INSTITUTE OF PROFESSIONAL STUDIES

AN ASSESSMENT OF THE RELIABILITY OF

AUTOMATED TELLER MACHINES (ATMS) IN

THE BANKING SECTOR IN GHANA

(A CASE STUDY OF FOUR SELECTED BANKS)

BY

GROUP 49

ABOAGYE KOFI AYISI 05DAW001

ABOAGYE EMMANUEL ODOOM 05DAR004

FYNN PHILIP KOFI BOAKYE 05DAR055

YEBOAH OWUSU MICHAEL 05DAW101

A DISERTATION PRESENTED TO THE DEPARTMENT OF ACCOUNTING OF FACULTY OF ACCOUNTING, INSTITUTE OF PROFESSIONAL STUDIES (IPS) IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE AWARD OF BSC. (HONS.) ACCOUNTING DEGREE.

MAY 2009

CANDIDATES’ DECLARATION

We the undersigned do here by declare that this Dissertation is the results of our own

original research and that no part of it has been presented for another degree in any

university. However, all sources of borrowed materials have been duly acknowledged.

Sign:…………………….Name:……………………………………..Date:…/……/.....

Sign:…………………….Name:……………………………………..Date:…/……/.....

Sign:…………………….Name:……………………………………..Date:…/……/.....

Sign:…………………….Name:……………………………………..Date:…/……/.....

SUPERVISOR’S DECLARATION

I declare that the preparation and the presentation of this Dissertation were in accordance

with the guidelines on supervision of Dissertation laid down by the Institute of

Professional Studies.

Sign:…………………………………

Name:………………………………..

Date………………………………….

DEDICATION

We dedicate this work to first of all the Almighty God for seeing us through our stay in

this wonderful institution, then to our Parents; Nana Kwame Ayisi Brempong and

Madam Janet Asante, Mr. Anthony Fynn and Mrs. Elizabeth Fynn, Mr. and Mrs. Yeboah,

Mr. Emmanuel Odoom and Mrs. Elizabeth Essel and all loved ones whose immense

support both physically, spiritually and morally have made our most cherished dream of

acquiring a University education a reality.

ACKNOWLEDGEMENT

To God be the glory and adoration for the opportunity and grace given us to write this

long essay. We acknowledge the guidance of the Holy Spirit through our Lord Jesus

Christ for the work done and the divine protection particularly during our four-year study

on campus.

We wish to express our heartfelt gratitude to Mr. Felix Sefa and Madam Freda Asante,

Bridget Fynn, Mrs. Comfort Yeboah and Mildred Odoom, without whose enormous

contribution and sacrifices it could not have been possible and positive for us to go

through this noble course. However, we will like to convey our sincere gratitude and a

special thanks to Mr. Felix K. Aveh, our Head of Department and his teaching assistants,

without whose guidance this study would only be mere information on paper.

We are also grateful to the managers and staffs of the various banks we contacted during

our research especially Mr. Ransford of G.C.B (Accra Branch) and Mr. Ernest Otchere of

S.C.B (Opeibea Branch).

Finally, to all lecturers and staff of the Institute of Professional Studies, we say thank you

for contributing in different ways towards a successful completion of our course.

ABSTRACT

Automated teller machines (ATMs) play a vital role in the survival of the banking sector,

to this end; the researchers assessed the reliability of automated teller machines (ATMs)

in the banking sector in Ghana on four selected banks, which are GCB, Stanchart,

Ecobank and NIB.

The study was conducted to identify the significance that Ghanaian banks and their

customers attach to the use of ATM, the extent to which this technology has been

implemented and how reliable it is to banks and their customers. For this reason,

questionnaires were administered to the ATM units and customers of the banks which

were analysed using the SPSS, graphs and charts. Purposive and systematic samplings

were used.

As part of the findings, it came to light that even though ATMs have reduced customer

inconvenience of spending longer hours in banking halls to withdraw money and other

transactions, users of ATMs still face several challenges such as shortage of cash from

the machine, scarcity of ATMs and terminal hitches. Based upon these problems, the

researchers came out with some appropriate recommendations.

TABLE OF CONTENTS

CONTENT PAGE

CANDIDATES’ DECLARATION i

SUPERVISOR’S DECLARTION ii

DEDICATION iii

ACKNOWLEDGEMENT iv

ABSTRACT v

CHAPTER 1: INTRODUCTION 1

1.1 Background of the Study 1

1.2 Statement of the Problem 3

1.3 Research Question 4

1.4 Purpose of the Study 4

1.5 Objectives 5

1.6 Significance of the Study 5

1.7 Scope and Organisation of the Study 6

CHAPTER 2: LITERATURE REVIEW 7

2.0 Introduction 7

2.1 Theoretical Literature 7

2.2 Empirical Literature 28

2.3 Definition of Terms and Constructs 32

CHAPTER 3: METHODOLOGY 34

3.0 Introduction 34

3.1 Research Design 34

3.2 Population and Sampling 34

3.4 Instrumentation 35

3.5 Data Analysis 35

CHAPTER 4: RESULTS AND DISCUSSION 36

4.0 Introduction 36

4.1 Method of Data Analysis 36

4.2 Results and Interpretation 36

4.3 Findings 48

CHAPTER 5: CONCLUSIONS 49

5.0 Introduction 49

5.1 Summary 49

5.2 Recommendations 50

5.3 Limitations of the Study 51

5.4 Topics for Further Studies 52

LIST OF TABLES 53

LIST OF FIGURES 54

LIST OF ACRONYMS 55

REFERENCES 56

APPENDIX: A QUESTIONNAIRE FOR CUSTOMERS 57

: B QUESTIONNAIRE FOR BANKS

63

CHAPTER ONE

1.0 INTRODUCTION

1.1 Background of the Study

Banks basically are financial institutions set up to provide customers with savings

services, money transmission services and credit services. In other words, banks are

involved in safe-keeping transaction and portfolio management functions for the purpose

of making profits and providing best services to their customers. It is believed that a

customer’s choice of bank is influenced by the innovativeness of the bank; the

convenience of services provided, the efficient processing of customer information and

improved customer turnaround. This means that the survival of any banking firm to a

large extent depends on the bank’s ability to attract and maintain customers through the

offer of innovative and technologically improved banking services and products in an

efficient faster and convenient manner.

Over the years an increased use of electronic technology has been an important

development emerging in Ghanaian banks. According to Mishkin (1992), Electronic

banking is the modern computer technology whereby bank customers are now able to

receive services through customer terminals that are not located at a bank or one of its

branches. Different people see electronic banking differently but for many customers

electronic banking simply means 24-hours access to cash through ATM.

Automated Teller Machine (ATM) is a form of Electronic Banking and is an electronic

network which includes plastic cards terminal hardware and software, communication

links, switching and processing centres and data base of one or more depository

institutions. Rose (1992) describes Automated Teller Machine (ATM) as one that

combines a computer terminal record keeping system and cash vault in one unit,

permitting customers to enter the bank’s book keeping system with a plastic card

containing a Personal Identification Number (PIN) or by punching a special code number

into the computer terminal linked to the banks computerized system and once access is

gained, it offers several retail banking services to customers”. The increased use of

Automated Teller Machine (ATM) is as a result of the growing need for customer

convenience rather than providing services at the convenience of banking institutions.

Automated Teller Machines (ATMs) are seen being operated by customers of many

financial institutions in Ghana, thus a customer can access some banking transactions at

his or her bank through the use of an ATM without necessarily going into the banking

hall. They are mostly located in retail establishments which include; filling stations,

shopping malls, campuses and banking premises. ATMs enable banks to provide an

uninterrupted 24-hour, Seven-days a week banking services to their customer thus

provides bank customers with services such as Fast cash, Cash withdrawal, Statement

request, PIN change, Funds transfer, Balance enquiry Cheque book request, Bill payment,

Transfer to ones own account or others account and sometimes mobile phone top-ups.

This study is therefore being carried out to identify the significance that Ghanaian banks

attach to Automated Teller Machines (ATM), the extent to which this technology has

been implemented by banks in the country and how reliable this banking technology is to

banks and their customers. The study will be conducted on four selected banks in Ghana;

these banks are; Standard Chartered Bank, National Investment Bank, Ecobank Ghana

Limited and Ghana Commercial Bank. The researchers’ choice of banks is influenced by

their rich experience in banking practice in Ghana and the fact that they have all been

operating in the system for quite a number of years.

1.2 Problem Statement

The Automated Teller Machine (ATM) system which was introduced about fourteen

years ago in the banking sector in Ghana is presently not a new thing among the banking

institutions and its users. The purpose is to reduce customer inconvenience of spending

longer hours in banking hall to withdraw money and perform other transactions.

Automated Teller Machines (ATM) seek to render important services to users in respect

of easier and more convenient means of making transactions with banks therefore

customers can get access to their accounts using Automated Teller Machine (ATM), pay

utility bills and request their bank statements without spending much time.

