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KAMPALA INTERNATIONAL UNIVERSITY DEPARTMENT OF BUSINESS AND MANAGEMENT
THE IMPACT OF AUTOMATED TELLER MACHINES (ATMs) ON
CUSTOMER SATISFACTION. -A CASE STUDY OF CRANE BANK.
UGANDA
Submitted by: NAKA YISO ESEZA Reg. No.: BBA/4195/31 I DV
Supervisor: Dr. SUNDAY NICHOLAS
A Research Report Submitted To the School Of Business & Management in Partial Fulfillment for the Award of the Degree in
Business Administration .
Kampala International University P.O. Box 20000, Kampala, Uganda.
August2006
ACKNOWLEDGEMENT
I wish to express my deepest gratitude to Dr. Sunday Nicholas my supervisor, for his interest and support throughout the study.
I owe my warmest thanks to my brother Mr. Golooba Edward for the financial suppmi especially paying my tuition fees throughout the entire course. I also wish to thank my mother Mrs. Nnalongo Saben Mukasa Kayiso for the help, assistance, support and advice. I also thank all my brothers and sisters for all their support and encouragement.
Special thanks go to Crane Bank especially the General Manager Operations and to all my respondents, without whom this study would not have materialized.
I wish to also thank Sr. Sarto Mukasa for her support especially through prayers. I also thank Mr. Kimuli Paul and all the rest who supported me in any way that may the good Lord reward you abundantly.
APPROVAL
"I declare that this research is my original work and has not been published or submitted for any Degree or award to any University\ Institution."
SIGNED: ..N~(f~ _______ fu i~1.,_0.,_~------------ Date: ___ L~~-A~~.:L: __ 2,0'l)b · NAKA YISO ESEZA STUDENT
SIGNED~R. SUND~ :;/&8
-------------- Date: K{ ti: Pb __ _ SUPERVISOR.
11
DEDICATION
This research project is dedicated to my parents, Ssalongo and Nnalongo Pontian Kimbugwe Kayiso ofKansanga, Mr. and Mrs. Golooba ofNajjera, Mukutoggumu Road, and to all my brothers and sisters.
iii
LIST OF TABLES Page
Table 1 Table 2 Table 3 Table 4
Table 5 Table 6 Table 7 Table 8
Graph 1 Graph 2 Graph3 Chart 1 Chart 2
Bio data of the respondents:-------------------------------------------- l 8 occupations of the respondents:---- --------------·---------19 the age brackets of the respondents---·---- •---------------------19 accounts that customers utilize in Crane Bank ----------20
level of satisfaction due to the ATMs---------------------------21 the rate at which the customers are coping up with the new developments---21 reveals al the problems encountered-----------------------------------------------22
the solutions that were given by the customers to the above problems---23
LIST OF GRAPHS AND CHARTS
customer satisfaction in the use of ATMs------------------------------------23 Is it easy to make mistakes----------------------------------·--------------24 Who explained how ATMs work to you--------------·--------------24 The changes realized by the bank due to customer satisfaction -----------25 Other modem facilities that Crane Bank should installl----------------25
ABBREVIATIONS ICT-------------------Information and Communication Technology ATMs----------Automated Teller Machines
IV
TABLE OF CONTENTS Page
Acknowledgement---------------------------------·-----------------------------------1 Approval---------------------- --------------------------11 Dedication-----------------------------------·------------------------------m List of tables------------------- ----------------- -------1v Abbreviations----------------------------------------------------------------1v Tab I e of contents--------------------------- ------------------------------v-v1 Abstract-------------------------------------------------------------------------------v11
CHAPTER ONE
1.0 Introduction 1.1 Background of the study-------------------------------------------------1 1.2 Statement of the problem-------------------------------------------------2 1.3 purpose of the study----------------------------·--------------------------------2 1.4 Objectives of the study----------------------------------------------------------------3 1.5 Research questions------·--- ---------------------------·---3 1.6 Scope of the study·--- -----------------------------------------------------3 1. 7 Significance of the study--------------------------------------------------3
CHAPTER TWO
2.0 Literature review 2.1 introduction------------------------------------------------------------------------4 2.2 Definitions-----------------------------------------------------------------------4 2.3 Role of ICT in bank performance---------------------------------------------------5 2.4 Concept of Automation-----•--- -----------------------6 2.4.1 Computerization and Management----------------------------------------7 2.4.2 ATMs and employees--------------------------------------------------8 2.4.3 ATMs and customers-------------------------------------------------------------9-10 2.4.4 ATMs and bank performance-----------------------------------------------------1 l 2.5 Challenges faced in introducing ICT in banks----------------------------------11 2.6 How the challenges are handled --------------------------------------------------12 2. 7 Safety to ATMs----------------------------------------------------------------------12 2.8 Relationship between customer satisfaction and ATMs-----------------------13 2.9 Conclusion---------------------------------------------------------------------------14
CHAPTER THREE
3.0 Methodology
V
3 .1 Introduction------------------------------- -----------------------------15 3 .2 Research design---------·---------------------------------------------15 3.3 Study population------- •------------------------------------------15 3.4 Sample design-----------------·-- •---------------------------------15 3 .5 Sources of data----------- ------------------------------------------15 3. 6 Data collection instruments------------------·--------------------------------16 3. 7 Data processing, analysis and presentation-·-----------------------· -------16 3. 8 limitations of the study---·-------------------------------------16 3.9 Budget estimates for research proposal and report-------------------------------17 3 .9 .1 Time frame-------------- --- ---------------------------------17
CHAPTER FOUR
4.0 Presentation, analysis and Interpretation of findings 4. I Introduction-----------·--- -------------------------------------------------------18 4.2 Bio data of the respondents--------·-------------------------------------------18 4.2.1 Customer service and satisfaction--------·--- --------------------------19 4.2.2 Customer satisfaction due to the use of ATMs-----------------------------20-21 4.3 Problems encountered at the ATMs---------------------------------------------22 4.4 Changes associated with ATMs that improve Customer satisfaction-------23 4.5 Is it easy to make mistakes ?----------------------------------------0 -------24 4.5.1 Who explained how ATMs work to you?--------------------------------24 4.6 The changes realized by the bank due to customer satisfaction-------------25 4.7 Other modem facilities that Crane Bank should install-----------------------25 4.8 Conclusion---------------------------------------------------------------26
CHAPTER FIVE
5.0 Summary, conclusions and recommendations of the study 5 .1 Introduction------------------------------------------·-- --------------------------2 7 5 .2 Summary of findings--------------·--- •--------------------------------27 5 .2.2 ATM and customer satisfaction--------------------------------------------27 5.2.3 Relationship between customer satisfaction and the ATMs----------------28 5.3 Conclusion -------------------------------------------------------------28 5 .4 Recommendations---------------------------------------------------------29 5.5 Issues for future research---------------------------------------------------29
APP END IX A-------------------------------------------·-------Reference APPENDIX B--------------------------------------------- ---Questionnaire
VI
ABSTRACT
The research was can-ied out with the main objective of finding out the impact of ATMs on customer satisfaction in Crane Bank Uganda. This study focused don four research questions.
