The main objectives of the study can be

stated as below:
(a) To examine the level of non staff customer satisfaction associated
with various aspects of ATM (such as promptness of card delivery, the
performance of ATM, the service quality of ATM personnel etc.)
(b) To examine the level of staff customer satisfaction associated
with various aspects of ATM and
(c) To make policy recommendations to improve the service quality of
ATM.

Abstract
One of the cardinal components of the banking industry is ATM service
and the extent to which customers feel comfortable to patronize its
service. This study therefore investigates ATM service and customer
satisfaction in the Upper East region of banks. More specifically, the
study looked at ATM service quality and customer satisfaction and
factors that influence ATM usage. The study uses primary data
collected from 200 respondents using convenience and simple random
sampling methods. The logistic regression model was used to analyze
the data. Multicollinearity and heteroskedasticit were corrected using
the variances inflation factor (VIF) and robust standard errors
respectively. The results suggest that customer’s satisfaction could be
improved by convenience, security and privacy and reliability of the
ATM services, as evidenced by a p-value of 0.0000 at 1% significance
level. The results further indicate that convenience, security and
privacy have positive effects on customer satisfaction at 1%
significant levels, whereas reliability has negative effects on customer
satisfaction at 1% significant levels. Also, security and privacy, ATM
user fees, educational level and location of the ATM are found to be
the major factors that influence customers’ willingness to use a
particular ATM services in the studied area.It is recommended that,
management of the various banks in the region should use
participatory approaches to ensure active involvement of its
customers with regards to ATM operations and policies safeguarding it
usage

Keywords:
ATM; customer satisfaction; Indian banks; private sector banks; public
sector banks Keywords: Automated teller machine, Customer
satisfaction, Logistic regression, Banks

. Introduction
Banking system can be traced to medieval and early renaissance
Italy, to the rich cities in the north like Florence, Venice and Genoa,
the Bardi and Peruzzi families dominated banking in the 14 th century
Florence, establishing branches in many parts of Europe. The most
famous Italian Bank was the Medic banks, established by Giovanni
medic in 1397. During the 20th century, developments in
telecommunication and computing resulting in major changes to
ways banks operated and allowing dramatically increasing size and
geographical spread. The late 2000’s financial crisis saw significant
number of bank failures including some of the world’s largest bank
and thereby raising much debate about banking regulations (Walter,
2012). The first decade of the 21st century also saw the culmination
of the technical institution in banking over the previous thirty (30)
years and saw a major shift away from traditional bank branches to
internet banking (Charles, 2006).
 Banking has long been problematic because local banks are often
unstable and corrupt as such governments and various industries
rely on international banks (UN report, 1995). In the years after
independence, governments heavily regulated the banking sector
and placed its limit on international competition. In recent decades,
banking reforms has been a priority of International Monetary Fund
(IMF) and World Bank (Walter, 2012).
Banking services in the Gold Coast was exclusively provided by two
expatriate banks functioning as Commercial Banks and the Central
Gold Coast Bank (Vidal et. al, 1999). Since the inauguration of the
Gold Coast Bank as the Central Bank of the then Gold Coast (1953)
and its maturity to the Central Banks after independence in 1957,
there has been the influx of a number of Commercial, Investment,
Merchant, Development and Private Banks among others. Banking
services contribute to the socio-economic development of every
country. Banking creates employment opportunities to citizens of
various countries. That is, banks helps in the day to day transactions
of businesses and also provides security to customer’s income.
Banking facilitates many developmental projects by granting loans.
Banks contribute to the development of the country. They perform a
lot of functions in the economy amongst which includes issue of
money (in the form of bank unit and current accounts subject to
cheque or payment at the customer’s order), netting and settlement
of payments, credits intermediation (banks borrow and lend back - to
- back on their own account as middleman), credit quality
improvements through diversification of the bank’s assets and
capital and maturity transformation [that is banks borrow more on
demand debt and short term debt, but provide more long term loans]
(ibid).
Rafiqul et al (2005) noted that the banking industry like any other
industry faces a lot of challenges in its operations that minimize the
level of customer satisfaction. Some of the challenges include;
accessibility of accounts when customers are not near their mother
banks and long waiting time in the banking hall. This can be minimized
by widening the infrastructural base of the banks. It has also been
observed overtime that management of banks put their focus on
treasury and corporate business whiles the operational side is often
ignored. The operational side is as important as other segments of
banking and banks should strengthen and give incentives to those
involved in the operational business. Another area in the banking
industry where a lot of progress should be made is the e-banking.
Although small and medium banks are now offering online services to
their customers, the large banks with more expanded branches
network and a large number of customers are required to move more
expeditiously so as to optimally utilize the e-banking network. This will
not only lower the transaction cost but will also help in improving the
customer services (Rafiqul et al., 2005).

