Customers Satisfaction On Atm.docx

The main objectives of the study can be stated as below: (a) To examine the level of non staff customer satisfaction associated with various aspects of ATM (such as promptness of card delivery, the performance of ATM, the service quality of ATM personnel etc.) (b) To examine the level of staff customer satisfaction associated with various aspects of ATM and (c) To make policy recommendations to improve the service quality of ATM.

Abstract One of the cardinal components of the banking industry is ATM service and the extent to which customers feel comfortable to patronize its service. This study therefore investigates ATM service and customer satisfaction in the Upper East region of banks. More specifically, the study looked at ATM service quality and customer satisfaction and factors that influence ATM usage. The study uses primary data collected from 200 respondents using convenience and simple random sampling methods. The logistic regression model was used to analyze the data. Multicollinearity and heteroskedasticit were corrected using the variances inflation factor (VIF) and robust standard errors respectively. The results suggest that customer’s satisfaction could be improved by convenience, security and privacy and reliability of the ATM services, as evidenced by a p-value of 0.0000 at 1% significance level. The results further indicate that convenience, security and privacy have positive effects on customer satisfaction at 1% significant levels, whereas reliability has negative effects on customer satisfaction at 1% significant levels. Also, security and privacy, ATM user fees, educational level and location of the ATM are found to be the major factors that influence customers’ willingness to use a particular ATM services in the studied area.It is recommended that,

management of the various banks in the region should use participatory approaches to ensure active involvement of its customers with regards to ATM operations and policies safeguarding it usage

Keywords: ATM; customer satisfaction; Indian banks; private sector banks; public sector banks Keywords: Automated teller machine, Customer satisfaction, Logistic regression, Banks

. Introduction Banking system can be traced to medieval and early renaissance Italy, to the rich cities in the north like Florence, Venice and Genoa, the Bardi and Peruzzi families dominated banking in the 14 th century Florence, establishing branches in many parts of Europe. The most famous Italian Bank was the Medic banks, established by Giovanni medic in 1397. During the 20th century, developments in telecommunication and computing resulting in major changes to ways banks operated and allowing dramatically increasing size and geographical spread. The late 2000’s financial crisis saw significant number of bank failures including some of the world’s largest bank and thereby raising much debate about banking regulations (Walter, 2012). The first decade of the 21st century also saw the culmination of the technical institution in banking over the previous thirty (30) years and saw a major shift away from traditional bank branches to internet banking (Charles, 2006).

Banking has long been problematic because local banks are often unstable and corrupt as such governments and various industries rely on international banks (UN report, 1995). In the years after independence, governments heavily regulated the banking sector and placed its limit on international competition. In recent decades, banking reforms has been a priority of International Monetary Fund (IMF) and World Bank (Walter, 2012). Banking services in the Gold Coast was exclusively provided by two expatriate banks functioning as Commercial Banks and the Central Gold Coast Bank (Vidal et. al, 1999). Since the inauguration of the Gold Coast Bank as the Central Bank of the then Gold Coast (1953) and its maturity to the Central Banks after independence in 1957, there has been the influx of a number of Commercial, Investment, Merchant, Development and Private Banks among others. Banking services contribute to the socio-economic development of every country. Banking creates employment opportunities to citizens of various countries. That is, banks helps in the day to day transactions of businesses and also provides security to customer’s income. Banking facilitates many developmental projects by granting loans. Banks contribute to the development of the country. They perform a lot of functions in the economy amongst which includes issue of money (in the form of bank unit and current accounts subject to cheque or payment at the customer’s order), netting and settlement of payments, credits intermediation (banks borrow and lend back - to - back on their own account as middleman), credit quality improvements through diversification of the bank’s assets and capital and maturity transformation [that is banks borrow more on demand debt and short term debt, but provide more long term loans] (ibid). Rafiqul et al (2005) noted that the banking industry like any other industry faces a lot of challenges in its operations that minimize the level of customer satisfaction. Some of the challenges include; accessibility of accounts when customers are not near their mother banks and long waiting time in the banking hall. This can be minimized by widening the infrastructural base of the banks. It has also been observed overtime that management of banks put their focus on treasury and corporate business whiles the operational side is often ignored. The operational side is as important as other segments of