Although Automated Teller Machines (ATMs) come with the above mentioned benefits,

banks are still faced with the following problems of using the Automated Teller Machine

(ATM). Apart from the initial cost of installing the system which makes banks’

expenditure go up and customers acquiring them for use, users of Automated Teller

Machines (ATMs) do sometimes face shortage of cash from the machine and also

scarcity of Automated Teller Machines which makes customers pay for the cost of not

transacting business at the banking hall and as such incurring additional cost of seeking

for another ATM. Customers sometimes find it difficult getting access to these Machines

since most of these banks do not have enough Automated Teller Machines (ATMs)

around. Thus, it is very common to come across long queues behind Automated Teller

Machine (ATM) terminals at University of Ghana, KNUST campus and other parts of the

country. Terminal hitches that render these machines ‘not in use’ are also a problem

facing the system. There is the tendency of the Automated Teller Machines to give the

user more or less of the amount the user intends to withdraw; these can cause the banks to

lose large sums of money. ATM cards also have varying life spans; most of them are not

resistant to magnetic fields hence get disfunctional when contacted with a magnet. They

can as well get destroyed with the least scratch or bending and can also be easily

misplaced. Most Automated Teller Machines (ATMs) have been developed with different

functions or uses, to meet the various needs and tastes of existing and potential

customers, but the public is not well informed about these numerous functions.

1.3 Research Questions

Has the use of ATM system in the banking sector in Ghana been reliable?

Has the use of ATM system ensured efficient, timely and accurate delivery of banking

services?

Does availability and the use of ATM by banks affects customer choice of bank and the

satisfaction derived?

Does banking institutions educate their customers and the public enough on the various

functions of the ATM system?

1.4 Purpose of the Study

The purpose of the study is to assess the reliability of ATM system in the banking sector

in Ghana. The study will examine the dependability of the use of Automated Teller

Machines (ATMs) to both the banking institutions and their customers and will seek to

unravel the deviations if any and make recommendations.

1.5 Objectives of the study

The study will ascertain whether the use of ATM system has ensured efficient, timely

and accurate delivery of banking services.

The study is to verify whether the availability and the use of ATM by banks affects

customer choice of bank and satisfaction derived.

To identify the level of education that various users of the ATM and potential

customers have on the functions of the ATM system.

To determine the cost to banks in operating the systems and the cost to customers in

using ATM systems and make recommendation regarding the use of ATMs.

1.6 Significance of the Study

The study will educate users of the ATM system, about the available functions of the

ATM and their uses, advantages and disadvantages derived from the use of ATM to help

them make informed choices and decisions.

The study will also help the banks to determine the level of satisfaction that customers

derive from the use of ATMs

The study will also serve as a reference document at the Institute of Professional Studies

for other students and researchers.

Finally, the study will serve as a basis for further research. Findings of this study will

serve as ground work for any further research relating to the topic. It will relieve

researchers the stress of starting from scratch.

1.7 Scope and Organisation of the Study

The scope of the study will cover four financial institutions and their customers.

Specifically it will cover selected banks with three (3) branches in Accra. The selected

banks are Standard Chartered Bank (SCB), National Investment Bank (NIB), Ecobank

Ghana and Ghana Commercial Bank (GCB) and their customers.

Organisation of the study

The study will be divided into five (5) chapters

Chapter one (1) will be the background of the study, statement of the problem, purpose of

the study, objectives of the study, significance of the study, scope of the study and

organization of the study.

Chapter two (2) will contain the literature framework of the study. It will account for the

assessment of the reliability of Automated Teller Machines (ATMs) in the selected

banks.

Chapter three (3) will provide the methodology and limitations to the study.

Chapter four (4) will consist of the presentation and analysis of data.

Chapter five (5) will be the last chapter which will consist of the summary,

recommendation and conclusion of the study.

CHAPTER 2

LITERATURE REVIEW

2.0 Introduction

This section provides literature which relates to the project work as documented by

authorities on Automated Teller Machines (ATMs). A literature review is a body of text

that aims at reviewing the critical points of current knowledge on a particular topic. The

review of the study will take both the empirical and theoretical form.

The financial services industry, under which banking services fall rely heavily on

computer technology in every aspect of the banking services or opportunities. Computers

and communication networks are bringing about a revolution and will make profound

changes in our lives. In the words of Sawyer and Williams (2001), “The wrenching

change in human history goes by many names: The computer revolution, information

revolution, communication revolution, digital age and others”. In the financial sector

however, it’s called Electronic Fund Transfer (EFT) or Electronic banking especially

Automated Teller Machine (ATM).

2.1 Theoretical Literature Review

Automation Banking

There is not much literature work on Automation of the Banking System by Ghanaian

writers. Most of these literature works are foreign oriented thus making it difficult to

relate their examples to the Ghanaian context. However until recently, most banking

institutions in the country were not automated with the exception of few international

banks. As such most of the banks did not write articles on automation. Having said this, it

is however important to note that a number of writers have distinguished themselves from

other writers by taking the initiative to express their views on the need for Ghanaian

banks to automate their operations taking into account the wide spread of competition in

the banking sector and the global computerisation of the international banking system.

The importance of customers as a key to the success of any banking service business and

the need for banks to improve and come up with innovations in their operations and

services to meet the ever changing customer needs cannot be over-emphasized.

Commercial activities increased and people developed more banking awareness, this

increased the volume of work and necessitated the need for a more efficient processing

system thus the introduction of electro-mechanical machines into banking operations in

the early part of the 70’s. This era according to the Sinkey (1992), went on till the

introduction of electronic computer system in the late 80’s due to high cost of

computerisation. Andoh(1988) was however of the opinion that even though

computerisation has been with us all these years with technological advancements thus

making computers affordable, studies conducted by him shows only some few banks in

the country are using computer systems.

To emphasise why there is the need for banks to automate their operations, Mr. Andoh

identified the following advantages to be derived by banks:

Improved customer turnaround time

Improved and accurate processing of account data.

Provision of up-to-date information for business decision-making and planning.

Analyses, processes, stores and retrieve accurately huge account, statistical and

other transaction and customer data.

The author then projected the future of the banking system in Ghana by making reference

to more advanced computerised banking systems such as the ATM and the Electronic

Funds Transfer. Mr Andoh considers security; availability of good currency notes on an

on-going basis, risk exposure for example an unauthorised overdraft and so forth as

considerate factors prior to the introduction of ATM services. He also emphasised the

need to extend these computer services into other regional and district capitals, thereby

helping to decentralise computerised operations in the banking sector.

Also, Safo (1995), states “a new phenomenon is fast sweeping the American banking

system, a phenomenon that will have profound implications for the business of banking

the world over”. In the first place, Safo drew the attention of his readers to how the

banking and financial sector is being revolutionised by some countries through the

introduction of electronic and computerised banking systems and the effects of these

developments on the economy as a whole. Most important to the researchers’ study is, the

tracing of the development of the Electronic Funds Transfer System in which Automated

Teller Machine (ATM) was identified, which is the researchers’ specific area of study.

The information provided under ATM by the author has given the researchers’ a fore-

knowledge as to what ATM is and what it does.

Sinkey’s View

Sinkey (1992), states that from the banking customer’s perspective, two of the practical

purposes of banking are convenience and accessibility of both funds and account

information. Technological advancement in financial services delivery and production

e.g. the use of ATM and customer database for accounts has made it convenient and

efficient to access funds and information. Computer usage has resulted in displacement of

paper transactions and human energy. Routine transactions are increasingly performed by

computers. Today, bank customers vary due to the wide range of services and products

that banks have to offer. Customers could be individuals or corporate customers. Modern

day banking with increased competition as a consequence of deregulation has led to

innovations in a wide range of financial products and services and with the new wave of

computer usage (made possible or easier with its accompanying software for various

applications in businesses and banks for that matter), it is worth taking how far the use of

cyber technology has improved customer service delivery.

Sinkey also wrote under the topic ‘Bank Technological Innovation, the payment system

and information processing’, Sinkey outlined and presented a conceptual view on

computerised and electronic banking systems and its implication on banks’ cost and

profitability. The author began his topic by making a distinction between Invention and

Innovation. Whilst defining invention as an unfolding technological opportunity, he

defined innovation as a profitable application of an invention. To illustrate his point, he

cited personal computers as invention whilst the profitable application of personal

computer in home banking as innovation. Sinkey then said on ATMs what the system is ,

benefits to be derived through its use such as low cost to users, quality service, easy and

convenient access to cash among others. The author also touched on automated banking

and stated some services available to customers through the use of the system such as

balance enquiry, bill payment, money transfer etc. According to him apart from efficient

and lower cost of operations, fee income from electronic and automation service will be

an important source of bank income taking into account falling interest margins due to

higher competition in the financial service industry.

The above literature has a number of issues worth considering to the researchers’ study,

Sinkey touched on the various aspects of electronic banking such as ATM etc. He also

related the concept of automated banking to bank cost, revenue and profitability. In

summary, Sinkey showed not only the extent to which automation is applied in delivery

of banking services and product but also its relevance to the banking industry, customers

and society as a whole.