After liberalisation of Indian Economy in July 1991, the Indian banking

sector has seen tremendous expansion. Indian banking sector, which
was mainly in domain of public sector, is in the process of
transformation due to the entry of private sector banks and foreign
banks. Staff competition in this sector is forcing the banks to become
customer friendly and customer oriented. Thus the customer
satisfaction has become more important with the increasing
competition. The Banking sector has gone into complete
transformation in the last two decades. The banking sector has
undertaken various initiatives to attract and retain their customers.
The modern banking has become customer-driven and technology-
driven. During the last decade, technology has been dramatically
transforming the banking activities in India. Driven by the challenges
of competition, rising customer expectations and shrinking margins,
banks have been using technology to reduce cost and enhance
efficiency, productivity and customer convergence. Technology-
intensive delivery channels, like Automated Teller Machines (ATMs),
internet banking, tele-banking and mobile banking etc., have created a
win-win situation by extending greater convenience and multiple
options For customers while providing tremendous cost advantages to
the banks (Shaineshand Choudhary, 2004).
foreign banks. Stiff competition in this sector is forcing the banks to
become customer friendly

and customer oriented. Thus The customer satisfaction has become

more important with the increasing competition. The Banking
sector has gone into complete transformation in the last two
decades. The banking sector has undertaken various initiatives to
attract and retain their customers. The modern banking has become
customer-driven and technology-driven. During the last decade,
technology has been dramatically transforming the banking activities
in

India. Driven by the challenges of competition, rising customer

expectations and shrinking margins, banks have been using
technology to reduce cost and enhance efficiency, productivity and
customer convergence. Technology-intensive delivery channels, like
Automated Teller Machines (ATMs), internet banking, tele-banking and
mobile banking etc., have created a win-win situation by extending
greater convenience and multiple options for customers while
providing tremendous cost advantages to the banks

Customer satisfaction and the banking

sector
Banking in the Western world is one of the many service industries
where customer satisfaction has been the focus of research (Holliday,
1996). This is mainly because of the fact that the banking sector is
increasingly experiencing a high level of competition. This puts a
tremendous amount of pressure on banks to improve their services
(File and Prince, 1992; Goode and Moutinho, 1995; Goode and
Moutinho, 1996; Goode et al.,1996; Levesque and McDougall, 1996).
However, a similar argument can be made in connection with the
banking sector in many Asian countries including India. For instance,
the banking sector in India has witnessed intensive competition in
recent years. The government has adopted liberalization policies
since 1991, which has encouraged some international banks and
private sector institutions to intensify their activities in the banking
sector. Customers are also increasingly becoming sophisticated as
they have access to the latest forms of delivery channels (such as the
ATM, internet banking ,etc). Consequently, many financial institutions
have to focus on increasing customer satisfaction and customer
retention through improved quality of their services. An element that
strongly drove customer satisfaction in banking was the warmth factor
related to the bank’s features and personnel attributes (Rust and
Zahorik, 1993). In another study by Krishnan and Ramaswamy (1998),
satisfaction with perceived product quality was suggested as a
primary driver of overall customer satisfaction. This finding
contradicts the notion of banking being a service with high credence
features, making evaluation of core service (technical quality) difficult.
However, they also found that other drivers of satisfaction were the
financial statements and services provided through different delivery
channels. Their study suggests that the impact of service delivery
factors differs substantially on customer satisfaction. For instance
they found that for customers who trade heavily and have high
investment assets, the effect of an automated telephone service is
higher than the other drivers of satisfaction. The research has
suggested that dissatisfaction is the major reason why
customer switches banks (Manrai and Manrai, 2007). Among other
factors, bank dis satisfaction typically come from fee charged for
services (Colgate and Hedge, 2001; Manrai and Manrai, 2007;
Santonen, 2007) and customer switch banks to get more favourable
price

The impact of ATM services on customer

satisfaction in Indian banks

(Farquhar and Panther, 2007). Thus the management of customer

churn is a top priority of executives in service industries like banking
(Sweeney and Swait, 2008). A net customer loss can have a
detrimental effect on the bank market share and profit (Manraiand
Manrai, 2007).Johnston (1997) forwarded the idea that banks in
general were in effect ‘barking up the wrong tree’ by improving service
quality efforts that had little or no effect on improving

customer satisfaction. Johnston (1997) Suggests that

satisfaction /dissatisfaction with retail banking does not stem from the
same elements. Rather, some elements of service quality if improved,
improve customer satisfaction however other elements may not
improve satisfaction but merely act to keep dissatisfaction at bay or
at best, reduced dissatisfaction alone. The purpose of this paper is to
understand the impact of ATM on the customer satisfaction in Indian
banking sector by studying the satisfaction level of the customers .

Following research questions will add clarity to the issue of customer

satisfaction in retail banking, its determinants and relative influence,
to aid retail bankers in highlighting or improving particular areas of
service in order to increase overall customer satisfaction:

1 What is the level of customer satisfaction for ATM service in retail

banking in India?

2 What are the determinants of customer satisfaction for ATM service

in retail banking in India?

