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Customer Satisfaction of ATM Service: A Case Study of HSBC ATM

Dr. Md. Rafiqul Islam Dr. Samir Kumar Sheel Pallab Kumar Biswas *

Abstract: The Automated Teller Machine (ATM) is one type of innovation that can mechanically accept deposits, issue withdrawals, transfer funds between accounts, collect bills, and make small loans. This study aims at investigating the satisfaction levels of HSBC ATM cardholders (both staff and nonstaff) with respect to various aspects (promptness of card delivery, the performance of HSBC ATM, the service quality of ATM personnel etc.) of using HSBC ATM and their opinions on various other related issues (such as positive and inconvenient features of HSBC ATM, recommendation to improve the service quality etc.). This study is one type of exploratory research using convenience sampling technique where samples have been selected on the basis of convenience. Thus, projecting data beyond the sample is statistically inappropriate. This study only provides information for analyzing ATM scenario of HSBC. Though the samples were selected on a convenience basis and it may not represent the whole population, but still it is no less important for the HSBC management to consider the recommendations with due care for better customer service and for being in a better competitive position. Keywords: ATM card, Machine breakdown, Unsuitable location, currency quality. 1.1 Background of the Study: 1.0 Introduction

Technology is revolutionizing the financial services industry through various unthinkable innovations. The volume of cross-border trading and other financial activities is increasing geometrically facilitated by technology. The influence of technology over product innovations in banks is enormous. In innovation process banks have to decide which products they wish to sell, whether they wish to build those products themselves, how they should deliver, and why they wish to deliver them to customers (Raihan 2001). Innovation is the art of overcoming constraints toward development. It occurs when a new or changed product or service is introduced to the market, or when a new or changed process is used in a commercial situation. No organization can remain happy with the existing products to cope with the competitors. Banks are no exception to this situation (Shahid 2004). The Automated Teller Machine (ATM) is such type of innovation that can mechanically accept deposits, issue withdrawals, transfer funds between accounts, collect bills, and make small loans. HSBC is one of the leading organizations in the modern financial world. . It started its operation in Bangladesh in 1996. Since then, it is their strategic decision to bring all modern technologies such as ATM, Easy Pay Machine etc. in banking in Bangladesh. This decision was to keep them in the market in a superior position competing in the market providing better services with various alternative channels 24 hours-a-day, and 7 days-a-week. The growth rate of HSBC ATM users are shown in the following table:

Table 1: Growth rate of HSBC ATM users

Particulars Growth rate

July 2000 -

July 2001 240.65%

July 2002 98.37%

July 2003 36.67%

July 2004 42.36%

July 2005 27.67%

Dr. Md. Rafiqul Islam and Dr. Samir Kumar Sheel are Associate Professors, Department of Marketing, University of Dhaka, and Pallab Kumar Biswas is a Lecturer, Faculty of Business Administration, Eastern University.

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Electronic copy available at: http://ssrn.com/abstract=990242

The above table shows that the use of HSBC ATM is increasing day by day. So it is high time to investigate how the customers feel with the HSBC ATM, what are their newer demands etc. 1.2 Statement of the Problem and Objectives of the Study: Commercial banking is considered as a service industry. In the process of conducting its own activities to achieve its own goals, i.e. making profit, a commercial bank provides various ancillary facilities (Ghosh 1981). Automated Teller Machine (ATM) is such an ancillary facility. ATM is a part of the electronic financial transactions systems. In Bangladesh, different banks are now offering ATM cards to their valued customers. The Hongkong and Shanghai Banking Corporation Limited (HSBC) also introduced the ATM facility in 1999. Different studies have been conducted by the internal management of this bank to have an idea about customer satisfaction about various banking products of HSBC, but no study has been undertaken to identify the level of customer satisfaction with respect of various aspects of HSBC ATM. But as day-by-day the use of ATM is increasing, it is important to make a study to gain insight about the level of customer satisfaction with respect to various aspects of HSBC ATM and to identify the problem areas and proposed recommendation leading to improvement. This study is such an attempt. The main objectives of the study can be stated as below: (a) To examine the level of nonstaff customer satisfaction associated with various aspects of HSBC ATM (such as promptness of card delivery, the performance of HSBC ATM, the service quality of ATM personnel etc.); (b) To examine the level of staff customer satisfaction associated with various aspects of HSBC ATM; and (c) To make policy recommendations to improve the service quality of HSBC ATM. 1.3 Rationale of the Study: The findings of the study will provide information to use in analyzing the current ATM situation of HSBC. As the use of ATM services is increasing day-by-day, on the part of the bank, it is important to have an idea about what the ATM users are thinking about various features of ATM, what are their problem areas, what are their recommendations, how do they compare the ATM service of this bank with that of any other banks etc. The banks marketing department also needs to have idea about the results of such types of study to determine appropriate marketing strategy. Thus the findings of the study will be very useful to them and it will also help the ATM section to identify their positive and negative features and the customer recommendation. The bank management can take actions on the basis of customer recommendations to improve the services and further growth assuming that the customers selected on the basis of convenience represent the whole population. 1.4 Limitations of the Study: In undertaking the study, a number of problems were faced. Thus the study has several limitations. The limitations are: (a) The survey conducted for the study is one type of exploratory research. So it does not provide conclusive evidence. Subsequent research will be required to provide conclusive evidence. (b) In this study because of acute time shortage and organizational restriction, nonprobability sampling technique (convenience sampling) has been used. So it is inappropriate to project the results of the survey beyond the specific sample. (c) In this study detailed classification of respondents could not be done. Each respondent might have been classified on the basis of their Age, Educational Background; Experience; Nature of profession; Types of Business; Sex; Status; etc. Analysis may be diversified done on the basis of this classification. -2Electronic copy available at: http://ssrn.com/abstract=990242