banking and banks should strengthen and give incentives to those involved in the operational business. Another area in the banking industry where a lot of progress should be made is the e-banking. Although small and medium banks are now offering online services to their customers, the large banks with more expanded branches network and a large number of customers are required to move more expeditiously so as to optimally utilize the e-banking network. This will not only lower the transaction cost but will also help in improving the customer services (Rafiqul et al., 2005). After liberalisation of Indian Economy in July 1991, the Indian banking sector has seen tremendous expansion. Indian banking sector, which was mainly in domain of public sector, is in the process of transformation due to the entry of private sector banks and foreign banks. Staff competition in this sector is forcing the banks to become customer friendly and customer oriented. Thus the customer satisfaction has become more important with the increasing competition. The Banking sector has gone into complete transformation in the last two decades. The banking sector has undertaken various initiatives to attract and retain their customers. The modern banking has become customer-driven and technologydriven. During the last decade, technology has been dramatically transforming the banking activities in India. Driven by the challenges of competition, rising customer expectations and shrinking margins, banks have been using technology to reduce cost and enhance efficiency, productivity and customer convergence. Technologyintensive delivery channels, like Automated Teller Machines (ATMs), internet banking, tele-banking and mobile banking etc., have created a win-win situation by extending greater convenience and multiple options For customers while providing tremendous cost advantages to the banks (Shaineshand Choudhary, 2004).

foreign banks. Stiff competition in this sector is forcing the banks to become customer friendly and customer oriented. Thus The customer satisfaction has become more important with the increasing competition. The Banking sector has gone into complete transformation in the last two decades. The banking sector has undertaken various initiatives to attract and retain their customers. The modern banking has become customer-driven and technology-driven. During the last decade, technology has been dramatically transforming the banking activities in India. Driven by the challenges of competition, rising customer expectations and shrinking margins, banks have been using technology to reduce cost and enhance efficiency, productivity and customer convergence. Technology-intensive delivery channels, like Automated Teller Machines (ATMs), internet banking, tele-banking and mobile banking etc., have created a win-win situation by extending greater convenience and multiple options for customers while providing tremendous cost advantages to the banks .

Customer satisfaction and the banking sector Banking in the Western world is one of the many service industries where customer satisfaction has been the focus of research (Holliday, 1996). This is mainly because of the fact that the banking sector is

increasingly experiencing a high level of competition. This puts a tremendous amount of pressure on banks to improve their services (File and Prince, 1992; Goode and Moutinho, 1995; Goode and Moutinho, 1996; Goode et al.,1996; Levesque and McDougall, 1996). However, a similar argument can be made in connection with the banking sector in many Asian countries including India. For instance, the banking sector in India has witnessed intensive competition in recent years. The government has adopted liberalization policies since 1991, which has encouraged some international banks and private sector institutions to intensify their activities in the banking sector. Customers are also increasingly becoming sophisticated as they have access to the latest forms of delivery channels (such as the ATM, internet banking ,etc). Consequently, many financial institutions have to focus on increasing customer satisfaction and customer retention through improved quality of their services. An element that strongly drove customer satisfaction in banking was the warmth factor related to the bank’s features and personnel attributes (Rust and Zahorik, 1993). In another study by Krishnan and Ramaswamy (1998), satisfaction with perceived product quality was suggested as a primary driver of overall customer satisfaction. This finding contradicts the notion of banking being a service with high credence features, making evaluation of core service (technical quality) difficult. However, they also found that other drivers of satisfaction were the financial statements and services provided through different delivery channels. Their study suggests that the impact of service delivery factors differs substantially on customer satisfaction. For instance they found that for customers who trade heavily and have high investment assets, the effect of an automated telephone service is higher than the other drivers of satisfaction. The research has suggested that dissatisfaction is the major reason why customer switches banks (Manrai and Manrai, 2007). Among other factors, bank dis satisfaction typically come from fee charged for services (Colgate and Hedge, 2001; Manrai and Manrai, 2007;

Santonen, 2007) and customer switch banks to get more favourable price

The impact of ATM services on customer satisfaction in Indian banks (Farquhar and Panther, 2007). Thus the management of customer churn is a top priority of executives in service industries like banking (Sweeney and Swait, 2008). A net customer loss can have a detrimental effect on the bank market share and profit (Manraiand Manrai, 2007).Johnston (1997) forwarded the idea that banks in general were in effect ‘barking up the wrong tree’ by improving service quality efforts that had little or no effect on improving

customer satisfaction. Johnston (1997) Suggests that

satisfaction /dissatisfaction with retail banking does not stem from the same elements. Rather, some elements of service quality if improved, improve customer satisfaction however other elements may not improve satisfaction but merely act to keep dissatisfaction at bay or

at best, reduced dissatisfaction alone. The purpose of this paper is to understand the impact of ATM on the customer satisfaction in Indian banking sector by studying the satisfaction level of the customers . Following research questions will add clarity to the issue of customer satisfaction in retail banking, its determinants and relative influence, to aid retail bankers in highlighting or improving particular areas of service in order to increase overall customer satisfaction: 1 What is the level of customer satisfaction for ATM service in retail banking in India? 2 What are the determinants of customer satisfaction for ATM service in retail banking in India?

