Int. J. Financial Services Management, Vol. 5, No.

2, 2011

177

The impact of ATM services on customer satisfaction

in Indian banks
Shamsher Singh
Banarsidas Chandiwala Institute of Professional Studies,
Sector 11, Dwarka,
New Delhi 110075, India
Fax: +9111-42770390
Email: shamsher_1965@rediffmail.com
Abstract: The aim of this paper is to understand the impact of ATM services
on the customer satisfaction in Indian banking sector. The study has used the
primary data of customer satisfaction survey (N = 400). The data was collected
using a structured questionnaire designed to ascertain the satisfaction levels.
ANOVA and factor analysis was used to identify significant factors and
frequency analysis was used to analyse customer satisfaction. The ATM services
have a positive impact on the customer satisfaction; if proper functioning is
ensured by the banks, there will be significantly higher customer satisfaction.
The research has been carried out primarily in urban area and hence cannot be
generalised on all India basis. The banks can utilise the finding to improve the
services of ATMs and can enhance the overall satisfaction of their customers.
The paper identifies the significant factors which the banks may take care to
enhance the customer satisfaction.
Keywords: ATM; customer satisfaction; Indian banks; private sector banks;
public sector banks.
Reference to this paper should be made as follows: Singh, S. (2011)
The impact of ATM services on customer satisfaction in Indian banks,
Int. J. Financial Services Management, Vol. 5, No. 2, pp.177196.
Biographical notes: Shamsher Singh is Associate Professor in the Banarsidas
Chandiwala Institute of Professional Studies, New Delhi. He received his
PhD in Management from Jamia Hamdard University, New Delhi (Joint
Programme of Jamia Hamdard University, New Delhi and MDI Gurgaon). His
topic of research was The Study of Effectiveness of Customer Relationship
Management in Indian Banking Sector with special reference to NCR Delhi.
He completed his MBA degree with specialisation in Marketing Management
from Department of Management Science, University of Pune (PUMBA) in
1996, Post Graduate Diploma in Export-Import Management from Indian
Merchant Chamber, Mumbai in 1998, Post Graduate Diploma in Human
Resources Management from IGNOU, in 2002, and Post Graduate Degree in
Public Administration from Panjab University, in 1992.

Introduction

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
Copyright 2011 Inderscience Enterprises Ltd.

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S. Singh

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 (Shainesh
and Choudhary, 2004).

1.1 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 liberalisation 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 banks 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 dissatisfaction
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

179

(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 (Manrai
and 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?

What are the determinants of customer satisfaction for ATM service in retail banking
in India?

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 todays highly competitive world of business.

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S. Singh

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 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 (Reichheld
and 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)

investments in service quality, customer satisfaction and customer relationships lead

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

high-quality service and customer satisfaction often result in more repeat purchases
and market share improvements (Buzzell and Gale, 1997)

customer satisfaction leads to customer loyalty and this leads to profitability

(Hallowell, 1996)

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

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181

relational performance, problem encountered and satisfaction with problem recovery.

The providers offering can also be expected to affect customer satisfaction (overall) and
ongoing patronage. Levesque and McDougalls (1996) study indicated that the banks
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.

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. Patrcio et al. (2003)
undertook a qualitative study of a Portuguese bank regarding customers use of multi-

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S. Singh

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 researches 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 and
Singh, 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 Dilijonas
et 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 Hise (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 interplay
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

The impact of ATM services on customer satisfaction in Indian banks

183

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, costeffectiveness 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 ATMrelated 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).

Methodology

3.1 Data collection method

The main instrument used for data collection in this research was the questionnaire; the
responses 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:

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S. Singh
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 banks 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 readability
and logical arrangements of questions. The questionnaire was administered to
100 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 Likerts 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.

The impact of ATM services on customer satisfaction in Indian banks

185

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.

3.3.1 Sampling plan

1

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.

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.

Sampling procedure: How should the respondents be chosen? 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.

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 from the branches or from the ATMs. Some of the
responses 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 Cronbachs 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

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S. Singh

variables of overall satisfaction (Hair et al., 1998). Both Bartletts test of spherecity and
Measure of Sampling Adequacy (MSA) were also carried out to ensure that the
requirements of factor analysis were met.