1. To find out the impact of ATMs on Customer Satisfaction 2. To find out the relationship between ATMs and customer satisfaction. 3. To find out the challenges faced by the banks when installing the ATMs 4. To find out how the challenges can be handled.
Data was collected using self-administered questionnaires to forty ATM customers. Key informants included the banking staff. Data was entered and analyzed using statistical means. The results of the study revealed the following:
The majority of the customers have used ATMs since the Bank introduced them, access the ATMs often (weekly) and find it easy to use them.
The findings also revealed that most of the customers prefer to use the ATMs, although most of them consider them located far away. Therefore, there is a need by the bank to further strengthen the benefits of the ATM and to address the problems related to using them, in order to have high customer satisfaction.
Vil
CHAPTER ONE
INTRODUCTION
1.1 Background of the study
Technology has always been the mechanism through which human kind has leveraged its
efforts, both individually and collectively to improve its quality of life. Technology
management is the ultimate battleground that will determine which companies and
owners will be the winners and losers in the wealth creation game. Technology has
become a key factor in defining competitive advantage in the modem business world and
it is likely to become an even more pervasive factor of production in the future (Norma
H& Danny S 2002, pg2)
Most countries have employed technology to accelerate economic growth pace. Foreign
capital and technology have played an important role in economic rejuvenation of
countries. It helps to increase productivity and hence provision of higher wages.
Information and communication technology (JCT) involves planned application of
integrated information handling tools and methods to improve the productivity of people
in office operations. The invention of information and communication technology in the
past century brought vast amounts of energies in scope of its usage and ATM's are part of
it.
Crane Bank is one of the commercial banks that exist in Uganda. There motto is
"Growing to serve and serving to grow". It started operating in 1995. It has got very
many customers and the presence of ATM's has drastically changed the culture in
Uganda, with Crane Bank at the forefront of it's development. Long hours and long
queues are history. The first ATM was introduced in May 2002, 32 ATM's in Kampala
and the main access account is the Crane Access account. In order not to inconvenience
the customers, the bank started the Crane Access account and customers don't have to go
to the bank to open an account and collect their ATM cards. All this can be done at the
ATM centre. With the ATM's, they have.been able to offer services at lower.costs. The
1
minimum balance is 10,000\=, there are no account maintenance charges, through
ATM's; you can top up airtime, change money, pay school fees or utility bills. A contract
was also made with the National Water and Sewerage Corporation to collect water bills.
Crane Bank also launched last year in October bank master software in order to enable
them fasten the ATM work. This software is able to store data at a faster rate.
Its usage has become diversified, and computers affect the greater part of our working
life. Automation is the act of implementing the control of equipment with advanced
technology; usually involving electronic hardware; "automation replaces human workers
by machines". It is also the condition of being automatically operated or controlled;
"automation increases productivity. The equipment used to achieve automatic control or
operation is advanced. Automation can also be called computerization or cybernation.
Business process automation (BPA) is the process of integrating enterprise applications,
reducing human intervention wherever possible, and assembling software services into
end-to-end process flows. As a significant part of business process reengineering, BPA
improves operational efficiencies and reduces risks.
1.2 Statement of the problem
Customers want a quick and faster delivery of services and this poses a challenge to the
banks to continue updating their services _to satisfy customers and work efficiently. This
involves quick services to reduce on the queuing customers in the bank. Therefore it is in
this perspective that the use of ATMs as part of ICT to improve on their services and
performance is important. As the banking industry keeps on growing, it also employs
more people. However despite the availability of the modem services, no initiative has
been taken to find the impact of ATMs on customer satisfaction.
1.3 Purpose of the study
The purpose of the study is to find out the impact of ATMs on customer
satisfaction that has possibly led to greater customer care and profitability of the banks.
2
1.4 Objectives of the study
The study was guided by the following objectives.
I. To find out the role of ATMs on customer satisfaction.
2. To establish the relationship between ATMs and customer satisfaction.
3. To find out the associated challenges faced in installing ATMs in Crane bank.
4. To find out how the challenges can be handled.
1.5 Research questions
The study was guided by the following questions.
I. What is the impact of ATMs on customer satisfaction?
2. What is the relationship between ATMs and customer satisfaction?
3. What are the associated challenges faced in installing ATMs in banks?
4. How can the challenges be handled?
1.6 Scope of the study
The study focused on the impact of ATMs on customer satisfaction and it was
conducted in Crane bank, at Crane chambers on Kampala Road and different ATMs were
also visited. The study considered ATM's as the independent variable and customer
satisfaction as the dependent variable, with much emphasis on the ICT department and
operations in the bank.
