COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF PUBLIC ADMINISTRATION AND DEVELOPMENT

MANAGEMENT

ASSESSMENT ON THE ROLE OF ATM SERVICE ON CUSTOMER

SATISFACTION: -THE CASE OF COMMERCIAL BANK OF ETHIOPIA
(AMBICHO GODE BRANCH)T

A SENIOR ESSAY SUBMITTED IN

PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE BACHELOR OF ARTS
DEGREE IN PUBLIC ADMINISTRATION AND DEVELOPMENT MANAG

BY: ABDALHAKI JEMAL ALI ID. NO. 1306373

ADVISOR: LAPISO E. (MA)

FEBRUARY, 2024

HOSSANA, ETHIOPIA
ACRONOMY
ATM Automated teller machine

CPU Central Processing Unit

CBE Commercial bank of Ethiopia

ICT Information commendation technology

ABM Automated Banking Machine

PIN personal Identification Number

SSA Sub Saharan Africa

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Table of Contents

CHAPTER ONE..............................................................................................................................................3
INTRODUCITON...........................................................................................................................................3
1.1 Background of the study......................................................................................................................3
Statement of problem.................................................................................................................................5
Research Questions.................................................................................................................................6
1.3 Objectives of the study..........................................................................................................................6
1.3.1 General objective............................................................................................................................6
1.3.2 Specific objectives...........................................................................................................................6
1.4 Significance of the study......................................................................................................................7
1.5 Scope of the study.................................................................................................................................7
1.6 Research Methodology..........................................................................................................................7
1.6.1 Research design..............................................................................................................................8
1.6.2 Types of data..................................................................................................................................8
1.6.3 Source of data.................................................................................................................................8
1.6.4 Method of Data Collection..............................................................................................................8
1.6.5 Sampling and Sample Size Determination......................................................................................8
1.6.6 Analysis of data...............................................................................................................................9
1.7 Limitation of the study.........................................................................................................................9
1.8 Organizing the paper.............................................................................................................................9
CHAPTER TWO...........................................................................................................................................11
2. LITERATURE REVIEW..............................................................................................................................11
2.1 Introduction.........................................................................................................................................11
2.2 What is ATM........................................................................................................................................11
2.3 The Concept of ATM............................................................................................................................12
2.4 ATM technology evolution..................................................................................................................12
2.5 Operation of ATM................................................................................................................................14
2.6 Effectiveness of ATM...........................................................................................................................14
2.7 The Concept of Customer Satisfaction.................................................................................................15
2.8 Who is a Customer..............................................................................................................................16
2.9 Importance of Customer satisfaction..................................................................................................16

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2.10 The relationship between ATM use and Customer satisfaction.........................................................17
2.11 Factors that Influence Customer Satisfaction....................................................................................17
2.12 Service concept..................................................................................................................................18
2.14 What determines customer satisfaction?..........................................................................................19
2.15 Consumer expectation.......................................................................................................................19
2.16 Conceptual frame work of customer satisfaction...........................................................................20
Figure 1: Conceptual frame work of customer satisfaction........................................................................20
Convenience..........................................................................................................................................20
Reliability...............................................................................................................................................20
Accuracy................................................................................................................................................21
Responsiveness.....................................................................................................................................21
CHAPTER THREE........................................................................................................................................22
3. Data presentation analysis and interpretation......................................................................................22
3.1 Background characteristics of the respondents...................................................................................22
Table 1: Percentage distribution of respondents by background characteristics........................................22
3.2 Services offered by ATM......................................................................................................................24
Table 2.Percentage distribution of respondents by services offered by ATM............................................24
3.3 Effectiveness of ATM services..............................................................................................................25
Table 3.Percentage distribution of respondents by rating of the ATM services.........................................25
Figure 2.Percentage distribution of respondents by the time they spend in the queue before accessing the
ATM services............................................................................................................................................27
Table 4. Percentage distribution of respondents by problems experienced when using the ATM.............28
3.4 Relationship between ATM services and customer satisfaction..........................................................30
Table 5.Relationship between ATM services and customer satisfaction...................................................30
3.5 Interview for personnel manager........................................................................................................31
Reference...................................................................................................................................................31

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CHAPTER ONE

INTRODUCITON

1.1 Background of the study

Banking Industry can no longer set away with operating loosely connecting groups of business
that happen to be locating around the world (Mitroff, 2003).Global competition in the banking
sectors has will be forcing management and executive to recognize that they must think
differently about banking. The banking industry has undergone a major change due to the
adoption of e- banking one of the latest channel distribution to be used in financial service
organization is electronic banking this was established in the mid-1990.

Thereafter steadily e- banking business rely on efficient and rapid access to banking industry
for cash flow review auditing and daily financial transaction pressing E- banking offers
ease of access secure transition and 24 hour banking option from startup companies to
more establish entities and small business rely on.

Most widely will be use E- banking instrument is ATM card. It is the first well known machine
to provide electronic access to customer. ATM is designed to perform important function of
bank. It will be operated by plastic card with special features. The plastic card is contains check
personal attendance or personal identification number banking house restriction and paper based
verification (Mskomal, 2004).

In recent years, the banking sector exhibits significant growth in a number of sub-Saharan Africa
countries. The growing major pan African and global banks on the continent has undoubtedly
improved the availability and quality of financial service in recent years. That said large banks
from well-developed financial markets on the African continent have made biggest impact. As
result, financial sectors across /SSA/ region stand to benefit from gains inefficiency innovation &
financial deepening. Despite strong banking sector growth a large proportion of the African
population still does not make formal financial service ( Roma &Roa ,2006). Especially in
developing nation (kahan, 2010) bank is increasing their technology based service option to

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remain competitive. In Ethiopia there is no separate legislation that deals with electronic
banking including enforceability of the validity of electronic contracts, digital signatures and
intellectual copyright and restricts the use of encryption technologies and High rates of illiteracy.
Low literacy rate is a serious impediment for the adoption of E-banking in Ethiopia as it hinders
the accessibility of banking services. For citizens to fully enjoy the benefits of E-banking, they
should not only know how to read and write but also possess basic ICT literacy (Gardachew,
2010).

