The study explores the use of the ATM services at Singida town. The main objective of the study is to make assessment on extent to which Automated Teller Machine (ATM) satisfy customer needs in Singida branch underlining the low patronage of ATM services at the branch. This was done by analyzing customer usage knowledge on ATM services, ATMs efficient and ATMs convenient. The study adopted the descriptive approach which uses quantitative method of data collection and analysis.

Questionnaires were the main instrument used for the data collection and it was solicited from 100 respondents using simple random sampling method. Both primary and secondary data sources were used for the study.

Questionnaires were used in gathering the primary data. The secondary data sources included the branch teller transaction reports, branch customer complain file, journals and the internet. It was found that most of the customers have a good knowledge on the services offered by the ATM. The motivating factors for using the ATM services are reliability, safety and accuracy.

Further study should be carried out to find out how the long queues seen in the banking hall especially during the end of the months affects man hours for customers and the overall effect on the development of CRDB Singida branch.















Background of the study1

Statement of the problem6

Research objective7

General objective7

Specific objective7

Research questions7

Hypothesis of the study7

Significance of the study.8


Researcher and Academicians8


Scope of the study8

Limitation of the Study8

Definition of terms9

Automated Teller Machine (ATM):9

Customer‟s Satisfaction:9


1. 11 Organization of the Study 9




Theoretical literature review10

Assimilation Theory10

Social Exchange Theory11

Empirical Literature Review12

Knowledge on ATMs Usage12

ATMs efficiency13

Convenience of ATMs13

Research gap14

Conceptual Framework15

Definition of variables16

ATMs efficiency16

Convenience of ATMs17

ATM usage knowledge17

Chapter summary18




Area of study19

Research philosophy and approach19

Research Design and Techniques21

Sampling design22

Population and Target Population22

Sampling Frame22

Sampling Techniques22

Simple Random Sampling22

Sample Size22

Data collection methods and instruments23


Data Analysis Methods24

Validity and Reliability Instrument24

Validity Instrument24

Reliability Instrument25

Research ethics25

Chapter Summary25



4.1 Introduction 27

Demographic or Personal Information27

Gender of respondents27

Age of Respondents28

Marital status28

Education Level of Respondents29

Test of Reliability and Validity30

Finding in relation to Objectives31

Impact of ATMs efficiency to customer satisfaction31

Factors that influence convenience of ATM to customer satisfaction37

Impact of ATM usage knowledge to customer satisfaction37

Test of Hypothesis38

Correlation analysis38

Regression analysis40

4.6. Discussion of Findings 42

4.7 Chapter Summary 44



5.1 Introduction 45


General Summary45

Summary of Findings46

Implication of Findings46

The Government46

Banking Industry47


The Researcher47

Limitations of the Study47



Recommendations for Action48

Recommendations for Future Research49





SECTION A: Personal Information 53





ABM - Automated Bank Machine ANOVA - Analysis of Variance

ATM - Automated Teller   Machine IBM - International Business Machine

CRDB - Cooperative Rural Development Bank PIN - Personal Identification Number RUCU - Ruaha Catholic University

SPSS - Statistical Package for Social Science TAM - Technical Accountant Manager

VISA - Virtual Instrument Software Architecture



This chapter covers the background information on the Automated Teller Machine (ATM) and its effects on customers` satisfaction. It provides a real image of what an ATM is its history in the world, how it works and some problems associated with the use of ATM in banking services also research objectives, research questions, hypothesis, scope of the study, and significance of the study as well as the definition of the key terms.

Background of the study

In banking industry, e-services are revolutionizing the way business is conducted. Electronic based business models are replacing conventional banking system and most banks are rethinking business process designs and customer relationship management strategies. It is also known as e-banking, online banking which provides various alternative e-channels to using banking services i.e. ATM, credit card, debit card, internet banking, mobile banking, electronic fund transfer, electronic clearing services etc. however, as per Tanzanian e-banking scenario ATM and mobile banking are most acknowledged than other e-channels(Singh and Komal, 2009).

