Rift Valley University

Bole Special Campus

Department of Business Management

ASSESSMENT OF AUTOMATED TELLER MACHINE

(ATM) SERVICE ON CUSTOMER SATISFACTION: THE
CASE OF UNITED BANK ADDIS ABABA CITY IN THE
SELECTED BRANCH CUSTOMERS

A Thesis Submitted in Partial Fulfillment of the Requirements for

Master of Business Administration
(MBA)
By: SELAM ALEMU

Advisor: Ketema Adere (Dr.)

Addis Ababa

June, 2019
STATEMENT OF DECLARATION

I, the undersigned hereby declare that this MBA thesis entitled “Assessment of Automated Teller
Machine (ATM) Service on Customer Satisfaction: The Case of United Bank Addis Ababa
City in the Selected Branch Customers ” is my own original work and it has not been presented
for the award of any other Degree or otherwise in any other university or institution. Sources and
materials used in this thesis have been duly acknowledge and properly documented.

Declared by:

Name: ________________________________

Signature: ____________________________

Date: ___________________________________

Confirmed by Advisor:

Name: ________________________________

Signature: ____________________________

Date: ___________________________________
ACKNOWLEDGMENT

First and foremost, I would like to thank my Almighty GOD, who helped me in every facets of
my life.

Next, I wish to express my gratitude to Dr. Ketema Adere, my advisor for his constructive
comments since the inception of this study.

I am also deeply thankful for all customers of United Bank S.C who have responded for the
questionnaire and also management body and employees of the bank who were helpful to me in
any way during my study. I am also grateful to my friends for their encouragement. I deeply
wish to pay highest tribute to my families for their love, support, encouragement and advice.

Finally, I want to express my deepest thanks to those who encouraged me, which I didn’t mention
their name by providing all the necessary support in my endeavor.

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Table of Contents
ACRONYMS.................................................................................................................................................iv
LIST OF TABLES..........................................................................................................................................ii
LIST OF FIGURES.......................................................................................................................................iii
ABSTRACT..................................................................................................................................................iv
CHAPTER ONE.............................................................................................................................................1
1. INTRODUCTION..........................................................................................................................1
1.1 Background of the Study................................................................................................................1
1.2 Statement of the Problem...............................................................................................................2
1.3 Research Question..........................................................................................................................4
1.4 Objective of the Study....................................................................................................................4
1.4.1 General Objective...........................................................................................................................4
1.4.2 Specific Objectives..........................................................................................................................4
1.5 Delimitation of the Study...............................................................................................................5
1.6 Significant of the Study..................................................................................................................5
1.7 Organization of the Study...............................................................................................................5
CHAPTER TWO............................................................................................................................................6
2 REVIEW OF THE RELATED LITERATURE..............................................................................6
2.1 Introduction....................................................................................................................................6
2.2 Theoretical Literature Review........................................................................................................6
2.2.1 The Role of ICT in Banking Operation...................................................................................6
2.2.2 Electronic Banking..................................................................................................................8
2.2.3 Concept of E- Banking............................................................................................................9
2.2.4 E- Banking Products...............................................................................................................9
2.2.5 E-Banking Development in Ethiopia.....................................................................................10
2.2.6 Automated Teller machine (ATM)........................................................................................11
2.2.7 ATM Service Quality............................................................................................................15
2.2.8 The Concepts of Service Delivery.........................................................................................16
2.2.9 Characteristics of Service......................................................................................................17
2.2.10 Service Quality......................................................................................................................18
2.2.11 Customer Satisfaction on Automatic Tellers Machine..........................................................20
2.3 Empirical Review Literature.........................................................................................................23

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 2.4 Conceptual framework for ATM services and Customer Satisfaction..........................................25
2.5 Operation of Variables..................................................................................................................26
CHAPTER THREE......................................................................................................................................27
3. RESEARCH METHODOLOGY.................................................................................................27
3.1 Overview of the Methodology......................................................................................................27
3.2 Research Design...........................................................................................................................27
3.3 Data Source..................................................................................................................................27
3.4 Methods of Data Collection..........................................................................................................27
3.4.1 Questionnaires......................................................................................................................27
3.4.2 Interviews.............................................................................................................................27
3.4.3 Secondary Data.....................................................................................................................28
3.5 Sampling Techniques...................................................................................................................28
3.6 Procedure of Data collection.........................................................................................................29
3.7 Method of Data Analysis..............................................................................................................30
3.8 Anticipated Ethical Issues.............................................................................................................30
CHAPTER FOUR........................................................................................................................................31
4 RESULTS AND DISCUSSION...................................................................................................31
4.1 Introduction..................................................................................................................................31
4.2 Demographic characteristics of Respondents...............................................................................31
4.3 ATM Services Quality and Customer Satisfaction Based on the SERVQUAL Dimensions........33
4.4 Interpretation of Interview Questions...........................................................................................48
CHAPTER FIVE..........................................................................................................................................50
5.1 Introduction..................................................................................................................................50
5.2 Findings........................................................................................................................................50
5.3 Conclusion....................................................................................................................................52
5.4 Recommendations........................................................................................................................52
References....................................................................................................................................................54
3 56
APPENDIX..................................................................................................................................................56
4 63

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ACRONYMS

ATM: Automated Teller Machine

E-BANKING: Electronic Banking

EFT: Electronic Fund Transfer

ICT: Information and Communication Technology

UB: United Bank

PIN: Personal Identification Number

POS: Point of Sale
PC: Personal Computer

CPU: Central Processing Unit

MS: Microsoft

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LIST OF TABLES

Table 3.1 Table Sample Size Determination.................................................................................................29

Table 4.1: Demographic characteristics of Respondents...............................................................................31
Table 4.2: Factors Affecting ATM Service Quality of Customers Satisfaction on Tangibility.....................34
Table 4.3: Factors Affecting ATM Service Quality of Customers Satisfaction on Reliability......................37
Table 4.4: Factors Affecting ATM Service Quality of Customers Satisfaction on Responsiveness.............40
Table 4.5: Factors Affecting ATM Service Quality of Customers Satisfaction on Assurance/ privacy &
Security/.......................................................................................................................................43
Table 4.6: Factors Affecting ATM Service Quality of Customers Satisfaction on Empathy........................46

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LIST OF FIGURES

Fig 2.1 Conceptual framework of the study (Parasuraman et al., 1988)................................................26

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ABSTRACT

Now a day’s business organizations, especially the banking industry operates in a complex and
competitive environment characterized by changing conditions and highly unpredictable
economic Climate. Now a day’s e-banking has become popular because of its convenience,
flexibility, and also transaction related benefits like speed, efficiency, accessibility, etc. This
study aims to measure satisfaction level of ATM card holders of United Bank S.C with respect to
various aspects of ATM service quality measurements; figure out the challenges that impact their
satisfaction; and provide possible solutions to get rid of those challenges in the future for better
service quality. The research employed case study approach and used both qualitative and
quantitative method for data collation purpose. Purposive sampling techniques were used in
selecting sample from employees and customers were chosen conveniently. Primary data was
successfully collected from 202 respondents through a structured questionnaire and an in-depth
interview with employees of UB. Data analysis was made through the use of SPSS and the
association between core variables. As a result, the study presented some possible
recommendations so as to alleviate the problems. These includes customers preferred placing
ATM machine around business halls, hospitals, than near or around the branches of the bank
and also unavailability of Network, user guideline, poor card delivery system, not settling errors
quickly are those attributes that create high customer dissatisfaction. Therefore, the results
designate that for United Bank to remain competitive through ATM service, efforts should be
exerted to maximize customer satisfaction.
Keywords: ICT, E-Banking, ATM, Service Quality and Customer Satisfaction.

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 CHAPTER ONE

1. INTRODUCTION

1.1 Background of the Study

Business organizations, especially the banking industry of the 21 stcentury operates in a

complex and competitive environment characterized by changing conditions and
unpredictable economic climate. It seeks an implementation of Information and
Communication Technology (ICT) programs which is a technology that facilitate the
automation of process, controls and information production using computers,
telecommunication, software and ancillary equipment (Woherem, 2000).

Nowadays the ICT products that are used in the banking industry include Automated Teller
Machine, Smart Cards, Telephone Banking, Electronic Funds Transfer, Electronic Data
Interchange, Electronic Home and Office Banking. In relation to ATM service quality
researches realized that, the Automated Teller Machine (ATM) is one type of innovation that
can mechanically accept deposits, issue withdrawals, transfer funds between accounts, and
collect bills. It has altered the relationship between banks and their depositors, as well as the
level of service quality of banking services.

Despite the services rendered through ATM machines, it should be 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, cash
and check deposit, transfer cash, saving and credit account on a 24 hours basis. In the
traditional methods of banking, the use of banks tellers is to provide service one to one
contact with the customer. However, the need to provide a 24 hours continuous service and
reduction in cognition in the bank’s the need for cost reduction in the use of banks. The need
for cost reduction in the use of bank office staff also prompted the introduction of the ATM
service a lot of expectation from both the bank and the customer on the performance of this
self-service technology (Joseph and Stone, 2003).

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 According to Joseph,M and Stone,G (2003), secure and convenient location, adequate
number of ATM, user-friendly system, speed, minimum errors, high uptime, cash backup,
cost, and service coverage are essential service quality aspects of ATM service and
functionality of ATM plays important role in customer’s satisfaction. Customer’s
satisfaction is defined as the company's ability to fulfill the business, emotional, and
psychological needs of its customers. However, customers have different levels of
satisfaction as they have different attitudes and experiences as perceived from the company.
Customer’s satisfaction is affected by the importance placed by the customers on each of the
attitudes of the product/ service. He also clarifies that, Customer satisfaction measurement
allows an organization to understand the key drivers that create satisfaction or
dissatisfaction; and what is really driving their satisfaction during a service experience.

In Ethiopia there are about 18 banks which are engaged in the stiff competitive financial
sector service. United Bank (Hibret Bank S.C) is one of these banks which were
incorporated as a Share Company on 10 September 1998 in accordance with the Commercial
Code of Ethiopia of 1960 and the Licensing and Supervision of Banking Business
Proclamation No. 84/1994. The Bank obtained a banking services license from the National
Bank of Ethiopia and is registered with the Trade industry and Tourism Bureau of Addis
Ababa city Administration. There are 233 branches throughout the country; of those
branches 114 branches are located in Addis Ababa. Each branch have their own customers
which they have right to handle them so as to meet the banks goal. UB has 69 ATM
machines throughout Addis Ababa.

United Bank offers a Debit Cards (i.e. Hiber Card) to its customers so as they can use these
cards for withdrawal of cash and shopping from their account through any of our ATM and
POS placed at convenient locations.  Thus, employees of these esteemed organizations
determination have full access to our Electronic Payment services (ATM & POS). 

1.2 Statement of the Problem

The financial institutions in Ethiopia especially banks have continued to install ATMs across
the country so that their customers can access the services in a more reliable and efficient
way. According to Worku (2010), despite the efforts by commercial banks to automate their

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banking systems, they have not yet fully achieved their intended objective of offering a high
satisfactory service to their customers. Therefore, assessing customer satisfaction has
become very important, especially for high tech products and services. As the use of ATM
services is exponentially growing from time to time, it is important to know the customers
perceptions about its various features and their problems while using ATM services.

