An investigation of ATM service disruption effects on customer loyalty in banking: a case study of AB Microfinance Bank
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Background of the Study
ATMs have become an indispensable part of modern banking, providing customers with quick and convenient access to cash and other financial services. However, service disruptions in ATM networks can severely impact customer loyalty and trust. AB Microfinance Bank has experienced intermittent ATM outages and technical issues, prompting a need to investigate the repercussions of such disruptions on customer loyalty (Udo, 2023). This study examines how ATM service disruptions influence customer perceptions, satisfaction, and overall loyalty to the bank.
The reliability of ATM services is a critical component of customer experience in the banking sector. Frequent disruptions not only inconvenience customers but also erode their trust in the bank’s operational capabilities. AB Microfinance Bank, known for its efforts to expand its ATM network, now faces challenges in ensuring consistent service delivery. The bank’s investment in ATM technology is intended to provide a seamless experience; however, technical glitches and service interruptions have raised concerns regarding the reliability of its infrastructure (Nwachukwu, 2024).
Moreover, the impact of ATM service disruptions extends beyond immediate transaction failures. Persistent issues can lead to long-term customer dissatisfaction, prompting clients to consider alternative banking options that promise more reliable service. The study also explores how communication and problem resolution strategies during service disruptions affect customer loyalty. Effective crisis management, such as timely notifications and compensatory measures, may mitigate the negative impact on customer perceptions (Okeke, 2025).
This research aims to investigate the direct and indirect effects of ATM service disruptions on customer loyalty at AB Microfinance Bank. By analyzing customer feedback, service performance data, and incident reports, the study seeks to provide a comprehensive understanding of the relationship between ATM reliability and customer retention. The findings will offer strategic insights into improving ATM network performance and developing robust contingency plans to enhance customer trust and loyalty (Balogun, 2023).
Statement of the Problem
AB Microfinance Bank’s ATM network has been plagued by frequent service disruptions, which pose a serious threat to customer loyalty. One of the primary issues is the inconsistent performance of ATMs, which leads to customer frustration and decreased trust in the bank’s ability to provide reliable financial services. These disruptions are often attributed to outdated technology, inadequate maintenance, and system integration issues (Afolabi, 2024).
Furthermore, the bank has struggled to communicate effectively during service outages, resulting in a perception of poor customer support. The lack of timely updates and remedial actions exacerbates customer dissatisfaction and increases the likelihood of customers seeking alternative banking services. There is also insufficient data on the long-term impact of repeated ATM failures on customer retention, making it difficult for the bank to quantify the financial losses associated with decreased loyalty (Olu, 2023).
Additionally, the operational challenges associated with maintaining a widespread ATM network in both urban and rural areas add to the complexity of the problem. Environmental factors, logistical issues, and the rapid pace of technological change further complicate efforts to provide consistent and reliable ATM services. This study seeks to address these multifaceted challenges by identifying the key factors contributing to ATM service disruptions and examining their effects on customer loyalty at AB Microfinance Bank (Eze, 2024).
Objectives of the Study
• To assess the impact of ATM service disruptions on customer loyalty.
• To identify the key causes of ATM service failures at AB Microfinance Bank.
• To propose strategies for mitigating service disruptions and enhancing customer retention.
Research Questions
• How do ATM service disruptions affect customer loyalty at AB Microfinance Bank?
• What are the primary technical and operational causes of ATM failures?
• How can the bank improve its response strategies to mitigate the negative effects of ATM disruptions?
Research Hypotheses
• H₁: Frequent ATM service disruptions negatively impact customer loyalty.
• H₂: Effective communication during service outages reduces the adverse effects on customer retention.
• H₃: Upgrading ATM technology significantly decreases service disruption incidents.
Scope and Limitations of the Study
This study focuses on the ATM services of AB Microfinance Bank across selected regions. Limitations include potential variability in service quality across different locations and the rapidly evolving nature of ATM technology.
Definitions of Terms
• ATM Service Disruption: Interruptions or failures in the operation of Automated Teller Machines.
• Customer Loyalty: The likelihood of customers continuing to use the bank’s services over time.
• Crisis Management: The process of handling disruptions to minimize negative impacts on service delivery.
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