THE IMPACT OF AUTOMATED TELLER MACHINE SERVICE QUALITY

ON CUSTOMER SATISFACTION IN THE CASE OF ASSELA COMMERCIAL

BANK OF ETHIOPIA

HARAMBE UNIVERSITY
By: HINSENE TAMIRU DERESA

PROPOSAL SUBMITED TO SCHOOL OF POST GRADUATE STUDY FOR

PARTIAL FUFILMENT OF REQUIREMENT FOR THE AWARD OF
MASTER’S DEGREE IN MASTER OF BUSINESS ADMINISTRATION AT
HARAMBEE UNIVERSITY

ADAMA, ETHIOPIA
SEPTEMBER, 2024
 HARAMBEE UNIVERSITY

THE IMPACT OF AUTOMATED TELLER MACHINE SERVICE QUALITY

ON CUSTOMER SATISFACTION IN THE CASE OF ASSELA COMMERCIAL
BANK OF ETHIOPIA
By: HINSENE TAMIRU DERESA
PROPOSAL SUBMITED TO SCHOOL OF POST GRADUATE STUDY FOR
PARTIAL FUFILMENT OF REQUIREMENT FOR THE AWARD OF
MASTER’S DEGREE IN MASTER OF BUSINESS ADMINISTRATION AT
HARAMBEE UNIVERSITY
ADVISER: HABTAMU DADI (PhD)

ADAMA, ETHIOPIA
SEPTEMBER, 2024
 ACKNOWLEDGMENT
Frist and foremost ,glory be to GOD for he has always been my strength and my light throughout this
research proposal work and most importantly ,throughout my life blessed be my families who has always
been there to guide me ,give moral support and encouragement making my journey a head a lot easier
through her unserved support.
Secondly I would like to give my deepest gratitude to my insightful advisor Dr Habtamu Dadi Whose
constructive advices; comments and expert guidance have been invaluable to me during this whole
process of research proposal writing.
Table of Contents Title Page
Chapter One:

Introduction………………………………………………………………………………………….....1
1.1 Back ground of the study……………………………………………………………………...1
1.2 Statement of the problem……………………………………………………………………...3
1.3 Research Questions …………………………………………………………………………...4
1.4 Objective of the study………………………………………………………………………....5
1.4.1. General Objective……………………………………………………………………....5
1.4.2. Specific
Objectives……………………………………………………………………………..5
1.5 Limitation of the study………………………………………………………………………...5
1.6. Delimitation of the study…………………………………………………………………….7
1.7 Significance of the study………………………………………………………………………7
1.8 Organization of the study……………………………………………………………………...8
1.9 . Operational
Definitions……………………………………………………………………......8

Chapter Two:Literature
Review……………………………………………………………………..9

2.1 Theoretical Framework………………………………………………………………………..9

2.1.1 Service Quality Theoretical Framework………………………………………………….9
2.1.1.1 Service Quality Concept……………………………………………………………...9
2.1.1.2. Characteristics of Service and Service
Quality……………………………………..11 2.1.1.3 Dimensions and Determinants of
Service Quality ………………………………….13 2.1.1.4. Traditional Service Quality and
SERVQUAL……………………………………...13 2.1.2. Technology based Theoretical
Framework………………………………………….....16 2.1.2.1. Technological Background
………………………………………………………..16 2.1.2.2. Technology Adoption
Theory……………………………………………………...19 2.1.2.3. E-Service
Quality………………………………………………………………......21 2.1.2.4. ATM Service
Quality…………………………………………………………….. .23 2.1.2.4.1. ATM and its
Benefits………………………………………………………….23 2.1.2.4.2. Dimensions of
ATM service Quality……………………………….. ………..24 2.1.2.4.3. Service quality,
Customer satisfaction and Dissatisfaction in ATM……….…25
2.1.3 Diverging Views Regarding E-service quality Dimensions…………………………..
2.2. Research Conceptual Framework………………………………………………..

Chapter Three: Research

Methodology………………………………………………………….42
3.1. Quantitative Research Design
……………………………………………………………...42
3.2.SamplingDesign…………………………………………………………………………………42
3.2.1Population of the study………………………………………………………………………43
3.2.2. Sampling frame………………………………………………………………………………43
3.2.3. Sampling Technique….........……………………………………………………………..44
3.2.4. Sampling Size………………………………………………………………………......44
3.3.Data Collection Methods and Procedures…..................................................44
3.3.1. Data collection Methods………………………………………………………………44
3.3.1.1 Secondary data………………………………………………………………………..44
3.3.1.2 Primary data ………………………………………………………………..............44
3.3.2. Data Collection Procedures……………………………………………………………45
3.3.3 Data collection Tools…………………………………………………………………….46
3.4. Data Analysis Methods…………………………………………………………………..47
3.5 Validity and Reliability……………………………………………………………….......48
3.6. Ethics…………………………………………………………………………………………48
 Acronyms
ATM: Automatic teller machine
CBE: Commercial Bank of Ethiopia
E-business: Electronic business
E-Recs-QUAL: Electronic recovery service quality
E-S-QUAL: Electronic service quality E-service quality; electronic service quality
SERVQUAL: Service Quality Techno-based: technology based
VIF- Variation of Inflation Factor
ABSTRACT
Currently the banking service is well equipped with innovations and as the application of the technology
in the banking industry is becoming so significant firms have made huge investment on technology based
banking and shifting from bricks and mortar banking to such branchless mode of banking . Following
such shift customers are also shifting to technology based banking service due to perceived usefulness,
convenient to use , privacy and freedom of mobility. Thus the objective of the study was to examine the
effect of ATM Service quality dimensions on customer satisfaction of ATM in the case of CBE. With a
high emphasis, a quantitative approach based on a convenience sampling technique was used, in which a
structured survey questionnaire was employed to collect data from the customers. Also with less emphasis
a qualitative method which is a structured interview was used to collect data from the bank. For data
analysis a descriptive and inferential statistics were used while to aid computation SPSS was applied. The
results of the study reveal that the effect of ATM service quality dimensions on customer satisfaction of
ATM is direct and significant. Also the results show that the effect of customer satisfaction of ATM is
direct and significant. More than 60% of respondents signed on positively showing that customers have
interest and found out convenient to use the banking technology instead of having interaction with human
tellers. It also allows customers to transact their banking service quickly, it saves time, their personal
information is not misused by their bank ,support service is good. Hence it can be.
1 CHAPTER ONE INTRODUCTION
This chapter provides a bird's eyes view of the entire study. Customer satisfaction,
the reason for the choice of the study and technology in the service sector such
banks is briefly detailed in the background of the study. Subsequently statement of
the problem, research objectives, research questions, limitations of the study, and
delimitations of the study, significant of the study, ethics and organization of the
study are briefly entertained.
1.1Background of the Study
Customer satisfaction has been an essential concept in the literature of marketing
and for customer focused firms, it is both a" goal and a tool”. And yet there are
factors that affect customer satisfaction such as friendly employee, service quality
and competitive pricing (Angelova and Zekiri, 2011).The challenge is as the
environment endures drastic changes and increased awareness with technological
advancement, how firms can manage service quality and hence satisfy customers,
is what motivated the student researcher to focus on the topic area which is
contemporary and dynamic.
Several technology based models have been proposed to measure the service
quality which has a direct relationship with customer satisfaction. The technology
provides arrays of opportunities to customers such as checking balance,
transferring funds and thereby reduces time and costs. Also it enables service
providers to customize their offering and make available with superior delivery.
And yet studies show that the economy of most developing countries including
Ethiopia is still cash driven and the monetary transactions are performed via the
exchange of bank notes, and coins for goods and services. To curve this and arm
itself with such technology CBE introduced for the first time ATM, in 2001.
According to the e-payment department office the number of CBE ATM card holders
are more than 50,000.
However, despite CBE's effortless attempts in the last one decade about the ATM
banking, studies show that its service is still with different problems and challenges
including low level of infrastructure development ,frequent power interruption,
broken and slow Internet connections which have adverse effects on the service
quality and customer satisfaction. Sangeetha(2012)states that in service sector
technology has been employed to standardize services through the minimization of
employee-customer interface and customers prefer a techno-based service offering
instead of having interaction with human teller.
He further contends that as the interface between the customers and service
providers shifted from a customer-employee to a customer- technology in
accessing a given organization, various issues are coming to surface regarding the
impact of technology on the service quality being delivered and it’s thereof on
customer satisfaction. Also Dabholkar(1996) cited in Sangeetha(2012) contends
that regarding customers preference for self-service alternatives little is known,
where customers' preference in Ethiopia, CBE in focus would not be exceptional. By
appreciating the actions taken by the CBE in adopting the technology such as a
fullfledged ATM and others to move the bank to the "world class" commercial bank,
based on the above premises it seems high time to examine the impact of ATM
service quality dimensions on customer satisfactions to maintain the momentum
and accelerate its growth in such a way that to do its level best to turn over the
shortcomings and challenges into better opportunities. Simply put, to provide more
insights regarding the pertinent issues in association with the service quality
delivery via ATM, the study opts to put in place a model which will be
comprehensive enough so that it can be employed to measure the impact of ATM
service quality and its thereof on customers satisfaction
The study was conducted on the CBE ATM card holders with convenient sampling
technique to get input into the different factors utilized while conducting the
assessment of the ATM service quality. In so doing the study is vindicated as it
presents a model which integrates the main dimensions that need to be examined
in measuring the impact of the service quality of ATM on customer 3 satisfaction in
CBE. It is essentially paramount and significantly valuable in providing
comprehensive insights to the marketers and practitioners in general and to the
bank in particular, regarding the essential issues related to the ATM and thereby
presenting the cue about customers' needs, quality service customer satisfaction.
1.2Statement of the problem
Currently the banking service is well equipped with innovations, postulating the
quality service as the de facto of the digital era using technology as an interface.
The world at large including some African nations is enjoying the technology. For
instance, studies show that in Singapore the digital economy is legally established
and bank notes and coins have sent to archives for historical memorandum.
However, a review on the extant literatures shows that most of the studies have
been done in the developed world such as USA,UK, Australia and in Asian countries
such as Singapore, Pakistan, India and a few in African nations.For instance,
Khan(2010) in Pakistani banks identified reliability, convenience ,efficient
operation ,security and privacy, responsiveness as dimensions of ATM service
quality. He suggests that he used survey design questionnaire but a "mixture of
interviews and qualitative data gathering techniques" are desirable to generate
more comprehensive outcome.
In this regard this study was employed a qualitative research method such as
interview to collect data from the service provider, in addition to an extensive use of
quantitative research method namely questionnaire survey which was used to
collect data from customers and try to balance the research out come by getting
data from both sides . Dilijonas etal.(2009) identified dimensions of ATM including
sufficient number of ATMs, search locations, user friendly ,ATM functionality and
conveniently located in the Baltic states. In Ethiopia however, banking service is
underdeveloped and cash note is still the dominant medium of exchange
(Gardachew, 2010).
Also, to the best of the student researcher's knowledge there is only two studies
that have been conducted on the challenges, problems and prospects of e-banking
in Ethiopia and two thesis's and determinants of customers' adoption of e-banking
in Ethiopia and two thesis on mobile banking. And yet, the techno- based service
quality studies have become increasingly significant as the preference of customers
is shifting towards techno- based self-service. Above all, in today's 4 fierce
competition and volatile business environment no firms can be remain static
enjoying its current innovations. So it is imperative that managers need to know the
criterion customers put in place in evaluating the services being offered and know
how to measure service quality from their customers’ perspective so that to
understand their needs and hence satisfy them. Here the intent is not "to rediscover
the Wheel" rather to make what is untapped in the area the research's deal. So the
study made an investigation to fill the gaps observed by addressing the pertinent
impact of ATM service quality dimensions on customer satisfaction.
In this regard, though in those two thesis's the issue of service quality dimensions in
ATM by Tewodros (2012) and determinants of customers' adoption of e-banking by
Mulugeta (2013) are addressed, the impact of ATM service quality dimensions on
customers satisfaction is still untapped. Likewise Mouawed and Kleiner(1996) cited
in Al-Hawari etal.(2005) state that customer perceptions and preferences of service
quality have an essential effect on a bank's success. However, in Ethiopia, CBE in
focus, customers’ perceptions and preferences of the techno -based self service is
not yet assessed. Sangeetha(2012) states that technology has been implemented in
the service organization with the aim of enhancing customer service quality and
delivery and thereby to reduce costs and standardize core service offerings.
However, to enjoy benefits of the technology, the technobased service delivery is
still non-existence in Ethiopian banks except some banking services such as ATM
debit and limited credit cards and with mobile-banking such as SMS messages
telling customers mainly balance "debited and credited" issues. So the factors
behind such failure of exploitation of the available technology are another gap that
should be examined. Dabholkar(1994) cited in Rasheed and Latif(2011)states that
to elevate more customer participation to a wider coverage , the technology-based
services have laid new service delivery options in firms. However, in Ethiopia, CBE
in focus the issue is not yet practiced and there are no studies conducted on such
area. So this is also another research gap that needs empirical studies. Thus from
the aforementioned premises, the focus or the problem study is, what is the effect
of ATM service quality dimensions on customer satisfaction and future prospects of
ATM in the case of the CBE?