Data analysis

The total sample size is 400 respondents. The respondents were primarily within the
2040 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.
Table 1

Demographic profile of respondents

Variable
Occupation

Education

Characteristics

Frequency

Percentage

Government service

90

22.5

Private service

143

35.8

Business

99

24.8

Student

68

17.0

Post Graduation

142

35.5

Graduation

219

54.8

10+2

34

8.5

Matriculation

1.2

2030 yrs

143

35.8

3140 yrs

126

31.5

4150 yrs

100

25.0

51 yrs & above

31

0.77

Age group

The respondent profile as displayed in Table 1 indicates the current scenario of banking
sector and their users profile. Most of the respondents (58.3%) were employed in either
private or government services, were either graduate (54.8%) or post graduate (35.5%) in
the age group of 2040 years. The profile of respondents indicates they are young, urban
educated and decently employed, which is the new generation who are tech-savvy and
want the services at the click of the button or mouse.

4.1 Reliability and validity

Table 2 reflects the result of reliability analysis Cronbachs alpha value. This test
measured the consistency between survey scales. A Cronbachs alpha score of 1.0
indicate 100% reliability. Cronbachs alpha scores were all greater than the Nunnallys
(1978) generally accepted score of 0.7. The score was 0.8345 for ATM service in the
findings that indicates reliability of the survey.
Table 2

Reliability analysis: Cronbachs alpha

Practices/services
ATM services

Number of cases

Number of items

Alpha value

400

12

0.8345

Table 3

Age group

Education level

Different banks
(SBI/PNB/ICICI/HDFC)

Type of bank
(Public/Private sector)

F-value

Sig.

F-value

Sig.

F-value

Sig.

F-value

Sig.

F-value

Sig.

2.725

0.044

1.210

0.300

0.545

0.652

3.406

0.018

5.594

0.019

Availability of cash

1.711

0.164

0.722

0.632

0.225

0.879

7.350

0.000

1.500

0.221

Time to process request

1.481

0.219

1.803

0.097

1.092

0.352

1.602

0.188

1.344

0.247

No. of ATMs in locality

2.678

0.047

1.429

0.202

0.527

0.664

3.737

0.011

3.806

0.052

Location/proximity of ATM

Response to query

5.106

0.002

2.667

0.015

0.512

0.674

5.003

0.002

6.567

0.011

Availability of desired forms

3.148

0.025

1.589

0.149

0.278

0.841

2.603

0.052

1.543

0.215

Availability of cheque drop box

4.223

0.006

2.063

0.057

0.533

0.660

4.991

0.002

5.765

0.17

Queues at ATM

4.043

0.008

1.623

0.139

0.420

0.739

2.110

0.098

2.092

0.149

Printed statement of transaction

3.644

0.013

1.485

0.182

1.202

0.309

4.046

0.007

0.506

0.478

Cash deposit facility

3.736

0.011

2.659

0.015

0.786

0.502

1.531

0.206

2.459

0.118

Availability of networked (shared) ATM

1.324

0.266

1.453

0.193

0.037

0.991

9.530

0.000

13.870

0.000

Fee charged for using other banks ATMs

3.023

0.030

1.352

0.233

0.837

0.474

3.720

0.012

8.512

0.004

The impact of ATM services on customer satisfaction in Indian banks

Occupation

Computation of ANOVA (5% level of significance)

Characteristics

187

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S. Singh

The following inferences can be derived from the tables:

1

Response to query and availability of cheque drop box is the most significant
factor as seen across the different variables such as occupation and age group of
respondents; different banks and type of banks (private/public sector banks) have
significant bearing on response time. This clearly indicates that ATMs irrespective
of banks may have appropriate processing time for queries as per consumer needs.

Location of ATM and its proximity to residence/workplace, numbers of ATMs, and

fee charged for using other banks ATMs are next significant factors with respect to
occupation of respondents, different banks and type of banks.

Availability of desired forms, cash deposit facility and availability of networked

(shared) ATM are significant factors either for occupation of respondents or different
banks.

The remaining factors are either least significant or not significant to explain any
variance in the responses.

The use of ATMs does not seem to be affected by educational background, as it is

not at all a significant factor for any characteristics of ATMs. All customers
irrespective of their educational background would like to use the ATMs services
almost in similar manner.

4.2 Factor analysis

Results of the factor analysis are shown in Table 4. Bartletts test of spherecity
was significant at the 0.001 level and that implies the presence of nonzero correlation.
The overall measure of sampling adequacy (MSA) was 0.898 which exceeds the
recommended cut-off level of 0.5 and individual measures were all well above this
cut-off level.
Table 4

KMO and Bartletts test

Kaiser-Meyer-Olkin measure of sampling adequacy

Bartletts test of spherecity

0.898

Approx. Chi-square

1.386E3

df

66

Sig.