Customer service refers to the financial products and services that banks offer. According

to Sinkey (1992), in the competitive environment of the financial services industry,

products development and marketing are critical factors to the degree of success

experienced by financial service firms. One of Sinkey’s classifications of commercial

banks is that; the banks can be viewed as a department store with a wide range of services

and products available for customers i.e. “One-stop banking”.

Emergence of Electronic Banking

Electronic banking has done more than replaced branch banking (that is, bank services

provided outside the branch). Once the ability to interact with customers by remote

electronic means was established, the way was opened for the introduction of range of

services: bill payments, credit transfer, online investments among others. It was the

automation of the account systems that started the banks’ serious involvement in

electronics some thirty years ago.

According to Kalakota and Winston (1992), “electronic banking started with the use of

proprietary software and private networks but was particularly unpopular till the

emergence of web”.

Emergence of Electronic Banking in Ghana

In Ghana, the earliest forms of electronic and communication technologies used were

mainly office automation devices. Telephones, Telex and facsimile were employed to

speed up and make more efficient the process of servicing clients. For decades, they

remained the main information and communication technologies used for transacting

bank business. Later in the 1980s, as competition intensified and the personal computer

(PC) got proletarian, Ghanaian Banks begun to use them in back-office operations and

later bank tellers, networking their branches and operations thereby making the one-

branch philosophy a reality. Standard Chartered Bank is one of the banks that pioneered

this very important electronic novelty, which changed the banking landscape in the

country.

Arguably, the most revolutionary electronic innovation in the country and the world over

has been the ATM. In Ghana, banks with ATM often have them networked and this has

increased their utility to customers. The ATM has been the most successful delivery

medium for consumer banking in this country since customers consider it as important in

their choice of banks. ATMs have been able to entrench the one-branch philosophy in

this country, by being networked, so people do not necessarily have to visit branches to

transact business.

Brief History of ATM

The history of ATMs paused for over 25 years, until De La Rue developed the first

electronic ATM, which was installed first in Enfield Town in North London, United

Kingdom on 27 June 1967 by Barclays Bank. This instance of the invention is credited to

John Shepherd-Barron, although various other engineers were awarded patents for related

technologies at the time. Shepherd-Barron was awarded an OBE in the 2005 New Year's

Honours List. The first person to use the machine was the British variety artist and actor

Reg Varney. The first ATMs accepted only a single-use token or voucher, which was

retained by the machine. These worked on various principles including radiation, was

wiped by the card reader to make fraud more difficult.[ However, some experts have the

opinion that James Goodfellow of Scotland holds the earliest patent date of 1966 for a

modern ATM, and John D White (also Docutel) in the US is often credited with inventing

the first free-standing ATM design. In 1967 John Shepherd-Barron invented and installed

an ATM in a Barclays Bank in London. Don Wetzel invented an American made ATM

in1968. However, it wasn’t until the mid to late 1980s that ATMs became part of

mainstream Banking.

A major advancement in the electronic aspect of the payment systems was the

introduction of Automated teller machines (ATMs). The goal is to reduce over-the-

counter workload of human tellers. Banks in Ghana, providing this service are currently

engaged in finding ways whereby banks could have reciprocal use of each other’s ATMs.

This would imply that customers would not be limited to the use of their bank’s ATM,

thus providing greater convenience for their customers. (Abor, 2004).

The first bank to introduce this service in Ghana was The Trust Bank, which has installed

ATMs since 1995 that allow customers 24-hour access to their funds. The Trust Bank has

networked all its branches to an Automated Clearing House (ACH) so that customers can

withdraw funds at any of their branches.

Following closely are Standard Chartered Bank and Barclays Bank. The two banks have

centralized operations at their respective head offices, and have networked all their

branches to enable customers to check their balances, make withdrawals, or deposit funds

into their accounts. (Abor, 2004).

According to Abor (2004), Ghana Commercial Bank (GCB) in collaboration with

Agricultural Development Bank started to offer ATM services known as READYCASH

in 2001. It enables customers’ access their current or savings account. Through any of

their READYCASH dispensers networked, customers can do all sort of transactions

throughout the day. Today, majority of the banks operate ATMs in Ghana and it has been

the most successful in the county. ATMs have made it possible for people to transact

business without having to visit their branch for the same services.

An ATM allows a bank customer conduct his/her banking transactions from almost every

other ATM machine in the world. As it is often the case with inventions, many inventors

contribute to the history of an invention, as in the case with the ATM.

Generation and Development of ATM

The first generation ATMs were of nothing more than cash dispensing machines. Next,

off-line, stand alone networked systems were developed. These systems were designed in

such a way that the ATMs were not connected to the entire centralised computer system

of the bank through cabling. Thus with this system, if you have an account with a bank

and you go in for any banking transaction through the ATM, since the system is not

connected directly to the bank’s centralised computer network, the transaction you

undertake would not be reflected instantaneously in your account in the bank’s

centralised computer network where all customers accounts are kept.

The next generation of ATMs were on-line systems with direct access to information on

customers’ accounts. With this system, transactions you undertake would instantaneously

reflect directly on your account in the centralised computer system. The basic services

usually available through the third generation ATMs include cash dispensing (against

transactions type accounts or pre-authorised lines of credit), making deposits, loan

repayments, bill paying (e.g. utility bills), transfer of funds between accounts and

account-balance enquiries.

Another model of ATMs is the driven-up operation system. This system is designed and

installed in such a way that you do not have to come out of your car, you simply drive to

the ATM, slot your card into the ATM and the transaction you requested is effected.

Another model is the industry’s smallest free-standing multidenominational ATM

designed specifically for off-premise placements.

Developments in ATMs can also be looked at in the area of networking. One of the

significant areas of ATM networking is the designing of software that links up ATMs in a

system known as the shared facility networking system. With this system, several banks

would be in the network of ATMs such that if one is a customer of bank A, one can easily

make banking transactions in bank B or any of its branches. This shared facility system is

possible because banks involved in this facility are linked together through ATMs,

modems telecommunications and sophisticated computer network systems. This therefore

helps the banks to do what is termed “electronic clearing”.

The system works in such a way that, each bank in the network, has its ATM card with

specific identification code number. Thus if you are a customer of Bank A but enter into

Bank B’s ATM, the system would immediately detect through electronic impulses, that

the owner of a card, is a customer from Bank A. immediately, the host ATM would hit on

Bank A’s ATM and centralised computer network system through electronic means for

detailed information about your account. If the host ATM is satisfied about your account

information including account balances, payments would then be made to you instantly.

More importantly, the software which controls and regulate the shared network system is

programmed such that, once the transaction has taken place, all information about the

transaction you undertook at Bank B’s premises is reflected instantly in your account in

Bank A’s centralised computer system. Bank B’s computer system would also store

information about transaction you undertook on its premises for purpose of its

documentation, verification and inter-bank clearing.

ATMs Explain Detailed

Rose (1999), describes ATMs as follows: “an ATM combines a computer terminal record

keeping system and cash vault in one unit, permitting customers to enter the bank’s book

keeping system with a plastic card containing a personal identification number (PIN) or

by punching a special code number into the computer terminal linked to the banks

computerized system once access is gained, it offers several retail banking services to

customers”. They are mostly located outside of Banks and are also found at airports,

malls and places far away from the home bank of customers. They were introduced first

to function as cash dispensing machines. However, due to advancements in technology,

ATMs are able to provide a wide range of services, such as making deposits, funds

transfer between two or more accounts and bill payments. Banks tend to utilise this

electronic banking device as all others, for competitive advantage. The combined services

of both the Automated and human teller imply more productivity for the bank during

banking hours. Also, it saves customers time, in terms of service delivery as alternative to

queuing in bank halls, customers can invest such time saved into other productive

activities.

ATMs are a cost efficient way of yielding higher productivity as they achieve higher

productivity per period of time than human tellers (an average of about 6,400 transactions

per month for ATMs compared to 4,300 for human tellers (Rose, 1999). Furthermore, as

the ATMs continue when human tellers stop, there is continual productivity for the banks

even after banking hours.

An automated teller machine (ATM) is a computerized telecommunications device that

provides the customers of a financial institution with access to financial transactions in a

public space without the need for a human clerk or bank teller. On most modern ATMs,

the customer is identified by inserting a plastic ATM card with a magnetic stripe or a

plastic smartcard with a chip, which contains a unique card number and some security

information, such as an expiration date. Security is provided by the customer entering a

personal identification number (PIN). Using an ATM, customers can access their bank

accounts in order to make cash withdrawals (or credit card cash advances) and check

their account balances as well as purchase mobile cell phone prepaid credit. ATMs are

known by various casual terms including automated banking machine, money machine,

bank machine, cash machine.

