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The Effect of Automatic Teller Machine Banking Service Quality on Customer Satisfacsatisfactiontion at Selected Abyssinia Bank Branches in Addis Ababa

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The Effect of Automatic Teller Machine Banking Service Quality on Customer Satisfacsatisfactiontion at Selected Abyssinia Bank Branches in Addis Ababa ST.MARY’S UNIVERSITY COLLEGE SCHOOL OF GRADUATE STUDIES THE EFFECT OF AUTOMATIC TELLER MACHINE BANKING SERVICE QUALITY ON CUSTOMER SATISFACSATISFACTIONTION AT SELECTED ABYSSINIA BANK BRANCHES IN ADDIS ABABA BY: --- ELELELIEL IIISABETSABET KENDIE A research project submitted in partial fulfillment of the requirement for Masters of Business Administration November 2016 ST. MARY’S UNIVERSITY COLLAGE SCHOOL OF GRADUATE STUDIES THE EFFECT OF AUTOMATIC TELLER MACHINE BANKING SERVICE QUALITY ON CUSTOMER SATISFACTION AT SELECTED ABYSSINIA BANK BRANCHES IN ADDIS ABABA BY ELISABET KENDIE Approved by the Board of Examiners: Advisor __________________________ Signature __________________________ Examiner __________________________ Signature __________________________ Examiner __________________________ Signature __________________________ DECLARATION I am submitting this paper in Partial fulfillment of the requirements for the award of the Masters of Business Administration and I hereby do declare that this is my own work and that all works of other persons have been dully acknowledged. Elisabet Kendie: ______________________ Date: _________________ ACKNOWLEDGMENTS First of all I would like to praise almighty God for helping me and enabling me to carry out this study and his mother Saint Mary. She pray, bless, protect and intercede for us. I am also greatly indebted to my advisor Dr. Temesgen Belayneh for his patience, encouragement and continual help and advice. A great thank and special gratitude addressed to all of my families and friends for their continual support. I also appreciate the management and staff of Bank of Abyssinia for the vital information they furnished me with. Most importantly, I would like to express my deep gratitude to the staff of the bank who participated in this study during the primary data collection process. i LIST OF ACRONYMS AND ABBREVIATIONS ATM(s) – Automated Teller Machine(s) BOA- Bank of Abyssinia CBE- Commercial Bank of Ethiopia SQ- Service Quality SPSS - Statistical Package for Social Science SERVQUAL- Service Quality ii TABLE OF CONTENTS BOARD OF EXAMINERS APPROVAL......................................................................I DECLARATION..........................................................................................................II ACKNOWLEDGMENTS……………………………………………………..…....III LIST OF ACRONYMS AND ABBREVIATIONS ………………………...………IV TABLE OF CONTENTS .............................................................................................V LIST OF TABLES ………………………………..………………….……….….....VII ABSTRACT ………………………………………..…………………….………..VIII CHAPTER ONE: INTRODUCTION 1.1 Background of the Study .........................................................................................1 1.2 Statement of the Problem…………………………….….…..…….……...…….....3 1.3 Basic Research Questions. …………………………………….…....……..……...4 1.4 Objectives of the Study............................................................................................5 1.5 Significance of the Study........................................................................................ 5 1.6. Scope of the Study...................................................................................................6 1.7 Limitation of the Study …………………………………………………………....6 1.8 Definition of Terms .................................................................................................6 1.9 Organization of the Study ………………………………………………………....7 CHAPTER TWO: REVIEW OF RELATED LITERATURE 2.1 Theoretical Review ..................................................................................................8 2.1.1 Banking in Ethiopia.......................................................................................8 2.1.2 What is ATM?.............................................................................................10 Evolution of ATM ……………………………………….……......……...12 Challenges of ATM…………...………...………………………………...13 Benefits of Using ATM …………………………………………...……..14 Growth of ATM in Ethiopia ………………………………………...…....17 2.1.3 Service Quality and Customer Satisfaction ........................................................18 iii 2.2. Empirical Review……………………………………………………………......26 2.3 Conceptual Framework ………………………………………………..….……..28 2.4 Research Hypothesis……………………………………………………………..29 CHAPTER THREE: RESEARCH METHODOLOGY 3.1 Introduction………………………………………………………………………30 3.2 Research Design.....................................................................................................30 3.3 Population and Sampling Techniques.................................................................. .31 3.4 Methods of Data Collection ............................................................................... .33 3.5 Procedures of Data Collection ...............................................................................34 3.6 Validity and Reliability………………………………….