1.3. Research Questions

1. What is the effect of ATM service quality dimensions on customer satisfaction?
 1.4. Objectives of the Study
1.4.1. General Objectives to examine the impact of the ATM service quality
dimensions on customer satisfaction based on perceived perception of the CBE
ATM card holders.
1.4.2. Specific Objective
 To assess the effect of ATM service quality dimensions on customer satisfaction

1.5. Limitation of the Study

Despite the appropriateness, applicability and suitability of the model adapted,
there are limitations. For instance, the study used a convenient sampling technique,
as a result the convenience sampling technique itself may have some bias effect as
there was no equal chance of selection. As convenient sampling enables a
researcher to take what he or she prefers, minimizing such bias might be difficult.
And yet to minimize such bias the student researcher tried to increase the number
of ATM stations from where the data was being collected. That is the number of
samples taken were designed out in such a way that to include enough number of
representative stations and with that intent eight ATM stations were selected. So
bias was minimized via increasing number of stations. Also to reduce bias the
sample was taken from four districts of the bank in which geographic and district
wise consideration were taken into account to include a representative sample in so
doing balancing was done and bias is reduced. Despite its strength, the
standardized questionnaire items typically represent the common characteristics in
assessing people's perceptions and orientations. By designing questions that may
be at least minimally suitable to all respondents the researcher may miss out what
is essential to many respondents showing that survey is superficial in its coverage.
Survey is flexible in some cases, but once it gets designed out modification is quite
difficult, requiring initial study design remain unchanged throughout the course
(Rubin and Babbie, 2010). Regarding survey instrument the student researcher had
taken due care during instrument selection in which the selected instrument and its
items to be comprehensive one in such a way that the possible points that will be
minimally suitable to most respondents will not be missed out.
As the statements generated were adapted from other scholars work and the
instrument was validated by external third party that is Emerald Group Limited
publishing and the instrument is generic one which can handle any technology
based banking service quality study regardless of the type of technology used the
inclusion of minimally suitable statements to most respondents are assumed to be
included. The student researcher had also taken due care during data collection
time not to collect misleading and biased data which would be malfunctioned by the
distributers in the case when the student researcher could not directly get and
contact customers to collect the data .
As a survey is empirically focused research, it fails to make contributions to
theoretical value and based on rigid science mode of hypotheses and significant
testing, it involves little creative thinking (Burton, 2000).To reduce such effect the
student researcher tried to have an instrument which is generic and not to be
deadly rigid science in such a way that to balance the gap between the rigid science
and theoretical aspects . Face to face structured interview can also be influenced by
personality of both interviewer and respondent, it is time consuming and relies on
the availability of respondents (Rubin and Babbie, 2010). To reduce interview bias
of personality of respondents the student researcher tried to be free and just asking
the managers for simply designed out structured questions.
For instance dressing wise the student researcher tried to be normal dressing in
order to not to be considered as someone who may be spying for competitor ,
strange person or from media or other area where the interviewee might be full of
fear not to disclose the truth about what he or she asked for. Also in the interview
leading questions were avoided so that bias would be reduced. This study employed
only one data collection method to collect data from customers, in which the
possibility of evaluating perception of customers by using different methods is
lacked by the study. To reduce such effect the student researcher tried to
supplement data from the managers so that to make a balance between what
customers would perceive and what the bank confirms regarding its service delivery
via the ATM.
1.6. Delimitation of the Study (Scope)
The study used extensively a quantitative research method in which it confines
itself to questionnaire survey on customers of CBE ATM card holders that are in
Assela city. Also the study with less emphasis used a qualitative research method
namely a structured interview questions to collect data from the bank. After a wider
range of assessment was done on existing literature a structural model which was
developed by Mojoodi etal.(2013) was adapted as a conceptual frame work of the
study which is generic model that can handle a given study regardless of the type
of technology used. The SERVQUAL model cannot be used in the technology based
banking service for the service content and the channel of delivery of techno-based
banking are different. In the techno-based banking service technology is the
interface.
The results of the research would be in a position to address the problem areas of
all CBE ATM stations across Ethiopia, if it had been conducted on larger scale.
However, as including all CBE ATM users in this study is practically impossible the
study delimited itself to CBE ATM card holders who are in Assela city only.
1.7. Significance of the Study
The purpose of the study was to examine the impact of ATM service quality
dimensions on customer satisfaction. Accordingly findings from this study will give
more insights for further investigation concerning the effect of ATM-service quality
dimensions on customer satisfaction. The results of the study will provide a cue
bank managers how to rectify problems and provide better service and hence
satisfy their customers. To the best of the student researcher’s knowledge except
two thesis works by Tewodros(2012) and Mulugeta(2013), this is the other research
that was conducted on such topic area in Ethiopia, CBE in focus, regarding the ATM
banking service. In this regard this study, which is the first in its kind may lay a solid
foundation for further research and enhance the application of ATM banking service.
Thus it is the student researcher's belief that the outcome of this study will render
more insights and fills out the knowledge gaps of the research in general and the
marketing management field in particular.
1.8 Organization of the Study
The study is organized into five chapters. Chapter One : deals with back ground of
the study statement of the problems stating, general and specific objectives,
research questions ,limitation, delimitation, significance and ethics. Chapter Two:
the nucleus of study discusses the extant literature such as theoretical frame work
of service quality and technology, prospects and challenges of ATM, diverging views
on e-service quality dimensions and the conceptual model. Chapter Three:
methodology: including research design ,research method, sampling method ,data
collection methods ,data analysis ,validity and reliability issues. Chapter Four is
about results and discussions including factor analysis, uni-variate analysis,
correlation analysis, regression analysis, and discussion of results and summary.
Chapter Five: about conclusion, recommendations, implications and suggestions for
further study.
CHAPTER TWO: LITERATURE REVIEW
This chapter entertains the review of the extant literature on the topic area of the
study. Subsequently different issues such as service quality concepts ,
characteristics of service and service quality dimensions, determinants of service
quality, traditional service quality, SERVQUAL, technological framework such as
background of technology, ATM service quality and its dimensions , prospects and
challenges of ATM ,diverging views on the eservice quality dimensions and the
conceptual framework of the study would be discussed.
2.1 Theoretical Framework
2.1.1 Service Quality Theoretical Framework
2.1.1.1 Service quality Concept Customers usually evaluate the service quality of
their banks' and yet, the criterion they use may be different from customer to
customer, based on their individual needs and preferences. Joseph etal.(1999)
state that during evaluation of quality of services being delivered customers
usually employ various criteria that are likely different from each other in their
importance. Most importantly, they sate that though many criteria are important
but only a few are so essential. Loudon and Bittea(1988)cited in Joseph etal.
(1999)state that these determinant attributes are those that shall define service
quality from customers point of view.
On the other hand, service quality has received much attention due to the fact
that it is related to cost ,financial performance ,customer satisfaction and customer
loyalty(Al-Hawari etal.,2005) and it has drawn the attention of mangers and
researchers due to its great influence on the performance of business firms
(Anglova and Zekiri ,2011). So providing quality service is essential as it leads to
higher satisfaction, profitability and retention of customers (Ndamnsa and Hamde,
2010). Ahmad and Al-Zu’bi (2011)state that quality has a long lasting effect on
customer satisfaction. Clow(1993) cited in Mosahab etal.(2010:72) claims "quality
as the organization's life-giving blood".
Mesay's(2012) findings on the Private banks in Ethiopia show that all service
quality dimensions are positively correlated with customer satisfaction , 10 showing
that the quality of banking service as essential prerequisite for having customers
that are satisfied with the service quality being delivered. Also nowadays
commercial banks due to high pressure of globalization and fierce competition
among themselves and volatile and dynamic market are continuously looking for
new ways so that they will be in a position to add value to their services being
offered to their customers (Muyeed, 2012). Accordingly due to the fact that
financial services are competing in the market place most of the time with
"undifferentiated products" service quality is a prime competitive tool (Stafford,
1996) cited in Muyeed (2012). Ndamnsa and Hamde(2013) pointed out service
quality as one of the basic aspects among other factors which has significant
contribution to business growth and leading position in today's fierce competition
of the business environment, in which service quality has a significant role in the
service sector, because of its untouchable nature which cannot be disclosed to
customers to make judgment before reaching the final decision.
Moreover, services are increasingly taken as a tool for sources of revenue across
regions, nations and across the globe(Mosahab etal.,2010) Thus building and
maintaining relationships with customer has become as service industries' main
strategy which enables them to have long term relations and corporate
performance via customer loyalty and customer retention(Anglova and Zeriki,
2011). According to Rahaman etal.(2011) service quality is an approach which
enables to manage the business processes so that it is feasible to ensure full
satisfaction of customers and this in turn will result to increasing competitiveness
and effectiveness of the given industry.
These show that for business firms to improve and maintain a better position in the
era of globalization, it demands to evaluate the performance of the services
provided to their customers (Ndamnsa and Hamde, 2013). This is due to the fact
that service quality is an essential gateway for customer satisfaction (Mosahab
etal.,2010). In the old days the game was "best cost " ,however, in the era of
globalization ,the game is "best cost and quality " underlying the quality of services
being offered as critical issue (Goetsch and Davis,2000). On the other hand,
Oh(1999) cited in Seth etal.(2004) has developed an integrative model of service
quality, customer value and customer satisfaction, whose central focus is mainly on
11 post purchase decision process. His model includes basic variables such as
perceptions, service quality, consumer satisfaction, customer value and intentions
to repurchase.
He contends that the model provides evidence in which customer value has a
significant role in customer’s postpurchase decision-making process and it is an
immediate antecedent to customer satisfaction and repurchase intentions.
2.1.1.2. Characteristics of Service and service quality Services can be defined as "
any activity or benefits that one part can offer to another that is essentially
intangible and dose sot necessarily result in the ownership of anything". That is "
services are a form of product that consist of activities , benefits or satisfactions
offered to, for sale that are essentially intangible and does not result in the
ownership of anything" including banks, hotels ,airlines(Kotler and
Armstrong,2006:233) Regarding the categorization of the services in the techno-
based service delivery Dabholkar(1994) cited in Joseph etal.(1999) contends that
there are three different classification.
One of such classification is “who delivers the service", which is to mean, person
to person, by which employee employs the technology or consumer to technology
such as the application of ATM. The concern of the second classification is “where
the service is delivered. This is either on the service firms sites themselves, at
customer's home or office or at a 'neutral' site such as ATM located in the air port
".The third category is concerned with the "contact the customer has with the
service operation, either direct or indirect such as in the case of telephone
banking". Service quality has three unique features namely: intangibility,
heterogeneity, and inseparability of production and consumption and in the
absence of objective measures, an appropriate assessment of the service quality of
a firm is to measure consumers’ perceptions of quality (Parasuraman etal., 1988;
cited in Angelova and Zekiri, 2011). There are four basic characteristics of service
offerings. Services are "performances or actions" and cannot be touched, tasted,
felt or seen. For instance, health care services are actions that will be carried out
by the service providers and directed toward patients including surgery and
diagnosis treatment.
