ATM Service Quality Attributes

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In the previous chapter, the significance of the study, as well as the problem statement and objectives of the research, were looked at. This chapter explores literatures, written by different authors, on the benefits of ATM banking in financial service delivery.

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In the service sector, technology has been used to standardize services by reducing the employee/ customer interface (Quinn, 1996). The automated teller machine (ATM) is one of the technological advances that brought about change in the way banks provide a service to their customers. This kind of technology has a bearing on service quality (SQ) and customer satisfaction level.

ATMs network contributed significantly in performing most of the customers’ financial services in a reliable way (Giannakoudi, 1999). According to (Mcandrews ,2003) ATMs can offer significant advantages to both banks and customers. The machines can enable depositors to withdraw and deposit cash at more convenient times and places than during banking hours at branches. At the same time, by automating services that were previously completed manually, ATMs can reduce the costs of servicing some customer demands.

For a person to use ATMs, they should be cheap, ease of use, secret and safety. However, safety related to privacy and security. In respect to the ATMs service costs, there are some varieties in the applicable fees. Some banks charge their customer some fees against the usage of their ATMs. On the other hand, some banks introduce the ATMs services free to their customers. In respect to the sharing ATMs, the ATM bank’s owner is usually charge those customers who hold other banks cards. In this context, (Mcandrews,2003) argued that the decision by banks to share their ATMs is partially determined by the terms under which different banks agree on. In particular, there are several prices that can be charged to or collected by the three main parties involved in an ATM transaction, the cardholder or the customer, the cardholder’s bank, and the ATM owner.

Financial Service Delivery

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

Financial service delivery involves the use of banks and other financial institutions to fulfill their obligations towards their customers through the use of facilities such as the internet, telephone and ATMs. Development of new and more efficient processing and delivery channels as well as more innovative products and services have come up as a result of financial liberalization and technology revolution. This has resulted in the banks striving to provide services of high standards. The service industries in general and the financial services in particular have generally been large investors in information technology. Time factor in the delivery of a service is of paramount importance as customers do not like spending a lot of time waiting to be attended to. For instance in a bank, customers would not like spend a lot of time on queues (Kotler, 2002).

The ATM was therefore introduced with the intention of addressing this issue of spending a lot of time in the bank. Banks first used the ATM as a marketing tool with regard to offering a 24 hours banking service but, are now using it for the provision of new and better services to the customers such as mobile phone talk time top up and utility payments.

The ATM banking service is as an innovation has both process and product characteristics. As a process, it brings in automated delivery of service in place of those previously offered by bank tellers on a bank counter as well as offering services not previously offered such as 24 hours service, foreign currency provision abroad and cash provision in areas remote to the bank premises such as public area and hotels. One aspect that is a great challenge in managing services is managing quality.

Service Quality and its Measurement

Quality has been defined differently by different authors. Some prominent definitions include ‘conformance to requirements’ (Crosby, 1984), ‘fitness for use’ (Juran, 1988) or ‘one that satisfies the customer’ (Eiglier and Langeard, 1987). As per the Japanese production philosophy, quality implies ‘zero defects’ in the firm’s offerings. Quality has come to be recognized as a strategic tool for attaining operational efficiency and improved business performance (Anderson and Zeithaml, 1984; Babakus and Boller, 1992; Garvin, 1983; Philips, Chang and Buzzell, 1983). This is true for the service sector too.

Several authors have discussed the unique importance of quality to serve firms (e.g., Normann, 1984; Shaw, 1978) and have demonstrated its positive relationship with profits, increased market share, return on investment, customer satisfaction, and future purchase intention (Anderson, Fornell and Lehmann 1994; Buzzell and Gale, 1987; Rust and Oliver, 1994). One obvious conclusion of these studies is that firms with superior quality products outperform those marketing inferior quality products.

Theoretically customers’ perception of service consists of two dimensions. Berry and Parasuraman (1990) distinguish a process and an outcome dimension. Of the five dimensions of quality, reliability is primarily concerned with the service outcome, whereas the rest are primarily concerned with the service process. However, all five dimensions emphasize the customer’s perception of the service (functional quality) rather than the service provider’s view of how the service should be delivered (technical quality).