Logistic Regression Model

The logit model is used to analyze the quality of ATM service and the
level of customer satisfaction as well as the factors that influence
the usage of ATM service in the studied area.
In this study, most of the variables to be used are dummy hence the
need for the usage of dummy variable regression models. In such
models it is assumed implicitly that the dependent variable is
quantitative whereas the explanatory variables are either qualitative
or quantitative (Vasisht, 2010). In statistics, logistic regression, or
logit regression, is a regression model where the dependent variable
is binary (Fox, 2010). This study covers the case of binary dependent
variables—that is, it takes only two values. Logistic regression
measures the relationship between the binary dependent variable
and independent variables by estimating probabilities of these
independent variables, using a logistic function, which is the logistic
cumulative distribution function. The logit model is given by;
(1)
 Where Yi is binary regress and,
X in are regressors with observable variables that relate to
alternative i and customer n,
ß is a vector of coefficients of the variables ß0 constant and
εi is random error term.
We adopt equation (1) to include the empirical study variables for
the first objective (quality of ATM service and the level of customer
satisfaction) as;

(2)

And for the second objective (factors that influence the usage of
ATM service) as;

(3)

Where β0……… β6 are the parameters of the logistic regression function

to be estimated and εi is the error term.

A general description and measurement of the variables is presented

table
 Results and Discussions

4.1. Demographic Characteristics of

Respondents
Ages and Sex Distribution of Respondents

Table 4.1 shows the frequencies and percentages of age and sex
distribution of respondents. From the table males are the most
frequent users of ATMs with a percentage score of 72.5% whilst
females (27.5%) are the least users of ATM. It was also realized that
the youth who fall between the ages of fifteen to twenty five (15- 25)
and are predominantly students use ATMs more often as they
represent 41.5% of respondents. The least users are customers of
various banks who are above the forty five (45) years of age.

Figure 4.1. Educational Statuses of Respondents

From figure 4.1 it is clear that 75.0% of the respondents have

tertiary education 15.5% have had senior high school (SHS)
education, 7.0% had their education up to the basic level (JHS) and
2.5% had never been to school. This indicates that people in tertiary
levels uses ATMs and are more involved in the banking sector
because they are believed to have a better understanding of banking
operations and are usually engaged in formal employments and as
such receive their salaries through banks.

Table 4.2. Location of Respondents

The Results from table 4.2 shows that 64% of the respondents do not
live near the bank and 36% live near their banks. This implies that,
customers who do not live near the banks are more likely to use ATM
than those who live near the banks.

Logistic Regression Estimates of the Study Objectives

Table 4.3. Logit Estimates of ATM Service

Quality and Customer Satisfaction
The results of the logistics regressions are represented in table 4.3.
It is clearly observed that three variables were found to have
statistical significant influence on customer satisfaction. They
include convenience, security and privacy and reliability as
evidenced by a p-value of 0.0000 at 1% significance level.
The coefficient of convenience of ATMs had a positive sign and is
statistically significant at 1%, with a marginal effect of 0.8575637.
This suggests that an improvement in convenience (time spent with
the ATM reduced and the ATM facility is more convenient) of usage
of the facility will increase customer satisfaction by 0.8575637 in
the region.
Security and privacy of ATMs is also significant at 1% and the
coefficient is positive. The positive direction of the marginal effect
value 0.9189495 shows that there is a probability that customer’s
satisfaction levels will be increased by 0.9189495 if the security and
privacy features of ATMs are enhanced in the delivery of ATM
services in the studied area.
 Reliability had a negative marginal value of -0.8837429. This shows
that the more customers are unable to make their transactions (such
as cash withdrawals) successfully, the more likely customers
satisfaction levels will decrease by 0.8837429.
The Pseudo R2 was 0.76 which implies that 76% of the regress and is
explained by the regressors and this is very strong. The pseudo R 2
reported in the output explains up to 76% of the variation in the
dependent variable. The chi square reports that the model is
statistically significant at 1%.

Factors that Influence ATM Usage

Table 4.4. Logit Estimates of Factors that Influence ATM Usage

From table 4.4, the goodness of fit of the model is 0.2644 as

indicated by the Pseudo R Square. This implies that the independent
 variables explain up to 26% of the variations in the dependent
variable, which is somehow weak. It can also be observed that
security and privacy of the ATM, ATM user fees, educational level
and location of the ATM are statistically significant 1%, 5% and 10%
respectively.
Security and privacy, educational level and location of the ATM have
a positive marginal customers’ willingness to use ATM services will
increase by their respective marginal values.
The negative marginal effect value of ATM user fees indicates that, if
the cost of making transactions on ATMs is increased by one unit,
customer’s willingness to use the ATMs will decrease by it marginal
value.
effect values. This implies that if there is improvement in any of
these variables.

Source of Data
Primary data constitutes the main sources of data for this research.
The sample size considered is 200 bank staffs and non staffs
(customers) in the studied area. Convenience and simple random
sampling techniques was used to select the sample units and both
structured and semi structured questionnaires were administered to
collect the data.

