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Review of Literature sample essay


This chapter reviewed the available literatures written on this topic and in other related areas in this chapter. This was made possible by the identification, collection and review of these literatures from various sources such as text books, journals, reports and the internet.

2.2The Concept of ATM

ATM is typically made up of the CPU for controlling the user interface and transaction devices, magnetic or Chip card reader for identifying the customer, display which is used by the customer for performing the transaction, function buttons usually close to the display or a Touch screen used to select the various aspects of the transaction and a record printer which provides the customer with a record of a transaction (Cronin and Mary, 1997). Most ATMs are connected to inter bank networks, enabling people to withdraw and deposit money from machines not belonging to the bank where they have their account or in the country where their accounts are held thus enabling cash withdrawals in local currency (Maxwell, 1990). They are often identified by signs above them indicating the name of the bank owning them.

2.2.1Evolution of ATM

ATM is said to have evolved from early cash dispenser and is said to have first been introduced in the early 1970’s. The dispensers were operated by a token inform of a punch card. This enables a customer to withdraw as sachets of suitable values of bank notes. These sachets processes and then return the card to the customers. Another source has it that ATM concept was started around 1967, and that it was first installed in Endfield town, on the London Borough of Endfield by Barclays Bank. Thomas (1996). This is said to have been accredited to John Shepherded Baron, although George Simon registered patent in New York and Don Wetzel and two other Engineers from Docatel Company also registered patent in June/ April 1973. Brendan (1996). This in the second generation was improved to the extent that made it possible to count proved money.

2.2.2Operation of ATM

ATMs typically connect directly to their ATM Controller via either a dial-up modem over a telephone line or directly via a leased line. Leased lines are preferable because they require less time to establish a connection. Musiime and Biyaki, (2010). It is observed that, most modern ATMs, the customer is identified by inserting a plastic ATM card with a magnetic stripe or a plastic smartcard with a chip that contains a unique card number. Security is provided by the customer entering a personal identification number (PIN). For one to access ATM service, he/ she (the card holder) has to insert the card (magnetic strip card) into the machine (ATM), which then reads the strip and makes contact with the central computer to confirm the genuity of the card which is either accepted rejected depending on whether it is valid or not. When accepted, the customer then punches his/ her PIN number which is then verified according to its compatibility with the information stored in the card. After which it then perform the service requested of like (issuing cash, accepting cash/ cheque deposit, balance enquiry, mini-statement) etc, and finally ejects the card.

2.3Effectiveness of ATM

Without usage of technology the banking sector cannot provide customers with effective services (Patricio et al., 2003). Effective service delivery is a new or significantly improved service concept that is taken into practice (Drake, 2001). Customer expectations concerning service encounter experiences and service delivery mechanisms as well as the entire concept of what constitutes quality service are therefore key issues that need to be considered prior to the implementation of any structural change. Patricio et al. (2003). Effective service delivery is a service product or service process that is based on some technology or systematic method. It can be a new customer interaction channel, a distribution system or a technological concept or a combination of them. (Kelley et al. 1990). Kumbhar (2011). Observed that effectiveness of service provision have a significant relationship with overall customer satisfaction. Effective service delivery is positively related to customer satisfaction in that, when a customer perceives that the delivery mode of the transactions that the bank is supposed to offer is quite good, the more the customers will be satisfied with the bank services.

The Concept of Customer Satisfaction

Cacioppo (2000) defines Customer satisfaction as the state of mind that customers have about a company when their expectations have been met or exceeded over the lifetime of the product or service as quoted by MALCOLM (2008). Increased customer expectations have created a competitive climate whereby the quality of the relationship between the customer and bank has taken on a greater significance in some cases than the product itself. (Musiime and Biyaki, 2010). Krishnan et al (1999). Point out that, the banking industry strives to succeed by putting the topic of rapid and changing customers needs to their agenda.

