rural Development Bank?

Yes No

4. If yes, are you aware of the existence of ATM banking?

26

Yes No

5. If yes, do you posses an ATM card?

Yes No

Part III Services offered by ATM

6. What are the services offered by ATM?

Withdrawal Cash/ Cheque deposit

Statement/ Mini-statement of account Balances

7. Are the services offered enough for you or still lacking?

Enough Not enough

8. If not, what other services would you like to see added?

i. ……………………………………………………………………..

ii. …………………………………………………………………….

iii. …………………………………………………………………….

Part IV Effectiveness of ATM Services

9. 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?

27

Costly Very costly

Cheap Very cheap

c. Security of your money?

Secure Very secure

In secure Very insecure

d. Time

Effective Very effective

In effective Very ineffective

10. 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

11. Do you experience problem/s using ATM?

Yes No

12. 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. How often do you experience such problem?

Very often Often

Less often Not at all

14. Has your bank done any thing to avert such problem/s above?

28

Yes No

15. If yes, did it solve all the problem/s encountered or not?

Yes No

16. 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 Relationship between ATM services and customer satisfaction

17. What is your take on the location of ATM points?

Convenient Very convenient

Inconvenient Very inconvenient

18. Is/ are the ATM service points enough or you desire more branch/es be opened?

Yes No

19. 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

32