ATMs are placed not only near or inside the premises of banks, but also in locations such

as shopping centres/malls, airports, grocery stores, petrol/gas stations, restaurants, or any

place large numbers of people may gather. These represent two types of ATM

installations: on and off premise. On premise ATMs are typically more advanced, multi-

function machines that complement an actual bank branch's capabilities and thus more

expensive. Off premise machines are deployed by financial institutions and also

Independent Sales Organizations (ISOs) where there is usually just a straight need for

cash, so they typically are the cheaper mono-function devices. In Canada, when an ATM

is not operated by a financial institution it is known as a "White Label ATM".

Before an ATM is placed in a public place, it must have undergone extensive testing with

both test money and the backend computer systems that allow it to perform transactions.

Banking customers also have come to expect high reliability in their ATMs, which

provides incentives to ATM providers to minimize machine and network failures.

Financial consequences of incorrect machine operation also provide high degrees of

incentive to minimize malfunctions. ATMs and the supporting electronic financial

networks are generally very reliable, with industry benchmarks typically producing

98.25% customer availability for ATMs and up to 99.999% availability for host systems.

If ATMs do go out of service, customers could be left without the ability to make

transactions until the beginning of their bank's next time of opening hours.

Of course, not all errors are to the detriment of customers; there have been cases of

machines giving out money without debiting the account, or giving out higher value notes

as a result of incorrect denomination of banknote being loaded in the money cassettes.

Errors that can occur may be mechanical (such as card transport mechanisms; keypads;

hard disk failures); software (such as operating system; device driver; application);

communications; or purely down to operator error.

Reliability of ATM

Reliability is the ability of the system to perform and maintain its functions in routine

circumstances, as well as hostile or unexpected circumstances. The Institute of Electrical

and Electronic Engineers defines reliability as the ability of a system or component to

perform its required functions under stated conditions for specified period of time. Thus,

it is the probability that a functional unit will perform its required function for a specified

interval under stated conditions.

To aid in reliability, some ATMs print each transaction on a roll paper journal that is

stored inside the ATM, which allows both the users of the ATMs and the related financial

institutions to settle things based on the records in the journal in case there is a dispute. In

some cases, transactions are posted to an electronic journal to remove the cost of

supplying journal paper to the ATM and for more convenient searching of data.

Some ATMs may be stocked and wholly owned by outside companies, which can further

complicate this problem when it happens. Bill validation technology can be used by ATM

providers to help ensure the authenticity of the cash before it is stocked in an ATM;

ATMs that have cash recycling capabilities include this capability.

Features of ATM

An ATM is typically made up of the following devices:

CPU (to control the user interface and transaction devices)

Magnetic and/or Chip card reader (to identify the customer)

PIN Pad (similar in layout to a Touch tone or Calculator keypad), often

manufactured as part of a secure enclosure.

Secure crypto processor, generally within a secure enclosure.

Display (used by the customer for performing the transaction)

Function key buttons (usually close to the display) or a Touch-screen (used to

select the various aspects of the transaction)

Record Printer (to provide the customer with a record of their transaction)

Vault (to store the parts of the machinery requiring restricted access)

Housing (for aesthetics and to attach signage to)

The ATM Card

Recently, due to heavier computing demands and the falling price of computer-like

architectures, ATMs have moved away from custom hardware architectures using

microcontrollers and/or application-specific integrated circuits to adopting a hardware

architecture that is very similar to a personal computer. Many ATMs are now able to use

operating systems such as Microsoft Windows and Linux. Although it is undoubtedly

cheaper to use commercial off-the-shelf hardware, it does make ATMs vulnerable to the

same sort of problems exhibited by conventional computers.

Brief History of the selected Banks

Brief history of Standard Chartered Bank

Standard Chartered Bank started its operations in the then Gold Coast in 1896 under the

name Bank of British West Africa (BBWA). The bank which happened to be the only

one in the country played a unique role in not only monetizing the economy and acting as

the country’s central bank, but also in exposing the people to the banking habit thus

laying the economic and business foundations of present day Ghana. The Bank is 80%

owned by standard Charted PLC and the remainder of the stock is owned locally and

traded on the Ghana Stock Exchange. It is the oldest bank in Ghana and ranked

consistently amongst the top three banks, locally. On attainment of independence, the

bank’s name was changed to Bank of West Africa Limited (BWA) and in 1965, as a

result of a merger with Standard Bank Limited (England), the name was further changed

to Standard Bank West Africa Limited (SBWA). In 1970 as a consequence of a merger

between the Standard Bank Limited and the Chartered Bank in the United Kingdom,

Standard Bank Limited became a member of Standard Chartered Bank group. In pursuit

of a common identity in the Standard Chartered Bank group throughout the world, the

name Standard Bank Ghana Limited was changed to Standard Chartered Bank Ghana

Limited with effect from January 1, 1985.

The Bank presently has about 19 branches and 2 agencies throughout the country.

The bank provides banking facilities for individuals, small business as well as corporate

banking facilities for big organisations. The bank has the following key functional areas

namely:

Corporate institutional banking

Personal banking

Treasury

Strategic planning and management

Internal Control

Finance

Information technology

Company registry/ Secretary and human resource management

The product objectives of the bank are to:

a) Strengthen the banks share of finance to selected corporate and retail

markets through Trade Finance and correspondence banking.

b) Maintain a leading share of the local currency deposit to maximize the

bank’s investment opportunities. Be a bank of choice for multi-national

companies for the local and offshore business transactions.

c) Provide acceptable shareholders earnings through improved credit

portfolio fee and interest income for service / product sales.

To justify its innovative and customer-oriented banking principles, Standard Chartered

Bank has introduced a whole range of innovative products and services for the

convenient needs of its customers. These services include:

i. Interest bearing deposits: savings accounts, fixed deposit accounts, current

accounts attracts interest but at very high deposits levels, negotiable certificate of

deposit which is a bearer certificate sold in multiples of GH¢10 ranging from 1

month to 1 year and freely transferable to any one ready to repurchase it and

finally the new 90 day Stanchart fixed account which attracts a high interest rate

determined by existing market rate plus bonus interest payment of 3% per annum

on maturity.

ii. Local funds transfer services: Telegraphic transfers, bank/ cheque draft issue,

cheque purchased.

iii. Foreign exchange business: Foreign transfers, bank drafts, travellers’ cheque,

foreign currency/ exchange account, forex bureau services.

iv. Trade finance: Documentary credits and bills of collection.

v. Bonds and guarantee services (bid tenders) performance and price hedging.

vi. Other products services: Company registry, agricultural advisory services, project

finance, safe deposit, Insurance agency services.

vii. Overdrafts, advances, seasonal loans and management and syndication of loans.

viii. Treasury

ix. Ware-house facility and Societe General de Surveillance (SGS)

x. Service card: this card is essentially a cheque guarantee card. It has an annual

expiring date and a limit of ¢50,000 per transaction.

Factors that draw the banks attention to the need for change cannot be overemphasized.

These are drawn from the problems associated with the manual system in customer

service delivery. It is important to note that customer care is an integral aspect of bank

marketing. Meeting the needs of present customer can generate repeated and increased

business and may lead to the attraction of new customers as a result of positive word of

mouth communication. Delivery systems are important elements of customer care. Again,

it has been discovered that the manual system is more prone to errors. As can be expected

of any human endeavour, the system (as it operated before computerisation) is subject to

the errors of misfiling and miscalculation. SCB experienced some of these problems even

though the bank had in place certain checks and balances to ensure that any errors, if they

should occur are detected and rectified as soon as possible. Again, the manual system is

more exposed to fraud and SCB did record a few cases.

Technological advancement has also transferred customer services. In the last few years,

deregulation increased competition the economic climate and changing customer needs

have forced banks to review their operations and embark on re-engineering. Re-

engineering is defined as the redesigning of basic business processes to promote

improved performance by the business organisation.

Brief History of Ghana Commercial Bank

Ghana Commercial Bank Ltd. established in May 1953 for Ghanaian entrepreneurs, is

now the largest indigenous Bank with 149 branches nation-wide. Their objective among

others is to support the private sector and facilitate the nation's economic growth. GCB

brings banking to the doorstep of existing and potential customers and extends credit

facilities to the private sector.

In 1996, the Bank was listed on the Ghana Stock Exchange and it is one of the heavily

capitalized companies. In line with its mission, GCB is committed to providing first class

customer service and developing long-lasting relationships with its publics.

GCB is doing this by networking its branches, restructuring human resource base and

strategizing. This is reflected in their profit performance of ¢296.9billion (December 31,

2001).In consonance with GCB's motto - WE SERVE YOU BETTER - the Bank is

represented in all the 10 regions and 170 districts of the nation in a bid to make banking

accessible to all Ghanaians.

