Abstract

Financial institutions have been in the process of significant transformation. Despite this transformation, even though there is a richness of information on the nature and scope of internet banking, there is a scarcity of evidence about the impact of internet banking activities amongst banks that have adopted it compared to those that have not done so. This study examines the impact of ATMs on customers’ satisfaction.

The objective of the study was to determine how the introduction and usage of ATM products and services have a general impact on the effectiveness and efficiency of a bank’s service delivery. The study adopted a descriptive survey design. The target population comprised of 33 respondents of NFC Bank, data collection was done through the use of questionnaires and analyzed using statistical tools.

From the study, it was revealed that the role of ATM Banking adoption on the performance of the banking sector mainly refers to time reduction and quality improvement, rather than cost reduction as reported by many authors. Questionnaire administration technique via a structured questionnaire was used to source data and information from 33 selected respondents which correspond to the sample and Chi-Square analysis was used to analyze the data.

The study revealed that the introduction of ATM Banking has impacted positively on the bank’s human resource performance, in terms of improved efficiency and effectiveness of financial institutions’ performance even as it has enhanced customer satisfaction and increased productivity. The study recommends that critical infrastructure that aids the usage of ATM Banking products should be provided.

CHAPTER ONE

INTRODUCTION

1.1 Background To The Study

Globally, in 1997 the ATM Industry Association (ATMIA) was established in the USA as a global nonprofit trade association to service an industry that built around the global growth of the ATM. There are now close to 3.5 million ATMs installed.

The idea of out of -hour cash distribution developed from bankers needs in Asia, Europe, little was known of the Japanese device called “computer loan machine” and supplied cash as a three-month loan at 5% per annum after inserting a credit card, the device was operational in 1966.

ATM cards are fast replacing confounding withdrawal forms as a convenient way of getting our money from banks. In a way, they are rewriting the rules of financial transactions. A smart person no longer needs to carry a wallet- full of money; rather what he/she needs to do, is to fish out an Automatic Teller Machine (ATM) card from his/her pocket, insert it in the slot of the machine, punch in a few details and go home with hard cash (Singh and Komal, 2009).

Adrian Ashfield invented the idea of a card combining the key and user’s identity in February 1962 and it was granted UK pattern 959,713 for “access controller” in June 1964 and assigned to W.S Atkins and partners who employed Adrian Ashfield.

It is widely accepted that the first cash machine was put into use by Barclays Bank in its Enfield Town branch in North London on 27 June 1967 and was inaugurated by an English actor called Reg Varney. This invention was led by a team engineered by John Shepherd Barron of De La Rue printing firm who was awarded an honor in 2005 in New York by City Bank.

ATM is said to have evolved from early cash dispensers and is said to have first been introduced in the early 1970s. The dispensers were operated by a token in the form of a punch card. This enabled a customer to withdraw as sachets of suitable values of banknotes. These sachets process and then return the card to the customers.

Another source has it that the ATM concept was started around 1967 and that it was first installed in Enfield town, on the London borough of Enfield b Barclays Bank (Thomas, 1996). This is said to have been accredited to John Shepherd Baron, although George Simon registered a patent in New York, and Don Wetzel and two other engineers from Docatel Company also registered patents in April 1973 (Brendan, 1996). In the second generation, it was improved to the extent, that it made it possible to count proved money.

ATM is designed to perform the most important function of the bank. The plastic card is replacing cheques, personal attendance of the customers, banking hour’s restrictions, and paper-based verifications. ATMs are used as springboards for electronic fund transfers.

ATM itself can provide information about customer’s accounts and also receive instructions from customers-ATM cardholders. An ATM is an electronic fund transfer terminal capable of handling cash deposits, transfers between accounts, balance inquiries, cash withdrawals, and pay bills (Hood, 1976). In many parts of the world, the majority of bank customers regularly use Automatic Teller Machines (ATMs) and today’s western youths have not known a world without them.

It has taken approximately 30 years to establish ATMs as ubiquitous examples of public walk-up-and-use devices. The adoption has not been straightforward, requiring trust in the technology and willingness to modify behavioral strategies in the very sensitive domain of personal finance. Financial institutions have played an important role in encouraging ATM adoption.