According to this characteristics in one hand, it is quite difficult for service
providers to readily display or easily communicate to customers the service which
is 12 intangible, on the other, it is quite challenging for customers to assess the
quality of the service being delivered (Zeithmal and Bitner,2004). The second
characteristics of service are heterogeneity. Because services are performances
that are performed by humans, there is little chances where two services being
performed for two customers will be exactly alike . Moreover , it is a hard fact that
there is no way that two customers are exactly alike , as they have their own
peculiar experience and performances and evaluate the services being offered to
them uniquely in their own ways and perspectives.
2.1.1.3. Dimensions and Determinates of Service Quality Gronroos(1984)cited in
Seth etal.(2004) in his technical and functional quality model states that to
compete successfully a firm need to have a comprehensive understanding
regarding customers perceptions of the quality and the way the service quality is
being delivered is influenced.
He contends that managing service quality means the service provider should
match the expected and perceived service to each other in such a way that
customer satisfaction will be attained. He further identified that the three
components of service quality including technical, functional and image. Technical
quality is the quality of what customer really gains following her or his interaction
with the service provider and is so essential to her or his evaluation regarding the
quality of service. The functional quality refers to how a customer gets the
technical outcome, which is so essential to her or his views of the service being
delivered to her or him. Finally the image is quite significant to the service provider
, by which it can built mostly through technical and functional quality of service
including the other factors such as word of mouth , pricing and public relations.
Accordingly Gronroos(1984) pointed out that the process of functionality quality
shows " how" the service delivered whereas technical quality or outcome meant
that "what" customers receive , the benefits of the service being delivered. 2.1.1.4
Traditional Service Quality and SERVQUAL By traditional service quality
Parasurman etal.(2005) meant that the quality of all nonelectronic based
customers that have interactions and expectations with companies. 14
Comparatively the traditional banking system is accompanied by tiresome
authentication and verification procedures which are time consuming and forcing
customers to incur costs by visiting a firm now and then in person (Saleem and
Rashid, 2011).
Service quality denotes the difference between customers' expectations of how a
firm need to carry out and the service performance which customers
perceive(Alanezi etal.,2010).To entertain such practices(measuring service quality)
there are many models that have been developed by different scholars ,of which
some are intended to focus on expectations and marginalize importance, for
instance, SERVQAL. Sangeetha and Mahalingam(2011) state that the issue of
managing perceived service quality entails that the firms should match the
expected service and perceived service to each other , in such a way that customer
satisfaction would be attained.
Parasuraman etal.(1985) identified ten determinants of service process quality
which were collapsed into five dimensions. Following this distillation the SERVQUAL
model show up in the sphere (Gupta and Bansal, 2012) and it was originally
designed out to measure the service quality ,that was based on the premise that
service quality is the difference between customers expectations and the
evaluation of the service outcome they received. Accordingly SERVQUAL employs
about 22 items ,to measure the five dimensions namely:
tangible ,reliability ,responsiveness, assurance and empathy. Generally studies
show that these five dimensions were relevant for banking , insurance, repair and
maintenance ,retail and business service (Clow and Kurz,2003).
In light of the traditional service quality measurement setting customer satisfaction
was measured using the SERVQUAL model (Parasuraman etal.,1988)by adopting
ExpectancyDisconfirmation Model, Performance only Model/SERVPERF( Cronin and
Taylor,1992) or American ASCI(Angelova and Zekiri, 2011). Among these the most
extensively employed instrument to assess quality service being delivered which
influences customer satisfaction in the traditional service settings was the
SERVQUAL model. However , despite SERVQUAL's wider range of applications
criticism came out to surface because of its dimensionality ,lack of universality and
fall short of generalizations (Cronin and Taylor 1992; Brown etal.,1993) cited in
Gupta and Bansal(2012).
For instance, the SERVQAUL model(Parasuraman etal.,1985,1988))shows that
customers' perception of service quality was influenced by series of expectations-
performance gaps. However, for SERVQUAL15 model to be properly functional,
expectations should be constant but Carman(1990) cited in Joseph etal.(1999)
came out with the notion that expectations do actually change with familiarity of
service. To overcome the shortcomings of SERVQUAL Cronin and Taylor(1992)
came out with a new scale called SERVSERF to measure the service quality cited in
(Gupta and Bansal ,2012;Seth etal.,2004). These two scholars in their study of
performance only model tried to examine the conceptualization and measurement
of service quality and its association with consumer satisfaction and purchase
intentions. They have made a comparison by computing the difference scores with
perception and came out with a conclusion that, perceptions only are better
predictor of service quality.
Furthermore, following the shortcomings of the framework of SERVQUAL, with
respect to conceptualization and measurement of service quality Cronin and Taylor
(1992) cited in Seth etal.(2004)proposed performance only measurement of service
quality(SERVPERF). Most importantly, they argued that it is Performance rather
than “Performance-Expectation” which can determine the service quality,
proposing that service quality is evaluated by perceptions only regardless of
expectations and importance weights. Generally studies show that in assessing
service quality SERVQUAL is not appropriate for conceptualizing the service quality
construct, due to the inadequacy of expectation /performance gap model that
underlines the conceptual development of the SERVQUAL scale, showing that the
underlying framework of SERVQUAL is not appropriate enough.
The basic difference between the two is that SERVQUAL dimensions conceptualize
service quality by comparing the perceptions of the service being received with
expectations whereas SERVSERF entertains only the perception of service quality,
the performance only. Seth etal.(2004) findings' show that service quality relies on
technical quality, functional quality and corporate image of the organization in
consideration which is consistent with prior findings such as (Gronroos, 1984). They
further state that service quality is an antecedent of consumer satisfaction and
may have a better effect on purchase intentions. "service quality is an antecedent
of consumer satisfaction, which has a significant effect on purchase intentions"
(Cronin and Taylor,1992)cited in Seth etal.(2004:920). Accordingly they have made
an attempt to make an assessment regarding the various service quality models
ranging from conventional personalized services to the internet-enabled services
including the organizational and behavioral aspects. From their assessment they
concluded that the service 16 quality end result and measurement is dependent on
type of service setting, situation, time and need factors. However, customers may
or may not utilize all of SERVQUAL dimensions in determining service quality
perception. For instance, in a remote encounter such as with an ATM banking
services empathy might not be relevant dimensions, showing that among these
dimensions, their relevancy will vary (Zeithmal and Bitner,2004).
Also some academicians tried to apply the SERVQUAL with the e- service quality
context and yet they have identified that SERVQUAL is problematic and may not be
an appropriate to measure the e- service quality. The very reason behind such
argument is that e-service quality is different from the traditional service setting.
Seth etal.(2004) state that in today's liberalized economy, to remain competitive
and gain competitive edge , service providers are increasingly providing to their
customers techno-based service options. Firms have employed techno-based
service with the purpose of reducing costs and creating value-added services for
their customers. For instance, Furey(1991)cited in Seth etal.(2004)proposes that IT
is so essential for enhancing service quality as it increases convenience, rendering
extra services, and collecting service performance information for management
use.
As the importance of the application of IT increased from day to day scholars get
motivated to have better insights regarding " how service customers evaluate IT-
based services and how their evaluations affect their perceptions of the overall
service quality of the service provider and of their own satisfaction"(Seth
etal.,2004:20). Accordingly this notion paved the road for the developments of
related models by different scholars such as (Berkley and Gupta, 1994; Dabholkar,
1996; Broderick and Vachirapornpuk,2002; Zhu etal., 2002; Santos, 2003)cited in
Seth etal.(2004:20). Thus in due course the details of the issue of the technology-
based service in the banking industry and its importance over the traditional
banking system will be discussed in details.
2.1.2 Technology Based Theoretical Framework
2.1.2.1. Technological Background As of the mid of 1990's , a radical shift has been
made in the banking industry regarding the channel of delivery through the
implementation of self service channels, that is via e- banking such as ATM and
internet banking( Musiime and Ramadhan, 2011 ).
Following such radical 17 shift in the banking industry channel of delivery,
customers as well have made a shift from traditional banking to the online
transaction system (Qureshi etal.,2008) cited in Musiime and Ramadhan(2011 ).
The basic driving force behind such shift is related to perceived
usefulness ,perceived ease of use , security and privacy (Musiime and Ramadhan,
2011 ). Kotler and Armstrong (2006)state that the "technology boom " has created
various ways which enable firms to learn about and track customers. Most
importantly, to create products and services which are finely tailored to the
individual customer needs, they state that the technology is providing a valuable
support business companies in such a way that they are in a position to reach out
their products and services more efficiently and effectively than ever before. In this
way technology has brought new ways of communication and tools which enables
companies to reach out their targeted customers at ease. For instance, through
ecommerce customers have arrays of opportunities to learn regarding the design ,
order and payment for the products and services of their choices directly from
home without visiting the showrooms physically.
So in today's competitive environment where "knowledge is king" a well designed
technology is quite essential in order to extend human capabilities so that
organizational competitiveness can be enhanced( Goetsch and Davis,
2000).Studies show that technological advancement is shaping the field and
influencing the practices of service marketing and significantly changing the nature
of the services which results in to tremendous potential, for the new service
offering. This means the technological development profoundly changing the way
services are delivered, putting both customers and service providers on the better
position in order to get and render more efficient and customized services
respectively. Most importantly, the technological development facilitates the global
reach of services which had been historically tied to the home locations (Zeithamal
and Bitner, 2004).
In this case, the development of technological innovations, have created
opportunities for organizations to provide superior services to improve customers
satisfactions. The number of bank customers having performance in using self
service delivery mode is also increasing which is attributed to the increase in
technological innovations in executing the transactions (Omar et al., 2011) .
Accordingly technology has been the basic force behind services innovations which
we have 18 now taken it for granted, including innovations automated voice mail,
ATM, online banking and electronic banking (Zeithamal and Bitner, 2004). Besides
rendering opportunities for new service offerings the technology is making
available vehicles to deliver existing services in more accessible, convenient and
efficient manners. For instance, technology such as ATM facilitates the basic
customers service functions including bill paying, checking account records,
tracking orders, transaction and information seeking ,applying for loans and shift
money among accounts without visiting branches.
In short technology has changed once and for all the customer service approach.
Above all, through self service technologies customers are in a position to serve
themselves in more effective and efficient manner which has never been
imaginable in the "old days". Joseph and Stone (2003) state that the installment of
customer friendly technology such as ATM ,telephone and internet banking as a
means to deliver the traditional banking and thereby to maintain customer loyalty
and increase market share. Because of these crucial importance banks make huge
investment in technology with the aim of controlling cost, attracting potential
customers and meeting the convenience and technical expectations of the existing
customers (Joseph and Stone, 2003).
Also the basic reason behind such huge investments and implementations by
banks is related to reduce cost of delivery through personnel and thereby to meet
the challenges posed by competitors that are highly innovative with technological
advancement (Howcraft and Beckett ,1996 ; Byers and Lederer ,2001 and Kelly,
1989) cited in Joseph and Stone (2003). The beauty of the technology is that for
employees it can render a valuable support in making them more effective and
efficient to deliver the required service to the intended customer at the right time.
Above all, employees will be in a position to customize the service they render in