2 Literature review
Customer satisfaction is an important theoretical as well as practical
issue for most marketers and consumer researchers (Churchill and
Suprenant, 1982; Goode and Moutinho, 1995; Piercy, 1996; Naser et al.,
1999). Customer satisfaction is a major outcome of marketing activity
whereby it serves as a link with various stages of consumer buying
behaviour. For instance, if customers are satisfied with a
particular service offering after its use, then they are likely to engage
in repeat purchase and try line extensions (East, 1997). Customer
satisfaction is widely recognised as a key influence in the formation of
consumers’ future purchase intentions (Taylor and Baker,
1994).Satisfied customers are also likely to tell others of their
favourable experiences and thus engage in positive word-of-mouth
advertising (File and Prince, 1992). This positive word-of-mouth
advertising is particularly useful in collectivist Asian cultures like
India where social life is structured in a way to improve social
relationships with others in the society (Hofstede, 1980). Dissatisfied
customers, on the other hand, are likely to switch brands and engage
in negative word-of-mouth advertising. A study conducted by Levesque
and McDougall (1996) confirmed and reinforced the idea that
unsatisfactory customer service could lead to a drop in customer
satisfaction and willingness to recommend the service to a friend. This
would lead to increase in switching by customers. So, the significance
of customer satisfaction and customer retention in strategy
development for a ‘market-oriented’ and ‘customer-focused’ firm
cannot be underestimated (Kohli and Jaworski, 1990). Customer
satisfaction can be considered as the essence of success in today’s
highly competitive world of business.

Customer satisfaction is increasingly becoming a corporate goal as

more and more companies strive for quality in their products and
services (Bitner and Hubbert, 1994). In this context, an understanding
of ‘determinant of customer satisfaction’ (Churchill and Suprenant,
1982; Levesque and McDougall, 1996) is of great significance to
marketers. The current paper reports findings from a recently
conducted study, which looked in to the significance and importance
of various determinants of customer satisfaction in retail banking in
India .Customer satisfaction is a judgement by the customer, post-
purchase. The most popular view of customer satisfaction in academia
is that customer satisfaction is the judgement borne out of the
comparison of pre-purchase expectations with post-purchase
evaluation of the product or service experience (Oliver, 1997).
Customer satisfaction can result from any dimension (whether or not it
is quality related) and its judgements may arise from non-quality
issues (e.g. needs, equity, and perceptions of ‘fairness’) and require
experience with the service or provider (Howard and Sheth, 1969;
Taylor and Baker, 1994). Strong linkages have been apparent between
service quality dimensions (for example speedy responses to
enquiries) and overall customer satisfaction (Anderson and Sullivan,
1993).Research has proven that customer dissatisfaction has a
greater psychological impact and a greater longevity compared to
good experiences as it has been estimated that two out of three times
as many customers will tell others of a bad experience than relate
agood one. Therefore, there is a multiplier effect of bad service; it
hurts not only the bottom line of the bank and its reputation, but
implies additional costs of losing potential customers apart from
existing ones. A number of studies have also shown that the costs of
acquiring a new customer are more expensive than retaining existing
ones (Reichheldand Sasser, 1990; Reichheld, 1996). In short, superior
service offering and satisfaction derived from services enhance the
customer experience and result in improvements in loyalty, retention
and subsequently business performance. The different studies have
concluded that:1 service quality is one of the effective means in
building a competitive position in the service industry (Lewis, 1991)2
investments in service quality, customer satisfaction and customer
relationships lead to profitability and market share (Rust and Zahorik,
1993)3 high-quality service and customer satisfaction often result in
more repeat purchases and market share improvements (Buzzell and
Gale, 1997)4 customer satisfaction leads to customer loyalty and this
leads to profitability(Hallowell, 1996)5 the costs of customer
acquisition are much higher than the costs of retention(Reichheld and
Sasser, 1990).Levesque and McDougall (1996) comprehensively
analysed the effects of service quality, service features and customer
complaint handling on customer satisfaction in the Canadian retail
banking sector. Their findings suggest that satisfaction determinants
in retail banking are driven by a number of factors including service
quality dimensions .Key variables of service quality indicating
customer satisfactions are – core and

relational performance, problem encountered and satisfaction with

problem recovery. The provider’s offering can also be expected to
affect customer satisfaction (overall) and ongoing patronage.
Levesque and McDougall’s (1996) study indicated that the bank’s
features (e.g. location), the competitiveness of the banks interest
rates, the customers’ judgements about the bank employees’ skills
and whether the customer was a borrower were all factors that drove
customer satisfaction, while bank features and competitive interest
rates were significant contributors. However, this study did not
categorically point out which had more influence; rather both core and
relational issues were categorised as one for retail banks to consider
when satisfying customers.