(d) As the sample size is very small, geographical and regional differences could not be made. (e) Because of time constraint, this study includes only Dhanmondi CSC and Uttara CSC other than head office ATM. 2.0 Methodology of the Study 2.1 Population and Sample: As a case study, the study covers only the HSBC. The population defined for this study was limited to the ATM users of HSBC and the Staff ATM users of HSBC head office. The population represents all the HSBC ATM users. In this study convenience sampling technique has been used. On the basis of convenience, 57 nonstaff ATM users and 42 staff ATM users were selected. 2.2 Database and Procedure of Analysis: Both primary and secondary data were used for the purpose of the study. One set of structured questionnaire was used to collect primary data for the study. Knowledgeable and potential respondents were consulted to make the questionnaire all inclusive i.e., all possible answers were given in the questionnaire. In the questionnaire responses were sought from various ATM users regarding their levels of satisfaction on various issues, opinion regarding the positive and uncomfortable features of HSBC ATM etc. In the questionnaire, respondents were asked ten questions of which eight were related to their level of knowledge and comments on various issues of the HSBC ATM. Two questions were asked to measure the level of satisfaction. In one question, respondents were asked to indicate their level of satisfaction regarding various aspects of the ATM (such as promptness of card delivery, performance, service quality of ATM personnel, quality of currency notes) of HSBC ATM on a 5-point scale (1 for Very Unsatisfied to 5 for Very Satisfied). In another question, a respondent simultaneously using other banks ATM was asked to compare the ATM service of HSBC with the service of other ATM used by him/her again on a 5-point scale (1 for Very Poor to 5 for Very Good). The questionnaire is shown in the appendix. After developing the questionnaire, it was given to two groups of respondents: HSBC head office staff who use HSBC ATM and nonstaff general HSBC ATM users. The staff users filled in the questionnaire themselves. For nonstaff ATM users, the survey has been conducted personally at selected ATM booths. Respondent ATM users have been explained the objectives of the study and requested to fill in the questionnaire in the spot. Besides many secondary sources have been used for supplementary purpose. Secondary sources include banks annual report, the group ATM branch procedure manual, relevant web-based materials and prior research reports. Data have been analyzed by using descriptive statistics. Mean levels of satisfaction of the two groups of respondents (nonstaff and staff ATM users) were calculated. By using these mean levels of satisfaction, information has been provided to use in analyzing the situation. As it is an exploratory research and convenience sampling technique has been used in selecting samples, this study does not provide conclusive evidence to determine particular courses of action. 2.3 Key Terms Used: For the purpose of the study, various key terms have been used, which are explained below. ATM: An automatic/automated teller machine (ATM) is an electronic device which allows a banks customers to make cash withdrawals and check their account balances at any time without the need for a human teller. Many ATMs also allow people to deposit cash or cheques, transfer money between their bank accounts or even buy postage stamps.

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ATM card: An ATM card is a plastic card that looks like a credit card. It allows the bank account holder to do the same things at a bank machine or Automatic Teller Machine (ATM) as he would at a bank. One can get cash, deposit money, check account balances, and receive a copy of your statement--all electronically--by using your ATM card and the password to your account, which is called your Personal Identification Number, or PIN (www.thebeehive.org). Debit card: Debit card is plastic card issued by a bank or building society to enable its customers with cheque accounts to pay for goods or services at certain retail outlets using the telephone network to debit their cheque accounts directly (Woelfel, 1994). Credit card: Credit card is plastic card issued by a bank or finance organization to enable holders to obtain credit in shops, hotels, restaurants, petrol stations etc. The customer receives monthly statements from the credit card company. This may be paid in full within a certain number of days with no interest charged or by means of a specified minimum payment plus a high rate of interest on the outstanding balance. The retailer or trader receives monthly payments from the credit card company equal to the total sales in the month by means of that credit card, less a service charge (Woelfel, 1994). Card mailer: A computer printed Bank Form with the address of the customer, PAN, date and a reference number used as the means of identifying which card and its presentation folder should be handled to which customer. ATM centre retains the card mailer after the customers signed in acknowledgment for the card. Card collection advice: A computer printed bank form sent out to the customer to advise his/her ATM card is ready for collection from their branch of account. GATS: Global ATM Switch Processor which is located in Hong Kong and performs switching of message, settlement and related services. Pin advice: A sealed envelope within which PIN is enclosed. The PIN advice and the PIN mailer are enclosed in a single window envelope and handed to the customer. 3.0 Evolution of ATM There has been a great deal of debate over the history of ATM, including who the ATMs inventor is. According to Invention & Technology Magazine (2000) in the late 1930s, Luther George Simjian started building an earlier and not-so-successful version of an ATM, but he register related patents. Starting in 1939, Simjian registered 20 patents related to the device and persuaded what is now Citicorp to give it a trial. But the patent was unsuccessful because after six months, the bank reported that there was little demand. Afterwards New Yorks First National City Bank (now CitiBank) installed a Bankograph (ATM predecessor) in several branch lobbies in 1960. The idea was for customers to pay utility bills and receipts without having to see a teller. A Barclays Bank branch near London takes the pride in installing first cash dispenser made by De La Rue Instruments in 1967. It uses paper vouchers from tellers. The machine is called the De La Rue Automated Cash System, or DACS. This was produced by NCR in Dundee. This instance of the invention is credited to John Shepherd-Barron, although George Simjian registered patents in New York, USA in the 1930s and Don Wetzel and two other engineers from Docutel registered a patent on June 4, 1973. Afterwards Barclays and a few other banks introduce a machine that encodes cash on plastic cards purchased from a teller in 1968. The problem is that the machine always eats the cards, and customers have to buy new cards if they want to make more transactions. First use of ATM magstripe cards started in 1969. Docutel installs its Docuteller machine at New Yorks Chemical Bank. the installation marks the first use of magnetically encoded plastic.Other manufacturers get into the game, but Docutel is the first to apply for a patent. Docutel is later credited by Smithsonians National Museum for Americal History as being the ATMs inventor. Doland C. Wetzel is given the credit for developing the Docutel machine. Docutel introduces its Total Teller, the first true fully functioning bank ATM in 1971. after 1971, proliferation begins to make the product more custoemr oriented. By 1973, 2000 ATMs- mostly form Docutel are operating in the United States. They sell for about $30000 each. Diebold begins