The distribution of banking services can be understood as the place and means by which the bank
services are offered to customers. In general, banks try to create a diversified distribution
strategy in order to market the range of their services, offering customers several ways through
which they can benefit from the bank services. The two main factors that led to the use of
multiple distribution channels by banks are: (1) major changes in the banking sector by growing
competition, increasing pressure from competitors and (2) changing customers’ preferences. As a
result, the banks then resorted to compete over price, and now the emphasis is on differentiation
by distribution channels used (Mobarek, 2007).

Zhu, Scheuermann&Babineauz (2004) postulate that distribution channels used by banks can be
divided into two main groups: in the first category are included those channels which typically
involve “personal contact with the consumer” – territorial units, and in the second category are
included those "channels which may either interact directly with the consumer, by non-personal
means, or operate through various intermediaries to traditional distribution methods (network of
territorial units). To meet better market requirements in terms of speed and efficiency of services,
banks have adopted an interactive electronic and computerized system for clients: banking
services via network of Automated Teller Machines (ATMs).

According to Komal (2009) the study establishes that ATM services enhance operations and
customer satisfaction in terms of flexibility of time, add value in terms of speedy, handling of
voluminous transactions which traditional services were unable to handle efficiently and
expediently. The machine can enable customers to deposit and withdraw cash at more convenient
time and places than during banking hours at branch (Muhammad, 2010). When it was first
introduced, the ATM was meant to reduce the unnecessary traffic in the banking hall, make
customers have a quick access to their money and make life convenient to a certain level.

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However, according to Ayo et al., (2010) the situation today has changed drastically; it has
become a source of worry to users and providers (banks), because the function it was meant to
provide has been seriously eroded. It has become a money spinner for fraudsters, who have
found new heaven in compromising innocent people’s personal identification numbers (pin).
ATM behavior can change during what is called “stand-in” time, where the bank dispensing the
cash is unable to access databases that contain account information (possibly for database
maintenance), that is, when there is network problem. ATMs at times can also deduct money
from the account without actually dispensing money; these, among others, are the bane of these
money dispensing machines. With all the problems and incompetence of this money dispensing
machine in Ethiopia; we can say it has recorded some success. The level of satisfaction intended
to be provided by these machines is reduced by technological and processing failures, the
perception that the service delivery mode is expensive and the insecurity regarding standalone
ATMs. All these create customer dissatisfaction.

Therefore the purpose of this study is to investigate the role of ATM service on customer
satisfaction with particular reference to CBE,6 kilo branch and increase the number ATM in
order to more satisfies the customers.

Statement of problem
Now a day’s business environment are changing rapid .The competition among industries is
becoming intense. Information technology is a key aspect which may be considered as a force for
such change (Kaleem& Ahmad, 2008).

Such phenomena affect either negatively or positively. The modern e- banking method like
ATM e- banking which refers to the use of modern technology that allow customers to
access banking service electronically . Whether it withdraws cash or transfer funds, there is a
little knowledge in Ethiopia (Mobile and Agent Banking Directive). It is difficult to withdraw
money without presenting the pass book and many transfer is allowed in between branches
of the same bank. unavailability of the backbone network connections is also another problem,
inadequacy of retables and secure information, infrastructure especially telecommunication
blurred of information communication and technology (ICT) penetration in banking sector in

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sufficient legal and regular form of support and etc. are the major challenges (Diligonasetal,
2009).

Apart from above many studies indicate that there are links between customer satisfaction,
service quality and profitability. In order to meet customer demand, many companies need to
better serve their customers.Tizazu (2012) has made a survey on service quality in relation to
customer satisfaction in Commercial Bank of Ethiopia. Messay (2012) also investigated Bank
Service Quality, Customer Satisfaction and Loyalty in Ethiopian Banking Sector. But, there is no
such prior research conducted to assess the role of ATM services in Ethiopia with relation to
customer satisfaction. Thus, this research perhaps appears to be one of the academic
investigations on the role of ATM service on customer satisfaction.

Research Questions
1. What is the role of ATM service delivery on customer satisfaction?

1. What are the relationships between ATM services and customer satisfaction?

3. What factors are affecting effectiveness of ATM service?

1.3 Objectives of the study

1.3.1 General objective
General objective of the study is to investigate the role of ATM service on customer satisfaction
of commercial bank of Ethiopia at 6 kilo branch.

1.3.2 Specific objectives

The specific objectives of the study are:-

2. To identify the role of ATM service delivery on customer satisfaction.

2. To assess the relationships between ATM services and customer satisfaction.

3. To identify the factors affecting the effectiveness of ATM service.

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1.4 Significance of the study
The result of this study will have significance or benefit for the student researcher, decision
makers and other researchers. The result will help a manager to identify the organization
strength, weakness on delivering service through ATM and use as an input.
The finding of the study was help the banking industry by showing how quality service can be
offered by ATM (Automated Teller Machine) services is essential.

This study will also have importance to future researchers who would conduct research in the
fields related to ATM system of banking and customer satisfaction. It will improve the student
researcher’s knowledge and skills related to the application of ATM service concepts in the real
world. The result of this study will be of great advantage to the customers and Banks. The
following are some of its significance;

1. Enable the company to evaluate its ATM service and to take a corrective action.

2. It will address the bank whether or not their customers are satisfied.

3. Contributing ideas for others who would like to know and make a detail investigation on the
ATM service.

1.5 Scope of the study

The study basically focused on the role of ATM service on customer satisfaction with ATM
service delivery in commercial bank of Ethiopia in 6 kilo branch. But, the study was done
only concerning four ATM due to the limitation of time and financial resources, mixed methods
were used.