Logistic Regression Model The logit model is used to analyze the quality of ATM service and the level of customer satisfaction as well as the factors that influence the usage of ATM service in the studied area. In this study, most of the variables to be used are dummy hence the need for the usage of dummy variable regression models. In such models it is assumed implicitly that the dependent variable is quantitative whereas the explanatory variables are either qualitative or quantitative (Vasisht, 2010). In statistics, logistic regression, or logit regression, is a regression model where the dependent variable is binary (Fox, 2010). This study covers the case of binary dependent variables—that is, it takes only two values. Logistic regression measures the relationship between the binary dependent variable and independent variables by estimating probabilities of these independent variables, using a logistic function, which is the logistic cumulative distribution function. The logit model is given by; (1)

Where Yi is binary regress and, X in are regressors with observable variables that relate to alternative i and customer n, ß is a vector of coefficients of the variables ß0 constant and εi is random error term. We adopt equation (1) to include the empirical study variables for the first objective (quality of ATM service and the level of customer satisfaction) as; (2) And for the second objective (factors that influence the usage of ATM service) as; (3) Where β0……… β6 are the parameters of the logistic regression function to be estimated and εi is the error term. A general description and measurement of the variables is presented table

Results and Discussions 4.1. Demographic Characteristics of Respondents

Ages

and

Sex

Distribution

of

Respondents

Table 4.1 shows the frequencies and percentages of age and sex distribution of respondents. From the table males are the most frequent users of ATMs with a percentage score of 72.5% whilst females (27.5%) are the least users of ATM. It was also realized that the youth who fall between the ages of fifteen to twenty five (15- 25) and are predominantly students use ATMs more often as they represent 41.5% of respondents. The least users are customers of various banks who are above the forty five (45) years of age. Figure 4.1. Educational Statuses of Respondents

From figure 4.1 it is clear that 75.0% of the respondents have tertiary education 15.5% have had senior high school (SHS) education, 7.0% had their education up to the basic level (JHS) and 2.5% had never been to school. This indicates that people in tertiary levels uses ATMs and are more involved in the banking sector because they are believed to have a better understanding of banking operations and are usually engaged in formal employments and as such receive their salaries through banks. Table 4.2. Location of Respondents

The Results from table 4.2 shows that 64% of the respondents do not live near the bank and 36% live near their banks. This implies that, customers who do not live near the banks are more likely to use ATM than those who live near the banks. Logistic Regression Estimates of the Study Objectives

Table 4.3. Logit Estimates of ATM Service Quality and Customer Satisfaction

The results of the logistics regressions are represented in table 4.3. It is clearly observed that three variables were found to have statistical significant influence on customer satisfaction. They include convenience, security and privacy and reliability as evidenced by a p-value of 0.0000 at 1% significance level. The coefficient of convenience of ATMs had a positive sign and is statistically significant at 1%, with a marginal effect of 0.8575637. This suggests that an improvement in convenience (time spent with the ATM reduced and the ATM facility is more convenient) of usage of the facility will increase customer satisfaction by 0.8575637 in the region. Security and privacy of ATMs is also significant at 1% and the coefficient is positive. The positive direction of the marginal effect value 0.9189495 shows that there is a probability that customer’s satisfaction levels will be increased by 0.9189495 if the security and privacy features of ATMs are enhanced in the delivery of ATM services in the studied area.

Reliability had a negative marginal value of -0.8837429. This shows that the more customers are unable to make their transactions (such as cash withdrawals) successfully, the more likely customers satisfaction levels will decrease by 0.8837429. The Pseudo R2 was 0.76 which implies that 76% of the regress and is explained by the regressors and this is very strong. The pseudo R 2 reported in the output explains up to 76% of the variation in the dependent variable. The chi square reports that the model is statistically significant at 1%.

Factors that Influence ATM Usage Table 4.4. Logit Estimates of Factors that Influence ATM Usage

From table 4.4, the goodness of fit of the model is 0.2644 as indicated by the Pseudo R Square. This implies that the independent

variables explain up to 26% of the variations in the dependent variable, which is somehow weak. It can also be observed that security and privacy of the ATM, ATM user fees, educational level and location of the ATM are statistically significant 1%, 5% and 10% respectively. Security and privacy, educational level and location of the ATM have a positive marginal customers’ willingness to use ATM services will increase by their respective marginal values. The negative marginal effect value of ATM user fees indicates that, if the cost of making transactions on ATMs is increased by one unit, customer’s willingness to use the ATMs will decrease by it marginal value. effect values. This implies that if there is improvement in any of these variables.

Source of Data Primary data constitutes the main sources of data for this research. The sample size considered is 200 bank staffs and non staffs (customers) in the studied area. Convenience and simple random sampling techniques was used to select the sample units and both structured and semi structured questionnaires were administered to collect the data.