Brief history of National Investment Bank

Established in March 22, 1963, the National Investment Bank Ltd. was the first

development bank in Ghana to promote and strengthen rapid industrialization in all

sectors of the Ghanaian economy. NIB Ltd. now operates as a universal bank in focusing

on development/commercial banking activities. NIB Ltd. has undergone management,

institutional and financial restructuring, which has strengthened the organization and

now, has over 25 branches nationwide. NIB Ltd. has in the past participated in foreign

lines of credit, which were administered by Bank of Ghana to meet term loan and

working capital needs of the Bank's customers.  NIB is also one of the designated

financial institutions, which sources funds from Export Development and Investment

Fund (EDIF) for on lending to exporters as Term and Working capital loans. The Bank

was awarded the prestigious Euro Market Award in 1994 and recently won the 2003 Best

Bank of the Year for Long Term Loan Financing.

National Investment Bank plays a leading role in developing a number of highly

successful industrial projects in Ghana, through equity and debt financing.  Some of these

are Nestle Ghana Ltd., Nexans Kabelmetal (Ghana) Ltd., Merchant Bank (Ghana) Ltd.

and Total Ghana Ltd.

Products and Services

Apart from its developmental banking activities, NIB Ltd. also provide corporate and

commercial banking facilities involving both domestic and foreign transactions at very

competitive rates and on flexible terms. They include Current and Savings Account,

Automated Teller Machine Services, Call Deposits, Fixed Deposits, Loans and Advances,

Personal Loans, Overdrafts, Western Union Money Transfer, Mobile Cash Management

Services and Warehousing. NIB Ltd. is networked nationwide and renders efficient

banking services. 

To ensure that their customers receive consistent and efficient services, highly trained

personnel of the Bank attend to standard banking needs promptly. They also deliver

quality service, tailored to meet requirements of customers.

Brief history of Ecobank (the Group)

ETI, a public limited liability company, was established as a bank holding company in

1985 under an Industry with the support of ECOWAS. In the early 1980’s the banking

industry in West Africa was dominated by foreign and state-owned banks. There were

hardly any commercial banks in West Africa owned and managed by the African private

sector. ETI was founded with the objective of filling this vacuum.

The Federation of West African Chambers of Commerce promoted and initiated a project

for the creation of a private regional banking institution in West Africa. In 1984,

Ecopromotions S.A. was incorporated. Its founding shareholders raised the seed capital

for the feasibility studies and the promotional activities leading to the creation of ETI.

In October 1985, ETI was incorporated with an authorized capital of US$100 million.

The initial paid up capital of ETI of US$32 million was raised from over 1,500

individuals and institutions from West African countries. The largest shareholder was the

ECOWAS Fund for Cooperation, Compensation and Development (ECOWAS Fund), the

development finance arm of the ECOWAS.

A Headquarters’ Agreement was signed with the government of Togo in 1985 which

granted ETI the status of an international organization with the rights and privileges

necessary for it to operate as a regional institution, including the status of a non-resident

financial institution.

ETI commenced operations with its first subsidiary in Togo in March 1988. Today, the

Ecobank Group is a full-service regional banking institution employing over 8,000 staff

in over 500 branches and offices in twenty five (25) west, central and east and southern

African countries namely Benin, Burkina Faso, Burundi, Cape Verde, Cameroon, Central

African Republic, Chad, Congo Brazzaville, Democratic Republic of Congo, Côte

d'Ivoire, Gambia, Ghana, Guinea, Guinea Bissau, Kenya, Liberia, Malawi, Mali, Niger,

Nigeria, Rwanda, Sao Tome & Principe, Senegal, Sierra Leone and Togo. The Group's

expansion plan includes the opening of new subsidiaries and branches in other Middle

African countries as well as representative offices and international banking facilities in

the major financial centres that have substantial trading and transaction links with Africa

such as London, Paris, Dubai and Beijing. ETI has two specialized subsidiaries: Ecobank

Development Corporation (EDC) and eProcess International (eProcess). EDC was

incorporated with a broad mandate to develop Ecobank’s investment banking and

advisory businesses throughout the countries where Ecobank operates. EDC operates

brokerage houses on all 3 stock exchanges in West Africa and has obtained licenses to

operate on the 2 stock exchanges in Central Africa: the Douala Stock Exchange in

Cameroon and the Libreville Exchange in Gabon. The mandate of eProcess is to manage

the Group’s information technology function with a view to ultimately centralizing the

Group’s middle and back office operations to improve efficiency, service standards and

reduce costs.

2.2 Empirical Literature Review

Empirical review can be defined as primary information that has been gathered on the

research concerning the reality on the ground. The empirical review will look at

dissertation on similar area of study conducted by other undergraduate students and

researchers. It also involves the viewpoint of various writers on the subject matter.

A survey of the top 20 UK Banks and Building Societies found that they are relatively

becoming aware that; “customer service is the key to differentiation in developing a

competitive edge, for the mid 1990s. Thus, with new developments in the type of

customer services available, computers help improve the efficiency in the delivery of

these services to the customer and the long run effect is the improvement of profitability.

(The Banker January, 1994 p.71). Improved customer services requires a bank to pay

attention to its products and services delivery system, delivery environment and

technology for product and service range, this include both basic product and augmented

service offerings (Gronroos, 1978). A basic or core financial service or product might be

a current account delivery systems need to be efficient responsive and reliable. The

delivery environment includes both physical design and access aspects, and also

emotional or atmospheric impact. The role of employees cannot be overstated and

includes their personal qualities, abilities to understand and satisfy customer needs, and

their skills and knowledge including flexibility.

Empirically, much has been said about how computer technology especially Automated

Teller Machine (ATM) has contributed to efficiency in customer service delivery for

most banks but its relationship with reliability and profitability has not been clear-cut.

However, through this study it is obvious that computer-based customers services are

imposed services that are expected, as in the case of {the four banks} to attract more

customers and in the long-run, increase the bank’s profit margin; through the linkage is

somewhat indirect.

Inherent problems associated with the ATM

Automated Teller Machine comes with its own problems to both the customer and the

bank. Ogunleye (The Banker, 2004) explains that “as the change comes with

opportunities particularly for banking and finance, it also presents challenges as the

increase complexity of financial instruments being offered by the financial system can

mask the true risk of asset portfolios and the speed with which their value can change”. In

his view, this can present in developing countries as the problem combines with other

structural problems in our environment to heighten the changes in banking instability.

Dimitris’ research (1988) into the challenges that providers of electronic services

encounter came out with a number of legal concerns. According to him, fraud, error and

technical malfunction in electronic banking such ATMs outlasts in some peculate way are

occurrences in banks’ quest to provide electronic services. When computers break down

or landlines are tapped, the basic question is who is to blame?

The second challenge pertains to whether the drawer’s signature is as scrutinized as they

used to be. “Can a signature be verified in an electronic transmission, and will such a

transmission make it harder to see alterations” (Safo, 1995).

Improper money checking can cause the possibility of a customer receiving counterfeit

banknotes from an ATM. While bank personnel are generally trained better at spotting

and removing counterfeit cash, the resulting ATM money supplies used by banks provide

no absolute guarantee for proper banknotes, as the Federal Criminal Police Office of

Germany has confirmed that there are regularly incidents of false banknotes having been

provided through bank ATMs. As a matter of fact a survey by IBM concluded that “those

banks that provide poor service will lose customers and money. In this highly competitive

market, the pressure is on to provide a high quality yet cost effective service”.

Benefits accrued by banks using ATM

The use of ATMs and its system has the potential to increase the efficiency of banking

services in Ghana. Automation tends to reduce cost associated with manual operations

especially delays and manpower cost. Invariably, the main cost involved in banking,

derived from the need to store large amounts of information, the need to access the stored

information quickly and to update such information regularly. The introduction of

microelectronics has reduced these costs considerably through both scale and scope

economies.

Banks in the vanguard of electronic banking have made massive achievements in respect

of revenues and general efficiencies.

Electronic Banking also offers a variety of opportunities to bank customers as they

interact with bank. According to (Pullet & Vandenberg, 2003), electronic banking affords

its customers the luxury of 24 hours access to cash and other traditional banking services

through the Automated Teller Machine (ATM). In the words of (Mishkin, 1992), bank

customers are now able to receive bank services through computer terminals that are not

located at the bank or one of its branches. Automated Teller Machine (ATM) reduces the

burden that bank customers once suffered. In that instance long queues which once were

phenomenal in banking halls have been eliminated in some banks and reduced

considerably in others, thanks to Automated Teller Machines Mishkin (1992).

Conclusion

It is observed from the foregoing review that Automation Banking guarantees invaluable

benefits to both banks and bank customers. Notable among others are cost reductions,

convenience, quick transactions and general increases in output. In the same vein,

Automation Banking posed a number of problems. Among them are errors, fraud and

malfunctioning of computer terminals.

However, as contended by the new management perspective, what will contribute to the

long term success in automation banking is the associated moral responsibility of banking

organizations and their stakeholders (Harris, 2002). In other words, all stakeholders of

automation banking must have the moral commitment to ensure the development of

Automated Teller Machines.

2.3 Definition of Terms and Constructs

Automated Clearing House (ACH): It is an electronic network for financial institution

that processes large volumes of both credit and debit transactions, which are originated in

batches.