Automated Teller Machine (ATM) refers to a machine that acts as a bank teller by receiving and issuing money to and from the ATM account holders/users (Singh, 2009). ATM means neither “avoids traveling with money” nor “any time money,” but certainly implies both (Singh and Komal, 2009). ATM cards are fast replacing confounding withdrawal forms as a convenient way of getting your money from banks. In a way, they are rewriting the rules of financial transaction. A smart person no longer needs to carry a

wallet-full of paper money; rather, what he/she needs to do is to fish out an Automated Teller Machine (ATM) card from his/her pocket, insert it in the slot of the machine, punch in a few details and go home with hard cash (Singh and Komal, 2009).

The history of ATM can be traced back to the 1960s, when John Shepherd-Barron who was managing director of De La Rue Instruments invented the first ATM machine. That machine used by Barclays Bank (Barclays Bank in Enfield Town in North London, United Kingdom) on 27 June 1967 (Anderson, 1993).

ATM is designed to perform the most important function of bank. The plastic card is replacing cheque, personal attendance of the customer, banking hour‟s restrictions and paper based verification. ATMs are used as springboard for Electronic Fund Transfer. ATM itself can provide information about customers account and also receive instructions from customers - ATM cardholders. An ATM is an Electronic Fund Transfer terminal capable of handling cash deposits, transfer between accounts, balance enquiries, cash withdrawals and pay bills (Hood, 1976). In many parts of the world the majority of bank customers regularly use Automatic Teller Machines (ATMs) and today‟s western youth have not known a world without them. For them, the prevailing Perception of a cash machine is that of a tool providing a familiar functionality of basic financial information and dispensing cash. The technology is hidden from sight; the computer is invisible. It has taken approximately 30 years to establish ATMs as ubiquitous examples of public walkup-and-use devices. The adoption has not been straightforward, requiring trust in the technology and willingness to modify behavioral strategies in the very sensitive domain of personal finance. Financial institutions have played a major, sometime coercive, role in encouraging ATM adoption. The ATM flourishes within societies where time is precious and money readily available. This culture is composed of individuals, who have personal bank accounts and access to a wide range of technology. For these individuals, ATMs are convenient and reliable everyday artifacts: push a few buttons and get the money. As ATMs cross-new borders and pervade different cultures, it is imperative to understand the role of cultural

characteristics on people‟s Perception of, attitudes towards, and action on, the machine. This understanding is instrumental in facilitating technology uptake and improving design localization, or the process of infusing a specific cultural context into products designed for different cultures (Anderson, 1993).

In Africa, ATMs are being introduced for the first time and we must understand the new users who live within a culture, which may bring new factors into the adoption curve. It concentrates on urban Africa but the approach can be generalized to cover other public (and personal) technologies, as well as other developing markets.

African Banking industry is witnessing an unprecedented competition. To stay ahead, banks are coming up with plethora of services to lure customers. Services like 24 hour banking, service at door step, telephone banking, internet banking, Extended Business Hours (EBH), speedy processing are only a few to mention. Greater part of today's bank transactions take place somewhere else other than in branch premises (Krishna and Rao, 2006).

Though, the aim of these services is to satisfy customers, there is a need to understand customer awareness, Perception and importantly the level of satisfaction. Efforts are directed to attract and retain customers by offering them a basket of tailor made schemes supported by a state of the art distribution system (the ATMs). The whole exercise is helping banks to serve their customers fast and avoid human intervention totally. And for the customers, ATMs offer hassle-free cash withdrawal. No more fighting with the bank's teller for change and fresh notes. The total cash movement through ATMs in Africa is already between Millions of shillings (local currency) every year.

In future, things are going to be even more different and challenging. The ATM has become a medium for non-cash transactions such as payment of bills, insurance payments, printing of statements or even accessing the internet (Krishna and Rao, 2006). Tanzania banking sector has adopted the use of ATM in offering services. Cooperative

Rural Development Bank (CRDB) Singida branch introduced ATM services in 2009, and now customers are accessing the service.