1. 7 Significance of the study
1. The research was to help management on how weII to use ATM's to have
customer satisfaction.
2. The research was to help future researchers to add on the existing body of
knowledge.
3. The research was to help the banking industry to know whether to instaII more
ATM's for customer satisfaction.
3
CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction
This chapter set out some of the main issues about the existing literature on
the subjects carried out by the scholars. It containsliterature on ATM's and there
impact on customer satisfaction.
2.2 Definitions
According to C.S. French (1993 pg.3), a computer is a device that works under control
of stored programs automatically accepting, storing and processing data to produce
information as a result of that processing ..
Technology is a collection of practices, procedures, techniques and devices used in
collecting, storing, retrieving, processing, distributing and delivering information and
knowledge that foster speed and accuracy in doing things.
Information Technology (ICT) is the technology which supports the activities involving
the creation, storage, manipulation and communication of information together with their
related methods, management and application (Norma H& Danny S, 2002 pg.3)
Computerization. According to French (1993, pg 7) it is a system used to convert data
from internal and external services by used of computer's information system and to
communicate that inforn1ation in an appropriate form to manage at all levels in all
functions to make timely and effective decisions for planning, directing and controlling
the activities for which they are responsible
4
A bank is a financial institution that accepts deposits, withdrawals and makes loans.
Banks operate with charging interests on money got and lending out money by making
loans.
Automated Teller Machines (ATMs) are specialized computer terminals, which are
connected online to the bank's Central Computer.
A TMs are sometimes known as Auto-banks or cash dispensers. They are normally
located outside the bank building, so that they can be accessed outside normal banking
hours (ATM magazine.comFeb. 19, 1999 by John Kennish).
2.3Role of ATMs to banks.
a) Time Saver. Saves time on data processing and transactions. ATMs have helped to
save time. This is because you can easily enter and retrieve data
b) Paperless office. ATMs have improved bank perfonnance through the reduction of
paper work. Data can easily be entered and stored in large amounts.
c) Accurate and updated transaction. According to Dr. Hamm Mukasa (2001 pg.16-
17), banks have become more accurate since several calculations can be done in a short
time with fewer mistakes. Computers are very accurate and can easily identify an en-or.
d) Greater volumes of data handled and processed. Large volumes of data can be
handled by computers due to ATMs. This has helped banks to store and easily look for
data hence overcoming the risk involved in the manual system.
e) Elongated banking hours. With manual systems, the banking hours were limited as
more time was needed to cru.Ty out the bank-office accounting functions after the counters
were closed for customers. With the introduction of computer systems, the banks could
offer longer hours for their customers. ·
f) Multi-tasking. Possibility of carrying out several activities at the sru.ne time.
Automation enabled any teller to caJ.Ty out more than one transaction type, if not all.
g) Any where banking. With the presence of ATMs, customers can can-y out their
transactions from any place.
5
h) Any time banking. The ATMs have also enabled the customers to carry out there
transactions at anytime. This is because the automatic generated machines are efficient 24
hours.
i) Deviation from the "branch" concept. Customers can get all their queries and
problems answered away from the bank branches. This can be done with the use of
ATMs.
j) Increased job satisfaction. With ICT in existence, this involves giving bonuses to
faster work done (Royal & Hughes 1991). The employees can enter data in a faster way
that ensures accuracy.
k) Budgetary control. Computers have benefited a lot through checking out several
business expenses that can get out of hand if not checked at regular intervals. A computer
can easily identify errors faster and can signal; warnings when things are not in order
(Royal & Hughes 1991).
2.4 The concept of Automation
Information technology has been hailed .to play a major role in development of most
economic paiis of the world. Automation through the use of computers provides an
opportunity for less developed countries to increase their development efforts. This new
technology has great potential but should be determined differently by a country or
economy. Info1mation management and handling in organizations involves much more
than the technologies utilized.
Bank customers use a special key that contains a magnetic strip along one side. The strip
is what contains data about the cardholder. The card is entered into the slot in the
machine, and account details from the strip are read by the ATM which then makes
contact with the central computer inside the bank. Next the customer enters a secret PIN
which provides the authorization to access the account. The facilities provided include;
withdrawing cash, finding out the account balance, top up airtime, change money, pay
school fees or pay utility bills, printing a mini statement, making deposits and
transferring money between accounts, (Nulurnansi, 2001).
6
ATMs offer a new alternative way in our daily banking affairs (Njuki, 2001). Over 70%
of the bank services provided by the banks could be automated or handled on self-service
basis.
ICT is important because it shows which businesses are winners and losers. The concept
also ensures a faster way of delivering services. This is because customers hate making
long queues for services, and they will always go for that bank, that can easily meet their
demands efficiently and effectively. Due to this call, all banks therefore are faced with a
challenge of installing ICT facilities given that it is a computerized era.
In almost every organization, people go for work and they are scheduled to perform
certain tasks to encourage efficiency and effectiveness, the only fancy way of describing
such events is division of labour, technology and its automation has by further greatest
impact in easing such events more as that of information system and all its speed in
organization, (Farbey, Land, Targett, 1995).
Some analytical scholars like Daniel Hertzberg (I 984) have already appreciated the
impact of computerization in the banking industry. He particularly highlights the
contribution of the modem innovations in the banking services such as the use of
automated teller machines (ATMs). The emergency of Internet banking and automated
teller machines (ATMs) networks has reduced the need for physical or direct contacts
between customers and their respective bankers.
