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Effects of Automated Teller Machine on the Performance of Nigerian Banks


1.0                                INTRODUCTION


In today’s business world, globalization and international experience has become critically important. Banking industries can no longer get away with operating loosely connected groups of businesses that happen to be located around the world, but must strategically integrate their activities. Mitroff stated that, only the banks, businesses, industries, and whole by societies that clearly understand the new rules of doing business in a world economy will prosper. Global competition in the banking sectors has forced management and executives to recognize that they must think differently about banking activities and management. As a global banking, the only way to succeed is to develop an effective global banking management system with personnel capable of designing and implementing transnational business strategies through the use of modern technology such as automated teller machines (ATMs).

Technology has tremendously stimulated expansion of the banking networks and range of the offered services during recent years. All banking services, such as electronic payments, loans, deposits, or securities have become heavily dependable on information and telecommunication technology. This is the main reason why banks are the biggest users of modern technology equipment. Due to the complexity of banking services, every opportunity to speed up their performance or to make them more accessible for customers is very well welcomed by banks. However with improvements of the quality of services, the important question appears if this process can provide the economic values for banks? Unfortunately not every increase in the customers satisfaction transfers into the higher bank profits, especially in the case of very expensive investments in technology like automated teller machines (ATMs).

Automated Teller Machine (ATM), also known as a automated banking machine (ABM) or Cash Machine and by several other names, is a computerised telecommunications device that provides the clients of a financial institution with access to financial transactions in a public space without the need for a cashier, human clerk or bank teller. On most modern ATMs, the customer is identified by inserting a plastic ATM card with a magnetic stripe or a plastic smart card with a chip, that contains a unique card number and some security information such as an expiration date or CVVC (CVV). Authentication is provided by the customer entering a personal identification number (PIN). Using an ATM, customers can access their bank accounts in order to make cash withdrawals, credit card cash advances, and check their account balances as well as purchase prepaid cellphone credit.

Ogbuji, et al. postulate that ATM allows a bank customer to conduct his/her banking transactions from almost every other ATM machine in the world. However, the spread of the machines has been generating a lot of heat, as customers face a splurge of frustration in using it; either the machines will not dispense cash, or debit transactions when cash is not dispensed or cards get stuck in them. Dapo indicate that the proliferation of the machines is giving more concern. As with every other technological breakthrough the ATMs have generated astronomical challenges and problems for the beneficiaries of financial services in Nigeria. Most users of ATM have encountered the problem of Scam. Apart from epileptic services rendered by the machines, faceless crooks steal from the accounts of hundred of bank customers via the ATM technology. The fraudsters perpetrate this financial crime by stealing the personal identification number, PIN, a special secret code that grants access to the usage of the cards, and consequently, getting hold of the funds of the susceptible ATM users.