such a way that, their offerings can fit individual customer needs. Hence the
technology has comes out in the potential for reaching out to customers across the
globe . That is , "Advances in communication technology have made people from
all over the world electronic neighbors and electronic customers" Goetsch and
Davis(2000:25).
As a result to align business strategies that enable them to be innovative, efficient
in functional operations and offer better service , competitive banks have made
huge investment to adapt the technology (Saleem and Rashid, 2011) and banks
are fundamentally shifting from traditional way of banking to branchless mode of
banking, by adopting the technology such as ATM (Angelova and Zekiri, 2011). 19
According to Seth etal.(2004)to gain a competitive edge an organization need to
employ the technology in such a way that to gather information regarding market
demands and exchange it between organizations with the aim of enhancing the
service quality.
They further state that researchers and managers are striving to learn the details
regarding components of service quality in their organizations targeting
achievement of customer satisfaction and increased profitability. Accordingly it is
predicted that conceptual models in service quality put in a position management
to examine quality problems and thereby help them in planning for the
commencement of a quality improvement scheme which is essential for improving
efficiency, profitability and overall performance.
2.1.2.2. Technology Adoption Theory According to Lee etal.(2008)cited in
Mulugeta(2013) there are theoretical approaches of consumers' adoption of
technology namely the diffusion of Innovation(DI) model and the technology
acceptance (TAM)model. Accordingly they state that the focus of DI is on consumer
characteristics which are related to the amount of time it takes to adopt whereas
TAM assesses consumer technology adoption through predispositions including
overall feeling, attitudes and perceptions. Also according to Fishbein and Ajzen
(1975)cited in Eid(2011)the theory of reasoned action (TRA) explains the
relationship between attitudes, intentions and behaviors. Accordingly they state
that the TRA model posits that human beings make rational decisions in light of the
information available to them, and the best immediate determinant of a person's
behavior is intent. Also the TRA model shows that an individual’s belief towards a
behavior is an immediate determinant of his or her intention to carry out a
behavior. The Technology Acceptance Model( TAM) Davis (1989) cited in
Eid(2011)contends that the intention to accept or use a new technology is
determined by its perceived usefulness and perceived ease of use. Expectation-
Confirmation Theory (ECT) which was proposed by Oliver (1980)cited in
Eid(2011)also states that consumers firstly form an initial expectation prior to
purchase, and then build perceptions about the performance of the consumed
product/service after a period of initial consumption. Eid(2011) states that then
consumers will decide on their level of satisfaction based on the extent to which
their expectation is confirmed through comparison of 20 the actual performance of
the product/service against their initial expectation of the performance. Scholars
such as Burke(2002) states that there are many factors affecting consumer
adoption and use of the technologies such as interactive shopping technologies
may provide extensive product selections, powerful search and screening tools,
and volumes of information. Hoyer and MacInnis(2010)classify those factors that
affect adoption of the technology including perceived value, uncertainty, consumer
learning requirements, social relevance legitimacy and adaptability and social
factors. Perceived ease of use and usefulness are the perception of consumers
regarding the innovation in question(Davis,1989) cited in Mulugeta(2013).
Hoyer and MacInnis(2010)state that consumers may decide to adopt for instance
purchase or resist adopting a new offering such as an innovation and adoption of
an innovation will occur as long as consumers do not resist that innovation.
Consumers resist the technology for various reasons, one of which is, it is simpler
or seems preferable for them to continue using a more familiar product or service.
Also customers may resist the innovation because of risks associated with it. For
instance, Khan(2010) state that old ages do not use the technology due to fear of
risks they associate with the technology. Also compatibility issue may force
customers from adopting the technology. This means "consumers resist new
technologies until they perceive that the negative effects from having to deal with
something new are outweighed by the positive effects the new product might
bring". For instance, Battles between incompatible technology standards, have
affected adoption of products such as DVD players in the past two decades (Hoyer
and MacInnis, 2010:447).
Moreover the complexity of technology may reduce the adoption of technology and
force the firm to incur costs to implement(Saleem and Rashid,2011). Hoyer and
MacInnis (2010) state that consumers differ in when they adopt an innovation and
the timing of consumers in adopting the technology. The five groups are
innovators, early adopters, the early majority, the late majority and laggards.
Characteristics of Adopter Groups According to Hoyer and MacInnis(2010)the
adopter groups tend to exhibit different characteristics. For instance, innovators
are enthusiastic regarding technology and they want to be the first to get a new
high-tech product, even in the presence of a few bugs or inefficiencies. Early
adopters are visionaries in the product category in which they admire a
technologically new product not for its features rather for its abilities to create a
revolutionary breakthrough in how things get performed.
These groups know that additional products that will follow the new product’s
introduction which may be cheaper, faster, and easier to use than the innovation
on the market right now and yet they do not await for the future products. On the
other hand, the early majority are pragmatists, in which their focus is on
innovations that provide incremental, predictable improvements on an existing
technology. As they do not like risk, they pay due care regarding who is making the
innovation as well as the reputation of the company. Late-majority consumers are
mainly conservative, cautious of progress, and depends on tradition in which they
fear regarding the high tech products not to be stung They prefer to buy
preassembled products that include everything in a single service. Finally the
laggards are those who are the slowest group to adopt the technology .Generally
Saleem and Rashid(2011)contend that the technology advancement increases the
usefulness in which it leads to higher customer satisfaction.
2.1.2.3.E-service Quality Studies show that the age of e-business has been
breaking out unconventional way of performing business and one of such
astonishing techno-based service delivery(e-business) is e-banking .Accordingly
studies pointed out that the advent of such e-business which has been
accompanied with technological innovations and globalization is urging firms to
rethink and redefine their business operations in light of value chain reengineering
and restructuring business models. Worldwide, e-banking such as ATM banking
service has emerged in the 1990s as one of the fastest means of service delivery in
the service industry such as banks(Saleem and Rashied, 2011) . According to Allen
and Barr(1996) cited in Zaman and Chowdhury (2012) e-service quality/techno-
enabled self service is any banking service which is rendered by employing
computer -controlled systems based on the application of IT without involvement of
banks usual branch. The trend in the banking industry has undergone through
various economic revolutions , passing from cash economy to cheque economy and
converted to plastic and card economy(Pahwa and Saxena, 2011). Some call the
present globalised era a "digital economy".
Accordingly in the past decade the banking industry has been highly affected by
the advancement of information and communication technology by which banks
and other financial institutions have made improvement on their services through
the implementations and application of IT. In so doing technology has become as
one of the essential tool which facilitates banks' organizational structures ,business
strategies, customers services and related functions (Zaman and Chowdhury,
2012). One of the imputes of such technological advancement in the banking
industry is its ability in bringing distant customers come closer( Howcraft and
Drukin, 2003) cited in Zaman and Chowdhury(2012). Rust and Lemon(2001) cited
in Seth etal.(2004) defined E-service as "the role of service in cyberspace".
According to Saleem and Rashid(2010) the banking industry is driven by
technological innovations and market uncertainty and competition ,which in turn
forced the business firms to shift from traditional banking to technology based
banking. Accordingly the technological innovation has provided an astonishing
plate form in such a way that to remove obstacles and limitations in the traditional
service setting. Simply put the astonishing innovations is in a position to cutoff the
requirements of office set up and other utilities ,reduced numbers and cost of staff
customers at the branch ,save firms investment on staff employee and thereby
allow firms to carry out the required activities under the supervisions of few skilled
IT professionals( Saleem and Rashid, 2010). Moreover, the e- services are
revolutionizing the way business is performed in the banking industry. Accordingly
the technobased business models have replaced the traditional banking system
and banks are reevaluating the business process designs and customer relationship
management strategies( Kumbhar,2011). Zhu et al.(2002) cited in Seth etal.
(2004)in their study on IT-based model demonstrated that service providers
employ IT for the purpose of cost reduction and creating value-added services for
their customers. And yet studies show that measuring the quality of e- service
quality is quite difficult and complicated. The reason behind the difficulties and
complication of measuring the quality of eservice quality in light of e-retailing is
that unlike the traditional retailing ,e-retailing is not a single uniform marketing
activities(Francis and White, 2004 ). Voss(2003)states that eretailing based service
systems differ from the traditional one in terms of channel delivery, service content
and product type cited in (Swaid and Wigand, 2009). Wolfinbarger and Gilly (2003)
developed an instrument in such a way that to measure eservice quality by taking
into account factors like website design ,reliability/fulfillment ,privacy/security and
customer service( cited in Swaid and Wignad,2009). Voss(2003) cited in Swaid and
Wignad(2009)contends that the SERVQUAL model should be reformulated in such a
way that it can fit the unique setting of the online stores . This is to mean that to
use for measuring the e-service quality such as online stores the SERVQUAL need
to be reformulated and reworded in such a way that it can fit the online store
setting applications and addresses the issues related to the requirements of the e-
service quality appropriately. Swaid and Wignad(2009) came out with six
dimensions regarding the e-service quality measurement such as website
usability , information quality , reliability ,responsiveness ,assurance and
personalization. Accordingly they found out that with the exception of
personalization e-service quality dimensions are related to the various types of
customers loyalty.
Furthermore, they sate that the perception of reliability and assurance are the
essential factors which have effect on favorable loyalty aspects including
repurchase intentions ,communicating positive word of mouth and loyalty.
2.1.2.4. ATM Service Quality
2.1.2.4.1 ATM and its benefits Studies show that the technological revolution came
to surface in the banking industry in the 1950s with the implementation of the
automated book keeping machines at banks and the history of ATM dates back to
the 1960s, the time at which the first ATM was invented by John Shepherd-Barron.
The machine was implemented for the first time in the banking industry by
Barclays bank in 1967, Wikimedia E-encyclopedia cited in Kumbhar(2011). The first
ATM which has been implemented in US in 1968 came out with only a cash
dispenser(Zaman and Chowdhury, 2012). ATM is "an electronic device which allows
a bank's customers to make cash withdrawals and check their balances at any time
without the need for human teller"(Islam etal.,2005: 3) They state that ATM is an
innovation which can mechanically accept deposits ,transfer funds between
accounts and collect bills. Also ATM is defined as "an automatic teller machine
which is used to save the cost and reach-ability of a bank ;by satisfying customer
needs"(Vasumathi and Dhanavanthan, 2010:469 ). They state that ATM service can
be taken as an indicator for the development of IT in the banking sector.
Accordingly, there are two types of ATMs namely: the branch ATM and the out
branch ATM. In the branches ATM, the branches are in a position to take care the
ATM which is located in their respective branches where as the out of branch ATMs
such as those located in department store will be entertained by cash centers.
ATM has several contribution to the banking industry, on one hand it add values to
customer satisfaction in terms of giving quality services , on the other it enables,
the bank to gain more competitive advantage over their rivals through the
provision of superior service delivery (Gbandeyan and Gbonda, 2011;Omar
etal.,2011). According to Khan (2010) the use of ATM has rendered new ventures
regarding the service quality dimensions and banks are delivering new choices and
channel alternatives to their customers. ATM, which is the most commonly utilized
electronic distribution channel, allows customers to carry out their foremost
banking transactions, such as deposits and withdrawals, 24 hours a day (Davies et
al.,1996) cited in ALHawari etal.(2005). Cabas(2001) cited in Khan(2010) pointed
out that investment opportunities , cost reduction, customers satisfaction and
competitiveness are taken as the basic motives behind the installation and addition
of new ATM to the existing network. This is because technological developments
such as ATM has devised ways to organizations in order to offer superior services
for customers' satisfaction(Surjadaja etal.,2000)cited in Khan(2010). Moreover,