Customer satisfaction is increasingly becoming a corporate goal as

more and more companies strive for quality in their products and
services (Bitner and Hubbert, 1994). Inthis context, an understanding
of ‘determinant of customer satisfaction’ (Churchill and Suprenant,
1982; Levesque and McDougall, 1996) is of great significance to
marketers. The current paper reports findings from a recently
conducted study, which looked into the significance and importance of
various determinants of customer satisfaction in retail banking in
India. Customer satisfaction is a judgement by the customer, post-
purchase. The most popular view of customer satisfaction in academia
is that customer satisfaction is the judgement borne out of the
comparison of pre-purchase expectations with post-purchase
evaluation of the product or service experience (Oliver, 1997).
Customer satisfaction can result from any dimension (whether or not it
is quality related) and its judgements may arise from non-quality
issues (e.g. needs, equity, and perceptions of ‘fairness’) and require
experience with the service or provider (Howard and Sheth, 1969;
Taylor and Baker, 1994). Strong linkages have been apparent between
service quality dimensions (for example speedy responses to
enquiries) and overall customer satisfaction (Anderson and Sullivan,
1993).Research has proven that customer dissatisfaction has a
greater psychological impact and a greater longevity compared to
good experiences as it has been estimated that two out of three times
as many customers will tell others of a bad experience than relate a
good one. Therefore, there is a multiplier effect of bad service; it hurts
not only the bottom line of the bank and its reputation, but implies
additional costs of losing potential customers apart from existing
ones. A number of studies have also shown that the costs of acquiring
a new customer are more expensive than retaining existing ones
(Reichheldand Sasser, 1990; Reichheld, 1996). In short, superior
service offering and satisfaction derived from services enhance the
customer experience and result in improvements in loyalty, retention
and subsequently business performance. The different studies have
concluded that:1 service quality is one of the effective means in
building a competitive position in the service industry (Lewis, 1991)2
investments in service quality, customer satisfaction and customer
relationships lead to profitability and market share (Rust and Zahorik,
1993)3 high-quality service and customer satisfaction often result in
more repeat purchases and market share improvements (Buzzell and
Gale, 1997)4 customer satisfaction leads to customer loyalty and this
leads to profitability(Hallowell, 1996)5 the costs of customer
acquisition are much higher than the costs of retention(Reichheld and
Sasser, 1990).Levesque and McDougall (1996) comprehensively
analysed the effects of service quality, service features and customer
complaint handling on customer satisfaction in the Canadian retail
banking sector. Their findings suggest that satisfaction determinants
in retail banking are driven by a number of factors including service
quality dimensions .Key variables of service quality indicating
customer satisfactions are – core and relational issues were
categorised as one for retail banks to consider when satisfying
customers. The different studies have concluded that:

1 service quality is one of the effective means in building a

competitive position in the service industry (Lewis, 1991)

2 investments in service quality, customer satisfaction and customer

relationships lead to profitability and market share (Rust and Zahorik,
1993)

3 high-quality service and customer satisfaction often result in more

repeat purchases and market share improvements (Buzzell and Gale,
1997)

4 customer satisfaction leads to customer loyalty and this leads to

profitability(Hallowell, 1996)

5 the costs of customer acquisition are much higher than the costs of
retention(Reichheld and Sasser, 1990).

2.1 ATM service quality

Lovelock (2000) identified the dimension of ATM service quality such
as secure and convenient location, adequate number of ATM, user-
friendly system, and functionality of ATM. Davies et al. (1996)
examined the factors that influence customers’ satisfaction on ATM
service quality. These factors include costs involved in the use of
ATM, and efficient functioning of ATM. Researchers have divergent
views about the use and effectiveness of ATMs. Stemper (1990)
stressed the positive dimension of ATMs based on freedom of
transaction. Effective service delivery in ATM system guarantees
quality excellence and superior performance and provide autonomy to
the customers (Lovelock,2000). Yavas et al. (2004) argued that
customer-focused ATM delivery systems that fulfil their needs and
maximise operational performance are essential dimensions for banks
to achieve and sustain competitive advantage. Dilijonas et al. (2009)
examined the essential aspects of ATM service quality in Baltic
States. They identified essential resources (adequate number of ATMs,
convenient and secure location and user-friendly system); important
dimensions of operation of ATM (maximum speed, minimum errors
,high uptime, cash back-up); and value-based aspects (quality service
at reasonable cost ,and maximum offering to cover maximum needs of
customers) as vital facets. Al-Hawari and Ward (2006) compiled a list
of five major items about ATM service quality that include convenient
and secured locations, functions of ATM, adequate number of
machines and user-friendliness of the systems and procedures. These
items constitute important aspects of ATM service quality. Islam et al.
(2007) examined the satisfaction level of ATM cardholders of a leading
bank (HSBC) in Bangladesh. The study found significant relationship of
ATM service quality with customers’ satisfaction. The study identified
that location, personnel response, quality of currency
notes, promptness of card delivery and performance of ATM were
positively and significantly related to customers’ satisfaction. The
security, frequent breakdown of machine, and insufficient number of
ATMs were major contributors of customers’ dissatisfaction. In
another study in Bangladesh, Shamsuddoha et al. (2005) found that 24
hours service, accuracy and convenient locations were the main
predictors of customer satisfaction. The study also indicated that lack
of privacy in executing the transaction, fear of safety and complexity
of the machine were the major cause of concern for the customers.
Joseph and Stone (2003), through focus group study in the USA, found
that easy access to location, user-friendly ATM and security are
important factors that influence majority of bank customers’
perception of ATM service quality. Patrício et al. (2003)under took a
qualitative study of a Portuguese bank regarding customers’ use of
multi-