First automated banking machine was the creation of an American inventor and businessman named Luther Simjian. . Simjian held patents on all kinds of things including, a self-focusing camera and a teleprompter but he was best known for his work on the Bankograph, a machine that could accept cash or check deposits at any hour of the day or night. In (1960, Simjian) managed to persuade a New York City bank to take a few of his automatic-deposit machines. So that customers could trust that they would see their money again, there was a microfilm camera inside the Bankograph that took a snapshot of every deposit. Customers received a copy of the photo as their receipt. In 1967, a Scottish inventor named John Shepherd-Barron was sitting in the bathtub when he had a flash of genius say that if vending machines could dispense chocolate bars, why couldn‟t they dispense cash? Barclays, a London bank, loved the idea, and Shepherd- Barron‟s first ATM was installed in a branch on Enfield High Street not long afterward. Unlike modern ATMs, Shepherd-Barron‟s did not use plastic cards. Instead, it used paper vouchers printed with radioactive ink so that the machine could read them. The customer entered an identification code and took her cash–a maximum of £10 at a time. The first automated banking machine in the world was devised by a Dallas engineer and former professional baseball player named Donald Wetzel. Wetzel‟s machine used plastic cards like the ones we use today. (Instead of radioactive ink, the cards stored account information in magnetic strips.) (Musiime and Biyaki, 2010).

Thirty seven years ago, on 1981, Standard Bank Group became the first of the major commercial banks in Africa in South Africa to introduce automated teller machines (ATMs) when it launched Auto Bank. The first ATM was a far cry from machines of today. We selected the IBM machine and the first live introduction to the public was at the trade exhibition called “Rand Show” in Johannesburg. On the same day Auto Bank went live at twenty five machines installed outside thirteen Standard Bank branches in selected high-density areas of Johannesburg, where there was a big demand for after

hour‟s cash facilities. National expansion of Auto Bank soon followed. Auto Bank could perform a normal cash withdrawal in 20 seconds and a balance enquiry in 60 seconds. At first Auto Bank operated only from 7am to 7pm, Monday to Saturday, but it soon became available on Sundays from 9am to 2pm. Mid-1982 saw extension of Auto Bank hours to 24 hours daily except on Sundays when operating hours were 8am to 2pm. A 24 hours a day, seven days a week availability was achieved towards the end of that decade (Balunywa, 2003).

The history of ATM in Tanzania is that banking services were rendered on manual basis characterized by, ledger keepers at back office, cashiers providing front desk service, ledger cards, cash registers among others. This is not only tedious, but also strenuous and slow besides providing inaccurate and unreliable information on a regular basis because of the human error. In 1993, Standard Chartered was the first Bank in Tanzania to introduce the Automated Teller Machine (ATM).

The evolution of Automated Teller Machine came due to the need to respond to the challenge of the multiple bulk of daily complex information that arises from among others, increase in competition, increased customer demand for service provision as well as efficiency, expansion due to the increase in demand for services (Kathleen, 2005). Balunywa, (2003) discovered that the use of ATMs in banks has produced largely positive outcomes such as improved customer services, more accurate records, ensuring convenience in business time, prompt and fair attention, and faster services and these make customer to be satisfied. Also, the banks‟ image is improved creating a more competent market. Work has also been made easier, and more interesting, the competitive edge of banks, relationship with customers, and the solution of basic operational and planning problem has been improved.

Therefore, this study wanted to assess the extent to which Automated Teller Machine (ATM) satisfy customer needs in Singida Town.

Statement of the problem

The impact of Automated Teller Machine cannot be ignored if meaningful goals and objectives are expected to be achieved. Automated teller machine is introduced into the banking system to enhance good services delivery and efficient customer satisfaction (Omankhanlen, 2010).