Moutinho(1992) pointed out that ATM facilities came out in speed of transactions
and saved time of customers.
2.1.2.4.2 Dimensions of ATM Service Quality The review of literature shows that
there are different models and dimensions of ATM service quality and different
scholars have proposed and developed various ATM service quality dimensions. For
instance AL-Hawari etal.(2005)proposed five items of ATM service quality
dimensions including sufficient number of ATM, secure locations , user friendly
system, conveniently location and ATM functions. Khan(2010) identified
convenience , efficient operation , security and privacy ,reliability and
responsiveness as the dimensions of ATM service quality. Lovelock(2000) cited in
Khan(2010) singled out that secure, convenient location , adequate number of ATM
, user friendly system and functionality of ATM are the dimensions of ATM service
quality . Dilijonas etal.(2009) identified five ATM dimensions namely: sufficient
number of ATMs, search locations , user friendly. convenient locations and ATM
functionality(such as withdrawal , money transfer and balance checking). Ganguli
and Roy(2010) came out with four dimensions namely customer service ,
technology security and information quality ,technology convenience and
technology usage easiness and reliability. Joseph and Stone(2003) in their study
regarding the US bank customers' perception of the impact of technology on
service delivery came out with accurate ATM and electronic banking ,customer
service ,excellent telephone and internet banking, secure and flexible service, easy
and convenient banking and personalized service as the essential dimensions of
the technology based banking service quality including ATM. Sangeetha(2012)has
identified different dimensions of technology interface service quality including
ATM ,Telephone banking ,Internet banking, Call center , Customer perception of
price and Core services and Queue systems.
2.1.2.4.3.Service Quality, Customer Satisfaction, and Dissatisfaction in ATM
Customer satisfaction has been a central concept in the literature of marketing and
a goal of firms to attain. The primary focus of marketing is to connect with
customers by building a strong customer relationship so that they can meet
customers' expectations and for customer focused firms , customer satisfaction is
both a " goal and a tool "(Angelova and Zekir, 2011).The changing business
environment following the emerging technology is creating challenges and
opportunities to business firms and the change of customers' perceptions about
quality service is intensifying the challenge.(Lewis ,1994) cited in (Khan ,2010).
This means, the development of technological innovations have created a
conducive opportunity for organization to provide superior services to improve
customer satisfaction and the number of customers having preferences in using
self service delivery mode is increasing and the preference is attributed to the
increase of innovations in executing the transactions(Omar etal., 2011).
Sureshchandar etal.(2002) indicate an existence of two- way relationship between
satisfaction and service quality cited in (Mosahab etal.,2010) while Mohammad and
Alhamadani(2011) state that customer satisfaction is highly influenced by
customers perceptions of the quality of service being delivered. Pahwa and
Saxena's(2011) findings show that customers are highly satisfied with availability
of cash in ATMs ,quality of currency notes in the ATMs as primary criteria by
customers and also equally satisfied with promptness delivery of ATM cards and
correctness of cash withdrawal made from the ATM.
However, on the other side of the coin their findings show that features such as
non-availability of compliant books, location issues and insufficient number of ATMs
as well as the failure of not having power back up in case of power break dawn
were the source for the dissatisfaction with the service being delivered.
Bloemer(1998) cited in Mosahab etal.(2010)proposed a model which shows that
the mental picture , service quality and customer satisfaction could influence
loyalty. Their findings came out with the view that service quality influences loyalty
both directly and indirectly through customer satisfaction. Caruana(2002) cited in
Mosahab etal.(2010)in the Malta's banks came out with conclusion that customer
satisfaction acts as mediators in the effect of service quality on customer loyalty
while Mircholi etal.(2013) state that delivering high quality service will result to an
increase in customer satisfaction and profit. Davies etal.(1996) cited in Khan(2010)
investigated factors that are influential regarding customers' satisfaction of ATM
service quality such as costs related to the use of ATM and efficient functions of
ATM. Hokanson(1995) cited in Angelova and Zekiri(2011) identifies factors that
affect customer satisfaction including friendly employees, accuracy of billing,
competitive pricing and service quality. Angelova and Zekiri(2011) show that
factors such as service quality and perceived value are the essential constructs
which affects the customer satisfaction with electronic or mobile service.
The findings of Malhotra and Galletta(1999) cited in Saleem and
Rashid(2011)shows that the technological advancement has made by firms leads
to increase in customer's ease and usage, which in turn increased the level of
satisfaction. Saleem and Rashid(2011)contend that to make certain and ensure
that customers adopt the technology , it need to be efficient ,quick ,and easy to
understand and use by customers at ease. Chmielar(2002)cited in Saleem and
Rashid(2011)states that functional diversification , service quality, versatility and
efficiency of customer inquire service are the key factors in measuring customer
satisfaction. According to Levessque and McDougall(1996) cited in Sangeetha and
Mahlingam(2011) high service quality comes out with customers satisfaction and
loyalty, greater willingness to share to somebody else, minimization of complaints
and enhanced customer retention rates. Service quality is an essential tool in order
to measure customer satisfaction(Pitt etal.,1995) cited in Paul(2013). Accordingly
there exist a close relationship between service quality and customer satisfaction
and it is usually taken as the critical prerequisite and determinant of
competitiveness for launching and sustaining, satisfying relationships with
customers( Rasheed and Latif 2011) and it is an essential indicator of customer
satisfaction (Spreng and Machoy, 1996) cited in Rasheed and Latif(2011). Studies
show that service quality has direct link with customer satisfaction( Parasuraman
etal.,1988) cited in Khan(2010).
Hallowell(1996) states that in the long term customer satisfaction and loyalty has
been perceived as the paramount performance for the firms' performance. Due to
globalization and liberalization, which affect economies of both developed and
developing nations across the globe, the focus areas of organizations are shifted
from profits maximizations to maximize profits via increased customer satisfaction.
Hurley and Estelmi(1998) cited in Gupta and Bansal(2012) singled out that whereas
service quality and satisfaction are distinct constructs, a causal relationship exists
between the two ,and that perceptions of service quality affects feelings of
satisfaction which are influential on future purchase behavior. Customer
satisfaction in the online environment known as "E-satisfaction" (Gupta and
Bansal,2012). "Customer satisfaction is influenced by customers’ perceptions of
quality "(Zeithaml and Bitner, 2004:87) while "Service quality is an antecedent of
the broader concept of customer satisfaction" (Gotlieb et al. ,1994; Buttle, 1996;
Zeithaml and Bitner, 1996; Lee et al., 2000)."The relationship between service
quality and loyalty is mediated by satisfaction" (Caruana, 2002; Fullerton and
Taylor, 2002) cited in Mohammad and Alhamadani(2011:4). According to
Mohammad and Alhamasani's(2011) findings, service quality is an essential
antecedent of customer satisfaction and consistent with prior findings (Gotlieb et
al., 1994; Buttle, 1996; Zeithaml and Bitner ,1996; Lee et al., 2000)cited in
Mohammad and Alhamadani's(2011).
Amirzadeh and Mousavi's(2011)findings show that security and privacy is the most
indicators of the ATM users while suitable place of ATM and integrated interbank
network are the essential factors which are in a position to increase the level of
customer satisfaction. Khan(2010) concluded that banks need to proactively
monitor customer preferences in relation to the channel alternatives for effective
responsiveness. Most importantly, he contends that banks need to focus on
essential aspects such as security and privacy and efficient operation of ATM and
augment and diversify their service offering through ATM in such a way that to
build strong, long lasting and sustainable relationship with customers. Accordingly
upgrading ATM systems in such a way that to speed up the machine to save time
and money, providing sufficient security to reduce theft of money, identification of
factors which affect customer dissatisfaction and promoting the culture of internet
banking and service usage are the main factors that should be taken into account
to make the technology enabled self service banking more effective ,satisfy
customers and thereby foster loyalty and long lasting relationship. Ganguli and
Roy's(2010) findings show that customer loyalty is influenced positively and
significantly by customer satisfaction.
They have identified that the service quality dimensions in relation to technology
based banking service (generic technology)which can be applied for measuring
service quality regardless of the type of technology being used by the banks for the
purpose of service delivery. Their study renders more insights regarding the
consumption process of the retail banking customers in today's volatile and
changing scenario of banking service , that is leveraging up on technology for the
purpose of service delivery and employing such technology as a weapon for
competitive edge and differentiation. Accordingly they further contended that the
identified dimensions would be employed by banks managers as guidelines as they
will aid them to gain comprehensive insights regarding the particular dimensions
which customers usually give highest priority in the process of evaluating the
service delivery of banks through technology based channel alternatives. Their
study further cleared out that the generic service quality dimensions have impact
on customer satisfaction and customer loyalty. Accordingly it is found out that
customer satisfaction is positively and significantly affected by technology usage
easiness ,reliability and customer service.
Studies show that there is significant correlation between ATM service quality and
ATM satisfaction level and service quality is taken as an antecedent of customer
satisfaction( Oliver 1993; Sprent and Mackoy, 1996). Dilijonas etal(2009) found out
that more than 50% of respondents agreed that the use of ATM is convenient and
time saving as it allows them free movement in providing cash acting like mini,
banking to those customers who are in need of cash. Moreover ,despite the
restriction and limitations of amount of cash withdrawal ,it fulfills the need of the
customers. Accordingly the authors suggest that banks need to pay attention to
essential aspects such as user-friendliness ,ATM functionality and availability of
transaction receipts, security and privacy, regular monitoring and maintenance of
ATMs. Mojoodi etal.(2013) tried to present a model which can be applied to
examine service quality dimensions related to banking technologies, regardless of
the type of technology being employed for the purpose of service delivery by the
banks. The model can be taken as generic one which will be applicable to any type
of technology in the banking industry. Accordingly , the model and identified
dimensions will be used as guidelines for managers in the provisions of technology-
based banking services. The model will aid bank managers to gain better
understanding regarding the specific dimensions which customers give highest
priority in the process of evaluation of technology-based self service banking.
Generally studies show that the different models or dimensions of service quality
have been identified thus far vary in the degree of emphasizes given, which is
mainly attributed to the objective of the banks. For instance, Ganguli and
Roy(2010) in their study have found out four dimensions including security ,
convenience ,easiness and customer service.
Mojoodi etal.(2013)state that in light of their study the assessment they have made
which is consistent with prior scholars' findings, have made measurement of
easiness ,certainty, convenience ,supporting services and employee's knowledge
factors as the basic dimensions of service quality. From the evaluation of the eight
dimensions regarding their effects on customer satisfaction and customer loyalty ,
Mojoodi etal.(2013) came out with a conclusion that variables such as
customization and comprehensiveness have no effect on customer loyalty and yet
they have enduring effects on customer satisfaction. From the aforementioned
literatures that have been conducted by different scholars across the globe the
student researcher has understood that some customers are welcoming the
emerging technology while others do not. The very reasons for such like and dislike
of use of ATM by customers are enormous.
Customers prefer ATM for it is time saving , avoid long queue in banks ,easy to
use ,readily available and can be accessed from anywhere without personal contact
of bank's employees. Khan(2012) on his part suggests that the youth prefer to use
innovative and technology based service offering such as ATM while the olds don't
make use of it, due to the perceived risk of failure complexity ,security and
absence of personalized service (Moutinho,1992) cite in Khan(2010). Also some
customers are in favor of technology based self service instead of traditional
service as it is easy to use and avoid interaction with human-teller( Meuter etal.,
2000) cited in Dabholkar(1996). Dissatisfaction is the main reason for why
customers switch banks (Manrai and Manrai, 2007)and the most essential
determinant of customer satisfaction is service quality being perceived by clients
(Titako etal.,2012).
Sivadaas and Baker-Prewitt(2000)cited in Singh(2006:4) contends that "there is an
increasing recognition that the ultimate objective of customer satisfaction
measurement should be customer loyalty" Furthermore, Fornell(1992)cited in