2 Literature review Customer satisfaction is an important theoretical as well as practical issue for most marketers and consumer researchers (Churchill and Suprenant, 1982; Goode and Moutinho, 1995; Piercy, 1996; Naser et al., 1999). Customer satisfaction is a major outcome of marketing activity whereby it serves as a link with various stages of consumer buying behaviour. For instance, if customers are satisfied with a particular service offering after its use, then they are likely to engage in repeat purchase and try line extensions (East, 1997). Customer satisfaction is widely recognised as a key influence in the formation of consumers’ future purchase intentions (Taylor and Baker,

1994).Satisfied customers are also likely to tell others of their favourable experiences and thus engage in positive word-of-mouth advertising (File and Prince, 1992). This positive word-of-mouth advertising is particularly useful in collectivist Asian cultures like India where social life is structured in a way to improve social relationships with others in the society (Hofstede, 1980). Dissatisfied customers, on the other hand, are likely to switch brands and engage in negative word-of-mouth advertising. A study conducted by Levesque and McDougall (1996) confirmed and reinforced the idea that unsatisfactory customer service could lead to a drop in customer satisfaction and willingness to recommend the service to a friend. This would lead to increase in switching by customers. So, the significance of customer satisfaction and customer retention in strategy development for a ‘market-oriented’ and ‘customer-focused’ firm cannot be underestimated (Kohli and Jaworski, 1990). Customer satisfaction can be considered as the essence of success in today’s highly competitive world of business. Customer satisfaction is increasingly becoming a corporate goal as more and more companies strive for quality in their products and services (Bitner and Hubbert, 1994). In this context, an understanding of ‘determinant of customer satisfaction’ (Churchill and Suprenant, 1982; Levesque and McDougall, 1996) is of great significance to marketers. The current paper reports findings from a recently conducted study, which looked in to the significance and importance of various determinants of customer satisfaction in retail banking in India .Customer satisfaction is a judgement by the customer, postpurchase. The most popular view of customer satisfaction in academia is that customer satisfaction is the judgement borne out of the comparison of pre-purchase expectations with post-purchase evaluation of the product or service experience (Oliver, 1997). Customer satisfaction can result from any dimension (whether or not it is quality related) and its judgements may arise from non-quality

issues (e.g. needs, equity, and perceptions of ‘fairness’) and require experience with the service or provider (Howard and Sheth, 1969; Taylor and Baker, 1994). Strong linkages have been apparent between service quality dimensions (for example speedy responses to enquiries) and overall customer satisfaction (Anderson and Sullivan, 1993).Research has proven that customer dissatisfaction has a greater psychological impact and a greater longevity compared to good experiences as it has been estimated that two out of three times as many customers will tell others of a bad experience than relate agood one. Therefore, there is a multiplier effect of bad service; it hurts not only the bottom line of the bank and its reputation, but implies additional costs of losing potential customers apart from existing ones. A number of studies have also shown that the costs of acquiring a new customer are more expensive than retaining existing ones (Reichheldand Sasser, 1990; Reichheld, 1996). In short, superior service offering and satisfaction derived from services enhance the customer experience and result in improvements in loyalty, retention and subsequently business performance. The different studies have concluded that:1 service quality is one of the effective means in building a competitive position in the service industry (Lewis, 1991)2 investments in service quality, customer satisfaction and customer relationships lead to profitability and market share (Rust and Zahorik, 1993)3 high-quality service and customer satisfaction often result in more repeat purchases and market share improvements (Buzzell and Gale, 1997)4 customer satisfaction leads to customer loyalty and this leads to profitability(Hallowell, 1996)5 the costs of customer acquisition are much higher than the costs of retention(Reichheld and Sasser, 1990).Levesque and McDougall (1996) comprehensively analysed the effects of service quality, service features and customer complaint handling on customer satisfaction in the Canadian retail banking sector. Their findings suggest that satisfaction determinants in retail banking are driven by a number of factors including service

quality dimensions .Key variables of service quality indicating customer satisfactions are – core and

relational performance, problem encountered and satisfaction with problem recovery. The provider’s offering can also be expected to affect customer satisfaction (overall) and ongoing patronage. Levesque and McDougall’s (1996) study indicated that the bank’s features (e.g. location), the competitiveness of the banks interest rates, the customers’ judgements about the bank employees’ skills and whether the customer was a borrower were all factors that drove customer satisfaction, while bank features and competitive interest rates were significant contributors. However, this study did not categorically point out which had more influence; rather both core and relational issues were categorised as one for retail banks to consider when satisfying customers. Customer satisfaction is increasingly becoming a corporate goal as more and more companies strive for quality in their products and services (Bitner and Hubbert, 1994). Inthis context, an understanding of ‘determinant of customer satisfaction’ (Churchill and Suprenant, 1982; Levesque and McDougall, 1996) is of great significance to marketers. The current paper reports findings from a recently conducted study, which looked into the significance and importance of various determinants of customer satisfaction in retail banking in India. Customer satisfaction is a judgement by the customer, postpurchase. The most popular view of customer satisfaction in academia is that customer satisfaction is the judgement borne out of the comparison of pre-purchase expectations with post-purchase evaluation of the product or service experience (Oliver, 1997).