1.6 Research Methodology

This part of the study tried to show how the research was conducted. Under this topic research
design, sample design and data of the research were discussed.

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1.6.1 Research design
The research used descriptive study design. Descriptive research involved gathering data that
describes events and then organizes tabulates, depicts and describes the data collection.

1.6.2 Types of data

The researcher used quantitative and qualitative type of data. The qualitative type was employed
to collect data from organization, while the quantitative was used for data collection from the
sampling respondents.

1.6.3 Source of data

For this study, the data had been collected from primary and secondary source. The primary data
was collected by interview and the way of asking questions orally. Therefore, it was used in
order to get the information need from the customer and the staff of the bank.

The secondary source of data was collected by reviewing magazines, bulletins and report of the
company. This method tried to discover written documents about the institution. These included
sample business policy manuals, procedures, business forms, reports and documents of the
existing system about role of ATM services.

1.6.4 Method of Data Collection

The researcher used the following methods to gather the required data.
A. Questioner: the researcher used both structured and unstructured questioners for selected
customers of the bank.
B. Interview: personal (face to face) interview conducted with selected employees through
constructed manner to acquire data.

1.6.5 Sampling and Sample Size Determination

Non random sampling technique made the process of collecting data faster, easier and less
costly. In this specific study, it was not possible to collect data from everyone who uses the
service. The target populations of the study were customers of commercial bank that are
currently using ATM service in Addis Ababa city especially in 6 kilo branches. The sampling
technique for this research was non-probabilistic (non-random) sampling. In this technique, the

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chance of including any unit of the population in the sample could not be determined. From non-
probability sampling techniques, this case study used convenient sampling. In using this
sampling technique, elements of the population those were readily available or convenient for the
investigation were 6000 and the researcher estimated the sampling error at 15% to take the
sample from the total population.

To determine the sample size of this study the researcher also used this formula,
(RonaldMiweiers, business statics, 2002).

N 6000
n= n= =45
1+ N (e) 2 1+ 6000(0.15)2
Where; N=number of target population
n=the required sample size
e=precise (error)
From the above information the sample size of the study is 45 and sampling of the total
population is 75%(0.75).

1.6.6 Analysis of data

After gathering the necessary data, analyzed the data that collected in a way that discussed
earlier, firstly arrange data found thematically according to their theme then, finally the
researcher interpreted data into information and knowledge and explored the relationship
between the variables.

1.7 Limitation of the study

This study is geographically restricted in Addis Ababa Town and the sample size is small due to
specified reason (the population are large the respondent has no equal chance dueto lack to
time and finance).Low return of questionnaire: form 45 questionnaire are distributed from
those 40 are collected Hence there is a scope for the respondent to be biased or pretentious

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1.8 Organizing the paper
This study was organized in to four chapters. The first included, introduction, statement of the
problems, objectives of the study, research question, significant of the study, scope of the study
and research methodologies. The second chapter was literature review, the third chapter was data
interpretation and analysis and the final chapter constituted summary, conclusion and
recommendation.

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CHAPTER TWO

2. LITERATURE REVIEW

2.1 Introduction
This chapter reviewed the available literatures written on this topic and in other related areas in
this chapter. This was made possible by the identification, collection and review of these
literatures from various sources such as text books, journals, reports and the internet.

2.2 What is ATM

ATM (Automatic Teller Machine) is a device which offers a range of services to users that are
authorized by using a PIN-code. From a cash ATM, user is able to make payments, withdraw
money or view account information (Myllynen, 2009).

Automated teller machines have reduced costs per transactions to almost one-fourth as compared
to the branches. ATMs support a variety of transactions such as cash withdrawal, cash deposits,
cherub deposits, placement of service requests, including the request for a new cheque book.
New technology has facilitated the installation of in-wall ATMs, which are weather-proof and
can be established in shopping malls or busy commercial localities and have further reduced the
transactions and operations costs for banks (Sambamurthy & Ashvin, 2010).

An automated teller machine or automatic teller machine (ATM), also known as an automated
banking machine (ABM) is a computerized telecommunications device that provides the clients
of a financial institution with access to financial transactions in a public space without the need
for a cashier, human clerk or bank teller. On most modern ATMs, the customer is identified by
inserting a plastic ATM card with a magnetic stripe or a plastic smart card with a chip, that
contains a unique card number and some security information (Humphrey, 2004).

Already, at least one credit union has added ATMs that do video conferencing in the place of
tellers in certain branches, which means it is possible to speak to a person via video on the ATM
rather than in person (ibid).

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2.3 The Concept of ATM
ATM is typically made up of the CPU (Central Processing Unit) for controlling the user interface
and transaction devices, magnetic or Chip card reader for identifying the customer, display
which is used by the customer for performing the transaction, function buttons usually close to
the display or a Touch screen used to select the various aspects of the transaction and a record
printer which provides the customer with a record of a transaction (Cronin & Mary, 1997).

Most ATMs are connected to interbank networks, enabling people to withdraw and deposit
money from machines not belonging to the bank where they have their account or in the country
where their accounts are held thus enabling cash withdrawals in local currency (Maxwell, 1990).
They are often identified by signs above them indicating the name of the bank owning them.

2.4 ATM technology evolution

The website www.engineersgarage.com/invention-stories/atm-history, it is believed that the
history of ATM started when an Armenian named Luther George Simjian is force to move to
USA in the year 1920, under the account of Armenian Genocide. He owned to his credit the
invention of that ATM was a wasteful addition to personal banking Hawariet .al (2006).