Gronroos (2001) however makes a distinction between functional and technical quality. The process of functional quality refers to how the service is delivered whereas technical quality which is an outcome refers to what customers receive (the benefits of using the service). In the case of the ATM, how cash is processed is a functional benefit whereas effectiveness, less time spent on an ATM, easy to use and efficiency over the traditional methods are known as technical benefit.

Some of the complaints that come from the customer are as a result of customers not knowing some of the technical aspects of an ATM whose source of problems is various. Some problems connected to ATM faults may require the attention of either the service provider, the bank or the communications company to intervene whereas the customer may view the problem differently due to lack of adequate knowledge on the operations of an ATM.

Organizations are aware that quality of service rendered or provided promulgates strategic competitiveness in dynamic business environment. Literature provides significant relationship between quality of service and firms’ performance based on improved productivity, increased market share, enhanced customers’ attraction and loyalty, improved staff morale and sustained profitability (Lassar W. M., Manolis C., and Winsor R. D., 2000).

Use of ATM has become exceedingly admirable and popular among customers as convenient mode of Banking Transactions. This technological innovation has transformed the Banking Business. The advantages and benefits of using ATM have given new impulsion in dimensions of quality of service and Banks are offering new choices to customers. The commonly used model, SERVQUAL (Parasuraman ,1988), SERVPERF (Cronin and Taylor, 1992) and BANKSERV, a model developed by Avkiran (1994) based on SERVQUAL, depends on the similar dimension of SQ that includes tangibles, reliability, responsiveness, empathy and assurance. However, depending on the product and or service under study the attributes in each of the dimensions have been different.

Several empirical studies have identified and verified a number of common elements within the five dimensions for ATM SQ. The attributes of ATM SQ identified by empirical researchers includes the following 25 items:

  • User-friendliness of ATM systems (Joseph and Stone, 2003; Lovelock, 200)
  • Speed of ATM operations (Patricio et al., 2003; Yavas et al., 2004)
  •  Cash availability in ATMs (Dilijonas et al., 2009)
  • Accuracy of transactions by ATMs (Dilijonas et al., 2009, Shamsdouha et al., 2005)
  • ATMs not out of order (Islam et al., 2005; Patricio et al., 2003;Howcroft, 1991)
  • Waiting time at ATMs (Mountihno and Brownlie, 1989)
  • Employee effectiveness in solving ATM problems (Islam et al., 2005 )
  • Returning fast swallowed cards (Islam et al., 2005)
  • Quick replacement of lost cards, bank employees friendliness and security at ATMs

Al Hawari and Ward, 2006; Dilijonas et al., 2009; Islam et al. , 2005; Joseph and Stone, 2003;Shamsdoha et al., 2005),

  • Fees charged (Athanassopoulos, 2000; Dilijonas et al, 2009)
  • Convenient location (Al Hawari and Ward, 2006; Dilijonas et al., 2009; Islam et al. , 2005; Joseph and and Stone, 2003; Lovelock, 2000; Moutihino and Brownie,1989)
  • Accessibility of employees to solve ATM problems, easy access to ATMs ; Joseph and Stone, 2003)
  • Advise on ATM usage and security, privacy when using ATMs (Shamsdoha et al., 2005)
  • Easy process of applying for ATM cards, cleanliness of ATMs and ATM sations, appearance of corporate branding on ATMs, issuing of clean or new notes (Islam et al., 2005)
  • •ssuing or readable slips, accessibility of a wide range of services via ATMs and the number of ATMs per ATM locations ( Dilijonas et al., 2009; Islam et al. , 2005; Joseph and Stone, 2003; Lovelock, 2000)

This study adopts the above 25 ATM SQ attributes validated by empirical researchers for measuring customer satisfaction with ATM banking service in selected commercial banks oin Ethiopia. The above mentioned service quality can also be classified in to five service quality dimension comprised Tangible (6 items), reliability (6 items), responsiveness (6 items), assurance (3 items) and empathy (4 items) the five SQ dimensions provided by Parasuraman et al. (1988).

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ATM Service Quality Attributes. (2021, Dec 29). Retrieved August 16, 2022 , from

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