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work on the development of the TABS 600 with plans for an off-line prototype. Diebolds first TABS 500 machine, an off-line version, is installed at a bank in Atlanta in 1974.Diebold develops the TABS 550, an on-line and off-line version. The flexibility of the machine makes it unique and more marketable to banks. The TABS 600 also is developed. The first IBM-compatible Diebold machine is installed at a bank in Indianapolis in 1978.Gradually with the popularity of ATM services this sector has developed dramatically (http://inventors.about and www.atmmarketplace.com). Although the 1st Cash Dispenser machine in Bangladesh was installed by Agrani Bank at Press-club branch but the modern use of ATM started in Bangladesh by Standard Chartered Bank in the early 90s. HSBC installed ATMs in 1997 and now they have 12 ATMs and 5 Easy Pay Machines (EPMs). 4.0 HSBC ATM: An Overview The HSBC Group introduced Automated Teller Machine (ATM) services to HSBC Hong Kong in 1980. The acronym ETC (Electronic Teller Card) was selected for the card as the Chinese translation meant easy flow of money. Therefore, ETC is the universally accepted title for the Groups local ATM cards which provide local customers with ATM services. As the need for money overseas increases, the Group has developed the ETCI (Electronic Teller Card International), also known as Global Access Card, to meet the transaction needs of frequent travelers. With the rapid growth of HSBCs global ATM network in recent years, the network was formally named Global Access in February 1992 with the Chairmans endorsement. The service is available 24 hours a day and 7 days a week. The purpose of the ATM service is not only to the public the progressive image of the Bank, but also to protect the market share of retail deposits if not to increase it. 4.1 ATM service area of HSBC: HSBC ATM (Automated Teller Machine)s are available in Dhaka and Chittagong covering Motijheel, Gulshan, Banani, Dhanmondi, Uttara, Sonargaon Road, Shantinagar, and Agrabad & GEC Circle respectively.Currently HSBC has 14 ATMs and 5 Easy-Pay Machines (EPMs). Nonresident Bangladeshis having HSBC ATM card and selected group of Bangladeshi customers having International card can access 800,000 ATMs through out the world. Foreigners having HSBC card can also get access into HSBC Bangladesh ATMs when they visit Bangladesh. 4.2 Features of HSBC ATM: The HSBC ATM enables the banks customers who are issued with an ETC/ETCI/Global Access Card/Credit Card and a 6-digit secret number (or 4-digit number for some areas) known as a PIN (Personal Identification Number), to comply with the local share ATM network regulation, to perform a number of transactions on the current, savings or credit card accounts. Table 2 enumerates the variety of those transactions. Table 2: Features of HSBC ATM
Cash Withdrawal From the ATM booth any ATM card holder can withdraw 50,000 taka in a day from his or her account. The customer of ATM card can withdraw in total 50,000 taka from any ATM booth as many times as he or she needs within 24 hours. Any amount up to account balance/available credit limit or daily cycle limit, whichever is lower, can be transferred between accounts under the same issuing bank within Bangladesh in any 24 hour period. In Bangladesh, the cycle limit is BDT (Bangladesh Taka) 1,00,000. The customer can send request to the bank by the ATM, when he/she requires his/her detail Account statements. The statement generally shows a ledger balance and an available balance, is the same format as a teller terminal balance request.

Transfer

Statement Request

When any customer enter the card into the ATM machine it displays some options -5-

PIN Change

on the ATM screen, PIN Change is one of the options. Customer can change his PIN whenever he desires e.g. if he is not happy with the PIN assigned by the bank, or if he believes that his PIN is compromised. For new card, customer is advised to change his PIN immediately. Account Activity The ATM users can have information regarding the account balance of his/her account Enquiry each and every time the ATM transaction is occurred. HSBC ATM has a option to provide a mini statement showing his/her last 8 (eight) transactions. Deposit/mail deposit Cash/Cheque, but not coins may be deposited in envelopes supplied by the ATM. Cheque Book The customer can send request to the bank by the ATM for new cheque book, when Request his/her current cheque book is finished. Enquiry Customer can enquire about anything, like any service, product, facilities through HSBCs ATM.

