Academic journal article UTMS Journal of Economics

Factors Affecting ATM Usage in India: An Empirical Analysis

Academic journal article UTMS Journal of Economics

Factors Affecting ATM Usage in India: An Empirical Analysis

Article excerpt


This study aims at identifying the factors affecting the customers demand for ATM services, by analyzing sample of 450 consumers' responses who have been interviewed personally through structured survey in 3 districts of Uttar Pradesh India. The results indicate that graduated and employed male customers who belong from higher income groups and having a bank account preferably in public sector bank are greatly emphasized to use of the banking services. Significant positive influence of the characterized socio-economic attributes on the use of ATM service was found. The service occupied customers significantly more emphasized to the use of ATM services. Noticeable, the banking attributes such as account type, convenience, number of services offered, and cost of banking services don't have very attentive influence on the use of advanced IT based banking services.

Keywords: ATM services, regression analysis, Logit Model, technology and innovation, consumer usage, customers satisfaction.

JEL classification: O32; O31

(ProQuest: ... denotes formulae omitted.)


The Indian Financial system is undergoing a period of substantial change, the impact of which is transforming the way financial services are delivered. Now a days there are number of alternative channels available for the delivery of services. The most commonly used delivery channel introduced for financial services is the ATM.

ATM is a cash rending teller machine. This helps a bank customer to withdraw money from his account without having to go to the bank. ATM is a user friendly, computer driven system, which operates 24 hours a day, 7 days a week. A totally menu-driven system, it displays easy-to-follow, step-by-step instructions for the customers.

It can be accessed using an ATM card that gives entry into ATM room. The Personal Identification Number (PIN), exclusive to each customer, has to be keyed-in for carrying out desired transactions.

From 1st April 2009 Reserve Bank of India (RBI) has abolished the charges which were being charged by the banks for using an ATM of other bank. Now banks will allow usage of any ATM of other banks to be used for three free transactions.

Some other experts believe growing levels of automation and cost control measures would make more and more transactions moving out of the branches. Dr V P Gulati, Director of Institute for Development of Research in Banking Technology (IDRBT), estimates that in mid-term, 40-50 percent of transactions will move to ATMs, 8-10 percent will move to Internet, 10-25 percent to mobile or Tele-banking, resulting only 15-40 percent of transactions will be done through branches (Professional Banker, August 2004).

The research of Burc Ulengin (1998) in Turkey and Almossawi (2001) in Bahrain concluded that ATM network in convenient locations was a dominant factor in bank selection decision making of consumers in those countries.

If a bank already has a reputation for technical innovation, its customers are likely to feel comfortable with more technology. But if a large share of its profits or growth comes from older customers who prefer personal service, it could be unwise to push ATMs too hard. Bank marketing managers need to continuously assess the customer's decisions-making process as well as the formation of attitudes, preferences and satisfaction of automated services. It is of little use for an organization to attempt to position an offering by emphasizing a particular attribute(s) that do not constitute significant choice criteria in target market (Devlin 2002).

Moutinho and Smith (2000) studied the bank customer satisfaction through mediation of attitudes towards human and automated banking. Their findings suggest that the drive towards 'ease of banking' and convenience is favored by customers and therefore banks should find alternative strategic routes designed to improve service delivery, either human based or technology based. …

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