channel offerings. The study identified accessibility and speed of

operation as strong predictors of customers’ satisfaction, whereas
security dimension and technical failures were main causes of
dissatisfaction. Previous researchers have found that reliability
feature of ATM is essential to consumers’ use of electronic channels
of banking(Polatoglu and Ekin, 2001; Liao and Cheung, 2002).Literature
provides support to the idea that pleasant experience of automated
services provides enhanced value to the customers and attracted
them to undertake improved business with their banks (Zhu et al.,
2002). Marketers have identified customers’ satisfaction through
behavioural, cognitive and attitudinal response to the service provider.
These dimensions manifest in repeated use of services, tolerance with
regard to price, word-of-mouth promotion and display of cognitive and
attitudinal behaviour (Bowen and Chen, 2001). Athanassopoulos (2000)
found strong empirical evidence of innovation, convenience, price and
service quality as vital dimensions of customers’ satisfaction. An
understanding of customers’ expectations enables organisations to
offer customer-focused services and reduce attrition of customers.
Literature offers significant evidence of the association between
satisfactions of customers and superior financial performance,
customer loyalty and market share (Beerli et al., 2004; Wood, 2008). A
number of studies have highlighted the satisfaction of customers with
ATMs (Moutinho,1992; Goode and Moutinho, 1996; Wan et al., 2005;
Mobarek, 2007; Komal andSingh, 2009).Mcandrews (2003) identified
that secure and convenient location, adequate number of ATM, user-
friendly system and functionality of ATM play important role in
customers’ satisfaction. While, Joseph and Stone (2003), Mobarek
(2007) and Dilijonaset al. (2009) mentioned that adequate number of
ATMs, convenient and secure location, user-friendly system, speed,
minimum errors, high uptime, cash back-up, cost and service coverage
are essential service quality aspects of ATM. Yoo and Donthu (2001)
And Szymanski And His (2000) Empirically found that customers’
perception of security and privacy played an essential role in their
satisfaction. Liao and Cheung (2002) argued that expectation of
security is essential in shaping customers’ perception of service
quality. The concern of customers about security and privacy, while
using this service, is a major cause of their dissatisfaction (Madu and
Madu, 2002).Wan et al. (2005) discovered that the accuracy of
transactions’ information was a major predictor shaping customers’
perception of ATM service quality. Tan et al. (2003)found that
accuracy of transactions’ information aspect positively and
significantly contributes toward customers’ perception of quality. The
literature provides strong support that reliability is an essential
determinant of customers’ perceived service quality and positively
relates to customers’ use of ATM services (Polatoglu and Ekin,
2001;Fassnacht and Koese, 2006).Komal and Singh (2009) had
identified that customer satisfaction is one of the major factors
measuring the performance of the banks. They examined the
relationship between various ATM facilities, factors affecting the
choice of ATM and its inter play with customer satisfaction. This study
has analysed the customer satisfaction level in two terms, i.e. Material
Customer Satisfaction (MCS) level and Abstract Customer Satisfaction
(ACS) level. Customer satisfaction in material sense denotes the
aggregate position of the banks in terms of fee charged, frequency
with which problems are faced

and post-purchase behaviour of the customers. In abstract sense,

customer satisfaction level denotes the position of the banks in terms
of post-purchase behaviour, the efficiency of facilities provided and
the example of others using the ATM of the same bank. It indicated
that there is direct relation between fee charged and
customer satisfaction. The overall material customer satisfaction is
highest in SBI, followed by ICICI and HDFC bank. In case of abstract
customer satisfaction it is in reverse order ;HDFC has the highest
satisfaction level followed by ICICI and SBI. Kumbhar (2011) has
stated that system availability, fulfilments and efficiency, security and
responsiveness, easiness, convenience, problem handling and contact
were not significantly correlated with overall satisfaction in ATM
service. However, cost-effectiveness of ATM service was positively
and significantly correlated with overall customers’ satisfaction in
ATM services. Khan (2010) in his study of Pakistani bank has stated
that there is a positive and strong relationship between ATM service
quality and customers satisfaction. The study has identified that
convenience, efficient operation, security and privacy, reliability and
responsiveness positively and significantly affect customers’
perception of ATM service quality. ATM service quality also relates to
the ability of the bank staff to provide the agreed services timely,
accurately, dependably and promptly. Customers prefer to resolve
their complaints expeditiously (Karjaluoto et al.,2002). Gerrard and
Cunningham (2003) found that staff response to customers’ ATM-
related needs influence their perception about service quality. The
responsiveness is crucial to sustain service quality and facilitates
building long-term relationship between service provider and the
customers (Long and McMellon, 2004; Bauer et al., 2006).