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 face
different types of problems with which ATM is directly related such as; break downs of
ATMs, poor quality of notes, network failure, unsuitable location, forgot ATM pin number,
limited knowledge on the use of ATM cards and its operation in just a few languages. In
addition to lack of different services like, deposit currency, cheque processing module, bill
payment and others available on ATM (Balunywa, 2003).

According to Daniel (1999) and Mols (1998) described that compared to ordinary banking
system; electronic banking is providing the competitive advantage by lowering the cost and
providing best satisfaction of customer needs.

The semi-annual report of United Bank S. C. on Jan 31, 2019 revealed that, some problems
facing the bank regarding the ATM services are; frequent power interruption, ATM machine
running out of money, irregular deduction from customer account without dispensing the
money to the user are mostly facing problems cited on the report but, the report doesn’t
include location problems customers are facing, awareness of the customers on how to
handle the transaction are not address and will be incorporated in the study.

The study undertaken by Million (2013) focused on Impact of E-banking on customers

satisfaction in Ethiopian banking Industry. He came up with E-banking service as highly
reduced the visits of bank hall, waiting time for service, and also enlightens customers who
don’t know what E-banking means and the banks except providing the card, they have to
give the necessary awareness training on how to use ATM machine.

A study undertaken by Gezahegn (2015), on assessment of customer satisfaction with ATM

banking on empirical evidence from selected commercial banks in Ethiopia mentioned that,

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 customers will have 24 hours accessibility to their money and less time spent away from
their work place, and also they expect accurate and efficient services.

Thus, this study have been intended to assess how ATM location suitable to customers
specially placing ATM machine near branches instead of placing like business areas,
hospitals, and business malls that create customer dissatisfaction as the customer can use the
branch for money withdrawal in working hours. ATMs are placed not only inside or near the
premises of the bank, but also in locations such as shopping malls, airports, grocery stores,
gas stations, restaurants or any place where large number of people may gather. Besides this,
other factors like privacy and security, frequent problems in connection with ATM usage
that create dissatisfaction were also be considered.

1.3 Research Question

Based on the problem stated in this study, researcher develops the following question.

1. How does ATM location near or around the branch affect customer satisfaction than
other places?
2. How does the ATM service quality of United Bank S.C. influence customer
satisfaction?
3. How customers feel the security and privacy of United Bank S.C.ATM service?
4. How do frequent problems encountered by customers influence customer satisfaction?

1.4 Objective of the Study

The study has two objectives: General and Specific objectives.

1.4.1 General Objective

The main objective of this study is to assess and examine the level of customer’s
satisfaction towards ATM service quality in the case of united bank Addis Ababa
city selected branch customers.

1.4.2 Specific Objectives

1. To examine the level of customer satisfaction in locating ATM machine inside or
near the branch
2. To identify problems/challenges hindering effective utilization of ATM services.

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 3. To examine problems associated with privacy and security issue in the delivery
of ATM service.
4. To identify frequent problems encountered by customers that create
dissatisfaction

1.5 Delimitation of the Study

The study have focused only to analyze customer satisfaction on ATM service quality,
specifically the information in this research work is limited to the activities of United bank
S.C. and also it emphasized on customers of United Bank that are using the ATM service in
Addis Ababa. Moreover, it does not include customers who have the ATM card but not used
since they have.

1.6 Significant of the Study

In light of the stated objectives which this study is set to achieve, the following are the
significance of the study:

- The knowledge that would be gained from this research work assists management of
the banks to know the problems associated with ATM service delivery and to enhance
customer’s level of satisfaction.
- It is also useful for the bank as a means to conduct further research on the area and
achieve technological advantage over their competitors.
- The study will act as a reference material to other researcher for further research in the
subject.
Finally ,the study is significant to future researchers who want to undergo study on several
area related customer satisfaction on ATM service.

1.7 Organization of the Study

The research paper is divided into five chapters with different section and sub-sections.
Chapter one contain the introduction for the main part of the paper, and Chapter two is
review of related literature which is essential to understand the previously indicated concepts
based up on the topic of the study. Chapter three discusses research methodology. Chapter
four focuses on result and discussions. Finally the last chapter gives conclusion and
recommendation of the study.

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 CHAPTER TWO

2 REVIEW OF THE RELATED LITERATURE

2.1 Introduction

This chapter reviews the available literatures written on the effect of Automated Teller
Machine (ATM) service on customer satisfaction. The review starts with introducing
concepts and then mainly focuses on related works done in different times. Accordingly, the
literature review covered all relevant related journals and reference books, reports and
internet.

2.2 Theoretical Literature Review

2.2.1 The Role of ICT in Banking Operation

ICT is the automation of processes, controls, and information production using computers,
telecommunications, software’s and other gadget that ensure smooth and efficient running of
activities. It is a term that largely covers the coupling of electronic technology for the
information needs of a business at all levels. ICT has surpassed the role of support services
or only electronic data processing; its fields of applications are slightly global and unlimited
(Khalifa 2000). ICT devices include data recognition equipment, factory automation
hardware and services, tele-computing and tele-conferences using real time and online
system. The widely used ICT products in the banking industry include Automated Teller
Machine, Smart Cards, Telephone Banking, Electronic Funds Transfer, Electronic Data
Interchange, Electronic Home and Office Banking. Researches reveals banks that are using
ICT related products such as online banking, electronic payments, security investments,
information exchanges, financial organizations can deliver high quality customer services to
customers with less effort.

ICT development has thus changed the product range, product development, service
channels and type of banking services, as well as the packaging of such services (Jayamaha,
2008). The financial services industry has thus become virtually dependent on IT
development that is why most banks make visible efforts to keep up with new systems and
processes (Jayamaha, 2008).

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ICT has in particular brought a complete paradigm shift on the banks performance and on
the customer service delivery in the banking industry.

The first machine was developed and built by Luther George simjian and was installed in
1939 in New York City Bank of New York though it was removed after six months due to
lack customer acceptance. For the next 25 years, there was no mention of ATMs until De La
Rue developed the first electronic ATM which was first installed by Barclays bank in
Enfield Town in North London on 27th of Mono- Functional ATM: June, 1967.The first
ATMs accepted only a single use voucher which was retained by the machine and then used
at the end of the day of balance the account (http://en.wikipedia.org/wiki/Authomated teller
Machine.2006).

By way of comparing the retuned vouchers with the amount of money withdraw on a
particular day. The notable companies that deal in this technology are IBM, Diebold, NCR
and Wincor Nixdorf. Two way of ATM have been developed over time namely. This is
where the machine only one type of transaction is carried out such as cash dispensing.

Multi – functional ATM: This is where the machine carries out several functions such as
accepting deposits, dispensing cash and giving out mini-stamens. These ATMs may either
be in lobby (inside a building) or external “through the wall type”. The banks have various
reasons for selecting a particular type of ATM which may include things such as a device
cost, Installation location, customer wait times, desired reliability and historical preference.

There were a number of challenges that were faced by the pioneers in the use of this
technology such as

1. Fear that customer would not accept this new technology as they were skeptical
about a machine handling cash. This was due to the face that the cost of using one
ATM per annum was US $ 8000 more than the use of one bank teller. The role of
technology in service organizations has been predominantly to reduce costs and
eliminate uncertainties (Kelley, 1989). However, with every new technology like in
the case of the ATM there is always uncertainty on whether the technology would
perform to expectation

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 2. Security was primitive in the early days as it was limited only to physical protection
against theft and manual procedures to balance the cash loaded against the cards
captured.

Since the first ATMs were using punched cards, fraudsters eventually emerged who
produced these on a large scale after they found ways of coding account numbers and
personal identification numbers? Due to these security problems that first generation of
ATMs had to be withdrawn not until the banks had tasted the cost savings that could be
achieved as a result of using ATMs and also as result of reducing the branch staff.

Banks Originally had ATMs installed only at the bank premises though the picture is not
different as the number of offsite ATMs at filling stations and shopping malls has increased.
With the coming up of VISA facility and ATMs networks, banks are now able to service
some of their customers who are in areas not serviced by their branches.

In Ethiopia this was a means by which banks which could not easily afford the cost of new
ATMs were able to service where a lot of people have now gotten used to the use of ATMs
for banking service. This can be seen in the number of ATMs that the banks are bringing in
with increases usage of the ATM, the banks have realized the need to increase the number of
ATMs.

2.2.2 Electronic Banking

Financial services industry over time has opened to historic transformation that can be
termed as e-developments which is advancing rapidly in all areas of financial intermediation
and financial markets such as e-finance, e-money, electronic banking (e-banking), e-
brokering, e-insurance, e-exchanges, and even e-supervision. The new ICT is turning into
the most important factor in the future development of banking, influencing banks‟
marketing and business strategies. In recent years, the adoption of e-banking began to occur
quite extensively as a channel of distribution for financial services due to rapid advances in
IT and intensive competitive banking markets. The driving forces behind the rapid
transformation of banks are influential changes in the economic environment include among
others innovations in information technology, innovations in financial products,

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liberalization and consolidation of financial markets, deregulation of financial inter-
mediation.

2.2.3 Concept of E- Banking

The definition of electronic banking (E-Banking) varies among researchers partially because
electronic banking refers to several types of services through which a banks customer can
request information and carry out most retail banking services via computer, television or
mobile phone (Daniel, 1991; Mols; 1998).

Defined e-banking as an electronic connection between bank and customer in order to

prepare, manage and control financial transactions. The Basel Committee Report (1998)
comprehensively define e-banking as “The provision of retail and small value banking
products and service through electronic channel, such products and services can include
deposit taking, lending, account management, the provision of financial advice, electronic
bill payments and service.

2.2.4 E- Banking Products

2.2.4.1 Automated Teller Machine (ATM)

ATM is a computerized telecommunication device that provides a financial

institution customer with a method of financial transactions in a public space without
the need for a human clerk or bank teller. It allows customers to access banking
services such as withdrawals, transfers, inquiries about account balances, requests for
cheque books, account statements, direct deposits, foreign currency exchange etc.

2.2.4.2 Credit Cards

A credit card is a small plastic card issued to users as a system of payment. It allows
its holder to buy goods and services based on the holder's promise to pay for these
goods and services.

2.2.4.3 Debit Cards

A debit card (also known as a bank card or cheque card) is a plastic card that
provides an alternative payment method to cash when making purchases.

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 Functionally, it can be called an electronic cheque, as the funds are withdrawn
directly from the bank account.

2.2.4.4 Electronic Funds Transfer at Point of Sale (EFTPoS)

An Electronic Funds Transfer at the Point of Sale is an on-line system that allows
customers to transfer funds instantaneously from their bank accounts to merchant
accounts when making purchases or at purchase points.

2.2.4.5 Internet banking

Internet banking refers to systems that enable bank customers to get access to their
accounts and general information on bank products and services through the use of
banks website, without the intervention or inconvenience of sending letters, faxes,
original signatures and telephone confirmations.