Singh(2006) pointed out that high customer satisfaction will come out with
increased loyalty which is a benefit for firms and customers will be less
overwhelmed from competitors while Anton(1996) cited in Singh(2006)states that
satisfaction is positively related to repurchase intentions , a possibility of
recommending a product or service , loyalty and profitability. And yet Sivadas and
Baker-Prewitt(2000)cited in Singh(2006:5) contend that "satisfaction in itself will
not be translated into loyalty" rather it is a prerequisite for maintaining a suitable
attitude and for recommendation and repeated purchase from the firms store.
Clarke(2001)cited in Singh(2006)on his part argues that a business whose focus is
merely on customer satisfaction will soon run to risk of becoming on
"undifferentiated brand" in which customer may think that the firm is running just
to meet the performance criteria in the category. Thus firms need not run just to
satisfy customers ,rather they have to go further ahead looking out for ways that
enable them to foster a sense of loyalty and long term relationship development.
Clarke(2001)cited in Singh(2006:4)further states that "customer satisfaction is
really no more than the price of entry to a category ". Singh (2006) on his part
states that to be effective satisfaction need to be in a position to create loyalty
among customers. He contends that satisfaction is a measure of how well
expectations of customers are getting fulfilled whereas customer loyalty is
measuring how likely a customer is committed to purchase repeatedly an engage
in relationship activities. Thus satisfaction may not be taken as accurate indicators
of loyalty. Most importantly Singh(2006:4)suggests that "satisfaction is a necessary
condition but not a sufficient condition for loyalty". Simply put, it is possible to
achieve satisfaction without loyalty and yet it is so difficult and unlikely to attain
loyalty without satisfaction .
Anderson and Jacobsen (2000)cited in Singh(2006)state that customer loyalty is
the end result of an organization's effort in creating a benefit for a customer so
that they will be in a favorable condition to maintain and increase their purchase
from that organization. They further state that true customer loyalty is maintained
provided that the customer becomes to the position of advocating for the company
without having any incentive to do so. Thus Singh(2006) concluded that, though
customer satisfaction will not be taken as a guarantee for having repurchase on the
part of the customer it has its own role to ensure and foster customer loyalty.
2.1.3.Future Prospects of ATM According to Zaman and Chowdhury (2012:1)for
more than a decade, the rapid advancement in information and communication
technology has significantly and drastically affected the banking industry across
the globe. As a result banks and other financial institutions have forced to improve
their services through the application of Information Technologies, which has
become a tool that facilitates banks' organizational structures, business strategies,
customer services and related functions.
They state that the recent " 'Information Technology (IT) revolution' has exerted
far-reaching impact on economics, in general, and the financial service industry, in
particular" and from the financial service industry, the banking sector was the first
to entertain such rapid globalization and get benefited significantly from that
development. In the rest of the world the application of technology based banking
service such as ATM is well developed while in Ethiopia such practice is quite low.
Actually CBE has been playing a significant role in providing technology based
banking services such as ATM in the past one decade , point of sales and recently
mobile banking and internet banking . The trend shows that without the application
of the technology conducting banking service may not be achievable in the coming
years. As a result banks in Ethiopia, CBE in focus should pave a way to this
emerging banking technology in such a way that the challenges will be minimized
and opportunities will be effectively utilized.
2.1.3.1 Opportunities for ATM Banking Service Studies show that the banking
industry claims that through the application of the emerging new banking
technology, they will be able to improve customer service level and tie their
customers closer to the bank (Hasan etal.,2010)cited in Zaman and
Chowdury(2012). One of such essential implications of technological advancement
in banking is that it makes distant customers come closer (Howcroft and Durkin,
2003 ; Zaman and Chowdury ,2012). This shows that as long as the stated owned
bank, CBE determined to work hard and armed itself with such emerging banking
technology to reach out its customers the future of banking system with such
astonishing technology is so bright and sustainable. Actually, according to the
interview which was held with the CBE E-payment department business solution
section the bank is in plan to introduce new banking technologies and add new
financial services, which will play a vital role in bringing efficiency to the techno-
based banking customer service which in turn enhance the service level being
delivered to the level of customers demand and thereby enable to reap the return
to be gained from such a practice.
In this regard Chandrasekhar and Sonar (2008) and Ali( 2010) cited in Zaman and
Chowdury(2012) state that banks will be in a position to reap the benefits of IT as
long as they pay due attention to technological progress and efficiencies on the
input and output sides. On the other hand, Lynch (1996) cited in Zamn and
Chowdury(2012) state that the technological benefit is twofold: firstly it is in a
position to reduce the cost of production of financial services whereas secondly, it
enables to reduce the cost of delivery of the services to the customers. This means
the technology is in position to maintain a lower cost by addressing population of
certain area at a time, which was not totally attainable in the past through manual
branch networking (Huda etal., 2007)cited in Zaman and Chowdury(2012). And yet
the implementation of such emerging new technologies are not an easy task and
Howard and Moore (1982)cited in Zaman and Chowdury(2012) state that
customers should be aware of the new brand before adoption and which in turn
urges the bank to create awareness on such astonishing technology based banking
service to the consumers. Thus, it is imperative for banks in Ethiopia , CBE in focus
to have understanding how to best design , manage and promote such technology
in such a way that to improve the chance of customers acceptance. The findings of
Qureshi etal.(2008) reflect that majority of customers in Pakistan have accepted
the online banking due to the fact that they have found out that such online
banking or technology-based self service has its own favorable factors.
Accordingly their study shows that usefulness , security and privacy are the key
factors behind customers pursuing for acceptance and utilization of the online
banking in Pakistan. Also factors such as amount of information which is rendered
to the customers through various ways including advertisement like print and e-
media regarding online banking was useful in fostering customer acceptance of
online banking in Pakistan. Hasan etal.(2013) concluded that service quality of ATM
has significant association with customer satisfaction and the service quality and
customer satisfaction have positive relationship. Accordingly the value of customer
satisfaction and customer retention show that they are positively related though
the association is not strong. Regarding the opportunities available to the
electronic banking in the Ethiopian banking industry Gardachew(2010) pointed out
the following issues . There are opportunities provided by the ICT through e-
learning program such as school net to increase the awareness of the public about
the technology. Being the later adopter ,the benefits of utilizing the already well
established soft-wares that have been tested and their weakness singled out
elsewhere across the board are so significant . There are supporters that have the
experience and expertise and financial wise to develop better strategies such as
(UNECA ,world bank and UNCTAD (UNCTAD,2004) cited in Gardachew(2010) .
Finally, there is commitment from the government side as it has initiated the
commendable ICT policy frameworks and many egovernment projects such as the
WoredaNet project(ITU4D, 2006) cited in Gardachew(2010).
2.1.3.2 Challenges of ATM Banking Service According to (Adeepoiu, 2010)the
modern contemporary era has changed traditional monetary instruments from that
of paper and metal based currency to "plastic money" in the form of credit
cards ,debit cards ,which has come out in the increasing utilization of ATM across
the globe. He further states that now-a -days the application of technology based
banking service as a medium of communication is practiced by both developing
and developed world. Particularity, businesses in the advanced economy have
understood that without the application of the emerging technology being a leader
and survive in the market is a night mere. As a result organizations are striving to
be armed with such technology and track technological changes (Nwabounu,2011).
Also following the ever changing of the globe ,which undergoes drastic move ,our
lives have over-whelmed with financial products and services. To overcome such
drastic move the services provided should maintain its pace with the demand of
the intended customers(Singal,2012). And yet ,as the world is becoming a small
village and the digital network is making business so easy and life style is getting
simpler in the banking industry ,the future prospects of such astonishing
technology is confronting a serious challenges. For instance, Nwabounu(2011)
argues that despite its valuable benefits ,ATM is not without challenges. One of
such challenge is fraud which is highly accelerating in West African nations such as
Nigeria and this threat can be comes out as a factor of losing customers. Also.
Zaman and Chowdry(2012)state some of the challenges of the future prospects of
the banking technology including legal barriers and inappropriate policy and
legatorial frame work of a country, inefficient and inadequate knowledge of the
bank's management regarding the issue of technology driven banking service ,high
costs incurred in establishing the technology driven banking system and
inadequacy of the back and front office management . As the usage of the
technology such as ATM is increasing, it is exposed to issues of security threat and
fraudsters( Adepoiu,2010). In this regard CBE need to be aware enough such
alarming financial crisis which has a serious impact on customer satisfaction and
future practice of the techno-based banking service.
The fraud type may differ from country to country. For instance , Adepoiu(2010) in
Nigeria identified ATM card theft, skimming , pin theft card reader techniques ,PIN
pad techniques force withdrawal. CBE as a back bone of the country's economy,
need to take into account the virtue of such threats as such threats will
significantly affect the use of the banking technology. Actually the issue of
customer loyalty in this moment is not as such practical for the banking technology
is a recent phenomenon in Ethiopia and thus instead of customer loyalty the deal of
future prospects is taken as an appropriate venture. Joseph and Stone(2003) state
that empowering customers with technology based channel alternatives is the
inexpensive way to maintain customer loyalty. Customer loyalty is defined as a
"deeply held commitment to frequently re-buy or re-patronize the same product or
service " (Power and Associates,2009) cited in Musiime and Ramadhan(2011 :264).
From this definition the issue of customer loyalty of techno-based banking service
is related to long term practice of the given service or product. Michael(2007:264)
contends that "loyalty equates to a willingness to sacrifice on the part of the
customer", by which the loyal customer forgo a lower cost offering from competitor
and lends time to the firm to improve its service valuing the other aspects of the
firms to continue doing business with the firm cited in Musiime and
Ramadhan(2011 :264).
Here again the "willingness to sacrifice on the part of the customer" in our country
is to the service of techno-based banking is still at low stage and a wider range of
practice is not established and customer has not yet get a chance to compare costs
and thus this study committed itself to future prospects of ATM instead of loyalty.
On the other hand, Roberts -Phelps(2003) findings suggest that there are several
factors for the loss of customers including price ,physical factors, customer
sophistication , complexity and competition. So providing excellent customer care
and effective handling is quite essential as it puts firms in a position to build a
strong loyalty and warmly relationship with their customers. They further state that
by building a "truly customer oriented business" which can treat customers as
individual and take into account their "live value” firms can move from
"transactional purchase to transformational relationships ". In this regard,
customers who are in touch with a given organization usually needs two basic
things namely: one they are looking for solutions for their problems.
Second Thomas etal.(2002)cited in Haque etal.(2009) contends that despite
technology's capability which creates new dimensions of scope and time , it is also
opening a window for crimes which can be committed at ease and customers need
assurance from banks regarding such threat of security. Raigaga(2000)cited in
Haque etal.(2009)states that the concern of security have been the main factors
which is challenging and hindering the banking sector from expansion of the
emerging technology among banks. Findings of Haque etal.(2009) show that
security of transaction is the major challenge in expanding e-banking. The
challenges of such a techno-based banking in the context of Ethiopian banking
industry, CBE in focus are so numerous and Gardachew(2010)states them as low
level of internet penetration and poorly developed telecommunication, lack of
suitable ,legal and regulatory frame work for e-commerce, high rate of
illiteracy ,frequent power interruption and security issues are the basic challenges
for developing electronic banking in Ethiopia. Also Abraham (2012) has identified
some of the common problems of electronic banking including data and network