John Kateeba Nyakahuma, Uganda Institute of Bankers -The New Vision 25th October
2001, further asserted that the combination of the computer and modem
telecommunications technology is changing the internal configuration of financial
intermediaries. It is further noted that allover the world the way business is conducted is
changing with the use of inf01mation technology. In virtually every industry from
banking and securities trading to manufacturing and design sectors, business managers
are striving to harness the power of information technology. The computer arrived in the
banking scene to stay during the 1960s.
7
2.4.1 Computerization and the management
The use of computers extends to several departments of the bank. The adaptation to
change is a managerial problem and this creates strategic advances or competitive edge
links. Top management is expected to handle situations where in major changes in
technology will affect the employees. This is ample scope to improve organizational
efficiency and effectiveness using ICT innovatively (Dr. Hamm Mukasa, 2003 pg 14-15).
Management has to work very hard to satisfy the customers. This will involve trying to
keep up the standards with the new ICT. This enables faster communication among
management and hence improves on Crane bank performance. The every day progress
made in infonnation technology has a significant impact on handling of transactions
because it has been made easier.
Automation enhances corporate adherence formation among several or even internally
between departments for the purpose of sharing infonnation which at that particular
moment is the major resource needed to gain strategic advantages.
Pierre Simon of Uganda Institute of Bankers further pointed out clearly that this
adherence (networking) could operate best for commercial banking networks, offering
services to cooperate, professional and individual customers. These banks could be of any
size given that small banks can also cool their resources or outsource the provision to
service sector companies. He further noted that progress made in information technology
over the past years has a significant impact on the handling of transactions.
2.4.2. ATMs and employees
ICT systems are numerous and can be like a bomb explosion, causing wide spread panic
and confusion in the organization. This requires the top executives to identify the areas of
impact properly in advance and precautions taken to cushion the shock. Some of the
impact areas are new inputs/ output equipment, organizational structural changes, fast,
efficient and h·ansparent operations (Dr. Ham Mukasa, 2003 pg 16).
8
Employees normally show reactions like; will it affect salary earning? Will it erode ones
authority? Will it mean change of job description? among others. Therefore, for the
perfo1mance not to change, the top executives should choose the employees who learn
faster to teach them. It is only after they realize that ICT relives them from the drudgery
of routine work that they start to appreciate the positive impact.
The banking personnel is always worried about losing their jobs, because one of the most
common duties was dispensing cash to customers. However such fear was unnecessary.
Instead of decreases of human resources in the bank offices, personnel found them to be
re-trained for managing the problems created by ATMs. The lines were reduced, cards
retained, notes filled in by machines and users claimed not to receive all the money they
specified. These are some of the problems that personnel had to handle on a day-to-day
basis.
2.4.3 ATMs and customers
Computers are being introduced to direct customer service in banks. Customers will
appreciate the speed at which services will be delivered. The customer is also
increasingly having to become a part of the transaction processing and therefore requires
knowing how to operate the ICTs. This leads to the new applications and services, which
can be offered, by banks to their customers through electronic banking, Internet banking
andATMs.
Good customer service leads to the growth of a sustainable customer base. A customer is
a person who enables a business to exist. He is not an outsider on air business, but part of
us. We are not doing him a favor by serving him; he is doing us a favor by allowing us to
serve him (Mahatma Ghandi, 1983).
Customer service is all about ending a transaction or interaction so that the customer feels
better than before it began. To the banking industry, great customer service pleased a
customer according to his or her individual preference so much so that the customer feels
9
special and remembers the interactions with the bank. According to Devendra (1983), to
bring services closer to a customer and to guarantee the opportunity to use them anytime,
a customer want to have the most important target in banking during the last twenty
years.
Computers have become the most important factor behind the decreasing amount of
working places (Lehti, 1996). This new information technology innovation, with
emphasis on ATMs, has greatly enhanced customer service (De Wit, 1990).
The most impmiant aspect of customer service should be viewed in terms of delivery and
should be availed when and where customer delivery should be seen as a product and like
any other product, it where to be developed, packaged, priced, provided, communicated,
distributed and marketed (Katz, 1998).
Customer service was further defined as an administrative process whereby· customers
expectations, orders and inquiries in addition to a wide variety of "before and after" sales
service and quickly, effectively, handled to meet customer needs and satisfaction,
(Kitimbo, 1994).
There is no doubts that customers are faced with similar offers from similar or related
funds and have consequently become very sophisticated hence if banks are to gain and
hold on to their customers, then they must offer good customer service that is attractive to
satisfy customers as a reward for their support of the firm, or else the banks are bound to
loose out (Chattered Bankers, 1997).
Providing a good service on a consistent basis implies that customers will continuously
be satisfied and return to the same service and perhaps recommend the service to their
colleagues. Eventually good customer service can become a good promotional tool for
the bank, consequently drawing and satisfying more customers, (Rendall and Senor,
1992).
10
A company's failure to provide the desired level of service quality may mean
dissatisfaction of customers and thus lead to loss of customers. Computerization such as
ATMs in several banks helps to improve customer service and satisfaction as well.
2.4.4 ATMs and bank performance
Most organizations have taken up computers as a form of ICT to handle their day-to-day
activities. The banking industry to date has a number of computer-aided programmers
developed to ease banking transactions. The introduction of ATM's and electronic
transfer system, currently in use is an example of an ICT programmed. According to Dr.
Ham Mukasa (2003 pg 17), customers and staff may be able to increase efficiency, with
which they make and receive payments and enjoy greater convenience. Electronic
banking may also increase access to financial systems for customers who have previously
found access limited. Electronic banking could also reduce operating costs for banks.
This allows more profits for the bank and hence favoring expansion. This also favors
credit extension activities and hence providing significant opportunities for the banks.
Management will realize a lot of improvement in their banking services if computers are
used to facilitate such activities (Simon, 1991). Management should adopt a
computerized system in order to reach customers the faster way and easily. The bank
performance will be shown by the customers available and the services that are offered.