The lack of demand for the ATM finally forced him to take a back seat. During this period it was
very clear that the time was not right for this concept to have been accepted generously. Simjian
clearly lost out on the success and fame and the same was passed on to two other gentlemen,
John Shepherd-Barron and Don Wetzel. John Shepherd-Barron was a Scottish national born in
India. Later he relocated to Britain and pursued his education from the University of Edinburgh,
and at Trinity College, Cambridge. After returning empty handed from a bank, Shepherd-Barron
was a portrait camera and then he later rolled out the formulated idea of ATM. Confident of his
invention, he persuaded Citibank to run his product on a six month trial most inventions have
happened due to sheer necessity and ATM is one of them. The history of ATM is full of
interesting facts of which some are known and others unknown (ibid).

According tobasis.Soon enough, he was disappointed with the performance and the lack of users
and concluded disappointed to have had no option than to wait till the bank opened the next
working day. And thus in a similar fashion like Archimedes, Shepherd Barron claims to have hit

10
his interesting moment while taking a bath. A self-sufficient cash dispensing machine was what
he was thinking about. And soon the ATM was invented in the early 1960s.

The invention of a self-sufficient cash dispensing machine was his second and successful attempt
at inventions. Prior to this invention he had invented an instrument to scare away seals (fish
eating mammals) at his Scottish Salmon farms. Unfortunately, this device instead of deterring
the seals attracted them, and was thus a failure. The same website also shows that the ATM
machine gained Shepherd-Barron an ever-lasting recognition in the banking world and paved the
way for hi-tech banking techniques, online bank accounts, Personal Identification Number (PIN)
and chip security technology. The four-digit internationally accepted standard PIN was also
invented by him. Earlier, he had a six-digit Army serial number in his mind but later his wife
suggested for a shorter PIN as it would be easy to remember.

Finally in 1967, the first ATM that dispensed paper currency round the clock (24 hour basis)
was unveiled. The ATM was installed outside a Barclay’s bank in North London. The ATM
machine accepted and generated money through cheques impregnated with certain chemicals. A
mild radioactive substance, Carbon 14 was used for detection by the machine. Once the PIN was
given, the machine gave out the cash. This radioactive substance had no ill effects on the health
of users and Shepherd-Barron claimed that a user would have to eat about 136,000 cheques to
suffer any kind of ill-effects. Reg Varney, a famous TV sitcom popular became the first person
to use the ATM in the year 1967 and withdrew about 10 dollars. The amount seems too less for
us, but this money was enough for a complete night out spent on the tiles in London, inclusive of
dinner, drinks, a show and a taxi-ride back to home. While this prototype device originated by
Shepherd Barron had started functioning, various parallel developments were happening in
different parts of the world Hawariet .al (2006).

The same website further shows that an American engineer Donald Wetzel of Docutel
engineered the Docuteller ATM which was declared as the first modern 21 magnetic stripe
machine. It recognized magnetically encoded plastic (credit cards) and not the usual paper
cheques. The development of ATM has gone through many stages, it started from its baby stage
in the late 1930s and then geared up for longer runs in the 1960s, and finally a matured and
stable stage that we see today. Undoubtedly, most of the ideas and patents contributed for
makeover of the ATM from time to time form the backbone of what was initiated as “holes in the

11
wall”. Today, ATMs hold a strong foothold in the world, offering everyone a better access to
their money, be it in any corner of the world. There are about 1.8 million ATMs in use around
the world with ATMs on cruise and navy ships, airports, newsagents and petrol stations. ATMs
too have been categorized as on and off premise ATMs. On Premise ATMs are capable to
connect the users to the bank with multi-function capabilities. Off premise, ATM machines on
the other hand are the "white label ATMs" and are limited to cash dispense. The developments
have not stopped; the contactless technology is on its rise.(ibid)

The same website concludes that Shepherd-Barron continued to take inimitable and lively
interest in technology well even in his old age and had foreseen a future where plastic cards too
would be numbered. For his excellent and unforgettable contributions to financial technologies,
Shepherd-Barron was offered the OBE award in the year 2005. In the year 2010, he took his last
breath and left behind his legacy of technological advancements (Pantouvak (2010).

2.5 Operation of ATM

ATMs typically connect directly to their ATM Controller via either a dial-up modem over a
telephone line or directly via a leased line. Leased lines are preferable because they require less
time to establish a connection Musiime&Biyaki, (2010). It is observed that, most modern ATMs,
the customer is identified by inserting a plastic ATM card with a magnetic stripe or a plastic
smartcard with a chip that contains a unique card number. Security is provided by the customer
entering a personal identification number (PIN). For one to access ATM service, he/ she (the
card holder) has to insert the card (magnetic strip card) into the machine (ATM), which then
reads the strip and makes contact with the central computer to confirm the genuity of the card
which is either accepted rejected depending on whether it is valid or not. When accepted, the
customer then punches his/ her PIN number which is then verified according to its compatibility
with the information stored in the card. After which it then perform the service requested of like
(issuing cash, accepting cash/ cheque deposit, balance enquiry, mini-statement) etc, and finally
ejects the card. (ibid)

2.6 Effectiveness of ATM

Without usage of technology the banking sector cannot provide customers with effective services
(Patricio et al., 2003). Effective service delivery is a new or significantly improved service
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concept that is taken into practice (Drake, 2001). Customer expectations concerning service
encounter experiences and service delivery mechanisms as well as the entire concept of what
constitutes quality service are therefore key issues that need to be considered prior to the
implementation of any structural change. Patricio et al. (2003). Effective service delivery is a
service product or service process that is based on some technology or systematic method. It can
be a new customer interaction channel, a distribution system or a technological concept or a
combination of them (Kelley et al, 1990). Kumbhar (2011) observed that effectiveness of service
provision have a significant relationship with overall customer satisfaction. Effective service
delivery is positively related to customer satisfaction in that, when a customer perceives that the
delivery mode of the transactions that the bank is supposed to offer is quite good, the more the
customers will be satisfied with the bank services.