The ATM flourishes within societies where time is precious and money readily available. This culture is composed of individuals, who have personal bank accounts and access to a wide range of technology. For these individuals, ATMs are convenient and reliable every day; push a few buttons and get the money.

As ATMs cross new borders and pervade different cultures, it is important to understand the role of cultural characteristics on people’s perception of attitudes towards, and action on the machine. This understanding is instrumental in facilitating technology uptake and improving design localization, or the process of infusing a specific cultural context into products designed for different cultures (Anderson, 1993).

In Africa, ATM is least as compared to other continents. It is estimated that in 2009, there were just 36,000 ATMs in Africa-far too low a ratio for a continent bearing one billion people. The African banking industry is witnessing unprecedented competition and 80% of ATMs are concentrated in four African Countries-Morocco, Egypt, South Africa, and Nigeria.

To stay ahead, banks are coming up with a variety of services to lure customers; services like 24 hours banking, services at doorstep, telephone banking, internet banking, Extended Business Hours (EBH), speedy processing are only a few to mention. A greater part of today’s bank transactions takes place somewhere else other than in-branch premises (Krishna and Rao, 2006).

The 2012 ATM future trends that, Africa will be the fourth most popular target market in 2017 after China, India, and the USA. Though the aim of these services is to satisfy customers, there is the need to understand customer awareness, perception, and importantly the level of satisfaction. Efforts are made to attract and retain customers by offering them a basket of tailored schemes supported by a state-of-the-art distribution system (the ATMs).

The whole exercise is helping banks to serve their customers fast and avoid human intervention totally. And for the customers, ATMs offer hassle-free cash withdrawals, no more fighting with the bank’s teller for change and fresh notes. The ATM has become a medium for non-cash transactions such as payment of bills, insurance payment, the printing of statements or even accessing the internet (Krishna and Rao, 2006).

In Cameroon, the value of ATM (per 100,000 adults) was 3.52 as of 2014. NFC (National Financial Credit) launched the ATM in 2012 to make life easier for its loyal customers. It has 7 branches over 10 regions of Cameroon. Though the northern regions of Cameroon are not yet served by the bank but progress is being made to create branches there. The company was created in 1989 and it has been ranked as the second in commercial activities in Cameroon.

1.2 Problem Statement.

The use of ATMs is a new way of accessing banking services necessitated by customer’s business needs and is enabled by fast-changing technology like the internet. Due to achievements brought about by increased utilization of Information and Communication Technology (ICT) in society, the banking industry has introduced ATM. ATMs provide a new method of dispensing customer services which are expected to increase efficiency, sales performance, and enhance customer satisfaction (Mboma, 2011).

ATM was introduced in Cameroon in 2004 and since then, it has been facing a lot of problems when carrying out its activities such as; breakdown of ATM machines, long queues at ATM service points, retention of customers cards, limited knowledge on the use of ATM cards and fraudulent transaction and operations. Studies have been carried out on the effect of ATM in providing services, and customer satisfaction in countries like the USA, UK, Malaysia, Singapore, Finland, and Australia (Gerrard and Cunningham, 2006).

However, no sufficient work has been done in Cameroon with regards to ATM services and customer satisfaction issues. It is therefore against this backdrop that the researcher was prompted to investigate and find out the impact of ATM and customer satisfaction in CCA Buea.

1.3 Research Questions

The research questions were:

1. To what extent are customers satisfied with ATM services offered by the CCA Buea branch?
2. What services does the ATM in Buea offer?
3. What are the problems faced by customers using ATM services?

1.4 Objectives Of The Study.

Main objective:

To examine the impact of ATM on customer’s satisfaction in Micro Financial Institutions (MFIs) in Buea

Specific objectives:

1. To examine the difficulties in introducing ATM machines.
2. To establish the effectiveness of ATM on account holders.
3. To establish a relationship between ATM and customer satisfaction.
4. To examine the problems of ATM on the bank’s customer satisfaction.

Further Readings

THE EFFECT OF ELECTRONIC BANKING ON CUSTOMER SATISFACTION IN THE BANKING SECTOR OF THE BUEA MUNICIPALITY