Automated Teller Machine: Is a computerized telecommunications device that provides

a financial institution’s customers a secure method of performing financial transactions in

a public space without the need for a human clerk or bank teller.

Electronic banking: It is the modern computer technology whereby bank customers are

able to receive services through customer terminals that are not located at a bank or one

of its branches.

Switch: It is a computer used in shared networks that routes transactions to the

appropriate financial institution when card holders use another institutions terminal.

Turnaround Time: The time between when a customer gets to the bank and when he

actually finishes doing his or her transaction. Thus the time when an ATM user gets to

the machine and when he actually finishes doing business with the machine.

CHAPTER THREE

3.0 METHODOLOGY

This chapter deals with the research methodology employed for the research. The

researches looked closely at the tools used in the conduct of the study.

3.1 Research Design

This study is based on a case study approach. The researchers study was conducted on

four selected banks and their customers. These banks are; Ecobank Ghana Limited,

Stanchart Ghana Limited, Ghana Commercial Bank Limited and National Investment

Bank.

3.2 Population and Sampling

The researchers’ population of interest for this study is defined as all banks in Ghana that

use the ATM System and their customers i.e. users of ATM. The sample for the research

was made up of the four selected banks and their customers. For the purpose of this

research, the researchers sample covered the management, staff and fifteen (15)

customers of each of the selected banks for the case study.

Purposive and systematic samplings were used, with respect to the banks; purposive

sampling technique was used to select the sample for the study since information needed

was specific and peculiar to the ATM system department of the four selected banks.

However, systematic sampling was adopted for the customers of the selected banks

because there were so many customers and each and every on had an equal chance of

being selected for the study.

3.3 Instrumentation

For the study instrument, the researchers employed the use of self-administered

questionnaires and interviews for the study. Most of the questionnaires were closed ended

questions with the rest been open ended questions. The questionnaires were administered

to the two (2) management staff of the ATM department and fifteen (15) customers of

each of the selected banks.

3.4 Conduct of the Study

Regarding the conduct of the study, the researchers developed questionnaires having in

mind the objectives of the research. It was followed with a visit to the ATM-unit of the

banks to learn more about the way activities are carried out in their units. The researchers

identified the key officers in charge so as to win their confidence. This was done to create

a rapport between the respondents and the researchers so as to alley their fears that the

project work was solely for academic purposes. The relevant officers were served with

questionnaires and given some few days to fill them.

3.5 Data Analysis

Information gathered for this study was analyzed using the Statistical Program for Social

Studies (SPSS) and presented in a form of frequency, tables, charts and graphs

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

4.0 Introduction

In the previous chapter of the study the researchers discussed the various tools in

gathering information. In this chapter, the researchers seek to analyze the data gathered

through the use of questionnaires and interviews and also discuss the major findings that

emerge from the study.

4.1 Method of Data Analysis

Data obtained were critically examined to ascertain their validity and relevance before

they were presented and analysed. Tables and pie chart were used for this purpose.

4.2 Results and Interpretation

Table 1 Age against frequency and percentage

Frequency PercentValid Percent

Cumulative Percent

above 46 years 4 6.7 6.7 6.7

between 26 and 45 years

11 18.3 18.3 25.0

between 18 and 25 45 75.0 75.0 100.0

Total 60 100.0 100.0

Figure 1 (pie chart representing the age of customers against the frequency)

The diagram above (figure 1) shows the ages of the entire population, with the range of

18-25 having the highest frequency of 45 representing 75%, 26-45 years having a

frequency 11 representing 18.3 with a frequency of 4 representing 6.7% being the least

frequency coming from respondents above 46 years.

Table 2 (Factors considered by customers before choosing a bank)

Figure 2 (pie chart representing factors considered by customers in choosing a

bank)

The chart above (figure 2) shows the factors customers took into consideration before

choosing their respective banks. 17 out of the 60 customers interviewed took into

consideration efficient customer service through the use of ATMs. The least considered

factors by customers in choosing a bank were the size of the bank and the efficiency of

the banks personnel.

Frequency Percent Valid Percent

Cumulative

Percent

variety of services

provided by the bank10 16.7 16.7 16.7

efficiency of bank

personnel6 10.0 10.0 26.7

efficient customer service

through the use of ATM17 28.3 28.3 55.0

quality services 10 16.7 16.7 71.7

size of bank 6 10.0 10.0 81.7

location 11 18.3 18.3 100.0

Total 60 100.0 100.0

Table 3: Efficient and Improved customer banking using Automated System

Frequency PercentValid Percent

Cumulative Percent

No 6 10.0 10.0 10.0

Yes 54 90.0 90.0 100.0

Total 60 100.0 100.0

Figure 3 (Efficient and Improved customer banking using Automated system)

The diagram above (figure 3) shows the responses given in respect of an efficient and

improved customer banking using an Automated System. 54 out of the 60 customers

belong to the “yes” category which represent the efficient and improved customer

banking using Automated system and the “no” category represents not efficient and

improved customer banking using Automated system.

Figure 4 (other services provided by the ATM apart from cash withdrawal)

The diagram above (Figure 4) shows the other services provided by the ATM apart from

cash withdrawal. 32 out of the 60 customers interviewed knew about balance enquiry as

another service provided by the ATM and 27 were aware of the cheque book request as a

service provided by the ATM’s.

Table 4: Other services provided by the ATM apart From cash withdrawal

Frequency PercentValid

PercentCumulative

Percentno response 1 1.7 1.7 1.7Cheque book

request 27 45.0 45.0 46.7

Balance inquiry 32 53.3 53.3 100.0Total 60 100.0 100.0

Table 5 Time spent in making withdrawal using an ATM

Frequency PercentValid Percent

Cumulative Percents

no response

1 1.7 1.7 1.7

3-5 mins 30 50.0 50.0 51.7

1-3 mins 29 48.3 48.3 100.0

Total 60 100.0 100.0

Figure 5 (Time spent in making withdrawal using an ATM)

When respondents were further asked how much time in their estimate they spent in

making a withdrawal using an ATM, 98.3% of the respondents said it takes them 5

minutes or less to make withdrawals as compared to going to the banking hall where an

average time of 30 minutes is spent.

Figure 6 A graph showing how cost effective the use of ATM is.

Respondents were asked how cost effective has the use of ATM being in terms of cost

they pay for the usage, more than 72% of the respondent agreed to the fact that the ATM

has been effective while 25% decided to stay neutral about the subject matter with 3% of

the respondents saying that they do not see it to be cost effective.

Table 6 Effectiveness of ATM in terms of cost

Frequency PercentValid Percent Cumulative Percent

not effective

2 3.3 3.3 3.3

Neutral 15 25.0 25.0 28.3

Effective 38 63.3 63.3 91.7

very effective

5 8.3 8.3 100.0

Total 60 100.0 100.0

Figure 7 A chart showing the availability of ATM

From the diagram above, 56.7 percent of the respondent said there is not much ATM

available in their area while 43.3 percent of these respondents have the privilege of

having it in their area. The majority of the respondents said they had to travel a long

distance whenever they want to use the ATM machine due to inadequate machines.

Table 7. A table showing the Availability of ATMs.

Frequency PercentValid

PercentCumulative

Percent

no 34 56.7 56.7 56.7

yes 26 43.3 43.3 100.0

Total 60 100.0 100.0

Figure 8. Places of easy accessibility of the ATM

The diagram above shows where ATM machines should be positioned so that customers

can get easy access of the machine. When respondents were asked where they would

want to see more of ATMs majority said they should be positioned near shopping malls.

Table 8 Places of easy accessibility of the ATM

Frequency PercentValid

PercentCumulative

Percent

Restaurants & food Courts

8 13.3 13.3 13.3

Bus stations 8 13.3 13.3 26.7

Filling stations 19 31.7 31.7 58.3

Shopping Malls 25 41.7 41.7 100.0

Total 60 100.0 100.0

Table 9 Problems mostly reported by customers to the service providers

Frequency Percent Valid Percent Cumulative Percent

Faulty machines & card

Being ceased and Not

receiving cash but

debited

1 25.0 25.0 25.0

Faulty machines &

Card being ceased3 75.0 75.0 100.0

Total 4 100.0 100.0

Figure 9 Problems mostly reported by customers to the service providers

Problems mostly recorded by banks about ATMs from their customers are highlighted in

the graph above 25 percent of the respondent said faulty machines, card being ceased and

Not receiving cash but debited was the major problems that their customers mostly report

to them when using the ATM to transact their business.75% of the respondents also cited

only faulty machines and card being ceased as the problems they mostly received from

their customers.