2.2.5 E-Banking Development in Ethiopia

As of June 30, 2014 nineteen commercial banks were operational in Ethiopia; of these
sixteen are private commercial banks while the rest three are state owned (NBE 2013/14).
Despite a rapid increase in the number of financial institutions which resulted out of the
financial liberalization, the e-banking in Ethiopian banking system can be considered as in
its infant stage compared to the rest of the world. Cash is still the most dominant medium of
exchange and Electronic banking is not well known. According to Worku (2010), modern e-
banking methods like ATMs, Debit cards, Credit cards, Tele banking, Internet banking,
Mobile banking and others are new to the Ethiopian banking sector and as a result,
customers of banks in Ethiopia missed to enjoy IT based banking products.

Banking sector in Ethiopia faces numerous challenges to adopt advanced technologies as

well as E-banking applications and seize the opportunities presented by ICT applications in
general. Low level of internet penetration and poorly developed telecommunication
infrastructure, Lack of suitable legal and regulatory framework for e-commerce and e-
payment, High rates of illiteracy, Absence of financial networks that links different banks,
Frequent power interruption, Fear of risk, resistance for new technology, security issues are
some of the critical challenging factors for e-banking development in Ethiopia (Worku,
2010).

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2.2.6 Automated Teller machine (ATM)

2.2.6.1 Definition of ATM

ATM is an innovative service delivery mode that offers diversified financial service
like cash withdrawal, fund transfer, cash deposit, payment of utilities and credit card
bills, cheque book request and other financial enquiries. ATM is a computerized
communication device that provides services to the customer of a financial institution
in a public place without the help of the human clerk or a bank teller. Automated
teller machines (ATMs) were the first well-known machines to provide electronic
access to customers. Traditionally, payments were made in cash but these days
various electronic based payments system such as ATM cards and Electronic Fund
Transfer (EFT) have made their presence. With advent of Automatic Teller Machines
(ATM), banks are able to serve customers outside the banking hall. Due to
technology advancement efficiency of banks have improved retail banking and
quality of services. Technology not only benefits banks but also other stakeholders
like employees and customers. Thus, delivery channels like ATM have been put up
by banks and are becoming popular among customers.

ATM service is connected to a computer terminal, record keeping system and cash
vault in one unit that permits a customer to enter personal identification number(PIN)
or by punching a special code number into the computer terminal that is linked to the
banks computerized records (Rose, 1999). An automatic teller machine allows a bank
customer to conduct his/her banking transactions from almost every other ATM
machine in the world. It replaces cheque, personal attendance of the customer,
banking hour’s restrictions and paper based verification. ATM, therefore, represents
greater customer’s satisfaction and cost savings device. Customers become their own
teller when they use ATM.

2.2.6.2 The Nature of Automated Teller Machine

An ATM is typically made up of two components - the hardware and the software.
Hardware is the physical part of the machine which we can see and touch. They
include: the Central Processing Unit (CPU), the Magnetic and/Chip Card Reader,
PIN Pad, Secure Crypto Processor, Display Unit, Record Printer, Vault, Dispenser,

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 etc. The software used is mainly Microsoft (MS) Windows XP Professional, MS
Windows XP embedded, Linux. ATM uses suitable Application software such as
CEN XFS.

The customer or a card holder is identified by inserting a plastic mark card with a
chip that contains a unique card number and security information such as an expiry
date. Customers are guaranteed with security of having Personal Identification
Number (PIN) that makes them have access to their Account.

2.2.6.3 Benefits of ATM

ATM increase profitability of banks, reduce cost of transaction and handle more
transaction per unit of time than. Point out the benefits of ATM technology is bank
decongestion, reduced cost of transactions for both customers and banks. This has
drastically reduced banking time.

The ability of ATM card holder to make withdrawal at any point in time and
anywhere close to him or her is one of the greatest benefits of ATM technology. This
has reduced the distress of one running out of cash. Another opportunity provided by
ATM to users is the flexibility to move around with minimal cash and thereby reduce
incidence of theft. ATM technology when properly used leads to the building of
cashless society. ATM card has assisted travelers in obtaining foreign exchange
service. These potential benefits of ATM are multiplied when banks share their
ATMs, allowing depositors of other banks to access their accounts through a bank’s
ATM.

Many banks are implementing electronic banking, because of the numerous potential
benefits associated with it. Some of these major benefits are briefly described below.

i. Choice and Convenience for Customers

In modern business environments, customers want greater choice. They want the
traditional range of banking services, augmented by the convenience of online
capabilities and a stronger focus by banks on developing personal relationships with

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 customers. Ease of use is important in using ATM card which related to customer
apprehension about the efforts required to learn to use ATM card.

ii. Enhanced Image

E-banking helps to enhance the image of the organization as a customer focused
innovative organization. This was especially true in early days when only the most
innovative organizations were implementing this channel.

iii. Increased Revenues

Point out that electronic bill payment and other related capabilities of e-banking have
a real impact on retail banking practices and rapidly expanded revenue streams.

iv. Load Reduction on Other Channels

It is obvious that, E-Channels are largely automatic, and most of the routine activity
such as account checking or bill payment may be carried out using these channels.
This usually results in load reduction on other delivery channels, such as branches or
call centers. Now a days, routine branch transactions such as cash/cheque deposit
related activities are also being automated, further reducing the workload of branch
staff, and enabling the time to be used for providing better quality customer services.

v. Reduce transaction cost

It clarifies that, improving customer service, increasing market reach and reducing
costs are now basic expectations of Internet banking services. If consumers are to use
new technologies, the technologies must be reasonably priced relative to alternatives.

vi. Access to current and historical transaction data

A customer can check balance by logging into banks website through a user name
and password. In this way he can enquire balance, status of cheques, perform funds
transfers, order drafts, request issue of cheque books etc.

2.2.6.4 Challenges of ATM Banking

In the study by it was found that the Customers were facing different types of
problems with which ATM is directly related. Machine complexity, machine

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 breakdown, poor quality notes, High frequency of use, safety and security are the
major problems identified by the ATM users. On the other hand customers do not
like ATMs because of impersonality, fear of technology and reluctance to change
and adopt new mode of delivery of service.

The followings are some of the challenges of ATM banking presented in extant literature.

i. IT and Telecommunication Infrastructure Issues

At present, the availability of e-banking is substantially greater in developed countries
than in developing economies. Many developing countries do not have the necessary
telecommunications, banking, commercial, bureaucratic and legal infrastructures to
support the widespread introduction of e-banking. Access to the Internet is a major
problem in the developing world and presents an obstacle to the growth of e-banking.

ii. Security
Security related issues are major source of concern for everyone both inside and
outside the banking industry. According to, security problems can mainly be
categorized as: hacking with criminal intent (e.g. fraud), hacking by „casual hackers‟
(e.g. defacement of web sites or „denial of service - causing web sites to slow or
crash), and flaws in systems providing opportunities for security breaches (e.g. a
user’s is able to transact on other users accounts). These threats have potentially
serious financial, legal and reputational risks associated with them.

iii. Systems Operational Risks

Bank IT rests on computers and telecommunications which could be susceptible to
system failure, internal manipulations and inconsistent regulatory policies.

In general, categorized ATM technology challenges into two: machine and human
related challenges.

1. Machine Related Challenges

Machine related challenges raised by are: Network Connectivity Problem, No Cash in

the Vault, inability of the Machine to give Print out Receipt, Wrong Debiting, Card
Trapping, and Irregular deduction from customer account.

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 2. Human Related Challenges

i. Robbery
Robbery at ATMs takes various shapes. The couriers who are going to fill ATMs with
cash are usually robbed, and the money in their possession taken away. Another ATM
crime is the issue of a robber waiting outside ATM for a valid user to complete his
transaction and be attacked and robbed.

ii. Production of Counterfeit ATM

Valid ATM customer’s card can be cloned and used to withdraw from the customer’s
account. This is done by copying information from valid card into the counterfeit card.
The counterfeit card is now used to withdraw people’s money. The fraudster uses a
special machine to copy the magnetic strip.

iii.Stealing of the Customers PIN by Sophisticated Means

There have been also a number of incidents of fraud where criminals have used fake
machines or attached fake keypads or card reader to existing machines. These, then have
been used to record customers PINs and bank account details in order to gain
unauthorized access to their account. Other sophisticated devices, include spy cameras
that make them to get customers bank details including the PIN. The criminals are
improving on a malicious software program that can be installed on ATMs running
Microsoft Windows XP operating system that records sensitive card details.

iv. Infrastructure problem

Lack of basic infrastructure such as power, Information and Communication Technology
etc. are major challenges to ATM application.

2.2.7 ATM Service Quality

Automated service quality is defined as the customers overall evaluation of the excellence of
the provision of services through electronic networks such as the Internet, Automated Teller
Machine (ATM) and telephone banking. Researches in relation to ATM service quality
realized that, the Automated Teller Machine (ATM) is one type of innovation that can
mechanically accept deposits, issue withdrawals, transfer funds between accounts, and

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collect bills. It has altered the relationship between banks and their depositors, as well as the
level of service quality of banking services.

Extant literature regarding customer satisfaction in service industry reveals that service
quality is a more specific judgment which can lead to a broad evaluation of customer
satisfaction (Oliver, 1980; Parasuraman, et al, 1985). That e-service quality is important to
assess customer satisfaction in the e-service setting. Use of ATM has become extremely
popular among customers as convenient mode of transactions. The technological innovation
has transformed the banking business. Banks are aggressively adopting this mode. The
advantages of using ATM have given new impetus in dimensions of service quality and
banks are offering new choices to customers. Noted that investment opportunities, reduction
in costs, satisfaction of customers and competitiveness as motives to install and add new
ATM to the existing network. Moutinho (1992) on his part established that ATM facility
resulted in speed of transactions and saved time for customers.

Some literature indicates different dimensions of ATM service quality. identified, adequate
number of ATM, user-friendly system, and functionality of ATM. examined the factors that
influence customers satisfaction about ATM service quality; These factors include costs
involved in the use of ATM, and efficient functioning of ATM. Joseph and Stone (2003)
examined the United States customers perception of ATM quality and found that user-
friendly, convenient locations, secure positions, and the numbers of ATM provided by the
banks are essential dimensions of ATM service quality.

In a case study of Botswana, Mobarek (2007) established speed of operation, and waiting
time as important predictors of ATM service quality.

2.2.8 The Concepts of Service Delivery

A service is any act or performance that one party can offer to another that is essentially
intangible and does not result in the ownership of anything (Kotler, 2002). Here services are
looked at in the context of financial delivery using ATMs. The banks are now providing
financial services via ATMs and this is looked at to see how well this facility affects service
delivery. A service must be consistent, easy to use and strategically applied. The ATM tries
to depict this by way of providing a service way beyond the normal banking hours of a bank.

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The ATM has easy to use menus which makes transacting easy, through this time may be
tied to literacy levels which so far easy, though improvement in Ethiopia. This has been due
to the vigorous coaching of customers carried out by members of staff assigned by the bank
to guide the customers. ATM usage patterns differ from one user to another based on the
consumer patterns and their perception of ATM attributes such as convenience, reliability,
security and suitability. Service can be divided into high–touch and high–tech services
(Kelley, S, 1989).

High–Touch Services

This involves the use of people in the delivery of service which includes physical resources
and technology based system that have to be managed and integrated into the service process
in a customer oriented fashion (Gronroos, 2001). This is linked to the traditional methods of
banking from which the banks are emerging, which consisted of instructions and personnel
assistance in using the services.