Customer satisfaction can result from any dimension (whether or not it is quality related) and its judgements may arise from non-quality issues (e.g. needs, equity, and perceptions of ‘fairness’) and require experience with the service or provider (Howard and Sheth, 1969; Taylor and Baker, 1994). Strong linkages have been apparent between service quality dimensions (for example speedy responses to enquiries) and overall customer satisfaction (Anderson and Sullivan, 1993).Research has proven that customer dissatisfaction has a greater psychological impact and a greater longevity compared to good experiences as it has been estimated that two out of three times as many customers will tell others of a bad experience than relate a good one. Therefore, there is a multiplier effect of bad service; it hurts not only the bottom line of the bank and its reputation, but implies additional costs of losing potential customers apart from existing ones. A number of studies have also shown that the costs of acquiring a new customer are more expensive than retaining existing ones (Reichheldand Sasser, 1990; Reichheld, 1996). In short, superior service offering and satisfaction derived from services enhance the customer experience and result in improvements in loyalty, retention and subsequently business performance. The different studies have concluded that:1 service quality is one of the effective means in building a competitive position in the service industry (Lewis, 1991)2 investments in service quality, customer satisfaction and customer relationships lead to profitability and market share (Rust and Zahorik, 1993)3 high-quality service and customer satisfaction often result in more repeat purchases and market share improvements (Buzzell and Gale,

1997)4 customer satisfaction leads to customer loyalty and this

leads to profitability(Hallowell, 1996)5 the costs of customer acquisition are much higher than the costs of retention(Reichheld and Sasser, 1990).Levesque and McDougall (1996) comprehensively analysed the effects of service quality, service features and customer complaint handling on customer satisfaction in the Canadian retail banking sector. Their findings suggest that satisfaction determinants

in retail banking are driven by a number of factors including service quality dimensions .Key variables of service quality indicating customer satisfactions are – core and

relational issues were

categorised as one for retail banks to consider when satisfying customers.

The different studies have concluded that:

1 service quality is one of the effective means in building a competitive position in the service industry (Lewis, 1991) 2 investments in service quality, customer satisfaction and customer relationships lead to profitability and market share (Rust and Zahorik, 1993) 3 high-quality service and customer satisfaction often result in more repeat purchases and market share improvements (Buzzell and Gale, 1997) 4 customer satisfaction leads to customer loyalty and this leads to profitability(Hallowell, 1996) 5 the costs of customer acquisition are much higher than the costs of retention(Reichheld and Sasser, 1990).

2.1 ATM service quality Lovelock (2000) identified the dimension of ATM service quality such as secure and convenient location, adequate number of ATM, userfriendly system, and functionality of ATM. Davies et al. (1996) examined the factors that influence customers’ satisfaction on ATM service quality. These factors include costs involved in the use of ATM, and efficient functioning of ATM. Researchers have divergent views about the use and effectiveness of ATMs. Stemper (1990) stressed the positive dimension of ATMs based on freedom of

transaction. Effective service delivery in ATM system guarantees quality excellence and superior performance and provide autonomy to the customers (Lovelock,2000). Yavas et al. (2004) argued that customer-focused ATM delivery systems that fulfil their needs and maximise operational performance are essential dimensions for banks to achieve and sustain competitive advantage. Dilijonas et al. (2009) examined the essential aspects of ATM service quality in Baltic States. They identified essential resources (adequate number of ATMs, convenient and secure location and user-friendly system); important dimensions of operation of ATM (maximum speed, minimum errors ,high uptime, cash back-up); and value-based aspects (quality service at reasonable cost ,and maximum offering to cover maximum needs of customers) as vital facets. Al-Hawari and Ward (2006) compiled a list of five major items about ATM service quality that include convenient and secured locations, functions of ATM, adequate number of machines and user-friendliness of the systems and procedures. These items constitute important aspects of ATM service quality. Islam et al. (2007) examined the satisfaction level of ATM cardholders of a leading bank (HSBC) in Bangladesh. The study found significant relationship of ATM service quality with customers’ satisfaction. The study identified that location, personnel response, quality of currency notes, promptness of card delivery and performance of ATM were positively and significantly related to customers’ satisfaction. The security, frequent breakdown of machine, and insufficient number of ATMs were major contributors of customers’ dissatisfaction. In another study in Bangladesh, Shamsuddoha et al. (2005) found that 24 hours service, accuracy and convenient locations were the main predictors of customer satisfaction. The study also indicated that lack of privacy in executing the transaction, fear of safety and complexity of the machine were the major cause of concern for the customers. Joseph and Stone (2003), through focus group study in the USA, found that easy access to location, user-friendly ATM and security are important factors that influence majority of bank customers’