5.0 Previous Research Findings A fair number of theoretical and empirical researches on ATM and ATM card have been undertaken throughout the globe due to the increasing scale of use of ATM cards and consequent conversion of the economy into a cashless one. In the twenty-first century, ATM cards have become one of the most popular non-cash instruments in the United States and popularity has been explosively growing around the world. As Stuart E. Weiner (1999) pointed out: The total number of ATM transactions has more than doubled over the last ten years and is estimated to reach near 11 billion again this year. And although there are signs that ATM volume may be peaking, ATM access continues to grow. The total number of ATM terminals has tripled over the last ten years. Robert E. Litan (1999) described the introduction and rapid use of ATM as the most visible revolutions in banking sector. He also supported his claim by stating: , ATMs offer consumers the convenience of banking in many more locations than ever before. Indeed, ATMs far outnumber brick-and-mortar banks, in large part because they are cheaper to operate than a bank branch. Today, nearly 200,000, ATMs are found throughout the country, more than the collective number of branches of banks, thrifts, and credit unions (approximately 83,000). In another article James J. Mcandrews (2003) talked about various utilities of ATM because of which it has become so popular worldwide. The utilities include withdrawal of cash at more convenient times and places than during banking hours at branches, reduction of cost servicing etc. The above mentioned articles talked about the various aspects of ATM mainly from the customers viewpoint. But Maria Gloria Cobas et al.(2001) have generalized some of the driving forces behind banks decisions to install ATMs in the United States. According to the authors: ...in the early 1970s, when rising inflation and interest rates made it more difficult for consumers to borrow, reduced consumers loyalty to their local banks. These changes in economic conditions and consumer attitudes stimulated competition among financial institutions. For banks that could afford the investment, ATMs represented an attractive strategy through which to distinguish themselves and achieve a competitive market advantage.....In the second half of the 1970s, more institutions began to install ATMs to enhance customer service and as a defensive measure against competition from other banks. Cost savings to banks were not a driving factor. Consumers used ATMs to access their accounts more frequently, so that the overall number of transactions increased ... In the 1980s, other factors began to influence ATM installations. Because construction and operation of brick and mortar branches became

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increasingly expensive, some banks limited branch expansion or closed branches. ATMs provided a partial substitute for those lost branches. Cash dispensing is still thought to be the killer-app of ATMs. Large numbers of customers still rely on ATMs for cash, but few constantly use them for other services (Cobas et al.2001). Professor Norman Penney claims the development of ATM services occurred for three reasons. First, financial institutions hoped to improve their competitive positions by attracting customer accounts and . . . increase their revenues by increasing loans, creating higher balances, and enhancing their financial services packages. Second, ATMs were designed to perform many of the same tasks as a human teller at a lower cost. Finally, Professor Penney notes that some financial institutions made ATM decisions based on marketing considerations. For example, before building a new branch, one financial institution in Florida used its ATM to test whether the location would support a branch office. Financial institutions have also used ATMs to encourage the direct deposit of payroll (Pidgeon, 2000). In Bangladesh, a broad spectrum of electronic banking services is available with different degree of penetration. Credit card service is provided by 23.1% of banks (PCBs and FCBs). Among other electronic banking services tele-banking (19.2%), electronic fund transfer (15.4%), and ATM (15.4%). ATM is gradually becoming popular in major cities. Some foreign banks provide electronic fund transfer services. A group of local banks have introduced shared ATM network, which has increased availability of this type of electronic banking service. The network will gradually be extended to other parts of the country (Raihan et al, 2001). There are huge potential cost savings if the banks manage to carry out a higher percentage of their transactions over the internet and other channels such as ATM (Raihan, 1998). Though various articles have been published in various articles in Bangladesh regarding electronic banking, computerization, innovation in banking sector etc but no separate study has been undertaken regarding customer satisfaction of ATM service. Though, the banks who are issuing ATM cards provide brochure to make the users understand what ATM is, how to use the service, the cost of service etc, but they rarely have information regarding the level of customer satisfaction with respects to various aspects of ATM use. 6.0 Survey Findings This section deals with the survey findings related with the questions that demanded the ATM users perception about the levels of satisfaction with respect to various issues. The survey findings with respect to the level of customer satisfaction with various aspects can be shown in the following table: Table 3: Level of Customer Satisfaction with various aspects Items Average level of satisfaction Nonstaff users Staff users Promptness of card delivery 3.54 3.88 The performance of ATM 3.12 4.00 The service quality of ATM personnel 4.05 4.17 The quality of notes (currency) 3.05 3.31 Relative Position of HSBC ATM 3.24 3.31 The above table indicates that both the nonstaff as well as staff ATM users are at more than neutral state of satisfaction (the neutral state of satisfaction is denoted by 3) with respect to