2.7 The Concept of Customer Satisfaction

Cacioppo (2000) defines Customer satisfaction as the state of mind that customers have about a
company when their expectations have been met or exceeded over the lifetime of the product or
service as quoted by Malcolm (2008). Increased customer expectations have created a
competitive climate whereby the quality of the relationship between the customer and bank has
taken on a greater significance in some cases than the product itself. (Musiime&Biyaki,
2010).Krishnan et al (1999). Point out that, the banking industry strives to succeed by putting the
topic of rapid and changing customers needs to their agenda. This can be achieved through good
customer care and offering attractive services or products that other competitors may not offer.
Therefore, customer satisfaction is seen as a key performance indicator within business. The
concept of customer satisfaction occupies a central position in marketing and practice (Cardozo,
1965). Customer satisfaction is a person’s feelings of pleasure or disappointment resulting from
comparing a product’s perceived performance or outcome in relation to his or her expectations.
(Musiime&Biyaki, 2010).
In summary, Customer Satisfaction is the actual meeting of customer’s expectation after he or
she has completed consuming a product or service.

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2.8 Who is a Customer
A customer is the most important visitor on our premises. He is not dependent on us. He is not an
interruption to our work. He is the purpose for it. He is not an outsider on our business rather he
is part of it, we are not doing him favor by serving him rather he is doing us favor by giving us
an opportunity to do so. Wasswa, (2003).Pg 35. He further described a customer as one that
enables the organization exists. They are the purpose of our business.
In my own view, I believe that, customers are the heart, the life and the soul of our businesses,
without whom we can’t hold even for a second to exist in business. Hence they should be
accorded utmost respect and care when rendering service to them.

2.9 Importance of Customer satisfaction

Khirallah (2005) defines customer satisfaction as; a customer's perception that his or her needs,
wishes, expectations, or desires with regard to products and service have been fulfilled.
Consumer satisfaction in short can therefore be defined as an evaluative process that contrasts
pre-purchase expectations with the actual perceptions of performance during and after
consumption experience. In summary, Customer Satisfaction is the meeting or even exceeding of
a customer’s expectation after the use product. The outcomes of satisfying a customer are:-
Customer loyalty- Loyal customers are those who have the enthusiasm about the brands or
products they use. The more enthusiastic a customer is, the higher the profit contributed to the
brand (Malcolm, 2008).

Musiime and Biyaki (2010), Loyalty is a combination of intentional repurchase behavior and
psychological attachments of a customer to a particular service provider. The fundamental
assumption of all the loyalty models is that keeping existing customers is less expensive than
acquiring new ones. In summary, Loyalty is customer’s demonstration of faithful adherence to
an institution despite the occasional errors. Thus satisfying a customer is very paramount to
organizations existence.

Customer retention- Customer Retention is the ability to hold on to customers over time.
Joseph and Stone (2003), Customer retention is the activity that the selling organization
undertakes to reduce customer account defections. It can also be described as a series of actions
that the selling organization undertakes to reduce defections. Musiime and Biyaki,(2010).

14
Ganesh et al., (2000)., observed that, long-term, customers become less costly to serve due to the
bank’s greater knowledge of the existing customer and to decrease serving costs. They also tend
to be less sensitive to comparative marketing activities (Czepiel, 1990).Loosing customers not
only leads to opportunity costs because the reduced sales, but also to an increased need for
attracting new customers which is five to six times more expensive than customer retention
(Joseph and Stone, 2003).

2.10 The relationship between ATM use and Customer satisfaction

Earlier research by Brownlie (1989) has recommended that some consumers have positive
attitudes towards ATMs based on dominant perceptions of convenience/accessibility/ease of
use. As observed by Malcolm (2008). On the other hand, Reichheld and Sasser (1990) have
recognized the benefits that customer satisfaction delivers to a bank. For instance, the longer a
customer stays with a bank the more utility the customer generates. This is a result of a number
of factors relating to the time the customer spends with a bank. Without usage of technology the
banking sector cannot provide customers with a satisfactory service (Patricio et al, 2003).
Effective service delivery is a new or significantly improved service concept that is taken into
practice (Musiime & Biyaki, 2010). According to, Patricio et al(2003) customers will use
different service delivery systems dependent on their assessment of each channel and how it
contributes to the overall service offering. Hence service satisfaction will not merely be based on
isolated service encounters and experiences but rather on the overall feelings of satisfaction.
With automated teller machines networks already in place in most of the urban areas, the drive is
now focused towards the rural areas where the use of automated teller machines is still
uncommon (Musiime & Biyaki, 2010).

2.11 Factors that Influence Customer Satisfaction

There are many factors that affect customer satisfaction. Such factors include friendly
employees, courteous employees, knowledgeable employees, helpful employees, accuracy of
billing, billing timeliness, competitive pricing, service quality, good value, billing clarity and
quick service (Hokanson, 1995). From the studies carried out in many countries, factors like:
service quality, and perceived value, are the key constructs affecting the customer’s satisfaction.
Studies also point out that customer satisfaction results ultimately in trust, price tolerance, and

15
customer loyalty. Therefore, building customer relationship is a backbone for all organizations in
general, and companies in service industries in particular. Issues like: customer satisfaction,
service quality, customer perception, customer loyalty, are the main concerns of the nowadays
service companies, which improves organization’s performance and translates into more profits.
Cited by (Ijaribss, 2011).