This can be achieved through good customer care and offering attractive services or products that other competitors may not offer. Therefore, customer satisfaction is seen as a key performance indicator within business. The concept of customer satisfaction occupies a central position in marketing and practice (Cardozo, 1965). Customer satisfaction is a person’s feelings of pleasure or disappointment resulting from comparing a product’s perceived performance or outcome in relation to his or her expectations. (Musiime and Biyaki, 2010). In summary, Customer Satisfaction is the actual meeting of customer’s expectation after he or she has completed consuming a product or service.

2.4.1 Who is a Customer

A customer is the most important visitor on our premises. He is not dependent on us. He is not an interruption to our work. He is the purpose for it. He is not an outsider on our business rather he is part of it, we are not doing him favor by serving him rather he is doing us favor by giving us an opportunity to do so. Wasswa, (2003). Pg 35. He further described a customer as one that enables the organization exists. They are the purpose of our business. In my own view, I believe that, customers are the heart, the life and the soul of our businesses, without whom we can’t hold even for a second to exist in business. Hence they should be accorded utmost respect and care when rendering service to them.

2.4.2Importance of Customer satisfaction

Khirallah (2005) defines customer satisfaction as; a customer’s perception that his or her needs, wishes, expectations, or desires with regard to products and service have been fulfilled. Consumer satisfaction in short can therefore be defined as an evaluative process that contrasts pre-purchase expectations with the actual perceptions of performance during and after consumption experience. In summary, Customer Satisfaction is the meeting or even exceeding of a customer’s expectation after the use product. The outcomes of satisfying a customer are:- Customer loyalty- LOYAL customers are those who have the enthusiasm about the brands or products they use. The more enthusiastic a customer is, the higher the profit contributed to the brand. (MALCOLM 2008). Musiime and Biyaki,(2010). Loyalty is a combination of intentional repurchase behavior and psychological attachments of a customer to a particular service provider. The fundamental assumption of all the loyalty models is that keeping existing customers is less expensive than acquiring new ones.

In summary, Loyalty is customer’s demonstration of faithful adherence to an institution despite the occasional errors. Thus satisfying a customer is very paramount to organizations existence. Customer retention- Customer Retention is the ability to hold on to customers over time. Joseph and Stone (2003). Customer retention is the activity that the selling organization undertakes to reduce customer account defections. It can also be described as a series of actions that the selling organization undertakes to reduce defections. Musiime and Biyaki, (2010). Ganesh et al., (2000)., observed that, long-term, customers become less costly to serve due to the bank’s greater knowledge of the existing customer and to decrease serving costs. They also tend to be less sensitive to comparative marketing activities (Czepiel, 1990).

Loosing customers not only leads to opportunity costs because the reduced sales, but also to an increased need for attracting new customers which is five to six times more expensive than customer retention (Joseph and Stone, 2003). 2.4.3The relationship between ATM use and Customer satisfaction Earlier research by Brownlie (1989) has recommended that some consumers have positive attitudes towards ATMs based on dominant perceptions of convenience/accessibility/ease of use. As observed by Malcolm (2008). On the other hand, Reichheld and Sasser (1990) have recognized the benefits that customer satisfaction delivers to a bank. For instance, the longer a customer stays with a bank the more utility the customer generates. This is a result of a number of factors relating to the time the customer spends with a bank.

Without usage of technology the banking sector cannot provide customers with a satisfactory service (Patricio et al., 2003). Effective service delivery is a new or significantly improved service concept that is taken into practice. Musiime and Biyaki,(2010). According to, Patricio et al. (2003) customers will use different service delivery systems dependent on their assessment of each channel and how it contributes to the overall service offering. Hence service satisfaction will not merely be based on isolated service encounters and experiences but rather on the overall feelings of satisfaction. With automated teller machines networks already in place in most of the urban areas, the drive is now focused towards the rural areas where the use of automated teller machines is still uncommon. Musiime and Biyaki,(2010).


From the review of literature, it can be observed that the operation and use of ATM services in the financial sector, has contributed a lot in changing the way in which financial services and products are being delivered to the banks clients. As the say goes that, for every step forward (development), a lot of challenges must have been faced, fought and overcome. Thus the development of ATM saw the emergency of some challenges for the industry as customers keep demanding for better service, while the financial institutions are very busy searching for the most efficient way by which they can improve on their service provision.

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