perception of ATM service quality. Patrício et al. (2003)under took a qualitative study of a Portuguese bank regarding customers’ use of multichannel offerings. The study identified accessibility and speed of operation as strong predictors of customers’ satisfaction, whereas security dimension and technical failures were main causes of dissatisfaction. Previous researchers have found that reliability feature of ATM is essential to consumers’ use of electronic channels of banking(Polatoglu and Ekin, 2001; Liao and Cheung, 2002).Literature provides support to the idea that pleasant experience of automated services provides enhanced value to the customers and attracted them to undertake improved business with their banks (Zhu et al., 2002). Marketers have identified customers’ satisfaction through behavioural, cognitive and attitudinal response to the service provider. These dimensions manifest in repeated use of services, tolerance with regard to price, word-of-mouth promotion and display of cognitive and attitudinal behaviour (Bowen and Chen, 2001). Athanassopoulos (2000) found strong empirical evidence of innovation, convenience, price and service quality as vital dimensions of customers’ satisfaction. An understanding of customers’ expectations enables organisations to offer customer-focused services and reduce attrition of customers. Literature offers significant evidence of the association between satisfactions of customers and superior financial performance, customer loyalty and market share (Beerli et al., 2004; Wood, 2008). A number of studies have highlighted the satisfaction of customers with ATMs (Moutinho,1992; Goode and Moutinho, 1996; Wan et al., 2005; Mobarek, 2007; Komal andSingh, 2009).Mcandrews (2003) identified that secure and convenient location, adequate number of ATM, userfriendly system and functionality of ATM play important role in customers’ satisfaction. While, Joseph and Stone (2003), Mobarek (2007) and Dilijonaset al. (2009) mentioned that adequate number of ATMs, convenient and secure location, user-friendly system, speed,

minimum errors, high uptime, cash back-up, cost and service coverage are essential service quality aspects of ATM. Yoo and Donthu (2001) And Szymanski And His (2000) Empirically found that customers’ perception of security and privacy played an essential role in their satisfaction. Liao and Cheung (2002) argued that expectation of security is essential in shaping customers’ perception of service quality. The concern of customers about security and privacy, while using this service, is a major cause of their dissatisfaction (Madu and Madu, 2002).Wan et al. (2005) discovered that the accuracy of transactions’ information was a major predictor shaping customers’ perception of ATM service quality. Tan et al. (2003)found that accuracy of transactions’ information aspect positively and significantly contributes toward customers’ perception of quality. The literature provides strong support that reliability is an essential determinant of customers’ perceived service quality and positively relates to customers’ use of ATM services (Polatoglu and Ekin, 2001;Fassnacht and Koese, 2006).Komal and Singh (2009) had identified that customer satisfaction is one of the major factors measuring the performance of the banks. They examined the relationship between various ATM facilities, factors affecting the choice of ATM and its inter play with customer satisfaction. This study has analysed the customer satisfaction level in two terms, i.e. Material Customer Satisfaction (MCS) level and Abstract Customer Satisfaction (ACS) level. Customer satisfaction in material sense denotes the aggregate position of the banks in terms of fee charged, frequency with which problems are faced

and post-purchase behaviour of the customers. In abstract sense, customer satisfaction level denotes the position of the banks in terms of post-purchase behaviour, the efficiency of facilities provided and

the example of others using the ATM of the same bank. It indicated that there is direct relation between fee charged and customer satisfaction. The overall material customer satisfaction is highest in SBI, followed by ICICI and HDFC bank. In case of abstract customer satisfaction it is in reverse order ;HDFC has the highest satisfaction level followed by ICICI and SBI. Kumbhar (2011) has stated that system availability, fulfilments and efficiency, security and responsiveness, easiness, convenience, problem handling and contact were not significantly correlated with overall satisfaction in ATM service. However, cost-effectiveness of ATM service was positively and significantly correlated with overall customers’ satisfaction in ATM services. Khan (2010) in his study of Pakistani bank has stated that there is a positive and strong relationship between ATM service quality and customers satisfaction. The study has identified that convenience, efficient operation, security and privacy, reliability and responsiveness positively and significantly affect customers’ perception of ATM service quality. ATM service quality also relates to the ability of the bank staff to provide the agreed services timely, accurately, dependably and promptly. Customers prefer to resolve their complaints expeditiously (Karjaluoto et al.,2002). Gerrard and Cunningham (2003) found that staff response to customers’ ATMrelated needs influence their perception about service quality. The responsiveness is crucial to sustain service quality and facilitates building long-term relationship between service provider and the customers (Long and McMellon, 2004; Bauer et al., 2006).

3 Methodology 3.1 Data collection method The main instrument used for data collection in this research was the questionnaire; there sponses have been collected by means of face-toface interviews by author.