High–Tech Services

These services are mostly based on the use of automated systems, information technology
and other physical resources. These include internet, telephone, short messaging services
(SMS) and automated teller machines (ATMs).

2.2.9 Characteristics of Service

1. Inseparability

Service differs from goods in several ways. They are usually produced and consumed
simultaneously meaning that the customer is intimately involved in the process as the
service is being produced and delivered. The customers become involved in this SST by
virtue of using the facilities such as the ATMs which are provided by the service
provider (banks). The customer has to carry out routines to get the process going such as
inserting of the ATM card and input of private identification number to be followed by
other process to complete the transaction. However, there are some separable services
that do not need the direct involvement of the customer hence resulting in production
and consumption not being simultaneous.

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2. Variability

Performance variability over time is a factor that differentiates services from goods
(Kelley, S, 1989, 1988, Parasuraman, el.at. 1985), and can be defined as changes in
performance from one service encounter to other with the same service provider. The
introduction of the ATM was meant to remove variations causes by the interaction of the
customer with the human tellers in the bank. However, variations would always occur
due to the involvement of the customer and also due to other external factors such as
overcrowding and literacy levels. From the ATM point of view, this term is associated
with the various services that are provided by this technology from which the customer
can choose from.

3. Intangibility

Services by definition are intangible and hence more difficult for both service providers
and customers to measure and evaluate objectively. In contrast to physical product, they
cannot be tasted, felt, seen, smelt, or heard before they are bought. To reduce on
uncertainties on quality of from the people, place, equipment, communication material,
symbols and the price of the service that they see.

When customers get to the ATM premise, they first experience the physical facility
within which the service is provided. They then experience the services that the ATM
provides such as cash withdrawals or account balance enquires. The customer will then
experience the explicit service itself that is, how and by whom they are served.
Returning customers expect the service to be consistent and of a particular standard.
Finally customers experience implicit services which relate to how user friendly the
ATM menus are and how responsive the ATM is to the customer requests.

4. Perishable

Service can easily be duplicated and are perishable which means that they cannot be
made in advance of demand and held in inventories. In other words they cannot be
stored. When demand is steady, service perish ability is not a problem but, when demand

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 for their use especially at month ends hence the reasons why some banks are considering
expanding their ATM networks.

Banks are now board on facilities such as telephone, internet and online banking so as
enable the customer to create value in different ways by facilitating the customer’s
interaction with and use of banks product and service at all points of contact.

2.2.10 Service Quality

Literally all organization in both manufacturing and service sections compete to some extent
on the basis of service hence the reason why more companies today would like to improve
service quality. Much of what has been written about quality and its management focuses
mostly on tangible goods and not service. Definition of product quality is not easy to apply
to services because of marked differences between the two.

Garvin (1987) summarized the literature on quality of physical goods and identified eight
distinct dimensions of product quality: performance, features, reliability, durability,
serviceability, conformance, aesthetics and perceived quality. He over take technical
orientation in his dimensions and only slightly considers the customer. Service quality is
most often related to a customer’s perception and satisfaction.

Service quality has been defined as the difference between a customer’s expectation of
service and his/her perception of the services performance. SERVQUAL stands for service
quality and his service quality measure tool or model that is used to measure the gap
between customer expectations and experience. When the quality of service. However, when
expectations match perception, the customer is satisfied and further still when expectations
match perception, the customer is satisfied and further still when expectations are exceeded,
and the quality of service is perceived to be expectation. If a customer expects to spend less
time on the ATM and the ends up being there much longer, they will end up with a
perception that the use of bank tellers would provide a much quicker service and hence get
dissatisfied with the service. If on the other hand a customer who only expects to withdraw
cash on an ATM also finds out that he /she can also deposit cash and get a mini–statement.
He/she will perceive the service to be excellent.

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Reliability is considered as the most important service dimension when it comes to meeting
customer expectations. It involves the dependability of and trust in the service provider and
service outcome. The other four dimensions which are associated mostly with the quality of
service process become an important issue in exceeding customer expectations. The service
providers are therefore supposed to provide a reliable service as promised with dependability
and accuracy.

The banks promise a reliable service through ATMs and hence the reasons for such a 24
hours access to ones account. Keeping to these promises makes the bank more competitive.
The SERVQUAL model of (Parasuraman, 1985) and (Kelley, 1989) is a technique that can
be used to perform a gap analysis of an organizations service quality performance against
customer service quality needs. SERVQUAL is an empirically derived method that may be
used by service organizations like banks to improve service quality. The method involves
the development of an understanding of the perceived service needs of target customers.
These measured perceptions of service quality for the organization in question are then
compared with an organization that is excellent. The resulting gap analysis may then be used
to improve service quality.

SERVQUAL takes into account the perceptions of the customers of the relative importance
of service attributes. The organization can prioritize these service attributes and thus
improve on the most critical ones. Questions based on a number of key service dimensions,
tangibility, responsiveness, assurance and empathy are asked from a sample of customers.
This provides an assessment of the gap between desired and actual performance, together
with a ranking of the importance of service criteria. Thus, the organization can focus its
resources and maximize service quality even as costs are controlled.

2.2.11 Customer Satisfaction on Automatic Tellers Machine

2.2.11.1 Customer Satisfaction

According to Churchill and Surprenant (1982), customer satisfaction can be

defined as a “disconfirmation paradigm” since it is a result of
confirmation/disconfirmation of expectation that evaluates a product’s performance
with it expectation and desire.

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Customer satisfaction is therefore an attitude or a rating made by the customer by
comparing their pre-purchase expectation to their subjective perceptions of actual
performance (Oliver,1980). Satisfaction is a person’s feeling of pleasure or
disappointment resulting from comparing a product’s performance (outcome) in
relation to his or her expectation (Kotler & Keller, 2006 p. 144).Bank customer
satisfaction is regarded as banks fully meeting the customers expectation and
also said to be a feeling or attitude formed by bank customers after service, which
expressly connects the various purchasing behavior. Customer’s satisfaction is
affected by the importance placed by the customers on each of the attitudes of the
product/ service. Customer satisfaction measurement allows an organization to
understand the key drivers that create satisfaction or dissatisfaction; and what is really
driving their satisfaction during a service experience.

2.2.11.2 ATM Service Quality and Customer Satisfaction

It has been found that consumer’s attitudes toward online banking are influenced by
the prior experience of computer and new technology. As far as online banking
adoption is concerned, security, trust and privacy concerns have been outlined as
extremely important ones from the consumer’s standpoint.

Defining service quality is difficult as compared to product quality due to some

features are unique to services including intangibility, inseparability, heterogeneity
and non-perish ability. Service quality has been defined in different ways by
researchers. Parasuraman et al. (1988) define service quality as a difference between
customer expectation of service and customers perceptions of the actual service.
Kasper et al. (1999) defines service quality as the degree to which the service offered
can satisfy the expectations of the user. According to these definitions, customers are
the sole judges of service quality. Gronroos (1978) suggests that service quality is
made of two components – technical quality and functional quality. Technical quality
refers to what the service provider delivers during the service provision while
functional quality is how the service employee provides the service.

Customer satisfaction and service quality are inter-related. The higher the service
quality, the higher is the customer satisfaction. Many agree that in the banking sector,

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 there are no recognized standard scales to measure the perceived quality of a bank
service. Thus, competitive advantage through high quality service is an increasingly
important weapon to survive. Service quality is particularly essential in the banking
sector, of the fact that services context because it provides high level of customer
satisfaction, and hence it becomes a key to competitive advantage. In addition, service
quality has a significant impact on banks success and performance.

(Parasuraman, 1988) categorized service quality into five dimensions namely:

reliability, tangibles, responsiveness, assurance, empathy whose descriptions are
defined below. In the case of ATM service the dimensions of service quality can be
relayed as follows:

1. Reliability: the ability performs the promised service dependably and accurately. This
relates to the ability to provide a service as expected by customers in terms of speed (how
quick the transaction is performed), accuracy (how correct the transaction is in terms of
money withdrawal) and if the equipment are operation hours 24 hours as expected.
Looking at the operation of the ATMs in Ethiopia, reliability is one aspect that brings up
a lot of disagreement from the customers. In some cases the ATMs are usually offline due
to unreliable communication which results in long queues. At times the ATMs run out of
cash especially during the month ends when a lot of customers want to access their
accounts. Slow response by service providers in repairing faulty ATMs also results in
Unreliable service. However, the ATMs in other instances perform to expectations and
beyond.
2. Tangibles: The appearance of physical facilities, equipment, personnel and
communication materials. This relates to physical appearance of the ATM. It should be
appealing to the customer and should be brightly at night. The surrounding should be
maintained clean by way of banks providing waste bins for litter generated from receipts.
The personnel that provide guidance to the customers should also look presentable.
3. Responsiveness: This may refer to help customers get when they bring forward ATM
complaints such as accounts being debited whilst money has not been dispensed, cards
being captured, underpayment, lack of certain currency denomination, no receipts being
issued and situations where the ATM is out of service for very long hours and times
days. This is another area which needs attention as customers feel the service.

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 4. Assurance: the knowledge and good manners of employees and their ability to convey
trust and confidence. The service provider should have staff that is knowledgeable on the
operation of the ATM so as to convey confidence in the customer even when things are
bad. In case of ATM having a major technical fault, which could take days to rectify, the
bank should be able to convey the message to customers in a manner that will generate
confidence. Another way of generating confidence is by making sure that the ATM is in
good working condition most of the time and especially during peak periods like month–
ends, week–ends, public holidays and festival period.
5. Empathy: The provision of caring, individualized attention to customers. This brings out
the issue on whether the banks care as they should for customers using the ATM. There
are times when the ATMs are completely down and customers are left cut off and the end
result are complaints that the banks do not care. However, there have been instances when
the bank has choose to open doors to the customers way beyond the normal banking
hours just to provide for their customers’ needs. This is in a situation where their ATMs
are unable to provide a service to the customer and is at the discretion of the bank.

2.3 Empirical Review Literature

Some related studies are conducted by different researchers in different parts of the world.
However, there are limited numbers of studies conducted in Ethiopia on e-banking and ATM
technology. Specifically (Gardachew, 2010) conducted a research on the opportunities and
challenges of e- banking in Ethiopia. The study was focused on analyzing the status of
electronic banking in Ethiopia and investigates the main challenges and opportunities of
implementing e-banking system. The author conducted a survey on the existing operating
style of banks and identifies some challenges of using e-banking system, such as, lack of
suitable legal and regulatory frame works for e-commerce and e- payments, political
instability in neighboring countries, high rates of illiteracy and absence of financial networks
that links different banks.

Furthermore (Assefa, 2013) conducted a study on the impact of e-banking on customer

satisfaction in two privet banks in Gondar city. The researcher employed descriptive and
inferential statistics in analyzing this study and it was limited to customers of two privet

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banks only. The results of the study implied that majority of users of e-banking are the
young, the educated, salaried and students, business men and women are not actively using
the service of e-banking, e-banking currently provided for saving and current accounts
holders only, e- banking reduced frequency of bank hall for banking service, reduced
waiting time for customers, there are customers who don’t know the fee charged for being e-
banking users , the bank customers satisfaction increased after being e-banking users,
enabled customers to control their account movements and there is high opportunity to
expand e-banking service in the city.