2.12 Service concept

Service is an area up activity to fulfill some one’s need in the market place. Service is something,
which can be skilled but cannot be touched or seen. Services presented by service sources cannot
be seen &touched, as they are intangible activities. Service marketing literatures define service
as follows. Services include all economic activities whose output is not a physical product or
construction, is generally consumed at the time it is produced, and that are essentially intangible.
According to (Kotler&Keller, 2009), “service is any act or performance one party can offer to
another that is essentially intangible anddoes not result in the ownership of anything. Its
production may or may not be tied to a physical product. Increasingly, however, manufacturers,
distributors, and retailers are providing value added services, or simply excellent customer
service, to differentiate themselves. They also noted that, Services have four unique
characteristics that greatly affect the design of marketing programs:

Intangibility: - unlike physical products, services cannot be seen, inventoried, or displayed

before they are bought.

Inseparability: - services are typically produced and consumed simultaneously.

Variability: - the value of services depends on who give them, when and where, and to whom,
services are highly variable or heterogeneity and

Perishability: - Services cannot be stored, resold or returned In service industries, customer

satisfaction is always influenced by the quality of interactions between customers and the
personnel involved in the contact services. In principle, the two main things closely related to
services are expected quality and experienced or perceived quality. The first is the customers'
expectations of service quality and the latter is the customers' perceptions of service quality. The

16
customers will always assess the services they experienced by comparing them with whatever
they expected or wished to receive. The basic difference between service & product is that
services are intangible but products are tangible and are required to follow some standardized
procedures. Service user can specify about that particular service satisfaction only after availing
it for some period of time. Some of the common service areas are: Retailing, Transportation,
Banking, Insurance, Education, Health &hospitality Services and many more.

2.14 What determines customer satisfaction?

The following are some of the determinants of customer satisfaction (Bitner p 87, 2000)

These are:-

Product and service feature :- customer satisfaction with product or service is influenced
significantly by the customers evaluation pleasure or disappointment resulting from comparing
a product performance or out come in relation to his or her expectation according to Helens
&Albinos 2004) satisfaction is an overall customer attitude towards a service provides or an
emotional reaction to the difference between what customer anticipate and what they receive
regarding the fulfillment of some need pool or desire further more researcher perceived
service quality whereas satisfaction is related to specification section Oliver (1981)
summarized the transaction is specific nature of satisfaction & differentiate it from attitude .

The more customer are satisfied with production service offered the more are chances for
any successful business as customer satisfaction lead to repeat purchase loyalty and customer
retention Zaire ( 2000) satisfied customer are more likely to repeat buying product or service

2.15 Consumer expectation

Expectation play an important role in the satisfaction formation the extent to which a product
/ service fulfills a customer need & may play an important role in forming feelings of
satisfaction. Because of the impact of confirmation or disconfirmation that have on satisfaction.
Consumer expect to be delivered quality products and service there froe companies try to
offer quality products and service the term expectation really matters to companies because
they want to know what customer expectation are viewed as a production made by a
consumer about what is likely to happen during an exchange ortransaction . According to
17
Oliver (1981) expectation are consumer events it the service quality literature is defined as
desire and wants. What a service provider should offer rather than would after customer
from their expectation from their past experience friends advice and marketers and
competition information and promise ( Kofler ,2000) therefore, providing service quality is
viewed as the difference between consumes perception and expectation for the service
provided .

2.16 Conceptual frame work of customer satisfaction

Figure 1: Conceptual frame work of customer satisfaction

Customer satisfaction Convenience

ATM Reliability

Accuracy

Responsiveness

- The dependent variable ofthis study is customer satisfaction

- The independent variable is ATM and

- The Intermediate variables are convenience reliability accuracy responsiveness security
and privacy.

Convenience
Most largely students found location convenience as an important influence on bank selection
(kaynak&kucukemiroglu, 1992).

As the ATM offers an alternative way of conducting banking have location .Convenience
refers to the site at which the ATM is located.

Most ATM are located in banks branches or offsite such as in shopping halls and college
confuses sometimes the bank’s ATM card is compatible with other banks ATM plat from
other ATMs at a small fee convenience e also involves an all-day all right availability of the
service to the customer.

18
Reliability
Technology can be intimidating to most customers and therefore one expects that ATM should
be designed to simplify the transaction process for customer. Ease of use are concept that has
been investigated in the technology adoption studied especially in work place environment
(Davis, 1989). In this regard Davis, et al. (1989, p 985/ define ease of uses as the degree to
which the prospective user expects the target system to be free of hustle them the chance of them
using the system will be greater. this study used the concept to mean the degree to which
ATM system offers a hustle free transaction for the customer research shows that ease of use
is a major factor determining the adoption and use of various corporate information
technology such as on line banking (Governaris&koitas 2008) ease of use is positive related
to ATM customer satisfaction.

Accuracy
As ATM are determined by machines customer integration one expects error that occur
during employee customer interaction at the banking halls to be minimized ATMs should
provide accurate transaction such as correct identification of name of customer recording of
routine frication and printing of receipts caller & being stock (2006 ) found information
accuracy and order accuracy criteria dimension of online retailer service quality. The higher
accurate of ATM service ether higher customer satisfaction with ATM service.

Responsiveness
It is sometimes impossible to expect flawless ATM service delivery at all times to customer
due to fact that technologies can sometimes fail to deliver to expected responsiveness measure
the extent to which the banks put in place measure to recouped survive when ATM survive
are negatively confirmed and to response quickly deals with the bank ability to hand
customer complaint arising as a result of transaction failures and well as company setting
customer against loss as insured such as money with draws illegally out of their account
increased responsibility will increase customer satisfaction.