3.2 Development of research instrument 3.2.1 Step 1 In order to develop a questionnaire, the personal interviews of the bank managers were carried out at the branch level as well as regional headquarters levels of these banks located in Delhi. The printed materials about the ATM services provided by these banks were also collected. Various books, journals and banks websites were also referred to develop the questionnaire. The questionnaires items were selected on the basis of literature review and discussion with the branch managers and customers of the banks and what service they look for in an ATM. 3.2.2 Step 2 Based on the information gathered and study material collected from these banks, the following characteristics were short listed for further study: • location of ATM/proximity to your residence/office • availability of cash • time to process request • number of ATMs in locality • response to the query • availability of desired forms • availability of cheque drop boxes

• queues at ATM/time required doing a transaction • printed statement of transaction • cash deposit facility • availability of networked (shared) ATMs • fee charged for using other bank’s ATMs. 3.2.3 Step 3 Prior to the final survey, the questionnaire was pre-tested using a sample of respondents similar in nature to the final sample. The goal of pilot survey was to ensure read ability and logical arrangements of questions. The questionnaire was administered to100 customers of selected banks (25 from each selected bank) included in the study to ensure that the respondents understand the questions. The respondents were made aware of the purpose of survey and were asked to go through the questionnaire carefully. Only those customers who had an account in any of the selected banks were included in the study. Each respondent was asked to complete the questionnaire and comment on the contents of the questionnaire. 3.2.4 Step 4 The responses of pilot study were thoroughly analysed. The questionnaire was reviewed in light of comments and shortcomings and then it was revised accordingly. The final questionnaire was administered to 400 customers (100 from each selected bank) as per the sampling plan. The overall satisfaction of the respondents towards the ATM services was gauged using a questionnaire containing close-ended question, which were designed to ascertain satisfaction level of the respondents using a five-point Likert’s scale with following options: Excellent, Good, Satisfactory, Poor, Worst, Not used. Excellent being the highest satisfaction level followed by Good,

Satisfactory and Poor. Worst was considered as the no satisfaction level. ‘Not used’ option was given, in case a particular service/characteristic of ATM is not used or availed by any respondents. The respondents were asked to read the questions and then choose the option for their response. Questions were explained to them if the respondent does not understand a particular question.

3.3 Sampling procedure To obtain a representative sample, a probability sample of population was drawn.400 respondents were divided equally among the four selected banks. In each bank, simple random sampling method was adopted. In simple random sampling, every member of the population has an equal chance of being selected in sample.

Sampling plan Sampling unit: who is to be surveyed? This calls for defining the target population to be surveyed. In this research the sampling unit was the customers of four selected banks, two banks from public sector and two banks from private sector (i.e. State Bank of India, Punjab National Bank, ICICI bank and HDFC bank) who had an account in any branch located in NCR Delhi. Random sampling method was adopted to select the customers.2 Sample size: how many people should be surveyed? In this survey the sample size decided was 400. This is fairly large enough to represent the population. Further It was decided that 100 respondents will be surveyed to make equal representation of each selected bank.3

Sampling procedure: How should the respondents be chosen To obtain are presentative sample, a probability sample of population respondents were divided equally among the four selected banks. In each bank simple random sampling method was adopted. In simple random sampling every member of the population has an equal chance of being selected in sample.4

Contact methods : In this research the intercept interview method was adopted because it is not possible to take appointment from a large number of respondents. Respondents were told about the purpose of this research and were helped in understanding any particular question in case there was any need. Sufficient time was given to respondents to go through the questionnaire before recording their responses. The questionnaire was administered to 400 respondents at different locations in Delhi, Gurgaon, Noida, Faridabad and Ghaziabad. Most of the responses have been collected either r from the branches or from the ATMs. Some of there sponses were also collected from institution and marketplaces so as to make it more representative in nature. Author has taken due care so as not to influence the respondent while recording the responses. Also the author has ensured that no personal bias or distortion take place while recording the responses.

3.4 Research and statistical tools employed The research and statistical tools employed in this study are frequency analysis, factor analysis and ANOVA (analysis of variance). SPSS 16 was used to perform statistical analysis. The reliability of the data was carried out by using Cronbach’s alpha value .Frequency analysis on the main factor under study indicates overall satisfaction levels of respondents with retail banking in general. ANOVA was

employed to find the significant factor which will determine the overall customer satisfaction. The third major analysis carried out was a factor analysis to examine the underlying or latent dimensions within variables of overall satisfaction (Hair et al., 1998). Both Bartlett’s test of spherecity and Measure of Sampling Adequacy (MSA) were also carried out to ensure that the requirements of factor analysis were met.

4 Data analysis The total sample size is 400 respondents. The respondents were primarily within the20–40 years category with majority of them having either graduate or post-graduate education, employed in the private service category. Table 1 illustrates the characteristics of the sample utilised in this study.

5 Limitations of the study The study has been carried out in the National Capital Region, which is metropolitan city area where the education level and income level of population is very high as compare to rest of India except the other metropolitan cities, hence the finding of the research can be generalised only for urban areas and cannot be generalised for the whole country.