Banks will work faster and efficiently to meet more customers in a given period of time.
The banks therefore should involve highly advanced technologies like ATMs in order to
hold on to their customers and ease their performance to higher productivity.
2.5 Challenges faced in introducing ICTs in banks
In the world of banking, it is often so, that as long as the old and familiar bank
service are easily available, interest in new technology in form of automatic services are
strongly Iimited,(Lehti and Kari,1996). It was difficult for old people to accept this new
technique and these new advantages of them. It wasn't easy to trust a new technology.
When a new product often enters the market, it is expensive, (Utterback, 1994). A lot of
11
money is spent on installing just a single ATM. This therefore means that there has got to
be a return on investment, otherwise the bank is bound to make losses.
a) The employees' adaptation to the technology takes time but after a while; they learn
to appreciate it.
b) Most employees think of losing their jobs. The introduction of Automation in any
organization inevitably leads to some jobs being made redundant alongside the people
who perform those tasks. But ICTs also create new and different jobs, new skills and new
challenges (Dr. Ham Mukasa, 2003 pg 17)
c) At times, banks meet a high cost of acquiring the A TM facilities and also stationing
them in different locations. Most banks are concentrated in the city center where they can
easily meet the facilities and upgrade them. They ignore other parts of the country and at
times not get enough customer response.
d) Repairing, maintaining and upgrading the facilities are also a challenge. The presence
of different computer viruses and also breakdown of operation by the A TM machines is a
big problem.
2.6. How the challenges are handled?
It is possible to balance the effect of job redundancy with re-skilling where, possible and
staff takes on new jobs and duties. Actions such as group discussions, training and post
implementation reviews assist during the transaction from manual to ICT based
operations through allying the fears of staff.
However all the fears that customer had about ATMs are gradually erased. The whole
system has become so much better, that popularity of ATMs has grown rapidly. Due to
A TMs attracting more and more customers, queues in the bank offices shortened
dramatically.
2.7 Safety to ATMs
ATM crime has continued to disturb the facility. It is hard to get a hand on how many
ATM crimes are committed, as they are generally tracked separately, (Westbrook.com).
12
Many corrective measures regarding ATM security cost money. So every time the idea of
breaking out ATM crime comes up, the bankers go into a cardiac aiTest and lobby against
it, (Kennish, 2000).
The American Bankers Association puts the number at an even lower crime rate, for
every 3.5 million transactions, or about 3000 a year. However, the biggest problem is that
consumers do not seem to be reassured by the statistics.
'Our customers seem to be satisfied with the service so far and we hope that none of
those terrible crimes affects us, (Byarugaba, 2001).
2.8Relationship between Customer Satisfaction and ATMs
An excellent customer satisfaction leads to growth of customer base. Customer base can
never grow with poor services. Crane Bank Uganda intends to become a low cost
provider, where all services will be made cheap through ATMs. Crane Bank has opened
32 ATMs in order to serve their customers better. Before introduction of these machines,
the bank had about 10,000 customers but to date, it boasts of a 70,000-customer base.
The managing director of Crane Bank is optimistic that the growth of customer base is as
a result of the service being offered to their customers.
Introduction of ATMs, improvement in customer service, this builds customer loyalty
that in turn erects a firm customer base_ leading profitability to the bank. This trend shows
a positive return on investment, to (Kakuru, 2000).
Customer service is a philosophy, which employees feel, and act accountable for creating
satisfied customers (Tom Reilly, Value Added Customer Service). Ferreul (1989) tries to
bring out what a company can do to satisfy its clients. He states that customers require
variety of services and at most basic levels, they need fair prices, acceptable services and
product quality, and dependable deliverances.
13
Pierre (1998) further noted that with computerization and presence of ATMs the
provision of home banking services is highly possible although they have to undergo
standardization at the remote banking service stations in order to be offered merely by
telephone. He cited the home banking services offered in Europe vial Automated Teller
Machines as an example that can be applied in Uganda as well as in other developing
countries. He stated that a survey in the European banking industry revealed that most
clients changed from their bankers because of the poor quality of the services offered to
them. The study thus seeks to investigate the situation and try to figure out probable
solutions where possible, say by devising avenues, capable of enhancing or instilling
loyalty in the customers depending on high quality service delivery, then can in turn
boost customer satisfaction. Financial institutions therefore need to computerize their
production facilities in order to develop a cooperate culture based on superior quality
service delivery.
Computerization of information system by any organization especially a financial
institution would enable it to maintain a high degree of flexibility and openness in their
information systems and operation as well as it brings about product customization and
benefits that accrue to it, (Giehira, 1997).
2.9 CONCLUSION
The banking industry has witnessed a positive invasion of technology used in today's
banks. Particular interest is focused on computerization of the bank's operations through
the introduction of ATMs. It is evident today that no bank will keep a customer if the
bank cannot serve the customer better and faster through computerization. ATMs have a
yardstick of self-service banking, and the customers' perception is very positive as far as
t5his facility is concerned. The ATM has further enhanced customer loyalty, because the
customers can access their cash 24 hours a day, due to the fact that the bank is open for
only a few hours a day.
14
CHAPTER THREE
METHODOLOGY
3.1. Introduction
This chapter presented the research design, procedure of the study, the sources of
data collection, data analysis, presentation and limitations of the study.
3.2. Research Design
The researcher used a descriptive and explanatory design in a way that it involved
in-depth interviews with the people themselves. The in-depth interviews were under the
qualitative data. The quantitative and qualitative data , WCU'., collected using semi
structured questioners. There was use of both numerical and non-numerical data. The
exploratory design included visiting the IO of the ATM locations in Kampala region and
recording what was on ground.
3.3. Study population
The researcher targeted forty ( 40) respondents and this sample was selected from
the management and customers. This was intended to facilitate the attainment of more
objective results. Ten ATM locations were used and the main branch at Crane Chambers.