…………………….....34 3.7 Methods of Data Analysis ................................................................................... .35 3.8 Ethical Consideration…………………………………………………………….35 CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND INTERPRETATION 4.1 Demographic Characteristics of the Respondents…………………….…………36 4.2 Data Analysis………………. ………………..………………………………….38 4.2.1 Descriptive Data Analysis .................................................................... 38 4.2.2 Correlation Analysis ..................................................................……….41 4.2.3 Multiple Regression Analysis.................................................................45 CHAPTER FIVE: SUMMARY, CONCLUSIONS AND RECOMMENDATIONS 5.1 Summary of Findings ............................................................................................49 5.2 Conclusions ......................................................................................................... .50 5.3 Recommendations .................................................................................................52 References ...................................................................................................................54 Appendix 1: Questionnaire for ATM users ................................................................IX Appendix 2: SPSS Results ………………………………………...……………….XV iv LISTS OF TABLES TABLE 2.1- Evolution of ATM……………………………………………………..13 TABLE3.1- Number of customers and proportion of samples taken from each branch………………………………………………………………………………...32 TABLE4.1- Respondent’s demographics statistics…………………………………..36 TABLE4.2 Descriptive statistics for service quality attributes………………………38 TABLE 4.3 Descriptive statistics for service quality dimensions……………………40 TABLE 4.4 Pearson Correlation between service quality attributes and customer satisfaction……………………………………………………………………………42 TABLE 4.5 Pearson Correlation between service quality dimension and customer satisfaction……………………………………………………………………………44 TABLE 4.6 Regression model summery…………………………………………….46 TABLE 4.7 ANOVA…………………………………………………………………46 TABLE4.8 Descriptive Statistics…………………………………………………….47 TABLE4.9 Coefficient……………………………………………………………….47 v ABSTRACT This research paper focuses on studying the effect of ATM banking service quality on customer satisfaction at selected Abyssinia bank branches in Addis Ababa Ethiopia. The main objective of this study is to examine the effect of ATM service quality on customer satisfaction. A sample of 381 customers was selected using Convenience sampling technique, and among those 290 was considered. Explanatory research design and quantitative and qualitative research methods used to analyze the data collected from customers. For the purpose of the study, primary data were collected using likert scale based questionnaire. In addition, the data was analyzed using descriptive statistics and inferential statistics. The result of this study shows that, there was significant relationship between all service quality dimension with customer satisfaction and SQ attributes with customer satisfaction in bank of Abyssinia. At the same time, all service quality dimensions and attributes significantly correlate to customer satisfaction and have significant influences on customer satisfaction. Among the dimensions, tangibles found to be the highest contributor for customer satisfaction. In conclusion, ATM banking service of the bank satisfies customers and has a positive and significant effect on customer satisfaction. Recommendations includes, improving the quality of human resources, increasing the number of ATM machines, working on the assurance and empathy dimensions are the major ones. Key words: ATM (automatic teller machine), service quality, customer satisfaction, SERVQUAL. vi CHAPTER ONE INTRODUCTION 1.1 Background of the Study In today’s intensive competitive economy, providing excellent customer service plays a vital role in a company success and failure. How the customers are deriving more and more benefits through the introduction of new innovative technology adopted by banking industry enhancing the good service quality level in order to meet their expectations. (Sabita, 2013) in line with technology advancement ,the advantages of using automatic teller machine (ATM ) have given new impetus in dimensions of service quality and Banks are offering new choices to customers. The idea behind the ATM was to automate the Bank tellers’ job, which subsequently removed the face-to-face interaction between the customer and the Bank teller by allowing the customer to use plastic cards with magnetic strips to access
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