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various aspects of ATM. But the staff users are more satisfied in all respects than the nonstaff ATM users. Both types of ATM users are satisfied (denoted by 4) in respect of the service quality of ATM personnel. In addition to this, staff ATM users are somewhat satisfied with respect to the performance of HSBC ATM. 6.1 Knowledge about the features of HSBC ATM and use of the features: The ATM users (selected on the basis of convenience) were requested to answer whether they know all the features of HSBC ATM and whether they ever use the facilities other than cash withdrawal. The results are given below: Table 4: Nonstaff ATM users knowledge about the features of ATM Knowledge about the Number Percentage Use of features by knowledgeable persons features of users (%) other than cash withdrawal Yes 37 65 Yes No 20 35 Total 57 100 32 (86 %) No Table 5: Staff ATM users knowledge about the features of ATM Knowledge about the Number Percentage 5 (14features by knowledgeable Use of %) features of users (%) persons other than cash withdrawal Yes 34 81 Yes No 8 19 Total 42 100 32 (94 %) No The above tables show that about 65% of nonstaff and 81% staff respondents know about the 2 (6 %) various features of HSBC ATM. Out of 65% nonstaff respondents, 86% use the facilities other than cash withdrawal (32). But about 35% of the respondents do not know all the features of the HSBC ATM. The % is a material one. Out of 81% staff respondents, 94% use the facilities other than cash withdrawal. Only 19% of the respondents do not know all the features of the HSBC ATM. Though this percentage is not a material one, but it is not a good signal that even the HSBC staffs dont know the features of ATM. 6.2 Comment on the positive features of HSBC ATM Table 6: Customers comment on positive features Features Nonstaff customers Staff customers Number Percentage (%) Number Percentage (%) Cash withdrawal 57 100.00 42 100 Service quality of ATM personnel 43 75.44 34 81 Off-shore ATM 38 66.67 32 76 Time savings 36 63.16 30 71 Easy to use 35 61.40 30 71 Prompt card delivery 33 57.89 32 76 24 hour service in 365 days 33 57.89 25 60 Account activity enquiry 22 38.60 24 57 Statement request 21 36.84 20 48 Safety-security 20 35.09 18 43 Transfer 19 33.33 20 48 Deposit/Mail deposit 19 33.33 18 43 PIN change 18 31.58 18 43 Good decoration & tidiness 18 31.58 18 43 Enquiry 13 22.81 15 36

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So the customers consider the cash withdrawal, service quality of ATM personnel, offshore ATMs, time savings, easiness in use, prompt card delivery as the positive features of HSBC ATMs. But the customers are not well aware of the positive features such as account activity enquiry, statement request, transfer, mail deposit, pin change, enquiry etc. 6.3 Comment on the uncomfortable features/issues of HSBC ATM: Table 7: Customers comment on uncomfortable features of HSBC ATM Uncomfortable features Nonstaff Staff Number Percentage (%) Number Percentage (%) Machine breakdown 37 64.91 16 38 Unsuitable location 30 52.63 13 31 Poor money quality 26 45.61 23 55 Unsecured 25 43.86 4 10 Machine complexity 22 38.60 7 17 Delay in card delivery 18 31.58 8 19 Card locking 7 12.28 7 17 Poor service quality 5 8.77 More denominator of currency 3 5.26 Old fashioned & untidy 1 1.75 2 5 The nonstaff ATM users feel that the HSBC ATM suffers from a number of uncomfortable features such as Machine breakdown, Unsuitable location i.e. insufficient number of ATMs; Poor money quality, Security problem particularly in Banani ATM. According to the staff (selected on the basis of convenience) poor money quality, machine breakdown, unsuitable location, delays in card delivery are the main problems of HSBC ATM. 6.4 Recommendation made by customers: Recommendation New ATM locations Better quality currency Increase of safety security More user friendly machine Increase in number of ATM Prompt card delivery Better customer service Facility to pay utility More withdrawal limit More denominator Making more attractive-decorations Table 8: ATM users recommendations Nonstaff Number Percentage (%) Number 42 61.40 30 26 45.60 23 25 43.86 4 22 38.60 7 20 35.09 15 20 35.09 8 5 8.77 5 8.77 5 3 5.26 3 5.26 1 1.75 1 Staff Percentage (%) 71 55 10 17 36 20 12 2

In order to improve the service quality of HSBC ATM, the nonstaff as well as staff ATM users made different types of recommendation. The recommendations include increase in the number of ATM locations, better customer quality, increase of safety security, more user friendly machine, increase in number of ATMs, prompt card delivery etc.

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The preference for new location: According to the nonstaff customers the following are the most important locations where HSBC can set up new ATM booth: Table 9: Nonstaff customers preference for new location Location Response Percentage (%) Mirpur 30 52.63 Mohammadpur 28 49.12 Mohakhali 25 43.86 The other locations include Farmgate (10), and Jatrabari (5). Among the different new locations selected by the staffs, the following are noteworthy: Location Mirpur Newmarket Mohammadpur Rampura Table 10: Staff customers preference for new location Response Percentage (%) 30 71.00 20 48.00 18 43.00 10 24.00

The other locations include Shaymoli, Mohakhali, Shahbag etc. 6.5 Comment on additional facilities by customers: Here the respondents were requested to comment on whether they want any further facilities other than ATM such as debit card, credit card etc. The responses are given in the following table: Facilities Debit card Credit card Both None Total Table 11: ATM users comment on additional facilities Nonstaff Staff Number Percentage (%) Number Percentage (%) 10 17.55 30 52.63 30 72.00 12 21.05 12 28.00 5 8.77 57 100.00 42 100.00

So the customers want some more facility such as credit card facility to be used in HSBC ATM. 7.0 Summary of Findings The survey findings can be summarized in the following manner: The staff and nonstaff HSBC ATM users (selected on the basis of convenience) are more than neutral state in respect of all the criteria selected to determine the level of satisfaction. The average satisfaction level of staff ATM users is more than that of nonstaff ATM users in all respects. And the difference is material in case of their opinion regarding the performance of HSBC ATM. The reasons can be explained below: Use of Branch ATM: The staffs use the facilities of branch ATM more than the off-site ATMs. The reason is obvious. They work in a particular branch. After the end of the day, or at a time of need if they are at the office, they use the branch ATM facilities. The branch ATM

