AN ASSESSMENT OF THE USE OF AUTOMATED TELLER MACHINE (ATM) IN THE BANKING INDUSTRY IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

According to (Fabunmi, 2010), the modern society or the entire world has grown to a level that the use of computers in the chain of production is inevitable. The genesis of automation in the banking industry in Nigeria can be linked to the on-going struggle by individual banks for survival and growth. Automation means the use of automatic equipment in place of manual labour; Automation is also the use of machine for four D’s task where the four D’s stands for Dangerous, Difficult, Dirty, and Dull. In Nigeria, Automatic Teller Machine technology is becoming more common than it ever was. ATMs appear to be mainly provided by banks in Nigeria (Fasan, 2007). Yet, their widespread adoption by customers of banks is not clear, as it appears that peoples’ perception of the technology is diverse, which in turn affects their decision to actually use ATMs or not. ATMs are set up to provide 24 hour services to bank customers, who cannot expect to be able to transact with Adoption of Automatic Teller Machines in Nigeria banks in the same period of time (Ugwu, 2008). Nevertheless, it is observed that banks still have many customers transacting with tellers within their doors, and queues are still not a thing of the past inside banks. The patronage of ATMs is also not well defined, and even epileptic at best, as sometimes long queues were observed outside ATMs, while at other times, there are few or no customers. It is consequently, important to discover why this is so, because as a technology, ATMs are supposed to make life easier and more efficient for the customers of banks. Concerning banks, ATMs ought to assist in improving a banks’ turnover, therefore low patronage of

ATMs by their customers could affect the banks’ profit adversely. Therefore, there is a need to study the constructs that could affect the adoption of Automatic Teller Machines. Using a popular and widely used theory such as the theory of diffusion of innovation, it is expected from this study that the extent of diffusion of ATM will be determinable with a view to knowing what could be done to prevent the inhibition surrounding its use. Thus, it could be reasoned that the benefits of ATM can only accrue to adopters in Nigeria when barriers to their diffusion and adoption are identified. The DOI theory was used in an attempt to model the use of ATM in Nigeria, so that the progression of its use could be anticipated and fully catered for by banks. Although the application of the theory had been tested in previous studies there is a need for it to be applied locally using a recently introduced technology, such as ATM in Nigeria. The use of the theory is vital as there is a requirement for more information that could add to existing research. Furthermore, there appears to be a dearth of information concerning diffusion studies on ATM in Nigeria using the DOI model. Accordingly, this could reveal areas that require further research, and provide answers to hitherto obscure questions concerning ATM adoption and diffusion.