19
CHAPTER THREE

3. Data presentation analysis and interpretation

This section deals with the analysis presentation and interpretation of data. For the sake of
clarifying the basic finding of the study, table, are used to present the collected data and using
percentage. The data are analyzed according in order to get a representative data 45
questionnaires were prepared and distributed to customer of the bank. Out of these 40 were
collected and returned but 5 questionnaires were not collected and some are refused to fill
from these account 88.8% responses are returned.

3.1 Background characteristics of the respondents

In order to come out with gender, occupational status as well as the knowledge of respondents
about the ATM services, the respondents were asked to state their age, occupation, whether
respondent had an account with Commercial bank of Ethiopian or not, awareness of ATM
banking and whether the respondents possessed an ATM card.
The result is presented in the table below

20
Table 1: Percentage distribution of respondents by background characteristics.

Frequenc Percen
Sex y t
Male 20 50
Female 20 50
Total 40 100
Occupation
Employed 12 30
Business 8 20
Student 12 30
None 8 20
Total 40 100
Do you have an account with Commercial Bank Of
Ethiopian?
Yes 40 100
No 0 0
Total 100 100
If yes, are you aware of ATM banking?
Yes 40 100
No 0 0
Total 40 100
If yes, do you possess an ATM card?
Yes 40 100
No 0 0
Total 40 100
Source; Questionnaire, 2017

21
Results presented in table 4.1 show an equal distribution of gender. This was largely due to an
equal distribution between the respondents with accounts in Commercial Bank of Ethiopian. The
table further shows that most of the respondents (ATM users) were either students or the
employed, followed by the business class and the non-employed lied bottom.

This can be attributed to the salaries that are mostly now being paid through the bank for the
employed classes and for the case of students, school fees as well as pocket money being sent or
toped through bank accounts this can be the justification for the high numbers. About holding an
account with Commercial bank of Ethiopian, awareness of ATM banking and possessing of the
ATM, all the respondents were aware of the existence of ATM banking, all held an account with
Commercial bank of Ethiopian and all of possessed ATM cards. All these can be attributed to the
convenience that ATM services offer in comparison to lining in the banking hall which is always
so tedious. This tends to be in agreement with the earlier point raised by Brownlie (1989) who
recommended that some consumers have positive attitudes towards ATMs based on dominant
perceptions of convenience, accessibility and ease of use.

In conclusion, it can be said that all sexes now hold an Account to near equal terms, are aware of
the existence of ATM services as well as all possesses an ATM card and uses it.

3.2 Services offered by ATM

This section presents the percentage distribution of respondents according to the services offered
by the ATM and tries to find out whether these services are satisfactory to the respondent or not.
The result can be seen as presented in the table below.

Table 2.Percentage distribution of respondents by services offered by ATM.

Services offered by ATM Frequency Percent

Withdrawal 20 50
Cash/Cheque deposit 8 20
Statement/Mini statement of account 8 20
Balances 4 10
Total 40 100
Are the services offered enough?

22
 Enough 25 62.5
Not enough 15 37.5
Total 40 100
Source; Questionnaire, 2017

With reference to table 4.2, most of the respondents identified withdrawal as the main service
offered by ATM, followed by statement/mini statement of account, checking of balances and
cash/cheque deposit came last as a result of the awareness test. The table further depicts that
more than half of the respondents were satisfied by the services offered by the ATM visa vee
those that said the services weren’t enough. The result above can be that the respondents aren’t
so aware of the different services offered by the ATM other than withdrawal. This calls for the
bank to do more awareness creation about the other different services offered by the ATM. On
whether the services offered were enough or not, the result can be that the banks clients are quite
satisfied by the services offered by ATM against the minority who were against. This is also in
agreement with Kumbhar (2011). Who observed that effectiveness of service provision have a
significant relationship with overall customer satisfaction. He went on to say effective service
delivery is positively related to customer satisfaction in that, when a customer perceives that the
delivery mode of the transactions that the bank is supposed to offer is quite good, the more the
customers will be satisfied with the bank services. This seems to be a direct result of the finding
here. It can therefore be concluded that, the respondents are to a good extent aware of the
services offered by ATM and also that those services are satisfactorily enough for their
requirements with only a few saying they aren’t enough.

3.3 Effectiveness of ATM services

This section presents the perception of respondents by how they rated the ATM services in terms
of available functions/services offered, costs associated with deposit and withdrawal, security of
the respondent’s money and the time. Other variables the researcher considered included the time
the respondent takes in the queue before accessing the ATM services, whether the respondent
experienced any problems while using the ATM and if yes, then what kind of problems and how
often do the respondents experience such problems. Also the researcher tried to find out whether
the bank had done anything to avert the problem/s and if yes, then were all the respondent’s
problems solved or not.
23
Table 3.Percentage distribution of respondents by rating of the ATM services

Available services/functions offered by the ATM Frequency Percent

Effective 25 62.5
Very effective 7 17.5
In effective 3 7.5
Very in effective 5 12.5
Total 40 100
Costs associated with deposit and withdrawal
Costly 12 30
Very costly 6 15
Cheap 17 42.5
Very cheap 5 12.5
Total 40 100
Security of your money
Secure 21 52.5
Very secure 13 32.5
Insecure 5 12.5
Very insecure 1 2.5
Total 40 100
Time
Effective 30 75
Very effective 6 15
In effective 3 7.5
Very ineffective 1 2.5
Total 40 100
Source; Questionnaire, 2017