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facilities are generally better than the booth ATM facilities. Because whenever the branch ATM facilities are out of order or some sort of problem arises with respect to branch ATM, the branch staffs can take quick action to bring the facility in order or to solve the problem. But in case of off-site ATM, the HSBC uses the services of Group 4 Falck which on behalf of HSBC, conducts the appropriate maintenance functions such as currency refilling, deposit collection, currency sorting, maintenance etc. So whenever a particular off-site ATM goes out of order for any reason, the authorized personnel of Group 4 Falck go to the problem area and conduct the repair & maintenance. But the communication consumes much time, for example, if the Group 4 Falck members are at Dhanmondi CSC, and problem arises in Uttara CSC , it takes time for them to reach Uttara. So during the time the customers have to wait for their arrival or move to other ATM booth. But the staffs face this type of problem rarely as they use branch service more. Psychological reason: The staff respondents hold good impression about their organization. So whenever they were requested to comment on their satisfaction levels in various aspects of ATM, they generally provided positive responses which are consistent with their mental setup.

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The main problem areas of HSBC ATMs are listed below: Machine breakdown: About 65% nonstaff and 38% staff ATM users feel that machine breakdown is the main problem of HSBC ATM. Machine breakdown generally occurs for the following reasons: Poor quality notes: If the notes supplied in the ATMs are of poor quality, the chance of machine breakdown increases. Because the sensor that picks the notes from the cassette cant operate smoothly. High frequency of use: As the number of ATMs of HSBC is less than that required, the frequency of use of ATM is very high. As ATM is a machine, the probability of going out of order rises with the high frequency of use of machine. Unsuitable location: About 53% customers and 31% staff ATM users feel that the location of HSBC ATM is unsuitable for the users. It means that the numbers of HSBC ATMs are so limited that the users have to face difficulty to get its service. Poor Currency Quality: About 55% staff and 46% customers believe that poor currency quality is a great problem of HSBC ATM. In respect of quality of notes, the mean satisfaction level is the lowest for both staff as well as nonstaff customers. The customers average satisfaction level is 3.05 and that of staffs is 3.31. This lowest satisfaction level indicates that the notes supplied at various ATMs are not of good quality. As a result, the customers receive poor quality notes such as old notes, torn notes etc. Unsecured: About 46% customers and 10% staff believe that the security system of HSBC ATM is not sufficient. By the term unsecured the customers mean that there exists security problem for them outside the ATM booths. It has found that from outside, any person can see through the glass of HSBC ATM what the customers are doing inside the booth.

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Machine complexity: About 38% nonstaff and 17% staff ATM users believe that the ATM machines are complex i.e. they are not easy to use. Customers generally put this argument when their cards are retained by the ATM machine. Cards may be retained for many reasons but ultimately the blame goes to the machine. Another reason can be that people in Bangladesh still get frightened while using any types of machine that deals with money. Delay in card delivery: About 32% nonstaff customers and 19% staff believe that the HSBC ATM center is not efficient in making quick delivery of cards. Delay in card delivery generally occurs because HSBC Bangladesh does not own any ATM card embossing machine nor it uses the facilities of any institution in Bangladesh. The HSBC ATM cards come from Hong Kong. So it takes time in making delivery. Moreover, HSBC ATM center uses the facilities of Sonar Courier, a private courier service-provider, to make delivery of cards which are to be delivered to the specific address of customers. Sonar Courier personnel sometimes fail to make delivery to the address because of the following reasons: Wrong address of customers; Incomplete address of customers; Fictitious address of customers; and Address which is outside the serving area of Sonar Courier. If such problem arises, Sonar Courier returns the cards back to the ATM center which then sends the cards to the respective branch where the customers opened the account. All these take time and delay in card delivery occurs.

Though HSBC ATM has many positive features such as account activity enquiry, mail/cheque deposit, statement request, PIN change, transfer, enquiry etc., the nonstaff ATM users and a material percentage of staff ATM users are not well aware of these. As a result for facilities other than cash withdrawal and cash deposit, they normally have to depend on the branch services. With respect to service quality of ATM personnel, both the nonstaff and staff users are satisfied. The average level of satisfaction is 4.05 for nonstaff customers and 4.17 for staff ATM users. It means that the ATM personnel have performed extremely well in serving the customers for their various needs. Other than ATM cards, customers also want credit cards, and debit cards. Recently, Standard Chartered has introduced debit card in addition to ATM card facility. The customers of HSBC feel the need of credit and debit card facilities. About 53% of nonstaff and 72% of staff ATM users demand the facilities of credit card to be incorporated in the ATM card. At present, HSBC offers debit as well credit cards but it has not yet allowed these cards to be used in ATMs. Customers want the restriction to be relaxed. The customers of HSBC ATM have made different recommendations for the improvement of service quality of HSBC ATM which have policy implications. The most important recommendations and their policy implications are as follows: New ATM locations: At present, numbers of ATM location are not sufficient to meet the needs of growing number of ATM users, new ATM location is a crying need. About 62% of nonstaff and 71% of staff ATM users (selected on the basis of convenience) have suggested the need for new ATM locations.Customers have also suggested the locations of new ATMs such as Mirpur, - 12 -