3.4 Sample design
The management, staff and customers was selected using random sampling
technique. This technique involved the use of probability sampling for better results. The
population was sub-divided into sub-populations. A total of three strata were selected and
from each stratum, the fourth respondent was selected.
3.5. Sources of data
The data that was used for the purpose of the study included both primary and
secondary data.
15
(i) Primary data
This was obtained directly from the bank records and individual persons include staff and
the bank customers. Questionnaires and personal interviews w_e,r-e, used for that effect.
(ii) Secondary data
This was collected from already available data and literature. It involved the use of
external and internal sources.
a) Intemal sources
-ATM reports by Crane bank
-Company financial statements (balance sheets and income statements)
b) External sources
-Commercial journals
-Government Publications
-Text books
-Periodicals by the Bank
-Research reports
3.6. Data collection instruments
The research instruments were self-administered questionnaires. It also involved
personal interviews.
3.7. Data processing, analysis and presentation
The data obtained was edited, coded, and arranged in percentages and frequencies. It l,vi;i.s
then be analyzed by use of pie cha1is and graphs as a statistical test.
3.8. Limitations of the study
These included problems that the researcher faced during the research study.
I. Financial resources. The researcher was faced with a problem of limited funds to
facilitate the study for example collecting data.
16
2. Time constraint. There was also limited by time since the researcher had to beat the
deadline.
3. Revealing of information. Some respondents were reluctant to provide the required
infonnation for the fear of revealing their business secrets to competitors in the same
industry.
3.9 Budget estimates for research proposal and report
Activity Description Amount in shillings
A Proposal writing and printing 60,000
B. Proposal review 40,000
C. Data Collection 60,000
D. Data analysis 40,000
E Dissertation write up 80,000
F Contingences 50,000
TOTAL 330,000
3.9.1 Time frame
Activity Description Expected Period (Weeks)
1. Proposal writing and review 5
2. Data collection 2
3. Data analysis 5
4. Dissertation write up 6
17
CHAPTER FOUR
4.0 PRESENTATION, ANALYSIS AND INTERPRETATION OF FINDINGS
4.1 INTRODUCTION
The purpose of the study was to find out the impact of ATMs on customer
satisfaction. This chapter comprises of the presentation, discussion, analysis and
interpretation of findings.
4.2 Bio data of the respondents
Under this section, the characteristics of the respondents m regard to gender,
occupation and age.
Table I showing the gender of the respondents
Gender Freqnency Percentage
Male 15 37.5%
Female 25 62.5%
Total 40 100
Source: Primary Data
The table clearly indicates that the majority of respondents comprising 62.5% were
females while 37.5% were males. This implies that the females dominate the bank.
18
Table 2 occupations of the respondents
Occupation Frequency Percentage
Students 20 50%
Bankers 5 12.5%
Business men 10 25%
Accountants 3 7.5%
Others 2 5%
Total 40 100
Source: Primary Data
From the above, 50% of the clients were students, 12.5% were bankers, .25% were
businessmen, 7.5% were Accountants and others were only 2%.
Table 3 showing the age brackets of the respondents
Age Frequency Percentages
15-25 10 25%
26-35 20 50%
36-45 5 12.5%
46-55 3 7.5%
55+ 2 5%
Total 40 100
Source: Primary Data
From the above table, 25% are between 15-25, the majority of the bank customers are
between 26-35 with 50%, 12.5% are between 26-45years, 7.5% are between 46-55years
and the least number of customers who are above 55 are only 5% of the clientele.
4.2.1 Customer service and Satisfaction in Crane Bank
The study findings showed that Crane Bank Uganda has a variety of services it offers to
its customers in a bid to meet their customer demands satisfactorily. The bank has got
accounts like current account, Ordinary savings account, Crane access account, Regular
19
Monthly Savings account, Crane access debit Account, Fixed Deposit account and
Children's Savings account. It was also noted that different customers utilize various
services as shown in the table below;
Table 4 of the accounts that customers utilize in Crane Bank
Service Frequency Percentage
Current account 10 25%
Ordinary savings account 3 7.5%
Crane access account 3 7.5%
Regular monthly savings account 5 12.5%
Crane access debit card 12 30%
Fixed deposit account 5 12.5%
Children's savings account 2 5%
Total 40 100
Source: Primary data
The table above illustrates that all the bank accounts are utilized by the customers,
current account 25%, ordinary savings account 7.5%, crane access account 7.5%,
regular monthly savings account 12.5%, the crane access debit card that is for the ATM
is the one that it highly utilized with 30%, fixed deposit account 12.5% and the children
savings account with 5%. This implies that the customers are more interested in the
Crane access debit account with the ATM card.
4.2.2 the level of Customer Satisfaction due to the presence of ATMs
The study also intended to establish the ATMs as part of computerization adopted by
the bank to foster customer satisfaction.
The findings revealed that Crane bank installing more ATMs and having bank master
software to make the work faster.
20
Table 5 the level of satisfaction due to the ATMs
Statement Frequency Percentage
Very good 25 62.5%
Good 10 25%
Poor 5 12.5%
Very poor - -
Total 40 100
Source: Primary Data
It is evident that the bank has attained improvement due to the presence of ATMs. The
table above reveals that 62.5% find the ATMs highly satisfying, 25% find them good and
only 12.5% find them poor. There was no client who was not getting satisfaction among
all the respondents.
Table 6 the rate at which the customers are coping up with the new
developments
Statement Frequency Percentage
Fast rate 20 50%
Fairly fast rate 10 25%
Slow rate 10 25%
Very slow rate - -
Total 40 100
Source: Primary Data
The above table revealed that most customers are coping up with the new developments
at a faster rate 50%, the other customers at a fairly faster rate 25%, only 25% are coping
up at a low rate and no customer is very slow at catching up with the developments.