The study of (AlaEddin& Hasan, 2011) on e-banking functionality and outcomes of

customer satisfaction in Jordanian commercial banks, it aims to explore the adoption of e-
banking functionality and investigates the impact of e-banking on the outcomes of customer
satisfaction. A purposive sampling technique was employed to recruit 179 customers
representing the desired range of demographic characteristics (e.g. gender, age, and
computer use), previous internet experience levels and product- related knowledge. The
research showed that adoption of e-banking (accessibility, convenience, security, privacy,
content, design, speed, fees and charges) had a positive effect on Jordanian Commercial
Bank customers' satisfaction.

The study of Kerem (2003) on the adoption of ATM banking: underlying consumer behavior
and critical success factors conducted in Estonia, was intended to study the further
understanding of, how consumers perceive ATM banking in the heyday of interactive
channels in Estonia, as Estonia is internationally renowned for being a pioneer in the
acceptance of new technologies. A series of an in depth interviews was conducted with
leading industry experts in Estonia. The selection criterion for the respondent was mainly
their involvement with the development of Internet banking systems from the early days of
its emergence. The survey conducted for this research addressed six different issues
influencing the adoption of Internet banking (Better prices, Recommendations, Better
service, Marketing efforts, Better access and higher privacy). The most important factors in
starting to use ATM banking are first and foremost better access to the services
(convenience), better prices and higher privacy. Better service (i. e. preferring self-service

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 over office service) was also of above average importance. Two factors that the respondents
did not consider relevant to their adoption decision were banks' marketing activities and
personal recommendations from friends and colleagues. Also the survey conducted six main
obstacles (computers are difficult, no access to internet, internet banking is expensive, low
security, have had no chance to try and I prefer personal contact) in adopting Internet
banking (results of a preliminary study, 100 respondents), the most important factors
discouraging the use of ATM banking are lack of Internet access and not having a chance to
try out ATM banking in a safe environment. The research indicates that, banking activities
alone may not be sufficient in achieving growth if general infrastructure, economic
environment and government initiatives are not supportive.

Jannatul (2009) in his study of ATM banking & customer satisfaction which focus on
understanding the impact of variables of ATM banking, on customer satisfaction in
Bangladesh, five service quality dimensions namely reliability, responsiveness, assurance,
empathy, and tangibles are established based on the SERVQUAL model and the literature
review. These variables are tested in ATM banking to explore the relationship between
service quality and the customer satisfaction. Data were gathered through survey interview
by a structured questionnaire with 250 customers. The study shows that these factors are the
core service quality dimensions for customer satisfaction in ATM banking. It also explores
that reliability, responsiveness, and assurance have more contribution to satisfy the
customers of ATM banking in Bangladesh.

In general, most of ATM banking related studies is not far from our cases in some points
but, none of them mentioned about the effect on customer satisfaction in placement of ATM
machine near or around the branch than in places like business malls, hospitals and other
places outside the branch.

2.4 Conceptual framework for ATM services and Customer Satisfaction

Customer satisfaction (dependent variable) depends on independent variables (the quality of

ATM services which include reliability, responsiveness, Assurance, Empathy and
Tangibility). Therefore, customer satisfaction is dependent on quality of ATM services such

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as reliability, responsiveness, Assurance, Empathy and Tangibility as shown in figure 2.1
below.

ATM Service Quality Dimensions

Service
Expectation
Reliability
Responsiveness
Assurance
Empathy Customer
Tangibility satisfaction

Perceived
Service

Fig 2.1 Conceptual framework of the study (Parasuraman et al., 1988)

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 2.5 Operation of Variables

The conceptual framework in figure 2.1 above shows the quality of ATM service is the
independent variable, while customer satisfaction is the dependent variable Independent
variable (Quality of ATM services) is measured by obtaining information’s on the respond
of a customer/respondent who received or utilizing the service using factors such as
reliability, responsiveness, Assurance, Empathy and Tangibility in solving customers
banking problems. On the other hand the Dependent variable (customer satisfaction) is
measured by the customer/respondent providing their inner fillings on how the service
fulfilling their expectations through the service they are using (ATM services) using factors
like less or no customer complaints about ATM services offered by 8 Branches.

CHAPTER THREE

3. RESEARCH METHODOLOGY

3.1 Overview of the Methodology

Many researchers have written extensively on research methodology. The underlying factor
in most studies on research methodology is that the selection of methodology is based on the
research problem and stated research questions.

3.2 Research Design

This study was intended on the assessment of customer satisfaction on automated teller
machine (ATM) service: the case of United Bank S.C, the researcher uses descriptive
research design. Because it is a method that describes the study systematically, factually and
accurately utilizing facts, behaviors and relationship between the subjects being studied. In
order to find out the role of Automated Teller Machine, qualitative and quantitative methods
were used.

3.3 Data Source

Primary and secondary data were used in this study. The primary data were collected
through, interview, and questionnaires. The secondary data were obtained by examining
various documents including, banks annual reports and training manual, Ethiopia business

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 review magazines, Research reports, published books related to ATM, internet and journal
articles.

3.4 Methods of Data Collection

This study was conducted by using three different data collection tools. These are:

3.4.1 Questionnaires
A questionnaire were distributed to 202 ATM users of eight sampled branches of
United bank S.C.

3.4.2 Interviews
In the qualitative strategy, semi-structured interview were conducted with 16
employees of the sampled branches United bank S.C.

3.4.3 Secondary Data

The secondary data were collected from published and unpublished documents,
ATM service related written manuals, and internet was also be used to get the
necessary information about the issue understudy.

3.5 Sampling Techniques

The target populations of this study were customers of United Bank S.C, Addis Ababa
branches and the size of the study population was twenty five thousand three hundred
seventeen (25,317) (source: ATM service department) and employees of UB. To make the
study manageable and because of cost & time constraint appropriate sampling methods was
employed. First, out of the 114 branches that are found in Addis Ababa 8 branches(Grade A,
Grade B, Grade C and Grade D) were selected (which are Beklobet, Bole, Kality,
Gunet,Yoseph, Kera, Hana Mariam and Saris Zenbaba) using simple random stratified
sampling method. Then out of the twenty five thousand three hundred seventeen (25,317)
total population size two hundred two (202) customers were selected as sample size for the
study using the sample size determination table developed by Yamen, (1967) with precision
level of ±7% and in each branches the questionnaires were addressed by selecting customers
conveniently because in convenient non- probability sampling it is assumed that respondents
are at the right time in the right place(in the selected branches of the bank) and purposive

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 sampling method were also be implemented in order to interview employees of the selected
branches of the bank.

The sample size of customers has been determined quantitatively using Solvents formula
which is presented below. This formula assumes the confidence level of 93%.
N
n=
1+ N e 2
25 , 317
n= 2
≈ 202
1+25317 x (0 . 07)
The researcher uses percentage distribution method in order to distribute the number
sampled size customer for selected branches as: Percentage multiplied by sample size of
customer. To get percentage each Brach ATM user customer divided by total ATM user
customer.

Table 3.1 Table Sample Size Determination

Location of ATM user Percentage Total No of

NO. Employees
the Branch Customers (%) Sample Size
1 Beklobet 2 4260 16.83 34
2 Bole 2 4125 16.29 33
3 Kality 2 3855 15.23 31
4 Gunet 2 3520 13.9 28
5 yoseph 2 3149 12.44 25
6 Kera 2 2880 11.38 23
7 H/mariam 2 1862 7.35 15
8 Saris 2 1666 6.58 13
zenbaba
Total 16 25317 100 202

From each branch two employees were included in the sample size. A questionnaire were
distributed to 202 customers and interview were conducted with 16 employees of ATM
users of eight sampled branches of United bank S.C.

3.6 Procedure of Data collection

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 The procedures followed when collecting data in this study was started by asking the
willingness of United Bank S.C to conduct the research on their company with a supportive
letter from Rift Valley University. Then after getting the permission from the Bank, first
pilot test on the questionnaire were conducted on 20 customers to check if there were missed
points that have to be included and if the design of the questionnaire will be comfortable to
respondents. Then the primary data which is relevant to the study were collected from 192
customers of the Bank through questionnaire. Customers were informed that their
participation will be on a voluntary basis and all information provided would be kept private
and confidential. The questionnaires were distributed to the customers who agree to
participate in the study and also the researcher briefly explained to respondents if there was
be unclear points when they fill up the questionnaires. And also side by side relevant
secondary data were collected from different documents, different web-sites, other research
works and journals.

3.7 Method of Data Analysis

Data analysis consists of examining, categorizing, tabulating, or otherwise recombining the

evidence, to address the initial proposition of a study (Yin, 1989; pp. 105). The researchers
were edited and coded the questionnaires. The data collected using questionnaires were
analyzed with descriptive statistics using statistical package for social scientists (SPSS)
version 20. Furthermore, Creswell (2003), suggested that qualitative research is
fundamentally interpretative i.e. the researcher makes an interpretation of the data. Thus, the
data that was collected from the interview and reviews of documents were interpreted
qualitatively. To sum, the analysis of quantitative data and interpretation of qualitative data
combines to seek convergence among the results (Creswell, 2003).

3.8 Anticipated Ethical Issues

The study was conducted using some ethical considerations. Each respondent to the study
was first informed about the objective of the study and the questionnaires to be administered.
The confidentiality of responses was clearly informed as the usage and information obtained
from all respondents used for academic purposes and kept properly and confidentially.

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 In addition, at the time of data collection, the researcher gave respect to the participants and
asked permission about their voluntariness for response. For the analysis of the collected
data, the researcher ethically considered to be frank and not to include any fictitious data for
analysis purpose.

CHAPTER FOUR

4 RESULTS AND DISCUSSION

4.1 Introduction

This chapter describes the analysis and interpretations on ATM services and customer
satisfaction, a case study of United Bank S.C in Addis Ababa. It covers the background
information about the respondents, overall ATM service, Customer satisfaction and the
relationship between ATM service and customer satisfaction based on the five service
quality dimensions: Reliability, Responsiveness, Tangibility, Assurance and Empathy.

4.2 Demographic characteristics of Respondents

To accomplish this thesis the researcher has selected 202 customer and 16 employees of
UB and 202 questionnaires were distributed to collect data from customers and an in-depth
interview were conducted with employees. Out of a total distributed 202 questionnaires,
192 questionnaires were properly filled and returned. Accordingly, 192 respondents were
included for the final analysis of the study making the overall response rate 95.05 % and
interview were conducted with all employees. During the data collection, it was difficult to

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collect all the questionnaires on time, due to the fact that some of the customers are not
willing to fill the questionnaire.

Table 4.1: Demographic characteristics of Respondents

Respondents
Item Sex
Frequency Valid Percent
A Male 104 54.2
1
B Female 88 45.8
Total 192 100
Age Frequency Valid Percent
A 18 -25 44 22.9
2 B 26 – 35 68 35.4
C 36 – 50 54 28.1
D >50 26 13.5
Total 192 100
Educational level Frequency Valid Percent
A < 10 2 1.0
B Grade 10 complete 6 3.1
C Certificate 32 16.7
3
D Diploma 56 29.2
E Degree 84 43.8
F Masters 11 5.7
G PHD 1 0.5
Total 192 100
Account Type Frequency Valid Percent
A Saving 128 66.7
4
B Current/Cheque 52 27.1
C Both 12 6.3
Total 192 100
Year of Association Frequency Valid Percent
A 1–3 68 35.4
5 B 4–6 74 38.5
C 7 – 10 28 14.6
D >10 22 11.5
Total 192 100
Source: Own Survey, 2019 G.C

As of Table 4.1 item 1, out of the 192 respondents, 54.2% respondents are male while
45.8% are female. It indicates that majority of the respondents are male.