security and privacy, weak telecommunications ,broken and slow internet
connections and lack of internet awareness.
2.1.4.Divergent Views Regarding E-service Quality Dimensions After a wider range
of assessment was done on the extant of the relevant literatures on the research
topic area , it is identified that presently there is no generally accepted model to
measure the e-service quality such as ATM service quality. Moreover , most of the
research studies that have been done and instruments developed so far as well
employed in the traditional service setting. Regarding technology based banking
though efforts have been made the development is still in its early stage and the
researches that have been done so far across the globe are mainly on internet and
banking and lesser studies on ATM banking. For instance, Al-Hawari etal.(2005)
argues that studies that have been conducted so far and available to be used to
measure ATM service quality are quite limited in their focus and the emphasizes is
only on one electronic channels ,called internet banking and the attributes of the
others such as ATM are ignored . They contended that several models have been
presented to measure the customer perceptions of service quality in face to face
interaction among customers and the employees of the firms so that it is possible
to conceptualize a service quality measurement models in the traditional service
setting and yet regarding the technology based banking very few are done.
They came out with five factors of customer perception of automated banking
service quality which have demonstrated strong uni-
dimensionality ,reliability ,convergent ,discriminate and criterion related validity.
They have conceptualized the automated service quality in banks as a five factor
structure including ATM service quality, telephone banking ,internet banking service
quality , core service quality and price quality. Jun and Cai( 2001) cited in Al-Hawari
etal.(2005)state that there have been a lot of studies that recognized the main
service quality factors in the traditional banking setting, where the interaction
between employees and customers is the basic communication channel while a few
studies have inspected in automated service quality attributes in banking.
Moreover, though extensive research has been conducted regarding the traditional
service quality ,only a limited number of scholarly articles are directly concerned
with how customers assess e-service quality and its antecedents and
consequences(Parasuraman etal.,2005). Wolfinbarger and Gilly(2003) cited in
Hongxiu etal.(2009) state that, though studies regarding service quality and e-
service quality have been conducted and various scales have already been in place
for the purpose of measuring e-service quality , the extant study on e-service
quality has been a fragmented one . Above all some models are limited in their
focus and others marginalize one or few channels and ignore the attributes of the
others. For instance, Zeithaml(2002) cited in Alanezi etal.(2010) by modifying the
SERVQUAL scale in such a way that to fit to the online setting, came out with eleven
dimensions including access, ease of navigation ,efficiency ,flexibility , reliability ,
customization /personalization, security /privacy ,responsiveness, assurance/trust,
site aesthetics and price knowledge.Based on these eleven dimensions
Parasuraman etal.(2005) developed a multiple item scale (ES-QUAL) to measure the
service quality provided through websites by which customers entertain shopping
online. The study was conducted in two stages . On one hand the basic scale (E-S-
QUAL) was developed with 22 items scale of four dimensions namely:
efficient ,fulfillment ,system availability and privacy whereas the E-Recs-QUAL is
salient only to those customers who are with non routine encounters with the sites
containing 11 items in three dimensions including responsiveness , compensation
and contact(complaint handling issues). However, their study limited in focus just to
one channel, websites and others such as ATM are overlooked. For instance , in this
study the scales E-S-QUAL or E-Recs-QUAL cannot used to measure the effect of
ATM service quality dimensions as it is limited to the websites only. Gefen(2002)
cited in Amirzadeh and Mousavi(2011) contends that in the process of evaluating
the online service quality, the five traditional dimension of SERVQUAL
model(Parasuraman etal.,1985,2988) should be collapsed into three tangibles,
combined dimension of responsiveness ,reliability and assurance ,and empathy
before employing to measure the eservice quality. Accordingly he tried to examine
and find out the links among the dimensions of e- service quality, perceived
risk ,trust and cost to switch and the variable of customer loyalty. Santos(2003)
cited in Amirzadeh and Mousavi(2011)came out with a model including: ease of use,
appearance, linkage , structure and layout and content and the active dimensions
consist of reliability , efficiency ,support ,communication , security and incentives.
Broderick and Vachirapornpuk( 2002) cited in Seth etal.(2004) by using participant
observation and narrative analysis of UK internet web site community have
explored the perception of internet banking customers. Alanezi etal.(2010) state
that because of the differences between the methods of measuring service quality
in e-government and the physical market services( traditional service) ,there is a
need to reword and modify the SERVQUAL scale items before employing these
scales to measure the online context. Unlike the traditional service quality, the
dimensions of the electronic banking system are new and different than the
traditional service quality model. Accordingly Amirzadeh and Mousavi(2011:102)
state that many models are in traditional service quality setting such
SERVQUAL ,whereas there are different models of the electronic service quality in
which many different dimensions are taken into account and " insights from studies
dealing with people- technology interactions imply that customer evaluation of new
technologies is a distinct process". As a result to measure the e-service quality
dimensions new instrument dimensions and a comprehensive framework need to be
in place to identify the dimensions of e-service quality(Hongxiu etal.,2009). Studies
show that customers prefer using a combination of automated service channels (Al-
Hawari.,2005). Even there are divergent views among the scholars regarding the
use of ATM and its service quality measurement. For instance, Dilijonas etal.(2009)
in the Baltic States assessed the five most dominate lever for ATM delivery channels
service quality improvement that can be articulated in terms of sufficient number of
ATMs, secure locations ,system user friendly, convenient locations ,and ATM
functionality. Al-Hawari etal.(2005)identified ATM service quality dimensions such as
sufficient number of ATM, secure locations , user friendly system, conveniently
location and ATM functions. In the "old days" the process of long term relationship
building has been practiced predominantly through face to face contact (Zeithmal
and Bitner, 2004)while in the digital era where technology is the interface regarding
communication between the service provider and the customer ,the trend is totally
shifted Sangeetha(2012). Zineldin(2000) cited in Sangeetha(2012) argues that
technology plays a significant role for the development of such long term
relationship. For instance ,through self service technologies customers can serve
themselves in more effective and efficient manner which has never been
imaginable in the "old days". Hence "Advances in communication technology have
made people from all over the world electronic neighbors and electronic customers
"(Goetsch and Davis,2000:34). Kapoulas etal.(2002) cited in Sangeetha(2011) refers
to such kind of relationship as "technological-ship " marketing. In Ethiopia , CBE in
focus ,the practice of delivering service via banking technology is quite
underdeveloped, and very few studies have been conducted in this area. And yet,
regardless of whether the banks in Ethiopia ,CBE in focus like it or not the
application of technology in banking service and its expansion is "knocking the front
door " of every firm across the globe, in which CBE would never be
exceptional(Gardachew, 2010). Thus it is imperative to assess the effect of ATM
service quality dimensions on customer satisfaction, as customers preference to the
use of the techno-based service is increasingly alarming. A few studies identify
problems, challenges and opportunities of the e-banking in the Ethiopian banking
context and one thesis entertain the adoption of ebanking in Ethiopia and the other
thesis assess the ATM banking service quality dimensions. And yet, no one came
out with the impact of the ATM service quality dimensions on customer satisfaction
in the case of CBE. Hence , the purpose of the study was to examine empirically the
most pertinent dimensions of the ATM service quality dimensions that can be
employed when measuring the ATM service quality and its thereof on the customer
satisfaction in the case of CBE. Despite such divergent views, after a wider range of
assessment was done on the extant models a structural model was adapted for this
study(Mojoodi etal.,2013)with eight dimensions namely easiness, security,
assurance, customization, comprehensiveness, convenience, support service and
employee knowledge. The very reason for adapting such model was that the
technology presented a plate form by which companies can be in a position to
design out and deliver services which is perceived by customers as superior
(Surjadjaja etal.,2003) cited in Al-Hawari etal.(2005)and it addresses the essential
constructs of the technology and managers may gain more insights and learn about
customers' needs and hence satisfy them. The other reason for adapting this model
over others is, it incorporates the possible factors that may shape customer
perceptions of ATM banking. To entertain those dimensions a generic technology
instrument (Ganguli and Roy,2010)was adapted, unlike others such as E-S-QUAL
which emphasizes the websites, this instrument includes the three pillars of the
technology interface(ATM, Internet and mobile banking) service quality dimensions.
Thus the outcome of this study is essentially paramount and significantly valuable
in providing comprehensive insights to the practitioners in general and to the bank
in particular, regarding the essential issues of ATM and thereby presenting the cue
about customers' needs, quality service and customer satisfaction which enables
the bank to make available the right services at the customers' desire state and
hence satisfy and even delight them.
2.2 Research Conceptual Framework The conceptual framework for this study is
based on Mojoodi etal.(2013) structural model which has eight dimensions . The
effect of each of these dimensions on customer satisfaction was assessed. In
summing up the discussions so far entertained, this study posits that the impact of
ATM service quality dimensions on customer satisfaction is based essentially on
those stated eight dimensions (see figure 1) Source : Figure 2.1:Conceptual
Model(Mojoodi etal.,2013:3211). Based on the study model and content
entertained the following hypotheses are demonstrated : Ho1.Generic dimensions
of service quality technology-based banking have no direct and significant effect on
customer satisfaction . HA1.Generic dimensions of service quality technology-
based banking have direct and significant effect on customer satisfaction . Ho1a:
Easiness has no direct and significant effect on customer satisfaction. HA1a
Easiness has direct and significant effect on customer satisfaction. Ho1b.
Assurance has no direct and significant effect on customer satisfaction. HA1b.
Assurance has direct and significant effect on customer satisfaction. Ho1c. Security
has no direct and significant effect on customer satisfaction. HA1c. Security has
direct and significant effect on customer satisfaction. Ho1d Customization has no
direct and significant effect on customer satisfaction. HA1d Customization has
direct and significant effect on customer satisfaction. Ho1e Comprehensiveness has
no direct and significant effect on customer satisfaction. HA1e Comprehensiveness
has direct and significant effect on customer satisfaction. Service Quality
Dimensions Satisfaction Support Service Convenience Comprehensiven ess
Easiness Security Assurance Customization Employee knowledge Ho1f
Convenience has no direct and significant effect on customer satisfaction. HA1f
Convenience has direct and significant effect on customer satisfaction. Ho1g
Support service has no direct and significant effect on customer satisfaction HA1g
Support service has direct and significant effect on customer satisfaction Ho1h
Employee knowledge has no direct and significant effect on customer satisfaction.
HA1h Employee knowledge has direct and significant effect on customer
satisfaction Ho2.Generic service quality dimensions of technology-based banking
have no direct and significant effect on customer loyalty.Customer satisfaction has
no a direct positive effect on customer loyalty.Customer satisfaction has a direct
positive effect on customer loyalty.
CHAPTER THREE
Research Methodology
The aim of this study was to examine the effects of ATM service quality dimensions
on customer satisfaction and future prospects (customer loyalty ). To achieve such
objective the research design, research methods , data Collection tools, data
collection methods ,sampling, target population ,sampling frame, data analysis
methods and validity and reliability analysis were briefly discussed which are the
essential components for the study.
3.1 Quantitative Research Design The research is cross-sectional descriptive survey
design in its nature. The study employed with high emphasis of a quantitative
research method, which involves the utilization of structured questionnaire for the
purpose of collecting data to address the research questions of interest at a given
point in time and descriptive and inferential statistics for data analysis. It also
employed with less emphasis a qualitative approach namely structured interview
questions to collect data from the bank. The study was primarily designed out with
the purpose to find out from a cross-section of customers of CBE ATM card holders
in those four districts of the bank's ATM station, which were selected based on
convenience sampling, regarding the perceived effect of ATM service quality
dimensions on customers satisfaction and future prospects of ATM. Thus the data
type of the study are both from quantitative and qualitative and the data sources