3 Methodology
3.1 Data collection method
The main instrument used for data collection in this research was the
questionnaire; there sponses have been collected by means of face-to-
face interviews by author.
3.2 Development of research instrument
3.2.1 Step 1
In order to develop a questionnaire, the personal interviews of the
bank managers were carried out at the branch level as well as
regional headquarters levels of these banks located in Delhi. The
printed materials about the ATM services provided by these banks
were also collected. Various books, journals and banks websites were
also referred to develop the questionnaire. The questionnaires items
were selected on the basis of literature review and discussion with the
branch managers and customers of the banks and what service they
look for in an ATM.
3.2.2 Step 2
Based on the information gathered and study material collected from
these banks, the following characteristics were short listed for further
study:

location of ATM/proximity to your residence/office

•

availability of cash
•

time to process request

•

number of ATMs in locality

•

response to the query

•

availability of desired forms

•

availability of cheque drop boxes

•

queues at ATM/time required doing a transaction

•

printed statement of transaction

•

cash deposit facility

•

availability of networked (shared) ATMs

•

fee charged for using other bank’s ATMs.

3.2.3 Step 3
Prior to the final survey, the questionnaire was pre-tested using a
sample of respondents similar in nature to the final sample. The goal
of pilot survey was to ensure read ability and logical arrangements of
questions. The questionnaire was administered to100 customers of
selected banks (25 from each selected bank) included in the study to
ensure that the respondents understand the questions. The
respondents were made aware of the purpose of survey and were
asked to go through the questionnaire carefully. Only those customers
who had an account in any of the selected banks were included in the
study. Each respondent was asked to complete the questionnaire and
comment on the contents of the questionnaire.
3.2.4 Step 4
The responses of pilot study were thoroughly analysed. The
questionnaire was reviewed in light of comments and shortcomings
and then it was revised accordingly. The final questionnaire was
administered to 400 customers (100 from each selected bank) as
per the sampling plan. The overall satisfaction of the respondents
towards the ATM services was gauged using a questionnaire
containing close-ended question, which were designed to ascertain
satisfaction level of the respondents using a five-point Likert’s scale
with following options: Excellent, Good, Satisfactory, Poor, Worst, Not
used. Excellent being the highest satisfaction level followed by Good,
Satisfactory and Poor. Worst was considered as the no satisfaction
level. ‘Not used’ option was given, in case a
particular service/characteristic of ATM is not used or availed by any
respondents. The respondents were asked to read the questions and
then choose the option for their response. Questions were explained
to them if the respondent does not understand a particular question.

3.3 Sampling procedure

To obtain a representative sample, a probability sample of population
was drawn.400 respondents were divided equally among the four
selected banks. In each bank, simple random sampling method was
adopted. In simple random sampling, every member of the population
has an equal chance of being selected in sample.

Sampling plan

Sampling unit: who is to be surveyed?

This calls for defining the target population to be surveyed. In this

research the sampling unit was the customers of four selected banks,
two banks from public sector and two banks from private sector (i.e.
State Bank of India, Punjab National Bank, ICICI bank and HDFC bank)
who had an account in any branch located in NCR Delhi. Random
sampling method was adopted to select the customers.2

Sample size: how many people should be surveyed?

In this survey the sample size decided was 400. This is fairly large
enough to represent the population. Further It was decided that 100
respondents will be surveyed to make equal representation of each
selected bank.3
Sampling procedure: How should the respondents be chosen To obtain
are presentative sample, a probability sample of population
respondents were divided equally among the four selected banks. In
each bank simple random sampling method was adopted. In simple
random sampling every member of the population has an equal chance
of being selected in sample.4

Contact methods
: In this research the intercept interview method was adopted because
it is not possible to take appointment from a large number of
respondents. Respondents were told about the purpose of this
research and were helped in understanding any particular question in
case there was any need. Sufficient time was given to respondents to
go through the questionnaire before recording their responses. The
questionnaire was administered to 400 respondents at different
locations in Delhi, Gurgaon, Noida, Faridabad and Ghaziabad. Most of
the responses have been collected either r from the branches or from
the ATMs. Some of there sponses were also collected from institution
and marketplaces so as to make it more representative in nature.
Author has taken due care so as not to influence the respondent while
recording the responses. Also the author has ensured that no personal
bias or distortion take place while recording the responses.

3.4 Research and statistical tools

employed
The research and statistical tools employed in this study are
frequency analysis, factor analysis and ANOVA (analysis of variance).
SPSS 16 was used to perform statistical analysis. The reliability of the
data was carried out by using Cronbach’s alpha value .Frequency
analysis on the main factor under study indicates overall satisfaction
levels of respondents with retail banking in general. ANOVA was
employed to find the significant factor which will determine the overall
customer satisfaction. The third major analysis carried out was a
factor analysis to examine the underlying or latent dimensions within

variables of overall satisfaction (Hair et al., 1998). Both Bartlett’s test

of spherecity and Measure of Sampling Adequacy (MSA) were also
carried out to ensure that the requirements of factor analysis were
met.

4 Data analysis
The total sample size is 400 respondents. The respondents were
primarily within the20–40 years category with majority of them having
either graduate or post-graduate education, employed in the private
service category. Table 1 illustrates the characteristics of the sample
utilised in this study.

5 Limitations of the study

The study has been carried out in the National Capital Region, which is
metropolitan city area where the education level and income level of
population is very high as compare to rest of India except the other
metropolitan cities, hence the finding of the research can be
generalised only for urban areas and cannot be generalised for the
whole country.