Table 10 Increase in profitability as a result of increase in production and service provided

Frequency PercentValid

PercentCumulative

Percent

about 15% and above

2 50.0 50.0 50.0

about 5% - 10% 1 25.0 25.0 75.0

about 5% 1 25.0 25.0 100.0

Total 4 100.0 100.0

Figure 10. Increase in profitability as a result of increase in production and service provided

With all the banks agreeing to it that the ATM systems introduction has been profitable,

50 percent of the respondents said it has made an increase in their production and

services provided to their customers by 15% and above whiles the other 50 percent said it

has increased theirs about 5% to 10%. This means ATMs have really made an impact on

banks production.

Figure 11. A chart showing whether ATM has been reliable

Table 11. A table showing whether ATM has been reliable.

Frequency PercentValid

PercentCumulative

Percent

Unreliable 1 1.7 1.7 1.7

Not much reliable

4 6.7 6.7 8.3

Neutral 5 8.3 8.3 16.7

Reliable 36 60.0 60.0 76.7

Much reliable 14 23.3 23.3 100.0

Total 60 100.0 100.0

Table 12. Responses to how reliable ATM’s is to banks

Frequency Percent Valid PercentCumulative

Percent

Fairly reliable

2 50.0 50.0 50.0

Very reliable 2 50.0 50.0 100.0

Total 4 100.0 100.0Respondents were in opinion that generally ATM has been reliable. 60% of the

respondents had the opinion that they see the ATM to be reliable, whiles 8.3% of the

respondents chose to remain neutral. 1.7% of the respondents said they do not see the

ATM to be reliable. All the banks interviewed said the system has been reliable to a

large extent. Below is a table showing responses to how reliable the ATM has been to

banks.

4.3 Findings

In conducting this study the researchers came across some interesting facts which need

further explanation. It was found out that the ATM was very useful and the major banks

that pioneered this revolution must be congratulated, especially S.C.B, G.C.B and not

forgetting Barclays Bank and Ecobank. It was also found that most of the respondents to

our study started using ATM few weeks after opening an account with their bank.

Banks also make sure that their clients are aware of this products availability immediately

or at the point of opening an account, so that it will ease their transaction problem and

this foresight of banks needed to be recognized.

In finding out problems usually encountered by users of ATMs most of the respondents

said faulty machines. This is not encouraging considering the fact that ATMs have been

in the country for over ten (10) years now. Most of the respondents too face the problem

of a frequent “no cash” in the machine. Others were faced with long queues due to

inadequate terminals.

Most of the time customers found themselves crowding in the banking halls but it was

found that introduction of ATM has reduced these crowding and the wish of customers to

get access to their money after banking hours and the convenience it brings made them to

acquire the ATM card. Also it was realised that withdrawing money from the ATM was

more appropriate than withdrawing from the counter.

CHAPTER FIVE

CONCLUSIONS AND RECOMMENDATION

5.0 Introduction

The final chapter presents a summary and major conclusion of the study. It also provides

recommendations that can help banking institutions to improve on the services provided

for their clients who use the ATM.

5.1 Summary

The researchers study was to research into the usage of automated teller machines as to

whether its usage has been reliable or not in the banking sector. Many facts were made

known and suggestions made. Four banks, which are G.C.B, S.C.B, N.I.B and Ecobank

and their customers were sampled for the study.

As such primary source of data was used for the study. Specific questionnaires and

interviews were presented and analysed in the form of tables and graphs.

From the researchers study, it was known that, ATM was first introduced in Ghana by the

Trust Bank and the most widely used electronic banking product by Ghanaians. Among

its usefulness are the facts that, it is convenient, saves time, gives privacy and makes cash

available to users at any point in time. Some problems that are associated with the ATM

included faulty machines, long queues and others.

Despite all these problems the banks think the product has had a positive impact on the

banks’ performances. In return the banks are bent on doing all their best in order to

provide better and convenient services for their numerous cherished customers.

5.2 Recommendations

After conducting this research, the researchers recommend that the providers of the ATM

system should monitor the machines they have. The researchers think when this is done,

the providers will be able to meet high expectations of the customers by providing

services 24-hours a day, have access to cash at all times and also transacts business at any

time of the day. To the researchers, if close monitoring of the terminals are done

effectively, the providers will be able to know when a machine is faulty or out of order

and therefore can speed up the time of restoring faulty machines. Customers also want to

have access to their accounts at any time and the bank must meet this need. Technicians

must also be employed and trained and given the responsibility of attending to the ATMs.

Banks must not only introduce financial innovations with the sole aim of making more

profit in the short run or short term. The researchers recommend the banks reduce the

charges involved in using ATMs. This stems from the fact that, most of the respondents

that were further interviewed complained that the amount charged for the services they

received from the ATM is a little bit high. The researchers entreat the banks to consider

the charge to be moderate enough; and to explain to customers the reasons for the

charges.

Another area of significance is that, the banks should increase the number of outlets.

When this is done, the problem of long queues will be reduced. This is because most of

our respondents complained of long queues when they go to the machines and therefore

an increase in the number of outlets can reduce this problem. There should be an increase

in the number of terminals.

Although the banks stated they educate their customers on services provided, most

customers still did not know much about the other functions of the ATM. This means the

banks should do more and be more particular about how best to educate their customers

as customers still queue in the banking hall to perform other transactions that can be

performed by the ATM.

The banks should educate it customers on other functions ATM apart from cash

withdrawal. This is because our respondents expressed sincere concern that, they really

need to be educated on how to use and access other functions such as Transfer of cash,

mini-statement, inquiry and others.

Although, banks have fully computerized its operations and have successfully introduced

a number of electronic banking products such as the ATM system, it should not stop

there. They should invest in research and come up with innovations that will make them

unique. They should think of improving on the current situation to provide more efficient

services to satisfy their customers. They should also interact more with their customers to

access their level of satisfaction with the various products they come out with.

5.3 Limitations of the Study

The study being undertaken by the researchers is embodied with some limitations. Since

most banks want to keep information secret, data considered by them to be confidential

are often kept from the public. It was difficult getting top level management to obtain

information that was necessary for the study and other staffs refused giving out such

information. Nevertheless, about 70 percent of our questionnaires directed to banks were

answered. Selection of only four (4) banks, that is G.C.B, S.C.B, N.I.B and Ecobank did

not fully represent the entire views of banks in the country.

5.4 Topic for Further Studies

Assessing The Contribution Of Automated Teller Machines (ATMs) To The

Profitability And Deposit Mobilization Of Banks

An Assessment of the reliability of automated teller machines (ATMs) in records

management in the banking sector in Ghana.

LIST OF TABLES

TABLE TITLE PAGE

TABLE 1 AGE AGAINST FREQUENCY AND PERCENTAGE 33

TABLE 2 FACTORS CONSIDERED BY CUSTOMERS BEFORE

CHOOSING A BANK 34

TABLE 3 EFFICIENT AND IMPROVED CUSTOMERS BANKING

USING AUTOMATED SYSTEM 35

TABLE 4 OTHER SERVICES PROVIDED BY THE ATM APART

FROM CASH WITHDRAWAL 36

TABLE 5 TIME SPENT IN MAKING WITHDRAWALS USING AN

ATM 37

TABLE 6 A GRAPH SHOWING HOW COST EFFECTIVE THE USE

OF ATM S. 37

TABLE 7 A TABLE SHOWING THE AVAILABILITY OF ATMS. 38

TABLE 8 PLACES OF EASY ACCESSIBILITY OF ATM 39

TABLE 9 PROBLEMS MOSTLY REPORTED BY CUSTOMERS TO

THE SERVICE PROVIDERS 40

TABLE 10 INCREASE IN PROFITABILITY AS A RESULT OF

INCREASE IN PRODUCTION AND SERVICE PROVIDED 41

TABLE 11 A TABLE SHOWING WHETHER ATM HAS BEEN

RELIABLE. 42

TABLE 12 RESPONSES TO HOW RELIABLE ATM’S IS TO BANKS 43

LIST OF FIGURES

FIGURE TITLE PAGE

FIGURE 1 PIE CHART REPRESENTING THE AGE OF CUSTOMERS 33

AGAINST THE FREQUENCY

FIGURE 2 PIE CHART REPRESENTING FACTORS CONSIDERED BY

CUSTOMERS IN CHOOSING A BANK 34

FIGURE 3 EFFICIENT AND IMPROVED CUSTOMER BANKING

USINGAUTOMATED SYSTEM 35

FIGURE 4 OTHER SERVICES PROVIDED BY THE ATM APART FROM

CASH WITHDRAWAL 36

FIGURE 5 TIME SPENT IN MAKING WITHDRAWAL USING AN ATM 37

FIGURE 6 A GRAPH SHOWING HOW COST EFFECTIVE THE USE OF

ATM IS. 38

FIGURE 7 A CHART SHOWING THE AVAILABILITY OF ATM 38

FIGURE 8 PLACES OF EASY ACCESSIBILITY OF THE ATM 39

FIGURE 9 PROBLEMS MOSTLY REPORTED BY CUSTOMERS TO THE

SERVICE PROVIDERS 40

FIGURE 10 INCREASE IN PROFITABILITY AS A RESULT OF INCREASE

IN PRODUCTION AND SERVICE PROVIDED 41

FIGURE 11 A CHART SHOWING WHETHER ATM HAS BEEN RELIABLE 42

LIST OF ACRONYMS

ATM – Automated Teller machine

PIN – Personal Identification Number

ETI – Ecobank Transnational Incorporated

KNUST – Kwame Nkrumah University of Science and

Technology

CPU – Central Processing Unit

IBM – International Business machines

ECOWAS – Economic Community of West African States

eProcess – Electronic Process

STANCHART – Standard Chartered Bank

GCB – Ghana Commercial Bank

SCB - Standard Chartered Bank

NIB – National Investment Bank

BIBLIOGRAPHY

Andoh, T.K.N. (1988). Computers in Banking. Journal of Ghana Institute of Bankers.