are both primary and secondary data. The structural model was adapted which is
composed of eight dimensions to carrying out the examination of the impact of ATM
service quality dimension on satisfaction of customers' of CBE ATM card holders and
future prospects of ATM(loyalty). To entertain those eight dimensions an instrument
was adapted from Ganguli and Roy(2010).
3.2 Sampling Design The type of sample design that was employed for the
population of this study is single stage non-probability sampling procedure. The
reason behind such selection is the merit of the nonprobability convenience
sampling will provide to the study while collecting the required data. One of such
merits is, it is straightforward and quick to conduct the data collection at ease
(David,2011) and less expensive to conduct the data collection. Also it is feasible to
this study as it is difficult to get respondents if another method is employed, for it
makes use of the 43 available sample (Rubin and Babbie, 2010). The single-stage
sampling procedure is a procedure by which a researcher is in a position to reach
out all names in the population and can sample the people or other elements
directly (Creswell, 2012). That is it is simple as it enables a researcher to use the
available data and can directly access without clustering further such available data
into sample groups unlike the multistage (Creswell,2012).
3.2.1 Population of the study Table1: Number of ATM stations in those four CBE
Districts District Name Total No. of ATM Stations per District East 65 West 34 North
59 South 53 Total 169 Source: E-payment Department of CBE, November 30,2013
Any person who is currently using CBE ATM card banking in the four districts of the
bank across Ethiopia has been taken as the target population of this study.
According to the data obtained from the CBE ATM e-payment department office the
total number of ATM card holders in those four districts of the bank across Ethiopia
is more than 500,000, which is the target population of this study.
3.2.2 Sampling Frame Those four districts of the bank were taken as the sampling
frame of this study and accordingly the sample size of the study with convenient
sampling strategy was taken from CBE ATM card holders who are in the city of
Assela . The sample size of this study was 384 which was conveniently drawn from
those four districts that are found in the city of Assela . To collect the data of
interest from these card holders who are in Assela city about eight ATM stations
with convenient sampling procedure were selected. Accordingly as the sampling
strategy is convenient sampling, those customers who are outside Assela city were
systematically excluded from the study.
3.2.3 Sampling Techniques The type of sample design employed for selecting
individuals in this study was based on two criterion namely the representation and
element selection technique .In light of representation the convenience sampling
procedure. The reason behind such selection is the merit of the convenience
sampling which is straightforward and quick to conduct the data collection at
ease(David,2011) and less expensive. Also it is feasible to this study as it is difficult
to get respondents if another method was employed for it enables to use the
available sample(Rubin and Babbie,2010). In light of the element selection
technique the unrestricted sample was employed, this is due to the fact that the
unrestricted sample will facilitate the data collection activities. Accordingly to
identify the sample of ATM-banking customers included in the study convenience
sampling technique was preferred among the sampling technique because of
difficulty of getting individual customers who are CBE ATM card holders.
3.2.4 Sampling Size/ sampling procedure To obtain a comprehensive sample,
convenience sampling technique was applied for the purpose of primary data
collection .So a sample of eight ATM stations from those 169 stations, which are
situated in the city of Assela was selected with convenience sampling methods. The
selected eight CBE ATM stations are Assela branch, Assela, has made available a
total sample size of 384 customers. The reason for these branches selection was
these stations were more suitable for the student researcher to collect the data. The
sample size was determined by using a table of Krejecie and Morgan(1970) cited in
Mulugeta(2013) that is used for the sample size determination when the number of
population is known.
3.3 Data Collection Methods and Procedures
3.3 .1 Data Collection Methods In this study both primary and secondary data were
used.
3.3.1.1. Secondary Data Secondary data from the bank were consulted to have a
prior understanding about the subject matter.
3.3.1.2 Primary Date Sources The sources of primary data were self administered
questionnaire. After the secondary data had been exhaustively assessed, to
examine questions that were not answered by secondary 45 data, the primary data
sources were entertained. According to Fin cited in Creswell(2002) there are
different types of data collection forms such as: self-administered questionnaires;
interviews; structured record reviews to collect financial, medical, or school
information; and structured observations. From these self administered
questionnaires and interview were used. The rationale behind for choosing self
administered questionnaire is four folds . First the strength and weaknesses of the
type of data collection type. Second the costs associated with this type of data
collection forms. Third the availability of the data and fourthly their convenience in
the process of data collection. The rationale for selecting a structured interview
was, it was easy to make clarification, probing and prompting with respondents
directly(Burton,2000). Respondents were not required to write their name on the
questionnaire and the letter attached to the questionnaire shall explain the
objectives and assure the anonymity of respondents. The data was collected from
Jan.20 2014 to Feb 19,2014.
3.3.2.Data Collection Procedure The items for measuring the ATM service quality
dimension were adapted from Ganguli and Roy( 2010). In collecting the data the
student researcher was personally approached customers and asking first of all for
their willingness and then prompts whether they are using ATMbanking and if they
are user questionnaire were distributed to be filled out. Since filling out a
questionnaire will take some time for staff customers , the student researcher gave
the questionnaire to the respective customer service mangers to distribute and fill it
out when the staff respondents have spare time at office. After questionnaires filled
out customer service managers collected and handed it to the student researcher.
Also in some branches "lobby persons" helped the student researcher in distributing
questionnaires to customers. Also data were collected from customers of CBEATM
users who are working in Ethio-telecom and Ministry of Transport. In the
questionnaire respondents were asked about their perceptions towards the ATM and
its quality. Also a structured interview was conducted with the bank to know what it
would say about its service delivery via the CBE ATM.46 3.3.3 Data Collection Tools
In this study the eight dimensions of service quality including
easiness ,security ,assurance, customization ,comprehensiveness, convenience,
support service and employee knowledge have been entertained as independent
variables . Whereas customer loyalty (future prospects) is entertained as dependent
variable ,customer satisfaction is a mediating variable. Independent Variables
Service quality denotes the difference between customers' expectations of how a
firm need to carry out and the service performance which customers
perceive(Alanezi etal.,2010). The meaning or usage of these eight dimensions
defined by ( Mojoodi etal.,2013) as follows:
1) Easiness: this means that users can easily learn how to work with the technology
and use it.
2) Assurance: this means that technology works true.
3) Security: safety in using technology, proper handling of information and quality
information.
4) Customization: to make (something/ services) according to a customer's
individual requirements and needs.
5) Comprehensiveness: this means that the technology must be capable of
providing a wide range of customer needs.
6) Convenience: convenience of using technology over the employees as well as
speed and time of using technology.
7) Support services: the service provided to customers during problem situations
and through call centers.
8) Employee knowledge: the amount of employees’ information and knowledge to
solve customer problems ( Mojoodi etal.,2013,p.3209) Dependent Variables
According to (Bhattacherjee,2012)Operationlization is developing items for
measuring constructs. The first step in operationalization is to define and specify
the meaning and concepts and variables to be studied, conceptualization of
constructs . From existing literature measurement was adapted which can fit the
current context. Thus future prospects of ATM(Customer loyalty) can be
operationalized as follows: Researchers "have used service recommendations to
other customers as a proxy for customer loyalty"(Caruana,2002,Collier and Bienstoc
,2006) cited in Ganguli and Roy(2010). In addition to "recommendation other items
which have been used extensively for measurement of customer loyalty are
consideration of the company as the first choice service provider
(Caruana,2002 ,Zeithmal etal.,1996) cited in Ganguli and Roy(2010). Mediating
variable Customer satisfaction :Hansemark and Albinsson (2004)cited in Angelova
and Zekiri(2011) define satisfaction as " an overall customer attitude towards a
service provider, or an emotional reaction to the difference between what
customers anticipate and what they receive, regarding the fulfillment of some need,
goal or desire”. The survey questionnaires were employed to measure the impact of
ATM service quality dimensions on customer satisfaction and future prospects of
ATM in the case of CBE. The status of the eight dimensions were: Easiness(3),
Assurance (2),convenience (2), comprehensiveness(2),
Security(2),Customization(3), support service (7),and employee
knowledge(3),customer satisfaction (4) and future prospects(3) respectively. The
survey questionnaire was divided into two parts. The first part is about demographic
profiles and usage patterns of respondents such as respondents gender, age
category, income range ,frequency of usage and type of service used. The second
part has three section. The first section dealt with measurement variables which is
to what extent do customers agree or disagree to the various statements or issues
related to ATM. The second section dealt with customer satisfaction and the third
section is about future prospects of ATM. A five point Likert scale was employed by
which the respondents were requested to show the extent to which they do agree
or disagree with the various statements provided to them and the five point Likert
scale has ratings of " Strongly disagree(1) and Strongly agree(5)".
3.4 Data Analysis Methods For the analysis of quantitative data both descriptive and
inferential statistics were used. To aid computation a Statistical Package for Social
Science (SPSS) version 20 was employed. After the data get collected, the data
analysis was done as follows: Coding: is assigning separate code number to each
variable in the study. Then the process of eliminating coding and data entry errors,"
clearing the data'(Rubin and Babbie, 2010) was done.
The statistical tools were utilized in the following ways:  The descriptive
statistics(Frequency distribution) was used to examine customers perceptions
toward ATM service quality dimensions , the level of the customer satisfaction  The
relationship and effect of the ATM-banking service quality dimensions and customer
satisfaction and future prospects were analyzed by using inferential statistics, in
particular correlation and multiple regression.  A simple linear regression analysis
was used to analyze the effect of customer satisfaction on customer loyalty (future
prospects).
3.5 Validity and Reliability Reliability "is the degree to which the measure of a
construct is consistent or dependable" (Bhattacherjee, 2012:57), while Validity
refers "to the extent to which a measure adequately represents the underlying
constructs that is supposed to measure"(Bhattacherjee, 2012:59). The model of this
study(Mojoodi etal.,2013) is revised, accepted and published under the African -
Eurasian Network for Scientific Information( AENSI) publisher and the validity's and
reliability's of all eights dimensions have been testified and within the acceptable
range. Also the instrument employed to collect the primary data to address the
stated dimensions of interest(Ganguli and Roy,2010) is revised, accepted and
published under the Emerald Group Publishing Limited and its validity and reliability
are testified and within the acceptable range. Thus as the statements have been
generated from previous studies were extensively reviewed by the scholars in other
cultural settings, its validity is assumed to hold good instrument and valid. The
overall reliability test of a cronbach's alpha for this study is 0.883 which is above
the minimum threshold (it is annexed as table 4). 3.6 Ethics This study like other
academic researches abides by ethical issues, moral conducts and commercial
confidentiality to the bank's data and for the privacy of respondents. The
questionnaires were designed out in such a way that respondents are not required
to write their names and reveal their personal information on the questionnaire and
the confidentiality of the data being collected is handled with due care and used for
academic purpose only

3.4 Budget
No Costing Unit of Number Unit Cost Total Cost
Reason Measurement in Birr in Birr
1 Purchase of Packet 1 1,000 1,000
Paper
2 Red Pen Number 4 15 60
3 Pencil Number 5 10 50
4 Flued Number 2 35 70
5 Blue Pen Number 4 15 60
6 Cost of Internet 600
Access
7 Transportation Trip 40 10 400
Cost
Total 2,240
 Contingency 2,000
Over All Total 4,240

3.5 Time Framework

Accomplishment Remark

Duration
No Activity

1 Searching Research Title August 15-30, 2024

2 Editing and submitting Research Title September 1-4,2024

3 Writing Statement of the problem September 5-6,2024

4 Completing the first chapter September 7-9,2024

5 Writing Literature Review September 9-10,2024

6 Writing Methodology, and Appendices September 9-10,2024

 7 Editing and Submitting the final draft September 9-10,2024

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