6 Future research This research focused on determinants of ATM service quality and its effect on customer satisfaction. However, the research did not study the association between customer satisfaction and retention of customers. Additional research may well explore the relationship between these two constructs. Age has a significant effect on the

pattern of use of technology-based services. Generally the youth prefer to use innovative and technology-based delivery channel like ATM that offer multiple benefits and autonomy of executing the transaction (Wan et al., 2005). The old age people are generally shy of use of ATM because of perceived risk of failure, complexity, security and lack of personalised service. Future research should explore the association between age and attitude and determine its effects on the ATM service quality and customers’ satisfaction .Similar research can be undertaken in rural area to find the differences between the customer satisfaction level between urban and rural customers.

7 Managerial implications The rapid increase in number of automated delivery channels and customers’ preference to use ATM because of multifaceted attributes are placing pressure on banks to respond aggressively to meet the customers’ needs. The study provides necessary input to the bank management to increase customers’ satisfaction through improving ATM service quality. The focus should not be on ATM service quality dimensions only. This aspect should be augmented and integrated with other aspects of the service quality of banks for satisfaction of customers. To further improve the service quality, ATM service should be able to provide enhanced interactivity, diversified offerings, and facilitate customers to participate in improving the service encounter with ATM and make it a memorable and pleasant experience. The banks should focus not only on the satisfaction of ATM users, but also aim at delighting them to ensure their retention .Banks should develop strategies to motivate non-users through awareness, education, extending personalized services, and demonstrating the functions of ATMs. Quick response to customers’ needs and queries about the ATM-related services are important to improve the service standards of ATM. This would facilitate customers to participate in improvement

of service quality, learn and perform, and have a pleasant experience through two-way communication. Banks should make a commitment to redress the service failures of ATMs. The banks under study may identify more locations for establishing new ATMs; however, if it is not possible either due to non-availability of space or resources crunch, they can have mutual understanding in sharing of their ATMs so that customers are able to do ATM transaction in the places where there is no ATM of their own bank. This will further enhance the customer satisfaction.

Conclusions and Recommendations The ATM services have positive impact on the customer satisfaction. Some characteristics have very high customer satisfaction whereas some characteristics have the lower customer satisfaction level which is major concern area for the banks and there is need to pay more attention of the banks. The factors related to infrastructure development need further probing and research. The response to query and availability of cheque drop box which are the most significant factors have overall lower satisfaction level; these two factors need further attention from these banks and there is scope for further improvement in the customer satisfaction levels. So the concerned banks need to keep these factors in find while designing the strategies to enhance the customer satisfaction and retain them to enhance their profitability. The rapid growth in use of ATMs in India offers opportunities to banks to use customers’ passion for this innovative service for strategic advantage. The banks should proactively monitor customers’ preferences with regard to use of this delivery channel for effective response. Banks should focus on important aspects of security and privacy as well as efficient operation of ATMs. Banks should also augment and diversify their offerings through ATM and use this medium to build a strong and sustained relationship with customers. This study investigates ATM service and customer satisfaction in the Upper East region of bank. More specifically, the study looked at ATM service quality and customer satisfaction and factors that influence

ATM usage. The study uses primary data collected from 200 respondents using convenience and simple random sampling methods, Multi collinearity and hetero skedasticity were corrected using the variances inflation factor (VIF) and robust standard errors respectively. The results suggest that customer’s satisfaction could be improved by convenience, security and privacy and reliability of the ATM services, as evidenced by a p-value of 0.0000 at 1% significance level. The results further indicate that convenience and security and privacy have positive effects on customer satisfaction at 1% significant levels, whereas reliability has negative effects on customer satisfaction at 1% significant levels. Also, security and privacy, ATM user fees, educational level and location of the ATM are found to be the major factors that influence customers’ willingness to use a particular ATM services in the studied area. Security and privacy, educational level and location were found to influence ATM usage positively, whiles ATM user fees has negative influence. Base on the findings, it has been realized that customer satisfaction is influenced by convenience, security and privacy and reliability of the ATM services in the studied area while customers’ willingness to use ATM services is influenced by security and privacy ,ATM user fees, educational level and location of the ATM in the studied area. It is recommended that banks should increase the number of ATM installations at the banks premises and at vantage points where customers can have full access to it more easily.This will prevent customers from travelling long hours before having access to some banking services and hence, reduce pressure on one ATM. Banks should put some vital mechanisms in place and intensify the educational problems on the ATM.They should provide personnel who are well resourced in the operation of the ATM to assist customers who are not able to use the machine. Participatory approaches should be put in place to ensure active involvement of customers with regards to ATM operations and policies safeguarding its usage. Banks should provide lower or lesser denominations in the ATM for customers who want smaller denominations to withdraw at anytime.

The ATM should also be able to always issue receipts after transactions for customers to know their accounts balances.