The results of the work are in line with the work of Herman Gichira, in the East African
21
Newspaper of August, 1997, where he lamented that in the banking industry today, it is
seen as the most fmtunate trend that technological advancement has brought in place.
4.3The problems encountered at the ATMs
Customers encounter many problems when operating or waiting to be served at the
ATMs. These problems can be explained below;
Table 7 reveals al the problems encountered
Statement Strongly Agree Strongly
agree Disagree
Long queues 25 10 5
(62.5%) (25%) (12.5%)
Disruption of 21 6 13
automated services
(52.5%) (15%) (32.5%)
Power failures 17 14 9
(42.5%) (35%) (22.5%)
Limited ATMs 17 13 10
(42.5%) (32.5%) (15%)
Source: Primary data
From the table above, it was revealed that the highest problem encountered at ATMs is
the presence of the long queues with 62.5%, followed by the disruption of the automated
services 52.5%, and then also the presence of fewer ATMs 42.5% and lastly power
failures with 32.5% since most of the tenninals have got standby generators.
22
Table 8 shows some the solutions that were given by the customers to
the above problems.
Statement Freqnency Percentage
Increase the ATM 25 62.5%
terminals
Servicing and 7 17.5%
maintaining the facilities
Open more branches Ill 3 7.5%
busy centers
Others 5 12.5%
4.4 The changes associated with ATMs in improving the level of
customer Satisfaction
Customer Satisfaction from ATMs
80% 70%
~ 60% .13 50% ; 40% ~ 30% if 20%
10% 0%
Yes No
Customer response
From the above graph, ATMs have improved the level of customer satisfaction
and 75% of the customers agree that they have derived better satisfaction through
the use of ATMs and only 25% did not agree.
23
4.5 Is it easy to make mistakes?
70 60
fil 50 C)
.fl 40 C
~ 30 if 20
10
0 Yes No
Customer Response
70% of the customers find ATMs convenient because they cannot easily make
mistakes when operating them. Only 30% of the customers find it hard.
4.5.1 Who explained how ATMs work to you?
50 45 40
fil 35 C) .fl 30 C 25 ~ 20 a, 15
D. 10
5 0
Banking staff Friends Bronchures None
Customer Response
According to the customers the bank staff is the one that explains more onhow
ATMs work with the percentage of 50%, followed by friends, with 30% then the
brochures provided by the bank offer only 12.5% of the explanation and lastly
some customers claimed that no one explained to the how the A TMs work.
24
4.6The changes realized by the bank due to customer satisfaction.
II Increase in customer base
Ill Efficiency
□Others
According to the research from the bank, it has been proved that A TMs have led
to increase in the customer base 270° (74%), bank efficiency has also increased by
45° (13%) and others by 45° (13%).
4. 7 Other modern facilities that Crane Bank should install.
25
IIIIMoreATMs
fill Others
Majority of the customers still want more ATMs to be installed especially in busy
centers in order to avoid inconveniences.
4.8 Conclusion
According to the research findings, most customers have got more satisfaction
through the use of ATMs and therefore Crane Bank should always focus on their
development to have a higher customer base and satisfaction hence high
profitability.
26
CHAPTER FIVE
5. SUMMARY, CONCLUSIONS AND RECOMMENDATIONS OF THE STUDY
5.1 INTRODUCTION
1. ATM and Customer Satisfaction
ii. Relationship between Customer satisfaction and ATMs.
m. Challenges faced in installing ATMs
1v. How are the challenges handled?
5.2 SUMMARY OF FINDINGS
ATMs have greatly improved customer satisfaction, and this can be cited in the
following ways;
1. 90% of the customers find it easy to use ATMs.
11. 78% of the customers, use ATMs at least once a week
5.2.2 ATMs and Customer Satisfaction
Customer base has grown as a result of introducing ATMs. The majority of the
respondents are satisfied with the present functions of ATMs. However, other functions
recommended by the respondents included acceptance of coins, giving legally accepted
notes and detailed bank statements.
27
5.2.3 Relationship between Customer Satisfaction and ATMs
1. 80% of the customers prefer the ATM to the Bank to make withdrawals or
deposits.
11. 85% feel safe using ATMs
m. 87% would like to have more ATMs especially in their villages
rv. 78% of the customers would like to have more A TMs within reasonable reach of
their homes, work place or schools.
v. Customers have found ATMs to be convenient, fast and accessible.
5.3 CONCLUSIONS
The numbers of customers who have used ATMs for a period greater than one
year are more currently than they used to be before 2001.
i. Crane Bank Staff only contribute 20% towards transfusing information about
ATMs to customers. Friends told majority of their customers about ATMs.
ii. 50% of Crane Bank staff explained to their customers how ATMs work.
iii. 78% oft/ze customers access ATMs at least once a week.
28
5.4 RECOMMENDATIONS
There is a need for further improvement of customer service by making the following
interventions;
1. Increasing the number of ATM service points and hence reducing queuing time
and also making the services more accessible.
2. Increasing available ATM functions so that customers have a wider an-ay of
transactions that they can perform at the ATM service points.
3. Reduce on failure of machines by creating better ICT connections and also
can-ying out regular maintenance.
4. Avoid putting forged notes at ATM terminals.
5. Improving security for customers at the ATM service points.
6. There is need for the Bank to further market the ATM as a useful utility in order
to increase the customer base. Sensitization can be done through brochures,
radios, Television and personal communication.
5.5 ISSUES FOR FUTURE RESEARCH
The researcher is of the view that further studies can be conducted to assess the impact of
A TMs on customer satisfaction for higher customer base, growth and profitability.