.000

Overall, the set of data meets the fundamental requirements of factor analysis
satisfactorily (Hair et al., 1998). In analysing the data given, the 12 response items were
subjected to a factor analysis using the principal component method. Using the criteria of
an eigenvalue greater than 1, two clear factors emerged accounting for 48.41% of the
total variance. As in common practice, a Varimax rotation with Kaiser normalisation
was performed to achieve a simpler and theoretically more meaningful factor solution.
The Cronbachs alphas score for all the factors was 0.8345 (Table 2).

The impact of ATM services on customer satisfaction in Indian banks

Table 5

189

Rotated component matrix

Components
1

Availability of cash

.706

.047

Availability of cheque drop box

.702

.197

Time to process request

.698

.124

Response to query

.689

.122

No of ATMs in locality

.679

.129

Queues at ATM

.639

.211

Availability of desired forms

.638

.071

Location/proximity of ATM

.614

.221

Printed statement of transaction

.507

.244

Fee charged for using other banks ATMs

.110

.812

Availability of Networked (shared) ATM

.370

.687

Cash deposit facility

.375

.530

Notes:

Extraction method: Principal Component Analysis.

Rotation method: Varimax with Kaiser normalisation.
Two components extracted, factor having value above
0.6 have been italicised.

It is clear from the factor loadings as highlighted in Table 5 that two factors emerge.
These two factors represent different elements of ATM services that form the underlying
factors from the original 12-scale response items given. Referring to the Table 5, Factor 1
represents elements of the ATM directly related to operation/function of ATM; it is
therefore labelled Operational/Functionality of ATM. These elements are availability of
cash, cheque drop box and desired forms, response to query queue at ATM time to
process request, and location and number of ATMs in the locality. Factor 2 represents
sharing of ATMs of others banks; it is therefore labelled as Sharing of ATM.
The elements are availability of shared/networked ATM and fee charged for using
shared ATM.
The frequency analysis in Table 6 is drawn from the responses of the respondents.
The excellent and good responses have been combined to understand the satisfaction
level and the satisfactory response has been treated as neutral response and the poor and
worst has been considered as no satisfaction or dissatisfaction.
Availability of cash has the highest overall customer satisfaction (70.75%) followed
by location/proximity of ATM (60.5%) and time to process request (56.5%). Availability
of desired forms, cheque drop box, queues at ATM, printed statement of transaction and
cash deposit facility has similar level of satisfaction around 50%. Response to query
(47.75%), availability of shared/networked ATM (45.5%) and number of ATMs in
locality has the lowest satisfaction level (44%).

PNB
Excellent + Good

Location/proximity of ATM

71

61

59

51

60.5

Availability of cash

84

62

75

62

70.75

Time to process request

64

59

50

53

56.5

No. of ATMs in locality

53

45

43

35

44.0

Response to query

61

46

41

43

47.75

Availability of desired forms

56

49

52

43

50

Availability of cheque drop box

60

44

52

41

49.25

Queues at ATM

53

53

50

44

50.0

Printed statement of transaction

56

44

63

43

51.5

Cash deposit facility

54

50

51

44

49.75

Availability of shared/networked ATM

53

45

57

27

45.5

S. Singh

SBI
Excellent + Good

Consumers perception of ATM services frequency analysis (all figures in percentage)

HDFC bank
Excellent + Good

190

Table 6

Overall satisfaction
(all banks combined)

ICICI bank
Excellent + Good

Characteristic

The impact of ATM services on customer satisfaction in Indian banks

191

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.

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.

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 personalised 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.

192

S. Singh

Conclusion

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.

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Questionnaire: The Impact of ATM on Customer Satisfaction in

Indian Banking Sector

Name of Customer (optional)

Occupation

: Govt. Service

Age

: 2030,

Pvt. Service

3140,

Business

4150,

Educational Qualification

PG

Graduation

Name of the Bank

SBI

PNB

Students

51 & above
10+2

ICICI

Matriculation

HDFC

Name of the Branch

(Where you do your Banking operations)

Please tell us about your experience about the following practices by rating them as excellent,
good, satisfactory, poor or worst. (Please tick the appropriate Box.)
Services of ATMs
Characteristics

Excellent

Good

Satisfactory

Very High

High

Poor

Worst

Not used

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 to do a
transaction
Printed statement
of transaction
Cash deposit facility
Availability of
networked (shared) ATM

Fee charged for using

other banks ATM

Satisfactory Nominal Not used