6 Future research
This research focused on determinants of ATM service quality and its
effect on customer satisfaction. However, the research did not study
the association between customer satisfaction and retention of
customers. Additional research may well explore the relationship
between these two constructs. Age has a significant effect on the
pattern of use of technology-based services. Generally the youth
prefer to use innovative and technology-based delivery channel like
ATM that offer multiple benefits and autonomy of executing the
transaction (Wan et al., 2005). The old age people are generally shy
of use of ATM because of perceived risk of failure, complexity,
security and lack of personalised service. Future research should
explore the association between age and attitude and determine its
effects on the ATM service quality and customers’ satisfaction .Similar
research can be undertaken in rural area to find the differences
between the customer satisfaction level between urban and rural
customers.

7 Managerial implications
The rapid increase in number of automated delivery channels and
customers’ preference to use ATM because of multifaceted attributes
are placing pressure on banks to respond aggressively to meet the
customers’ needs. The study provides necessary input to the bank
management to increase customers’ satisfaction through improving
ATM service quality. The focus should not be on ATM service quality
dimensions only. This aspect should be augmented and integrated
with other aspects of the service quality of banks for satisfaction of
customers. To further improve the service quality, ATM service should
be able to provide enhanced interactivity, diversified offerings, and
facilitate customers to participate in improving the service encounter
with ATM and make it a memorable and pleasant experience. The
banks should focus not only on the satisfaction of ATM users, but also
aim at delighting them to ensure their retention .Banks should develop
strategies to motivate non-users through awareness, education,
extending personalized services, and demonstrating the functions of
ATMs. Quick response to customers’ needs and queries about the
ATM-related services are important to improve the service standards
of ATM. This would facilitate customers to participate in improvement
of service quality, learn and perform, and have a pleasant experience
through two-way communication. Banks should make a commitment to
redress the service failures of ATMs. The banks under study may
identify more locations for establishing new ATMs; however, if it is not
possible either due to non-availability of space or resources crunch,
they can have mutual understanding in sharing of their ATMs so that
customers are able to do ATM transaction in the places where there is
no ATM of their own bank. This will further enhance the customer
satisfaction.

Conclusions and Recommendations

The ATM services have positive impact on the customer
satisfaction. Some characteristics have very high customer
satisfaction whereas some characteristics have the lower customer
satisfaction level which is major concern area for the banks and
there is need to pay more attention of the banks. The factors related
to infrastructure development need further probing and research.
The response to query and availability of cheque drop box which are
the most significant factors have overall lower satisfaction level;
these two factors need further attention from these banks and there
is scope for further improvement in the customer satisfaction levels.
So the concerned banks need to keep these factors in find while
designing the strategies to enhance the customer satisfaction and
retain them to enhance their profitability. The rapid growth in use of
ATMs in India offers opportunities to banks to use customers’
passion for this innovative service for strategic advantage. The
banks should proactively monitor customers’ preferences with
regard to use of this delivery channel for effective response. Banks
should focus on important aspects of security and privacy as well as
efficient operation of ATMs. Banks should also augment and
diversify their offerings through ATM and use this medium to build a
strong and sustained relationship with customers. This study
investigates ATM service and customer satisfaction in the Upper
East region of bank. More specifically, the study looked at ATM
service quality and customer satisfaction and factors that influence
 ATM usage. The study uses primary data collected from 200
respondents using convenience and simple random sampling
methods, Multi collinearity and hetero skedasticity were corrected
using the variances inflation factor (VIF) and robust standard errors
respectively.
The results suggest that customer’s satisfaction could be improved
by convenience, security and privacy and reliability of the ATM
services, as evidenced by a p-value of 0.0000 at 1% significance
level. The results further indicate that convenience and security and
privacy have positive effects on customer satisfaction at 1%
significant levels, whereas reliability has negative effects on
customer satisfaction at 1% significant levels. Also, security and
privacy, ATM user fees, educational level and location of the ATM
are found to be the major factors that influence customers’
willingness to use a particular ATM services in the studied area.
Security and privacy, educational level and location were found to
influence ATM usage positively, whiles ATM user fees has negative
influence. Base on the findings, it has been realized that customer
satisfaction is influenced by convenience, security and privacy and
reliability of the ATM services in the studied area while customers’
willingness to use ATM services is influenced by security and
privacy ,ATM user fees, educational level and location of the ATM in
the studied area.
It is recommended that banks should increase the number of ATM
installations at the banks premises and at vantage points where
customers can have full access to it more easily.This will prevent
customers from travelling long hours before having access to some
banking services and hence, reduce pressure on one ATM.
Banks should put some vital mechanisms in place and intensify the
educational problems on the ATM.They should provide personnel
who are well resourced in the operation of the ATM to assist
customers who are not able to use the machine.
Participatory approaches should be put in place to ensure active
involvement of customers with regards to ATM operations and
policies safeguarding its usage.
Banks should provide lower or lesser denominations in the ATM for
customers who want smaller denominations to withdraw at anytime.
The ATM should also be able to always issue receipts after
transactions for customers to know their accounts balances.