CHAPTER ONE

INTRODUCTION

1.1    Background
of the Study

Automated Teller Machines (ATM) are devices used
by bank customers to process account transactions. Typically, a user inserts
into the ATM a special plastic card that is encoded with information on a
magnetic strip. The strip contains an identification code that is transmitted
to the bank’s central computer by modem. To prevent unauthorized transactions,
a personal identification number (PIN) must also be used by the user using a
keypad. The computer then permits the ATM to complete the transaction; most
machines can dispense cash, accept deposits, transfer funds, and provide
information on account balances. Banks have formed cooperative, nationwide
networks so that a customer of one bank can use an ATM of another for cash
access, by extension all commercial bank’s ATM in Nigeria are inter-connected
(Okoh, 2010).

Globally, Automated Teller Machines (ATMs) have
been adopted and are still being adopted by banks. They offer considerable
benefits to both banks and their depositors. The machines can enable depositors
to withdraw cash at more convenient times and places than during banking hours
at branches. In addition, by automating services that were previously completed
manually, ATMs reduce the costs of servicing some depositors of demand. These
potential benefits are multiplied when banks share their ATMs, allowing
depositor of other banks access their account through a bank’s ATM (Andrews,
2003).

Banks have become the principal deployers of ATMs.
Two reason for this are that they want to increase their market share, although
due to the prevalence of ATMs, it is not likely to be the primary means by
which ATMs increase profitability for most banks, or/and above a certain level
of operations, the cost of a single transaction performed at an ATM is
potentially less than the cost of a transaction conducted from a teller, as
ATMs are capable of handling more transactions per unit of time than are
tellers (Laderman, 1990).

In Nigeria the deployment of ATM by banks and its
use by bank customers is just gaining ground and has burgeoned in recent times.
This has happened especially after the recent consolidation of banks, which has
in all probability, made it possible for more banks to afford to deploy ATMS or
at least become part of shared networks (Fasan, 2007).

The increased deployment of ATMs in the banking
sector has made the issue of technology relevance important.  ATM services have a history that is less than
ten years in Nigeria. At first, they were operated as elitist services designed
for those desirous of exclusive services. Cards were rare and the process for
obtaining them tortuous.

Presently, the use of ATM cards has been widely
promoted. Banks no longer appear to want personal contact with their customers.
Some banks have resorted to penalizing the customer as it were, for not
possessing an ATM card, by debiting the account of such a customer for
withdrawing below a certain amount across the counters. Agboola (2006) reported
that although only a bank had an ATM in 1998, by 2004, fourteen of them had
acquired the technology.

Agboola (2006) discovered that the adoption of ICT
in banks has produced largely positive outcomes such as improved customer
services, more accurate records, ensuring convenience in business time, prompt
and fair attention, and faster services etc. Also, the banks’ image is improved
creating a more competent market. Work has also been made easier, and more
interesting, the competitive edge of banks, relationship with customers, and
the solution of basic operational and planning problem has been improved.
Fananopo (2006) stated that Nigeria’s debit card transaction rose by 93 percent
over previous years owing to aggressive roll out initiatives by Nigerian banks,
powered by interswitch network the number of ATM transactions through
interswitch network had increased from, 1,065,972 in 2004, to 21,448,615
between January 2005 to March 2012.

This is a rise of 92.6 percent with respect to the
previous years. More than 1700 ATMs have been deployed on the network, while
about 12 million cards have been issued by 18 banks as at March 2012.

A recent survey conducted by Intermarc Consulting
Limited revealed that ATM services provided by Nigeria by banks and
non-financial institutions stood as the most popular e-business platforms in
Nigeria (Intermarc Consulting Limited, 2007). The report showed that awareness
for various banking services rendered by Nigerian banks is mostly limited to
the traditional banking services. The findings shows that 99% of the
respondents were aware of savings account, while 92 were aware of current
accounts and 72 percent are aware of local money transfer services. However,
among the more modern banking services such as electronic banking, internet
banking, point of sales (POS) transactions, money transfer, ATMS emerged as the
most popular with 96 percent awareness level ATM awareness also ranked higher than
awareness level about current accounts and slightly below savings account
(Omankhanlen, 2007).

Hence, there is clearly a need to study the impact
of automated teller machine (ATM) on bank customer satisfaction. It is against
this background that the research sees the subject-matter worthy of
investigation.

1.2    Statement of Problem

The impact of Automated Teller Machine cannot be
ignored if meaningful goals and objectives are expected to be achieved.

Automated teller machine is introduced into the
banking system to enhance good services delivery and efficient customer
satisfaction. Presently Nigeria problem in automated teller machine is the use
of outdated or inappropriate technology and lack of adequate knowledge all
experience about the machine being use in another problem facing automated
teller machine.

The success of our present day organization on how
to satisfy customer or consumer by providing a good service of economic growth
this end this research preoccupied with the impact of automated teller machine
on customer satisfaction in Access Bank (Nigeria) Kaduna.

1.3    Objective of the Study

The main objective of the study is to examine the
impact of Automated Teller Machine on bank customer’s satisfaction. Other
specific objectives are:

1.          
Investigate
how Automated Teller Machine enhances customer’s satisfaction in Access Bank.

2.          
Examine
the benefits a customer derives from using Automated Teller Machine (ATM) in
Access bank.

3.          
Identify
the challenges militating against ATM operation in Access Bank.

4.          
To
highlight the advantage of automated teller machine over manual system of queue
in line.

5.          
To
determine the level of usage of automated teller machine by the Nigeria
populace and the problem they encounter.

1.4    Research Questions

In the study, the research questions below are proffered with answer:

1.      How does ATM enhance customer’s
satisfaction in Access Bank?

2.      What benefits do customers derive from
using Automated Teller Machine (ATM) in Access Bank?

3.      What are the challenges militating against
ATM operation in Access Bank?

4.      What are the advantages of automated
teller machines over manual system of queuing in line?

5.      What level of usage and problem encounter
Nigeria populace on use of automated teller machines?

6.      How can the automated teller machine
enhance customer satisfaction?

1.5    Significance of the Study

The study would enable banks executives and indeed
the policy makers of the banks and financial institutions to be aware of Automated
teller Machine as a major product of electronic commerce in Nigeria with a view
to making strategic decisions. The research is equally significant because it
would provide answers to factors militating against the operation of Automated
Teller Machine (ATM) in Access Bank this work would also be useful to student,
scholars and researchers who may wish to undertake a similar study as they will
use it as springboard to their own work.

1.6    Scope of the Study

In pursuance of the objective of the study,
attention shall be focused on Automated Teller Machine (ATM) among other
electronic banking implementation. In order to conduct an empirical
investigation into the impact of Automated Teller Machine (ATM), the researcher
intend to restrict the study of the impact of Automated Teller Machine in
Access Bank (Nigeria) Kaduna.

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