24
According to Table 4.3, there is a high support by about three quarter of the respondents rating
the services offered by ATM to be effective. Withdrawal and depositing of money through the
ATM being cheap also got more support. Table 3 further depicts that the majority of the
respondents felt their money was secure and more than three quarters agree that the time spent in
a queue was effective. (It is further elaborated in figure 1 below). This can be that first of all
ATM offers them (respondents) all/most they require of it and to their expectation as per
Khirallah (2005) definition of a customer satisfaction as; a customer's perception that his or her
needs, wishes, expectations, or desires with regard to products and service have been fulfilled.
About the security of their money, can be the reason that ATM offers secrete PIN codes which
makes it easy to protect ones money safely. This is in agreement with the explanation in chapter
2.5 Operation of ATM line five that stated; security is provided by the customer entering a
personal identification number (PIN). Then lastly about convenience of time spent in the line,
can be in comparison with the time they are to take in the line over the counter. That of ATM
seems to be more satisfactory. Conclusively, all is well with effectiveness of ATM services as
there has been agreement with all questions raised. However more improvement needs to be
done so as to satisfy the few others who were not in agreement so as to retain them.

25
Figure 2.Percentage distribution of respondents by the time they spend in the queue before
accessing the ATM services.

40
34.1
35

30 26.6

25 2.2

20

15 12.2

10
4.9
5

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

Source; Questionnaire, 2017

Figure 1, presents contrasting scenario with more than a quarter of the respondents saying they
spend few minutes before accessing the ATM services. Those next to few minutes follows but
with those saying they takes quite long in the queue before accessing their money coming third.
This is an indicator that ATM services are quite fast, rather the challenge can be that the ATM
points are few that sometimes results in to congestion causing the delay as observed above.

26
Table 4. Percentage distribution of respondents by problems experienced when using the ATM.

Frequenc
Do you experience problems when using the ATM? y Percept
Yes 30 75
No 10 25
Total 40 100
If yes, what type of problems do you face?
Network/machine breakdown 12 40
Complication 6 20
Limited amount of money to be withdrawn 5 16.7
Card retention 6 20
Other 1 3.3
Total 30 100
How often do you experience such problems?
Very often 2 7.1
Often 11 39.3
Less often 15 53.6
Total 28 100.0
Has your bank done anything to avert such problems?
Yes 25 89.3
No 3 10.7
Total 28 100
If yes, did it solve all the problems encountered or not?
Yes 22 88
No 3 12
Total 25 100
Source; Questionnaire, 2017

27
Table 4, puts respondents who experienced problems while using the ATM at about three quarter
with the commonest problem encountered being machine/network breakdown, followed by card
retention with other problems coming last. The table also indicates that the respondents
experienced such problems less often. It further put the majority of the respondents as saying the
bank has tried to put an end to these problems with more than three quarter saying all the
problems encountered have been resolved by the bank completely. This clearly shows that
despite the occurrences of the problem with the ATM, it is not too rampant and it also indicates
that the bank has keen interest in trying to solve the problem/s as and when they occur. In
conclusion therefore, ATM service still has some shortcomings though it appears not so much
with the bank coming in to try and solve/avert the situation.

3.4 Relationship between ATM services and customer satisfaction

This section shows the relationship between the ATM services and customer satisfaction. The
variable considered by the researcher under ATM services was the location of ATM points and
under customer satisfaction was whether the services offered by the ATM were enough.

The outcomes are presented in the table below.

Table 5.Relationship between ATM services and customer satisfaction.

Satisfaction

Location Enough Not enough Total

12 4 16
Convenient 75 25 100
13 3 16
Very convenient 81.2 18.8 100
2 3 5
Inconvenient 33.3 66.7 100
1 2 3
Very inconvenient 25 75 100
28 12 40
Total 72.9 27.0 100
Source; Questionnaire, 2017

28
According to Table 5, three quarter of the respondents in agreement with the location of the
ATMs were also satisfied by the ATM services and also more than three quarter of the
respondents who were too much in agreement with the location of the ATMs were too satisfied
by the ATM services. Less than a quarter of the respondents who said the location of the ATMs
was inconvenient further went on to say their services were not satisfactory and about half of the
respondents who said the services were very inconvenient also said the services were
unsatisfactory.

3.5 Interview for personnel manager

 What are the differences that make the ATM better than window based service?

He said that ATM service is very good for customer then window based service
because it is simple and easy to use whereas window based service is not as so no
easy and simple.

 What are the factor affecting the ATM service?

He said that there are a lot of problems especially network connection in bank is not always
available.

 How can it be improved by what method?He said that making contact with
telecommunication making discussion to facilitate network.

29
  4 The Research Work Plan and Budget Breakdown

 4.1. Work Plan

 Table 1: Work Plan of Research Work

Sr. Duration in Months,2024/months/

No Apr. May June.
Activities

March.
.

Feb
Jan
1 Bibliographic research or search for xxx
literature review.
2 Problem defining and literature finding, xxx
Title selection.
3 Submission of senior essay proposal. xxx
4 Fine tine research question and xxx
methodology.
5 Prepare research tolls in detail. xxx
6 Organization of Data. xxx
7 Data collection. xxx
8 Data Analysis. xxx
9 Writing up of paper. xxx xxx
10 Revision,editing and submission. xxx
11 Submission of research paper. xxx
12 Senior essay defense. xxx
 Source: From Self Arrangement

30
  2 Budget Breakdown

 Table 2:Cost of the Research Work

Budget heading Unit Quantity Cost Total cost
[Birr]
Perdiem for the research Person 01 1000 1000
Perdiem for data collector Person 01 1000 1000
Transport cost Person 02 700 1400
Stationary and Equipment
Photo copy Ream 292x5=1450 2 2900
Pen Pcs. 20 10 2000
Flash disk Pcs. 1 300 300
Miscellaneous Birr 100
Sub-total 6400
Contingency 10% 640
Grand Total 8440

 Source: From Self Assessment

31
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