As shown in Table 4.1 of item 2, 35.4% of respondents fall in the age group on 26-35 while
22.9% are in the age group of 18-25, 28.1% fall between 36- 50 and the rest 13.5% fall in

32 | P a g e
 the age group of > 50. Majority of the respondents belong to the age group 26 to 35 years.
This show that younger generation is more inclined to use ATMs as compared to the older
generation.

As it is depicted in Table1 of item 3, 43.8% of the respondents are degree holder, 29.2% are
diploma holder, 16.7% are certificate holder and the remaining 10.3 % are master’s degree
and above holder, grade 10 completed and below grade 10. This shows us that majority of
the respondents are educated and they can easily know how to use ATM machine and
process there transaction by their own.

As shown in Table 4.1 item 4,66.7% of the respondent are saving account holders, 27.1%
are current account holder and the remaining 6.3% are both saving and current account
holder. Based on the above data saving account holders prefer to use ATM service than
current account holders. This indicates that most of current account holders prefer to use
cheque for their transactions, but during non-working hours they tends to use ATM card for
their own consumption.

As of Table 4.1 item 5, about 38.5% of the respondents have 4-6 years of association with
the bank, 35.4% has 1-3 years of association, 14.6% has 7-10 years of association while the
remaining 11.5% of the respondents has more than 10 years association with the bank. This
shows that more than 70% of the respondents have less than 6 years of association with the
bank. This may be related to the fact that ATMs service introduction is of recent
phenomena and also banks are able to inform and easily communicate the service when
customers are opening new accounts than to existing ones.

4.3 ATM Services Quality and Customer Satisfaction Based on the

SERVQUAL Dimensions.

This section describes the effect of ATM service quality on customers satisfaction based on
the five SERVQUAL dimensions.

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34 | P a g e
 Table 4.2: Factors Affecting ATM Service Quality of Customers Satisfaction on Tangibility

Strongly Strongly Total

Item Agree Agree Neutral Disagree disagree cumulative
Statement under analysis Mean SDV
No.
F % F % F % F % F % F %
When I receive ATM card, I
1 informed the location of ATM
terminals 1.96 0.93 36 16.0 9 4.7 33 17.2 79 41.1 68 35.4 192 100
It is not useful to locate ATM
Machine adjacent to branches
2
where anyone can get service in
normal working time 3.49 1.28 55 28.6 49 25.5 37 19.3 38 19.8 13 6.8 192 100

My ATM card enable me to

3 perform banking activities
anywhere and anytime 2.34 1.32 18 9.4 23 12.0 35 18.2 47 24.5 69 35.9 192 100
The ATM is always neat and
4
clean 2.65 1.40 31 16.1 29 15.1 17 8.9 71 37.0 44 22.9 192 100
The bank uses modern and
5 updated equipment and ATM
facilities 2.67 1.22 19 9.9 31 16.1 42 21.9 68 35.4 32 16.7 192 100

Source: Own Survey, 2019 G.C

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As of Table 4.2, item number 1, 16% of the respondents strongly agree, 4.7% of the
respondents agree, 17.2% of the respondents neutral, 41.1% of the respondents disagree and
35.4% of the respondents strongly disagree that, the bank have informed them about ATM
terminals with a mean value of 1.96 and standard deviation of 0.93. The above analysis
shows that, about76% of the respondents argue they didn’t get any material that indicates the
ATM terminals. Thus the bank must have to prepare a material that consist locations of ATM
terminals so that customers can choose their nearest place and also they will avoid waste of
time in searching terminals.

As it is depicted in Table 4.2, item number 2, 28.6% of the respondents strongly agree,
25.5% of the respondents agree, 19.3% of the respondents are neutral, 19.8% of the
respondents disagree and 6.8% of the respondents strongly disagree on not useful to locate
ATM machine adjacent to branches where anyone can get the service in normal working
hours with a mean score value 3.49 and standard deviation of 1.28. This indicates that the
majority of the respondents agree not to locate the ATM machine adjacent to the branches.
Most of the time people use ATM service for urgent and necessary withdrawal; therefore it
will be wise to locate ATM machine around Business areas, Supermarkets, Hospitals, and
around malls than near branches, as the customers can use it during working hours.

As it is indicated in Table 4.2 of item number 3, 35.9% of the respondents strongly agree,
24.5 % of the respondents agree, 18.2% of the respondents neutral, 12% of the respondents
disagree, 9.4% of the respondents strongly disagree that through ATM card able to perform
banking activities anywhere and anytime with mean score value 2.34 and standard deviation
of 1.32.This indicates that most of the respondents strongly agree as it reduce burden of
carrying the liquid cash that can be stolen or lost easily.

As of Table 4.2, item number 4, indicates that, 16.1% of the respondents strongly agree,
15.1% of the respondents agree, 8.9% of the respondents are neutral, 37% of them were
disagree and 22.9% of the were strongly disagree that the ATM is always neat and clean with
the mean score of 2.65 and standard deviation of 1.40. This implies that the ATM machine is
not always neat and clean as those respondents who were disagreed mention that sometimes
they found dust particles on the Machine especially on ATM machine located around

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Business areas and on branches near to highway roads. Therefore the bank has to order the
respective staffs so as to keep the ATM machine.

As indicated in Table 4.2, item number 5, 9.9% of the respondents strongly agreed, 16.1% of
the respondents agreed, 21.9% of them were neutral, 35.4% of them were disagreed and
16.7% were strongly disagreed that the bank uses modern and updated equipment and ATM
facilities with the mean value of 2.67 and standard deviation of 1.22. This indicates that the
bank has to implement more advanced technological facilities so as to satisfy its customers in
ATM service delivery.

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 Table 4.3: Factors Affecting ATM Service Quality of Customers Satisfaction on Reliability

Strongly Strongly Total

mea
Sr. Agree Neutral Disagree
Statement under analysis n SDV Agree disagree cumulative
No.
F% F % F % F % F % F %
My bank ATM card delivery system is 2.30 1.15 7 3.6 33 17.2 24 12.5 75 39.1 53 27.6 192 100
1
Fast
I found always my bank ATM in
working 2.54 1.12 9 4.7 32 16.7 51 26.6 62 32.3 38 19.8
2 192 100
Condition
I found quality notes of birr when I
withdraw money through ATM 3.97 1.04 74 38.5 62 32.3 36 18.8 17 8.9 3 1.6 192 100
3
The bank provides me promised services 3.79 1.09 63 32.8 58 30.2 41 21.4 28 14.6 2 1.0 192 100
4
As per the schedule
Employees of the bank showing me
sincere 3.89 0.88 56 29.2 66 34.4 63 32.8 6 3.1 1 0.5 192 100
5
Interest in solving problems related to
ATM
Source: Own Survey, 2019 G.C

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As of Table 4.3, item number 1, indicates that, 3.6%of the respondent strongly agree,17.2%
of the respondent agree,12.5% of the respondent neutral, 39.1% of the respondent disagree
and 27.6% of the respondent strongly disagree on quick delivery system of my bank ATM
card with mean score value 2.30 and standard deviation of 1.15. The analysis in the above
table shows that, more than 76.7% of the respondents agree that, the card delivery system is
too slow. The bank must design a mechanism with the vendor in order to shorten the printing
time of ATM cards as customers dissatisfy on long time waiting of the delivery.

Item number 2 of Table 4.3 shows that, 6 4.7% of the respondents strongly agree, 16.7% of
the respondents agree, 26.6% of the respondents neutral, 32.3% of the respondents disagree
and 19.8% of the respondents strongly disagree that they found the ATM in working
condition always with mean value 2.54 and the standard deviation of 1.12. From the analysis
it can bed deduce that the majority of the customers didn’t found the ATM service in
working condition. The bank must have a stand by technician to fix when the ATM machine
so that the service not discontinued.

As of Table 4.5, item number 3, 38.5% of the respondents strongly agree, 32.3% of the
respondents agree,18.8% of the respondents neutral, 8.9% of the respondents disagree, 1.6%
of the respondents strongly disagree to founding of quality notes of birr when withdrawn
through ATM with a mean score value 3.97 and standard deviation of 1.04. Based on the
analysis, even though 70.8% of the respondents agree that, they found poor quality of notes
when cash dispensed, 18.8% was under neutral, which means the notes are neither poor nor
good in quality. This indicates that the bank should have to take at most care when inserting
notes to ATM machine to maintain good image in the eyes and mind of customers.

Item 4 of Table 4.3 indicates that, 32.8% of the respondents strongly agreed, 30.2% of the
respondents agreed, 21.4% of the respondents neutral, 14.6% of the respondents disagreed
and 1.0% of the respondents strongly disagreed on the banks service provision as per the
schedule with the mean value 3.79 and a standard deviation 1.09. As the analysis indicates
that about 63% of the respondents were agreed on the service provision as per the schedule,
about 15% were disagreed and 21.4% were neutral. This indicates that there a drawback in
providing service as per the schedule. Thus, the bank has to improve its practice in providing
service as per the schedule.

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As it is depicted in Table 4.3, item number 5, 29.2% of the respondents strongly agreed,
34.4% of the respondents agreed, 32.8% of the respondents neutral, 3.1% of the respondents
disagree and 0.5%of the respondents strongly disagree with employees showing a sincere
interest in solving problems with the mean value of 3.89 and standard deviation of 0.88.

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 Table 4.4: Factors Affecting ATM Service Quality of Customers Satisfaction on Responsiveness

Strongly Strongly Total

Sr. Agree Neutral Disagree
Statement under analysis Mean SDV Agree disagree cumulative
No.
F % F % F % F % F % F %
ATM withdrawal error settled quickly
in
my bank 2.77 1.16 18 9.4 39 20.3 35 18.2 81 42.2 19 9.9 192 100
1

There is a power back-up generator for 192 100

2 power interruption 3.52 1.28 58 30.2 46 24.0 39 20.3 36 18.8 13 6.8

Employees of the bank have

willingness to help customers 192 100
3 3.5 1.22 48 25.0 59 30.7 36 18.8 39 20.3 10 5.2

Staffs are always ready to respond

customers request 3.46 1.38 61 31.8 45 23.4 26 13.5 42 21.9 18 9.4 192 100
4

The bank apprises the nature and

schedule of services available in the
organization to customers 3.08 1.12 28 14.6 33 17.2 71 37.0 48 25.0 12 6.3 192 100
5

Source: Own Survey, 2019 G.C

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As it is depicted in Table 4.4, item number 1, 9.4% of the respondents strongly agree, 20.3%
of the respondents agree, 18.2% of the respondents neutral, 42.2% of the respondents
disagree, 9.9% of the respondents strongly disagree that ATM withdrawal error settled
quickly in my bank with a mean score value 2.77 and standard deviation of 1.16 This shows
that, whenever an error occurred it will take time to solve the problem. The bank should
assign a section that handle only errors committed by ATM machine and get solution as
quickly as possible.