Chorofas, D. N. (1988). Electronic Funds Transfer. Butterworths, London.

Dr. Harris, L. (2002). The New Management Perspective.

Gronroos, C.(1978). A service Oriented Approach to Marketing of Services. European

Journal of Marketing..

Koch, T.W., MacDonald, S.S. (2000). Bank Management. (4th ed.). The Dryden Press,

Orlando. p. 463.

Mescon, M.H., Bovee, C.L., Thill, J.V. (2002). Business Today. (10th ed.). Prentice Hall,

New Jersey. p.463.

Miller, R.L., Pulsinelli, R.W. (1985). Modern Money and Banking. McGraw-Hill, Boston.

Mishkin, F.S. (1992). The Economies of Money, Banking and Financial Markets (3rd ed.).

Mumm, G. et al. Encyclopaedia of Banking and Finance. (9th ed.). pp. 55-56.

Ogunleye, G.A. (2004). The Banker.

Pullet, Y., Vandenberg, T.P. (2003). Customer Advocacy Magazine.

Rose, Peter S. (1999). Commercial Bank Management. (4th ed.). Irwin & McGraw-Hill,

Boston.

Saunders, A., Cornett, M.M. (2007). Financial Markets and Institutions. (3rd ed.).

McGraw-Hill, New Delhi .pp. 351-353.

Sinkey, J.F. (1992).Commercial Bank Financial Management in the Financial Services

Industry. (4th ed.). p.113

Taxmann (2007). Banking Products and Service. (2nd ed.). Taxmann Publications Ltd, New Delhi. P.45.

Taxmann. (2005). Information System for Banks.Taxmann Publications Ltd. New Delhi.

The Banker. (1994). Step by Step. P.71.

Wright, D., Wally, V. Business of Banking. (2nd ed.). pp. 155-162.

Internet Sources

http://en.wikipedia.org/wiki/Automated_teller_machine.

http://www.atmmachine.com/atm-inventor.html.

http://www.gcb.com.gh/history

APPENDIX: A

QUESTIONNAIRE FOR CUSTOMERS

INSTITUTE OF PROFESSIONAL STUDIESRESEARCH QUESTIONNAIRE

(Information provided will be treated with absolute confidentiality)

This questionnaire has been designed to solicit your opinion on the topic:

“ASSESSMENT OF THE RELIABILITY OF AUTOMATED TELLER MACHINES

IN THE BANKING SECTOR IN GHANA”

Any information provided will be used to make sound empirical analysis in order to

provide suitable recommendations that will help banks and users of ATM.

1. AGE: Between 18 and 25 years

Between 26 and 45 years

Above 46 years

2. Which Bank do you operate your account with?

i. Ecobank ii. GCB iii. Stanchart iv. NIB

3. What type of account do you hold/have?

Savings Current

4. How long have you being saving with your bank?

i. 1-3 yrs ii. 3 -5 yrs iii. 5 -10 yrs

5. Which of the following factors would you consider before choosing a bank to

save with?

i. Location

ii. size of the bank

iii.Quality

iv.Efficiency of bank personnel

v. Efficient customer service through the use of ATM

vi.Variety of services provided by the bank

Vii. None of the above

6. Do you think Automating Banking Operations is relevant in modern Banking

practice?

Yes No

7. Do you think banks using Automated System provide improved and efficient

customer banking services than those without? Yes No

If yes,

why?...........................................................................................................................

....................................................................................................................................

...................................................................................................................................

If No,

why?...........................................................................................................................

....................................................................................................................................

...................................................................................................................................

8. i. Do you have an ATM card?

Yes No

9. Was the ATM card a major factor in opting to save with your Bank?

Yes No

10. For how long have you been using your ATM card?

i. 0 – 3 yrs ii. 3 – 5 yrs iii. 5 and above

11. Do you know any other service provided by the ATM system apart from Cash

withdrawal?

Yes No

If yes, what other services do you know of? (Please tick)

i. Balance inquiry

ii. Cheque book request

iii. PIN Change

iv. Transfer of funds

12. How will you access the degree of satisfaction you receive from using the ATM

system?

i. Extremely Satisfied

ii. Satisfied

iii.Somehow satisfied

iv. Dissatisfied

v. Extremely Dissatisfied

13. How long did it take you to get your ATM card when you applied/requested for

it?

Within; i. 2 wks ii. A month iii. 2 months and above

14. How efficient is your bank’s service delivery in the area of cash withdrawal

through the ATM?

i. Very efficient

ii. Efficient

iii.Inefficient

iv.Highly inefficient

15. How long does it take you to make withdrawals using the ATM?

i. 1 – 3 mins ii. 3- 5 mins iii. 5 – 10 mins

iv. 10 mins and above

16. Do you encounter any problem (s) when using the ATM?

Yes No

If yes, (please tick)

i. Faulty Machines ii. No Cash iii. Long Queues iv. Inadequate

terminal v.No Receipt but debited

17. In your opinion how do you think your chosen problem can be solved?

....................................................................................................................................

....................................................................................................................................

....................................................................................................................................

...................................................................................................................................

18. In your estimate how long/quickly does it take your bank to restore services or

solve your problems?

i. Very Quick

ii. Quickly

iii.Slowly

iv.Very Slow

v. No Response

19. How cost effective is it using the ATM?

i. Very effective

ii. Effective

iii.Neutral

iv. Not Effective

v. No Response

20. In terms of availability, are there enough ATMs in your area?

Yes No

21. Where would you like to see more ATM machines?

i. Shopping Malls

ii. Filling stations

iii.Bus stations

iv. restaurants & food courts

22. Do you place much reliability on the ATM system of your bank?

i. Much reliable

ii. Reliable

iii.Neutral

Iv.Not much Reliable

v. Unreliable

APPENDIX: B

INSTITUTE OF PROFESSIONAL STUDIESRESEARCH QUESTIONNAIRE

(Information provided will be treated with absolute confidentiality)

This questionnaire has been designed to solicit your opinion on the topic:

“ASSESSMENT OF THE RELIABILITY OF AUTOMATED TELLER MACHINES

IN THE BANKING SECTOR IN GHANA”.

Any information provided will be used to make sound empirical analysis in order to

provide suitable recommendations that will help banks and users of ATM.

1. Name of Bank...........................................................................................................

2. When and why did your bank choose to install and operate Automated Teller

Machine (ATM)

………………………………………………………………………………

……………………………………………………………………………………….

……………………………………………………………………………………….

b. Is it because every Bank is using it? Yes No

3. In your own estimate, what percentage of your customers uses the ATM?

About; 0% -25% 26% - 50% 51% - 75% 76% and

above

4. Has ATM system being reliable to a large extent?

i.Very reliable ii.Fairly reliable iii.Neutral ivUnreliable

5. What was the cost of installing the ATM system?

About; $ 20,000 $ 20,000 - $ 40,000 $ 40,000 and above

b. what is the cost of operating the system per month?

About; i. 2% - 5% of total expenditure/month

ii. 5% 10% of total expenditure/month

iii. 10% - 15% of total expenditure/month

6. How much revenue is generated from operating the system?

About; i. 5% of total revenue

ii. 5% - 10% of total revenue

iii. 10% - 15% of total revenue

7. Has the system been profitable; thus has it increased production and service

provided?

Yes No

If yes, by what percentage; about; 5% 5% - 10% 15% and above

8. Does your Bank educate customers on the usage of ATM system?

Yes No

If yes, what medium do you use?............................................................................

.................................................................................................................................

9. How often does a customer report complaints?

i. Daily ii. Once –a –week iii. Twice - a- week

iv. Once a month

10. What sort of problems is mostly being reported by customers?

i. Faulty machines & Card being ceased

ii. Not receiving money but debited

iii.No cash and others

11. How long does it take for such problems to be solved?

Within; i. 2- hrs ii. 24- hrs iii. 2 days iv. 1 week and above

12. Do you think customers are satisfied with the ATM system?

Yes No

If yes, how do you rate customer satisfaction?

Very satisfied satisfied dissatisfied

13. As a technician suggest ways that you think can solve or improve upon the

problems facing the system?.........................................................................................

…………………………………………………………………………………………

….

…………………………………………………………………………………………

……………………………………………………………………………………….