29
APPENDIX A: REFERENCE
1. Chartered Institute of Bankers (Vol. No.3 March (1997)
2. C.S.French (1993, 1995) Computer Science
3. Devendre (1983): Indian Banking and Automation.
4. De Wit,G.R (1990): The Character of Technological Change and Employment in
Banking: A Case study of Dutch Automated Clearing House(BCG)
5. Donald A. Marchand, William J. Kettinger & John.D, Rollins (2001) Information
Orientation. The link to Business Performance
6. Donald H.S (1983) Computer today MC Graw-Hill,Inc
7. Farbey B. L & Target.F(1995) How to assess your I.T Investment Management
Today
8. Herman Gichira (1997) Financial Institution and Information Technology,
Internet.
9. Kakuru J.(2000): Financial Management. Makerere University Press.
10. Kennish (2000): Technological advance in Banking. ATM Magazine.com.
I 1. Lehti-Kari(l996): Pankkitoiminta tietoyhteiskunnassa.
Suunta2002,Kustarmusyhtio. Otava, Keuruu.
12. Mahatma Ghandi(l983): Banking and Customer Service. Vajpayee press.
13. Mark.L& Louise K.(2000). E- Commerce. Doing business Electronically
14. Njuki A,(2001): Alternative ways in daily BankingAffairs. Capital Markets
Authority, Vol.4 110.8.
15. Norma Harrison and Danny Samson (2002) Technology Management. Text and
International cases.
16. Pierre Simon, New Technology and Coperative Advantage. (UIB) Journal
17. Scott Basham& Stephenson College (1995) Chartered Institute of Bankers in
Scotland. Information Technology
18. Stephen P. Robbins (2001) Organizational theory. Structure, Design &
Applications
19. The Institute of bankers of Sri-Lanka 2003. Bankers' Journal Vol 22 No.3
20. The New Vision Contract Publishing, August 18'\ 2005, Crane Bank 10th
30
Anniversary
21. Utterback, James M(l994): Mastering the Dynamics of Innovations; How
Companies can seize opportunities in the Face of Technological change.
31
APPENDIX A
RESEARCH INTERVIEW GUIDE ON THE IMPACT OF ATMS ON
CUSTOMER SATISFACTION
Please kindly fill these forms completely. They are for academic purposes only.
Tick the suitable alternative.
PART 1: PERSONAL PROFILE
I. Gender for the respondent
a) Female b)male ~I-~
2. Occupation of the respondent-----------------------------------------------------------
3. Age
a) 15-25
b) 26-35
c) 36-45
d) 46-55
e) 55+
PART2: GENERAL DATA
I. What services does Crane Bank offer to you?
Cunent account
Ordinary savings account
Crane access account
Regular monthly savings account
Crane access debit card
Fixed deposit account
Children's savings account .
Others specify--------------------------------------------------------
2. For how long have you worked for/been a customer of Crane Bank?
1-2
2-4
4-6
6-8
8-10
Others specify----------------------- ----------------------------
3. Is it believed that ATMs play a major role in customer satisfaction?
Strongly agree
Strongly disagree
Agree
Not agree
4. What problems do you encounter when withdrawing money?
Long queues
Power failures
Limited counters
Limited working hours
Disruption of automated services
Others specify-----------------------------
5. What solutions would best deal with the above problem?
Increase the ATM terminals ·
Servicing and maintaining the facilities
Open more branches in busy centers
Others
6. Have the changes associated with ATMs improved the level of customer
satisfaction?
a) Yes b)No
7. How would you describe the performance of your bank as a result of
computerization?
Very good C=:J Goodc:=:J Poorc:=:J Very poor C=:J
8. At what rate are you copping up with the new developments associated with
Computerization?
Fast rate C=:J Fairly fast ratec:=:J Slow ratec:=:J Very slow rateCJ
9. Are the employees satisfied with how reliable the A TM facilities are?
Very satisfied C=:J Satisfied CJ Dissatisfied CJ Very dissatisfied CJ
10. Are you satisfied with how flexible the system is?
Very satisfied C=:J Satisfied C=:J Dissatisfied C=:J Very dissatisfied CJ
11. What new changes have you realized in your bank that has been due to customer
satisfaction?
12. Which other modern facilities would you like to install for a better performance?
13. Who explained how ATMs work?
Banking staff C=::J Friends
Brochures None
14. Is it easy to make mistakes?
No C=::J Yes
Thank you for your corporation.
KAMPALA INTERNATIONAL UNIVERSITY
Ggaba Road, Kansanga • PO BOX 20000 Kampala, Uganda Tel: +256 (0) 41 • 266 813 • Fax: +256 (0) 41 · 501 974
E-mail: [email protected] • Website: http://W1Nw.kiu.ac.ug
Office of the Dean School of Business and IVIanagement
THE HEAD THE HUMAN RESOURCE DEPARTMENT CRANE BANI< LTD l<AMPALA,UGANDA
Dear Sir/Madam,
Date: 27TH July,2006 ·
RE: MISS. NAKAYISO ESEZA REG.NO BBA\4195I31\DU This is to confirm and inform you that the above referenced lady is a bonafide student of Kampala International University pursuing a Bachelor of Business Administration Degree programme(banking and Finance option) in the school of Business and Management of this University.
Her title of the Research Project is "THE IMPACT OF AUTOMATED TELLER MACHINES ON CUSTOMER SATISFACTION" A CASE STUDY OF CRANE BANK LIMIED.
As part of her studies (research work) she has to collect relevant information through questionnaires, interviews and reading materials from your place.
In this regard, I request that you kindly assist her by supplying/furnishing her with the required information and data she might need for her research project and also by filling up the questionnaire.
Any assistance rendered to her in this regard will be highly appreciated.
Yours Sincerely,
DR. Y. NYAB GA ASSOCIATE DEAN - SCHOOL OF BUSINESS AND MANAGEMENT TEL.NO. 0752 843 919
"Exploring the Heights"