As of Table 4.4, item number 2, indicates that, 20.2% of the respondents strongly agree, 14%
of the respondents agree, 15.3% of the respondents neutral, 38.8% of the respondents
disagree, 11.8% of the respondents strongly disagree on the availability of back-up or
generator for power interruption with mean score value 3.52 and standard deviation of
1.28.This implies that majority of the respondents fear for power interruption and may lose
their trust towards ATM service. Therefore, the bank should have to buy and use a functional
power backup generator in the place where ATM machines are located.

As of Table 4.4, item number 3, 25% of the respondents strongly agree, 30.7% of the
respondents agree, 18.8% of the respondents neutral, 20.3% of the respondents disagree and
5.2% of the respondents strongly disagree on the willingness of employees to help customers.
This implies that almost above 25% of employees have no willingness to help customers in
relation to ATM services with the mean value of 3.5 and standard deviation of 1.22. This
might be due to lack of knowledge about ATM transaction handling system. Thus the bank
should have to employ and train a staff who is responsible in relation to ATM services. Item
number 4 of Table 4.4, depicts that, 31.8% of the respondents strongly agree, 23.4% of the
respondents agree, 13.5% of the respondents neutral, 21.9% of the respondents disagree and
9.4% of the respondents strongly disagree on the readiness of staffs to respond customers
request in relation to ATM services with the mean value 3.46 and standard deviation of 1.38.
Almost 30% of the respondents do not agree on the readiness of staffs to respond their
request. This indicates that employees of the bank are not always ready to respond customers
compliant in relation to ATM services. This may happen due to lack of knowledge on how to
handle ATM service problems. Therefore the bank should have to train each staff about
ATM machine services handling system. As of Table 4.4, item number 5, 14.6% of the

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respondents strongly agree, 17.2% of the respondents agree, 37% of the respondents
neutral,25% of the respondents disagree and 6.3% of the respondents strongly disagree on the
appraisal of the nature and services available with the mean value of 3.08 and standard
deviation of 1.12.

As it can be seen in the above analysis 37% of the respondents have no interest respond
whether they agree or disagree, they are neutral. This indicates that the bank is not active in
making appraisals about its nature and services available. Therefore, it should have to work
on it.

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.

Table 4.5: Factors Affecting ATM Service Quality of Customers Satisfaction on Assurance/ privacy & Security/

Strongly Strongly Total

Statement under
Sr. Agree Neutral Disagree
analysis Mean SDV Agree disagree cumulative
No.
F % F % F % F % F % F %
I trust the security of the 2.98 1.287 13 6.8 77 40.1 32 16.7 34 17.7 36 18.8 192 100
1
ATM‟s as it is placed in
convenient & secured place
I feel safe in inserting my 3.91 1.02 59 30.7 85 44.3 23 12.0 21 10.9 4 2.1 192 100
2 pin number and when I took
Money
By using ATM‟s my 4.24 1.06 108 56.3 47 24.5 18 9.4 14 7.3 5 2.6 192 100
3
banking information will
not fall into wrong hands
The ATM has user friendly 4.33 0.99 118 61.5 34 17.7 27 14.1 11 5.7 2 1.0 192 100
4
screen to handle transactions
My bank give the guideline 4.33 0.89 108 56.3 51 26.6 23 12.0 9 4.7 1 0.5 192 100
5
On how to use ATM
I recommend the ATM service to
other to use it. 4.15 1.03 98 51.0 42 21.9 38 19.8 11 5.7 3 1.6 192 100
6
Source: Own Survey, 2019

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As it is shown in Table 4.5, item number 1, 6.8% of the respondents strongly agree, 40.1% of
the respondents agree, 16.7% of the respondents neutral, 17.7%of the respondents disagree,
and 18.8% of the respondents disagree in connection with trust and security in which the
bank ATM‟s are placed with the mean score value 2.98 and standard deviation value 1.28.
Even though, about 46.9% of the respondents have confidence on the place where the bank’s
ATM machine is in convenient and secured area, around 16.7% 36.5% of respondents were
neutral and didn’t feel comfortable and secure in using the bank ATM terminals respectively.
This indicates that, even if most of the respondents feel secure, the bank must have to
increase the security features.

Item number 2 of Table 4.5, depicts that, 30.7% of the respondents strongly agree, 44.3% of
the respondents agree, 12% of the respondents are neutral, 10.9% of the respondents disagree
and 2.1% of the respondents view is strongly disagree to feel safe in inserting their pin
number and when they took money with a mean score value 3.91 and standard deviation of
1.02. This indicates that the majority of the customers are feel safe in inserting and when
they withdraw money through ATM of UB.

As it is indicated in Table 4.5, item number 3, 56.3% of the respondents strongly agree,
24.5% of the respondents agree, 9.4% of the respondents neutral, 7.3% of the respondents
disagree and 2.6% of the respondents strongly disagree with regard to banking information
will not fall into wrong hands with a mean score value 4.24 and standard value of 1.06.
Based on this analysis, almost 80,8% of the respondents have confirmed that they are reliable
on the banking transaction through UB ATM machines.

As of Table 4.5, item number 4, indicates that, 61.5% of the respondents strongly agree,
17.7% of the respondents agree, 14.1% of the respondents neutral, 5.7% of the respondents
disagree, 1% of the respondent strongly disagree in that the ATM has a user friendly screen
to handle transaction with mean score value 4.33 and standard deviation of 0.99. This implies
that almost one – third of the respondents were agreed that the ATM has a user friendly
screen.

Item number 5 of Table 4.5, depicts that, 56.3% of the respondents strongly agree, 26.6% of
the respondents agree, 12% of the respondents neutral, 4.7% of the respondents disagree,

45 | P a g e
0.5% of the respondents strongly disagree that the bank give the guideline on how to use
ATM with a mean score value 4.33 and standard value of 0.89. This indicates that the
majority of them have get guideline on how to use ATM service. However, this is a good
result, the bank must have to prepare more advanced guidelines on how to use ATM
machine, and this will help the customer to use easily the service. Also it will minimize the
cost of maintenance and replacement cost of the machine.

As of Table 4.5 of item number 6, 51% of the respondents strongly agree, 21.9% of the
respondents agree, 19.8% of the respondents neutral, 5.7% of the respondents disagree, 1.6%
of the respondents strongly disagree with the mean value of 4.15 and standard deviation of
1.03 on that they recommend the ATM service to others to use it. However, this is a good
result; still the bank must have to struggle to avoid such minor (7.3%) disagreements so as to
be a pioneer bank in providing ATM services.

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 Table 4.6: Factors Affecting ATM Service Quality of Customers Satisfaction on Empathy

Strongly Strongly Total

Sr. Agree Neutral Disagree
Statement under analysis Mean SDV Agree disagree cumulative
No.
F % F % F % F % F % F %
Emph1 Poor visibility of statement 2.42 1.24 14 7.3 33 17.2 22 11.5 74 38.5 49 25.5
Print out paper is not 3.74 1.04 37 19.3
Emph2 regularly replaced before 107 55.7 21 10.9 16 8.3 11 5.7 192 100
running out
Due to frequent net work 3.98 1.02 71 37.0 69 35.9 35 18.2 12 6.3 5 2.6
Emph3 problem I couldn’t get 192 100
ATM service
Frequent interruption of 3.77 1.05 52 27.1 73 38.0 43 22.4 18 9.4 6 3.1 192 100
Emph4 ATM service because of
Electric power
Account debited but cash 4.01 1.09 81 42.2 59 30.7 31 16.1 14 7.3 7 3.6
Emph5 not dispensed to ATM 192 100
service user
There are time where the 3.92 1.11 41 21.4 98 51.0 19 9.9 21 10.9 12 6.3
Emph6 ATM machine run out of 192 100
Cash
Source: Own Survey, 2019 G.C

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As of Table 4.6, item number 1, 7.3% of the respondents strongly agree,17.2% of the
respondents agree,11.5% of the respondents neutral, 38.5% of the respondents disagree and
25.5% of respondents disagree on poor visibility of statements given by ATM machine with
mean score value 2.42 and standard deviation of 1.24. This indicates that majority of
customers are not getting a clear and visible statement from the ATM machine.

As it is depicted in Table 4.6, item number 2, 19.3% of the respondents strongly agree,
55.7% of the respondents agree, 10.9% of the respondents are neutral, 8.3% of the
respondents strongly disagree, 5.7% of the respondents strongly disagree on the replacement
of printout paper before running out of paper with a mean score value 3.74 and standard
deviation of 1.04. This implies that majority of the respondents agree that it is not regularly
replaced and makes customers not to get their statement when they need.

Item number 3 of Table 4.6 above indicates that, 37% of the respondents strongly agree,
35.9%of the respondents agree, 18.2% of the respondents are neutral, 6.2% of the
respondents disagree, 2.6% of the respondents strongly disagree due to frequent network
problem they couldn’t get ATM service with mean score value 3.98 and standard deviation
of 1.02. Most of the customers face the problem of network as they may need the money for
urgent cases or at night or in weekend where banks are not in their working hour. Therefore,
the bank should have to provide a better solution by communicating with the sole provider
“Ethiopian Telecommunication.”

As Table 4.6, item number 4, indicates that, 27.1% of the respondents strongly agree, 38% of
the respondents agree, 22.4% of the respondents neutral, 9.4% disagree and 3.1% strongly
disagree on frequent interruption of ATM service because of electric power with mean score
value 3.77 and standard deviation of 1.05. This implies that the majority of the respondents
face the problem when they are withdrawing money through ATM terminals. Therefore the
bank must have a power backup or stand by generator for the smooth service delivery.

As item number 5 of Table 4.6 depicts that, 42.2% of the respondents strongly agree, 30.7%
of the respondents agree, 16.1%of the respondents are neutral to the statement, 7.3% of the
respondents disagree, 3.6% of the respondents strongly disagree in connection with the

48 | P a g e
 customer account debited but the ATM machine is not dispensing the cash with mean score
value 4.01 and standard deviation of 1.09.

The majority of the respondents (72.9%) faced the problem and they needs an immediate
solution. Therefore, the bank must assign a section or department that can solve such
problem as early as possible.

As it is indicated in item number 6 of Table 4.6, 21.4 % of the respondents strongly agree,
51% of the respondents agree, 9.9% of the respondents are neutral to the situation, 10.9% of
the respondents disagree and 6.3% of the respondents strongly disagree with the mean score
of 3.92 and standard deviation of 1.11 on ATM machine run out of cash. Almost one – third
of the respondents respond that there are times where the ATM machine may not have the
necessary cash when they need cash withdrawal. Such a problem lead customers loses their
trust on ATM service of their bank and they may be forced and prefer to use other banks
ATM service.

4.4 Interpretation of Interview Questions

In this section the researcher describes the response collected from an in depth interview
from employees of UB. The interview was conducted with 16 employees of UB and their
response is interpreted in textual approach. The first question forwarded to all of them is “Do
you think that ATM location near or around the branch affect customer satisfaction than
other places?”