Mohammadpur, New market, Mohakhali etc. So the top management should consider the growing demand of new ATM locations. But they should consider the costs and benefits of such decision. Better quality currency: Better quality currency is another important recommendation of customers. About 46% of nonstaff and 55% of staff customers of HSBC ATM think that the currency quality should be improved. It can be done by supplying new notes to the ATM. The HSBC should make sufficient arrangement so that they can receive better quality notes from Bangladesh Bank. Increase in number of ATMs:

The present ATMs are located in various busy places. Customers have to wait in line to get facility of these ATMs. It consumes their valuable time. So about 36% of customers have urged for the increase in number of ATMs in an existing booth. Management might consider increasing the number of ATMs. But here they should also consider the liquidity issue. New ATMs will mean that more liquid money more be needed and if the demand is not enough, the organization will face the problems arising out of excess liquidity. So management should consider the issues while making the decision. More user friendly machine: About 39% customers (nonstaff) and 17% of staff customers think that the ATMs should be more user friendly. User friendliness can be improved by increasing awareness of how ATMs can be used. Another option may be redesigning the software used in ATMs. Increase of safety security: About 44% of nonstaff ATM users believe that the safety and security measures should be improved inside and outside ATMs. This can be done by Use of nontransparent glass so that people outside the ATM booth cant see what is happening inside the ATM. More security measures outside the ATM booth through requesting the appropriate law-enforcing agencies. Providing licensed arms to the security persons of ATM. Prompt card delivery: About 35% nonstaff and 20% staff ATM users think that there should be quicker delivery of ATM cards to the customers. This can be done by one of the following two ways: Importing embossing machine: At present HSBC Bangladesh does not own any embossing machine and does not use the embossing facility of any organization because of poor quality. But HSBC Bangladesh has to bear the procurement charges, courier charges of new ATM cards, etc. So it can think of importing the embossing machine to Bangladesh which will facilitate prompt card delivery, savings of courier charges, new employment generation (social responsibility) etc. HSBC Bangladesh should consider the costs of new embossing machine as well the potential benefits while making such decisions. Motivating the customers to provide exact address to which the ATM cards will be posted and in case of change of address, communicating the address change to the appropriate authority. Motivating the courier authority to increase their service area so that no card is returned back due to nonavailabilty of service.

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8.0 Scope of Future Research Further studies can be undertaken in this area. For instance, Quality Function Deployment (QFD) technique may be used to find ways to improve customer satisfaction of ATM service. QFD concentrates on maximizing customer satisfaction (positive quality) by seeking out both spoken and unspoken needs, translating these into actions and designs, and communicating these throughout the organization end-to-end. Further QFD allows customers to prioritize their requirements, benchmark against competitors, and then direct to optimize those aspects of product, process, and organization that will bring the greatest competitive advantage (www.qfdi.org). so customers requirements and their relationships with design characteristics are the driving forces of QFD methodology (Govers 2001). Again, in this study, convenience sampling technique has been used. The use of this sampling is subject to error. So further research can be undertaken using the random sampling technique to make the sample more representative of the total population. 9.0 Concluding Remark From the above analyses, it is evident that HSBC ATM has many positive features but the customers selected on the basis of convenience are not well aware of all these. These customers are also facing different types of problems with which ATM is directly related. Machine complexity, machine breakdown, poor quality notes etc. are the major problems identified by the ATM users. Some inconvenient features are not directly related to HSBC ATM such as safety-security, decoration etc. Staff and nonstaff ATM users have different levels of satisfaction with various aspects of HSBC ATM. The most important thing is that at every aspect, the selected customers have more than neutral state of satisfaction. Though this study cant provide conclusive evidence to determine particular courses of action and further research will be required to provide conclusive evidence. But the management of HSBC should consider the findings and take all necessary steps for further research and if they think that the customers of HSBC ATMs are homogeneous in their choice and preferences, They may follow the recommendations made by the customers such as increase of number of ATM locations, new ATMs, better currency quality, increase of safety-security, introduction of credit card, debit card etc. to gain more customer base and achieve more customer satisfaction. References Anderson, D. R., D. J. Sweeney, T.A. Williams (2000), Essentials of Statistics Statistics for Business and Economics (New York: South-Western College Publishing, Second Edition): 81-82. ATM Cards, available at http://www.thebeehive.org/money/atm-cards.asp (accessed on 25.09.05) Automated Teller History, available at http://www.atmmachine.com/atm-inventor.html (accessed on 22.08.05) Automatic Teller Machine, available at http://en.wikipedia.org (accessed on 30.08.05) Automatic Teller Machine, available at http://www.frodop.com/atm/ (accessed on 22.08.05) Bala, S. K., M. A. Yusuf, and A. Chowdhury (2005), Use of Credit Cards in Bangladesh: Enabling Smart Business in the Digital Age, Journal of Marketing (Dhaka University), forthcoming. Cabas, M. G.(2001), A History of The Future of Banking: Predictions and Outcomes, available at http://www.hass.berkeley.edu/finance/CMWpaper.pdf (accessed on 29.09.05)

