The Impact of ATM Service Quality on Customer Retention: A Study of UBA, Ogun State
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Background of the Study
Automated Teller Machines (ATMs) are pivotal in shaping customer experiences in modern banking. UBA, a leading bank in Ogun State, has significantly invested in enhancing ATM service quality to ensure seamless banking experiences. With the rapid adoption of digital financial services, ATMs remain a crucial touchpoint for customers who rely on quick, efficient, and reliable access to cash and other banking services (Balogun, 2023). The quality of ATM services, including speed, reliability, ease of use, and security features, plays a vital role in influencing customer retention.
In recent years, banks have recognized that while digital channels are on the rise, ATMs continue to offer essential services—especially in regions where internet penetration may be inconsistent. UBA’s strategic deployment of ATMs across urban and semi-urban locations in Ogun State aims to address these needs. Enhanced service quality at ATMs, such as reduced transaction times, minimized downtime, and improved security protocols, directly contributes to customer satisfaction and loyalty (Adeyemi, 2024). This study examines the relationship between ATM service quality and customer retention, highlighting how technical performance and customer interface improvements can lead to sustained patronage.
The study also explores the impact of technological innovations—such as biometric authentication and real-time issue resolution—on customer confidence in ATM transactions. These advancements have the potential to mitigate common issues such as service disruptions and fraud, which often deter customers from using ATM services (Taiwo, 2025). By investigating these aspects, the research seeks to provide comprehensive insights into how improvements in ATM service quality can serve as a strategic lever for enhancing customer retention in the competitive banking environment.
Statement of the Problem
Despite UBA’s extensive network of ATMs, persistent challenges in service quality have raised concerns about customer retention. Frequent technical malfunctions, extended downtimes, and occasional security breaches have undermined customer trust and satisfaction (Afolabi, 2023). Many users have reported instances where ATM services failed to meet their expectations, leading them to seek alternative banking options. Additionally, the rapid technological changes in the banking sector mean that outdated ATM hardware or software can quickly become a liability.
The inconsistent performance of ATMs, especially in peak usage hours, further exacerbates the problem by causing customer frustration. Furthermore, a lack of timely maintenance and efficient customer support when issues arise contributes to the negative perception of ATM services. This study aims to identify the critical areas of ATM service delivery that require improvement and explore the correlation between service quality and customer retention. By understanding these challenges, the research intends to recommend measures that can enhance the reliability and efficiency of ATM services, thereby fostering greater customer loyalty and ensuring that UBA remains competitive in a rapidly evolving banking sector.
Objectives of the Study
- To evaluate the quality of ATM services provided by UBA in Ogun State.
- To determine the impact of ATM service quality on customer retention.
- To propose recommendations for improving ATM performance and customer support.
Research Questions
- How does ATM service quality influence customer retention at UBA?
- What are the key factors affecting ATM performance in Ogun State?
- What strategies can be implemented to improve ATM service quality?
Research Hypotheses
- Higher ATM service quality leads to increased customer retention.
- Technical reliability of ATMs is positively related to customer satisfaction.
- Effective customer support during ATM failures improves overall service perception.
Scope and Limitations of the Study
This study focuses on UBA’s ATM services in Ogun State. Limitations include variability in ATM locations, potential data collection challenges during technical downtimes, and the influence of external factors such as power supply issues.
Definitions of Terms
- ATM Service Quality: The measure of performance of ATM services including reliability, speed, and security.
- Customer Retention: The ability of a bank to retain its customers over time.
- Technical Reliability: The consistency and dependability of ATM operations.
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