- All of the employees responded that it does not affect customer satisfaction. They believe
that the bank should have to locate ATM machines in Business areas, Malls, Supper
markets and other laces rather than near to branches. This is because; customers can access
transactions in the branches since they came to near the branches.
- The second question is “Does customer satisfaction influenced by the ATM service quality
of UB?”
- Almost all of them agree that customer satisfaction is affected by ATM service quality,
because customers always needs a responsible person to handle their compliant on the
services like: absence of quality of Birr notes, print out report, neatness of the ATM
machine, failure due to electric power, when the ATM do not dispense a cash while it
already withdraw from their account and so on.

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- For the third question about the existence of customers compliance list on the ATM
service, almost all of them said “yes”, but they agree that the list was not a register list
whereas it is a bundle of compliance form. This form helps customers to fill their
compliance on the ATM service.
- The last interview question forwarded to employees of UB is that “How often problems
encountered by customers and how it influence their satisfaction?”
- All of the employees responded that they encounter customer’s compliance on the ATM
service daily, it might be a minimum of 5compliance. This may happen due to poor
network connection, system failure due to electric power and absence of cash in the
machine.

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 CHAPTER FIVE

5. FINDINGS, CONCLUSIONS, RECOMMENDATIONS AND FUTURE

RESEARCH
5.1 Introduction

In this chapter the research findings, conclusions and recommendations based on the analysis
are presented.

5.2 Findings

Based on the in the analysis part of this paper, the following basic findings are summarized
as follows:

Under Tangibility, I found that:

- It is found that locating ATM machine near the branch is not useful as someone can get
the service from the branch in working hours.
- There is no a guideline to inform customer about the locations while providing ATM
card.
- I found that customers are not agreed on the neatness of ATM machines and their
modernity.

Under Reliability, I found that:

- The bank card delivery system is not fast.

- The ATM machine is not always in a working condition.
- Customers found quality notes of birr while withdrawing money through ATM.
- Employees of the bank are not showing sincere interest in solving customer compliance
in relation to ATM services.

Under Responsiveness, I found that:

- It is also found that frequent network problem affects customers

- It is found that Electric Power interruption affect the service delivery
- There is also high challenge when customer account debited but cash is not dispensed.

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 Under Assurance/ Privacy and Security/, I found that:

- Customers trust the location and security of ATM‟s as they are placed in convenient
place.
- Customers feel safe in inserting their PIN number and withdrawing money
- It is found that guidelines on how to use ATM machines are not given by the bank
- Most of the users of ATM cards do not recommend the ATM service to others.
- Moreover, customers are comfortable in using ATM service as the information does not
fall in wrong hand.

Under Empathy, I found that:

- There is a high rate of poor visibility of statements that customer get from ATM
- Prints out papers are not regularly placed in ATM machine before running out.
- There are many incidents that the ATM machines of UB runs out of cash.

From the interview conducted with the employees the following findings were investigated:
- All of the employees responded that it does not affect customer satisfaction. They believe
that the bank should have to locate ATM machines in Business areas, Malls, Supper
markets and other laces rather than near to branches. This is because; customers can access
transactions in the branches since they came to near the branches.
- Almost all of them agree that customer satisfaction is affected by ATM service quality,
because customers always needs a responsible person to handle their compliant on the
services like: absence of quality of Birr notes, print out report, neatness of the ATM
machine, failure due to electric power, when the ATM do not dispense a cash while it
already withdraw from their account and so on.
- Almost all of them said “yes”, but they agree that the list was not a register list whereas it is
a bundle of compliance form. This form helps customers to fill their compliance on the
ATM service.
- All of the employees responded that they encounter customer’s compliance on the ATM
service daily, it might be a minimum of 5compliance. This may happen due to poor
network connection, system failure due to electric power and absence of cash in the
machine.

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5.3 Conclusion

Based on the research findings on the analysis of data the following conclusions are drawn:

- It is not necessary to locate ATM machine inside or adjacent to the branch when anyone
can get the service in normal working time.
- The ATM service are associated with slow card delivery system, lack of information on
where ATM terminals are found for new customers, not getting a working ATM
machine.
- Frequent network failure even if most of the attribute show good trust and secure on the
location where ATM machines are placed there is a safe feelings of customers in insuring
pin code and receiving money from ATM machine which creates inconvenience in using
the service beside this customers feel comfortable that their banking information will not
fall in the wrong hands when using ATM service.
- Lack of power back-up/generator during power interruptions, decreasing from customer
account but unable to dispense the requested amount, unable to give guidelines other
problems create dissatisfaction on customers, unavailability of guideline given on how to
use ATM.
Hence, in order to create competitive advantage and achieve more customer satisfaction
United Bank needs to improve all the problems associated with ATM banking service.

5.4 Recommendations

As a banking sector, United Bank has a number of strengths in service delivery. Even though
it has strengths the researcher found some weaknesses on the service quality of ATM
services. Thus, in order to alleviate those weaknesses the following recommendations are
drawn:

- In order to satisfy its customer and to provide a better service, UB has to locate ATM
machines around hospitals, Business malls, Hotels and areas where many people gather
than near to branches.
- In working hours customer can get the service from the branch but if, person needs
money in business malls or hospital it will travel to get ATM terminals especially in
weekend or night time as there is no any banking service other than ATM.

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- United Bank must have to negotiate with Ethiopian telecom in order to get a better
network service, because availability of network facility, is a paramount to banking sector
products like ATM, besides this, it must have to improve the slow card delivery system
by getting a better card supplier and shortening the process of filling forms, and
compiling and sending to central office through them obtaining the card printing
company.
- It has to prepare various printing materials, or brochures to locate ATM terminal so as to
make easy for customers to reach the service; even if it is more beneficial to new
customers, it also helps the existing customers to choose the nearest location.
- The bank should have to employ and trained a responsible staff to handle ATM service
compliance at least in each of its branches.
- The ATM machine located inside or near the branch have a power backup generator
support at the time of power interruption, but those that are located in other places may
lack the power back-up and create disturbance to the user. Therefore, the bank must
arrange the availability of power back-up generators while installing its ATM machine.

Finally, this research paper has tried to identify the issues that affect customer’s satisfaction
on ATM service quality. Thus, future researcher can study the issues raised in this research in
a different perspectives that affects customer satisfaction by considering a large number of
sample size and branches.

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References

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Gronroos,C. (2001), “ Service Management and Marketing: a customer relationship management
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Malhotra (2006) Marketing Research New Delhi; Prentice Hell of India PLC

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Mols N (2000) The internet and service marketing-the case of Danish retail banking. Internet
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3

APPENDIX
Appendices - I

Rift Valley University

Bole Campus

Masters of Business Administration

QUESTIONNAIRE-ATM USERS

Dear Respondents

I am a Rift Valley University student currently studying for a Master’s in Business Administration
and undertaking a research on the Assessment of Automated Teller Machine (ATM) Service on
Customer Satisfaction: the case of United Bank Addis Ababa city in the selected branch
customers.

I wish to request for your input in the following questionnaire so as to enable me make an
informed decision. The information that will be obtained from you for this study will be used
strictly for academic purposes only and will be handled with the strictest confidentiality.

Finally I wish to thank you in advance for taking much of your precious time to answer this
questionnaire.
Direction
 No need to write your name
 Answer by making a mark, in writing wherever appropriate

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  In case you have ambiguities on any of the questions, please do not hesitate to contact
me through my mobile number or email adders.

Yours sincerely,
Selam Alemu

Contact information

Telephone:-251-913545499

Email:-selamal@hibretbank.com.et
Mar, 2019

N.B: Please put a tick mark () in the proper box listed below

Part I: Respondents Demographic Factors

1. Background Information

1.1 Sex A. Male B. Female

1.2 Age A. 18-25 B. 26-35 C. 36-50 D. > 50

1.3 Educational Background

A. Below grade 10 E. Degree

B. Grade 10 Completion F. Masters

C. Certificate G. PHD or Above

D. Diploma

Part II. General ATM Related Question

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 2.1 Type of account used

A. Saving Account B. Current/Cheque Account

2.2 Year of association with the bank

A. 1-3 B. 4-6 C. 7-10 D. >10

Part II. Customer’s satisfaction on ATM service quality in terms of service quality
dimensions.

5-strongly agree, 4-Agree, 3- Neutral, 2-Disagree, 1-Strongly disagree

` Statement Degree of response

5 4 3 2 1

A Reliability

1 My bank ATM card delivery system is fast

2 I found always my bank ATM in working

condition

3 I found quality notes of birr when I withdraw

money through ATM

4 The bank provides me promised services as

per the schedule.

5 Employees of the bank showing me sincere

interest in solving problems related to ATM

B Tangibility

1 When I receive ATM card, I informed the

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 location of ATM terminals

2 It is not useful to locate ATM Machine

adjacent to branches where anyone can get
service in normal working time

3 My ATM card enable me to perform banking

activities anywhere and anytime

4 The ATM always neat and clear.

5 The bank uses modern and updated

equipment and ATM facilities

C Responsiveness

1 ATM withdrawal error settled quickly in my

bank

2 There is a power back-up generator for

power interruption

3 Employees of the bank have willingness to

help customers.

4 Staffs are always ready to respond customers

request

5 The bank apprises the nature and schedule of

services available in the organization to
customers

D Assurance-Privacy and Security

1 I trust the security of the ATM is as it is

placed in convenient & secure place

2 I feel safe in insuring my pin member and

when I took money

By using ATM my banking information will

3 not fall into wrong hands

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 The ATM has uses friendly screen to handle
4 transaction

My bank give the guideline on how to use

5 ATM

I recommend my ATM service to other to

6 use it
E Empathy

1 Poor visibility of statement

Print out paper is not regularly replaced

2
before running out
Due to frequent net work problem I couldn’t
3 get ATM service
Frequent interruption of ATM service
4 because of electric power
Account debited but cash not dispensed to
5 ATM service user

There are time where the ATM machine run

6
out of cash

F. To which measure of service quality you give priority? Please rank according to their
importance to you (i.e. write 1, 2... 5)
Reliability Empathy
Responsiveness Tangibility

Assurance

G. Please kindly state any other suggestion the bank faces in the assessment of automated
teller machine (ATM) service on customer satisfaction: the case of united bank.

Thank you!

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Appendices - II

Rift Valley University

Bole Campus

Masters of Business Administration

Interview Question-Employees of UB

Dear Respondents

I am a Rift Valley University student currently studying for a Masters in Business Administration and
undertaking a research on the Assessment of Automated Teller Machine (ATM) Service on Customer
Satisfaction: the case of United Bank Addis Ababa city in the selected branch customers.

Interview question

1. Do you think that ATM location near or around the branch affect customer satisfaction than
other places?
2. Does customer satisfaction influenced by the ATM service quality of United Bank S.C.
3. Do you have customers compliance list on how they feel the security and privacy of
the ATM service that you provide. If yes, how they feel?
4. How often do problems encountered by customers and how it influence customer
satisfaction?

Thank you for your patience to complete this interview!!

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Appendices – III

Sample size determination table

Sample Size for ±3%, ±5%, ±7%, and ±10% Precision Levels where Confidence Level Is 95% and

Size of
500 A 222 145 83

800 A 267 163 89

2000 714 333 185 95

5000 909 370 196 98

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 a = Assumption of normal population is poor. The entire population should be sampled. (Yamane,

Appendices –IV

Branches Name and Address

City Branches Address

Beklobet
Kera
Bole
Gunet
H/Mariam
Kality
Infront of Gumruk
Yoseph
Saris Zenbaba

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