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Ghosh, S. N., J. C. Shukladas, and M. Ahmed (1981), Choice of Banks, Customers Service and Credit Policy, a case study of the Consensus among Bank-Executives, depositors and borrowers of Nationalised Commercial Banks of Bangladesh, Dhaka: Bureau of Business Research, University of Dhaka. Govers, Cor P.M. (2001), QFD not just a tool but a way of quality management, International Journal of Production Economics, Vol. 69: 151-159. Gupta, S. P. (1994), Practical Statistics (New Delhi: S. Chand & Company Ltd.). Hasib, A.T.M. (2005), HSBC ATM service, an unpublished paper presented at HSBC Officials Meet, Dhaka. HSBC Group, A brief History, available at www.hsbc.com. HSBC (1998), The Group ATM Branch Procedure Manual, Hong Kong: HSBC; June. Hunt, R. M. (2002), An Introduction to the Economics of Payment Card Networks, Review of Network Economics, Vol. 2, Issue 2 (June): 80-96. Kothari, C. R., Research Methodologies: Methods and Techniques (New Delhi: Wishwa Prakashan, Second Edition). Litan, R. E. (1999), ATM Fees: An Economic Analysis, available at www.aba.com/aba/ (accessed on 17.09.05) Mazur, Glenn. Voice of the Customer (Define): QFD to Define Value, a publication by QFD Institute, University of Michigan, available at www.qfdi.org, accessed on 22.02.06 McAndrews, J. J. (2003), Automated Teller Machine Network Pricing A Review of the Literature, available at http://www.rnejournal.com/articles/ (accessed on 15.09.2005). Pidgeon, A.C. (2000), Show Me The MoneyBut Dont Make Me Pay For It: An Analysis Of Why Legislation Banning Atm Surcharges Is Inappropriate And Unwarranted, available at www.law.nyu.edu/journals/legislation/articles/ (accessed on 19.09.05). Raihan, A. (1998), Information Technology and Electronic Banking, Bank Parikrama, Vol.XXIII, Nos. 3&4 , September & December, 1998. Raihan, A. (1999), Status of Banking Technology in Bangladesh, A Seminar Paper presented in BIBM, July 1999. Raihan, A., S. R. Khan, M. R. Alam and K. Rabbi (2001), Computerization and IT in Banking Sector: Hindrances and Remedies, Bank Parikrama (Dhaka: BIBM), Vol. XXVI, No. 1 (March): 95-133. Rahman, M. M. (2003), Present Status of E-Banking in Bangladesh, Journal of the Institute of Bankers, Bangladesh (IBB), Vol,50, No. 1 (June): 101-113 Reserve Bank of Australia (2000), Debit and Credit Card Schemes in Australia: A Study of Interchange Fees and Access, mimeo (October). Shahid, A.T.M A. et al. (2004), Innovation in Banking Products, Bank Parikrama, Vol.XXVIII & XXIX, June 2003- Dec 2004. Standard Charterd Bank (2002), Card Services Directory (Dhaka: Card Services, Hadi Mansion, Dilkusha Commercial Area). The History of ATM, available http://inventors.about.com/library/inventors/blatm.htm (accessed on 29.09.05) The HSBC Business Profile, available at: www.hsbc.com/businessprofiles

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Timeline: The ATMs history, available at http://www.atmmarketplace.com/ (accessed on 2.10.05) Vanik Bangladesh Ltd. (1999), The Key to a Better Life (Dhaka: Kemal Atatturk Avenue, Safura Tower, Banai). Weiner, S. E. (1999), Electronic Payments in the U.S. Economy: An Overview, available at http://www.kc.frb.org/publicat/econrev/PDF/4q99wein.pdf (accessed on 01.10.2005). Woelfel, Charles J. (1994), Encyclopedia of Banking & Finance, Delhi: S Chand & Company Ltd. Zikmund, W. G. (2003), Business Research Methods, USA: Thomson South-Western.

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Appendix

Use of ATM and the level of satisfaction


Location: . Point Level of satisfaction 1 Very Unsatisfied 2 Unsatisfied 3 Neutral 4 Satisfied 5 Very satisfied

Questionnaire Please put tick () /comment on the following as appropriate:


1. Level of satisfaction with v The promptness of card delivery: v The performance of HSBC ATM v The service quality of ATM personnel (Query response, timely action on request etc) v The quality of notes (currency) 1 2 3 4 5

2 YES YES

2. 3. 4.

Do you know all the features of HSBC ATM? If yes, have you tried ever to use the facilities other than cash withdrawal? If no, what is the reason behind your reluctance?
q q q q q q

It is cumbersome I dont like it Branch service is better It cant provide me required information It is time consuming Any other-please specify

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5.

What are the positive features of ATM service of HSBC


q q q q q q q q q q q q q q q q

Prompt card delivery Easy to use Satisfied with the service quality of ATM personnel Time savings 24 hour service in 365 days Off-shore ATM Cash withdrawal Account activity enquiry Transfer Deposit/Mail deposit Statement request PIN change Enquiry Safety-security Good decoration & tidiness Any other-please specify are the uncomfortable features/issues of HSBC ATM? Poor money quality Card locking Delay in card delivery Machine complexity Machine breakdown Unsuitable location Unsecured Old fashioned & untidy Any other please specify

6. What
q q q q q

q q

7.

q What are your recommendations to improve HSBC ATM services? More user friendly machine q Better customer service Prompt card delivery New ATM locations Increase in number of ATM ( which location) More withdrawal limit

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Facilit y to pay utilit y Increase of safety security Better currency quality Making more attractive-decorations Any other- please specify

8.

Other than ATM, do you want Debit card Credit card Both None Any other-please specify

9. Do you use the ATM service of any other bank? 10. If yes, how can you compare the ATM service of HSBC with the same of any other bank in Bangladesh?
Very poor Poor

YES
Average Good Very good

Thank you very much for your time, cooperation & patience

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