The use of ATM is a new way of accessing banking services necessitated by customers` business needs and is enabled by fast changing technology like Internet. Due to achievements brought about by increased utilization of Information and Communication Technology (ICT) in society, the banking industry has introduced ATM. ATMs provide a new method of dispensing customer services which are expected to increase efficiency, sales performance, and enhance customer satisfaction (Mboma, 2011).

But the use of ATM banking systems has received different perceptions. One of the views is that, it may not have really created customer satisfaction for bank clients, and the other is that, it may have. Despite of all the merits of the ATMs, customers still complaint of shortfalls on the use of the system such as; break downs of ATMs, long queues at ATM service points, retention of customers cards, limited knowledge on the use of ATM cards, fraudulent transactions and its operation in just a few languages (Mohd, 2015).

There exist valuable empirical literatures that study the ATMs advantages. These include Awitta (2016) and (Gachanja, 2016); however, not much literature investigates actual effect of automated teller machine in Tanzania Msaki et al (2016). This study therefore seeks to fill the literature gap in the country specific study by exploring the effect of automated teller machine to customer satisfaction in CRDB Bank, Singida branch.

Research objective

General objective

Generally this study sought to assess the effect of ATM system to customer satisfaction, a case of CRDB Singida branch.

Specific objective

More specifically the study attempted to:

i. To examine the impact of ATMs efficiency to customer satisfaction.

ii. To identify factors that influence convenience of ATM to customer satisfaction.

iii. To examine the impact of ATM usage knowledge to customer satisfaction.

Research questions

The study was guided by the following research questions;

i. What are the impacts of ATMs efficiency to customer satisfaction?

ii. What are the factors that influence convenience of ATM to customer satisfaction?

iii. What are the impacts of ATM usage knowledge to customer satisfaction?

Hypothesis of the study

Ha1There is a significant relationship between ATMs efficiency and customer satisfaction.

Ha2There is a significant relationship between convenience of ATMs and customer satisfaction.

Ha3There is a significant relationship between ATM usage knowledge and customer satisfaction.

Significance of the study.


The findings of the study will help NMB as well as the banking industry by showing how quality services offered by ATM service points are essential.

Researcher and Academicians

The study will also be used as a partial fulfillment for the awards of a bachelor degree. This study can also be of great importance to future scholars who will pursue research in fields related to ATM system of banking and service satisfaction.


The conclusions and recommendations of the study will be used to help the banking industry in the identification of the weaknesses in the use of ATM system of banking on the ways of improving its services

Scope of the study

This study was carried out at NMB Bank; the branch of Singida Municipality is selected so as to provide the information that can be used in the research .This study will examine extent to which Automated Teller Machine (ATM) satisfy customer needs in Singida town. The researcher decided to carry out the study in the branch because of the ever-long queue at the bank‟s ATM service point day in day out but worst at the end of the month.

Limitation of the Study

Researcher expected to face the following challenges during conducting this study:

i. Some of important information would not be disclosed from the respondents due to issue of confidentiality of information.

ii. Financial problem would arise since researcher will use his own pocket and not from any sponsor.

Definition of terms

Automated Teller Machine (ATM):

Automated Teller Machine (ATM) refers to a machine that acts as a bank teller by receiving and issuing money to and from the Automated Teller Machine account holders/users. The evolution of Automated Teller Machine was not in isolation, rather as a result of the general global wave in the technological revolution (Kathleen, 2005).

Customer’s 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.


A bank is a financial institution and a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly by loaning or indirectly through capital markets (Kumbhar, 2011).

1. 11 Organization of the Study

This study comprises five chapters. Chapter one unveils the problem which informs the study and its context. It provides the justification for the study. Chapter two presents a review of relevant literature, synthesis and research gap to the study. Chapter three describes the research methodology and procedures of data collection and analysis. Chapter four entails data presentation, analysis and discussions, while chapter five provides the summary, conclusions and recommendations of the study. References and appendices cover the last part of the study.



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