International Journal of Bank Marketing

Perceived Attributes of ATMs and Their Marketing Implications

Robert Rugimbana Philip Iversen
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Robert Rugimbana Philip Iversen, (1994),"Perceived Attributes of ATMs and Their Marketing Implications", International
Journal of Bank Marketing, Vol. 12 Iss 2 pp. 30 - 35
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Robert Rugimbana, (1995),"Predicting automated teller machine usage: the relative importance of
perceptual and demographic factors", International Journal of Bank Marketing, Vol. 13 Iss 4 pp. 26-32 http://
dx.doi.org/10.1108/02652329510082924
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Fiona Davies, Luiz Moutinho, Bruce Curry, (1996),"ATM user attitudes: a neural network analysis", Marketing Intelligence
& Planning, Vol. 14 Iss 2 pp. 26-32 http://dx.doi.org/10.1108/02634509610110778
Luiz Moutinho, Anne Smith, (2000),"Modelling bank customer satisfaction through mediation of attitudes towards
human and automated banking", International Journal of Bank Marketing, Vol. 18 Iss 3 pp. 124-134 http://
dx.doi.org/10.1108/02652320010339699

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 30 INTERNATIONAL JOURNAL OF BANK MARKETING 12,2

When attempting to gauge the performance of 1979; Murphy, 1983), and more recently psychographic
ATMs, the association between consumer usage characteristics (Stevens et al., 1986).
patterns and perceptions of ATM attributes are
While the information gained from such associations has
seen as providing a basis for effective marketing been useful, particularly in helping commercial bank
strategies. managers within electronic banking societies to
understand and react to the more visible demands of the
retail banking marketplace, the prevalence of significant
consumer resistance to automated tellers (Murdock et al.,
1983; Stevens et al, 1989., 1987; 1986; Zeithaml et al, 1987)

Perceived
would suggest that research focus may need to be
directed towards other factors.

Rogers (1961) identified five characteristics or attributes

Attributes of of innovations that affect the rate at which innovations

are adopted (and ultimately their usage patterns): their
relative advantage, compatibility, complexity, divisibility
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(trialability), and communicability (observability).

ATMs and Their Additional characteristics were later added; perceived

risk (Ostlund, 1974) and financial and social cost
(Zeithaml, 1981).

Marketing Despite the fact that it is widely acknowledged that

perceptual variables (specifically the Rogers (1961)
framework) are far more successful as predictors of the

Implications purchase outcome than consumer personal character-

istics (Ostlund,1974; Taylor,1977) very few studies have
been conducted that attempt to associate perceptual
variables with ATM usage. Consequently strategic
questions, such as how retail bank consumers perceive
ATM technology and how far they accept this innovation
Robert Rugimbana and Philip Iversen as one which can fully and satisfactorily replace human
tellers in all the banking services handled by the
innovation, have remained largely unanswered.
International Journal of Bank Marketing, Vol. 12 No. 2, 1994, pp. 30-35
© MCB University Press, 0265-2323
The present study was initiated in response to this
apparent lacuna on consumer perceptions, and examines
the ATM usage patterns of two banking institutions with
a view to assess the relative importance of the different
perceptual variables in explaining consumer usage
patterns.
This article reports the findings of a study examining the
performance of ATMs in terms of acceptance and level of
usage in two banking institutions; a credit union and a
bank, in the Australian retail bank services market. The Method
overall aim of this study was to determine retail bank
consumers’ usage patterns of ATMs and whether these are Data Collection
associated with their perceptions of the attributes of The survey was conducted using samples of retail bank
ATMs. The implications of such an association would be consumers from two banking institutions in separate
crucial for bank marketers who are actively devising metropolitan regions; a bank in Newcastle (NSW) and a
strategies and practices aimed at increasing ATM usage. credit union in Adelaide (Southern Australia) over the
period September, 1991 and March, 1992. The selection of
Although recent marketing literature, notably that the samples was based purely on the willingness of
emanating from the USA, reflects strong concern for retail institutions to participate in the study. The sample is
bank consumers’ usage patterns of ATMs, much of the therefore convenient and does not form a representative
research has concentrated on providing evidence of the sample of the whole industry. As an incentive to
association between consumers’ acceptance/non participate, the institutions were promised that data
acceptance of ATMs and personal characteristics (Hood, would be presented anonymously and in aggregate form.
 PERCEIVED ATTRIBUTES OF ATMS AND THEIR MARKETING IMPLICATIONS 31

A five page questionnaire was developed and pretested Results of Study

prior to actual data collection. The final instrument While presenting the aggregate results it is necessary to
contained a section on usage, rejection, and non-usage of note that although the range of services carried out by the
ATMs, ATM awareness and transactions performed, a ATMs were fairly homogeneous within Institutions, there
perceptions section and a demographic section. The was one difference between Institutions. The Credit Union
perceptions section operationalized the “expanded” ATMs carried a slightly greater range of services than
version of Rogers variables whereby five-point Likert their bank counterparts, specifically two functions; the
scaled responses were sought on 14 statements. Except payment of bills and the ordering of cheque books. For
for demographic information the afore-mentioned data the purpose of presenting aggregate results, responses on
were used for the statistical analysis reported here. The questions relating to these functions were left out of the
expected relationship between perceived ATM attributes analysis.
and ATM usage is as determined in a previous study on
innovations, i.e. positive to the attributes of relative Usage
advantage, compatibility, trialability, and observability Extent and Level of Usage of ATMs
and negative to the attributes of complexity and risk Although overall usage (adoption) of ATMs was found to
(Ostlund,1974). be consistently high for both forms of banking institutions
(67.5 per cent), with an overall high awareness level (92 per
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A systematic “branch floor” intercept survey methodol- cent), the bulk of users in both samples used ATMs only 1-
ogy was used at all banking branch locations where 2 times a week. In both institutions usage was found to be
specific test facilities were set up for respondents. The concentrated on cash withdrawal (see Figure 1),
survey was conducted over a period of five working suggesting that most users perceived ATMs to be no more
days to minimize the possibility of “branch floor than convenient cash dispensers. Notably, the majority of
burnout”, whereby the same people are inadvertently users conducted less than 50 per cent of their banking
requested to complete the questionnaire more than once. using ATMs (see Figure 2).
This resulted in a total of 698 questionnaires being
completed by the two separate samples. Of these, a total
of 268 questionnaires were completed by customers of Figure 1. Extent of Use of ATM Facilities by Adopters
all 13 bank branches in Newcastle, and 430 (Combined Samples)
questionnaires completed by customers of all six credit
union branches in Adelaide. Subsequently an overall Cash
withdrawal
433
response rate of 63.45 per cent was achieved, which is
significantly higher than the rates usually reported in Balance
of a/c 85
diffusion studies (Rogers, 1976).
Funds
51
transfer
Data Analysis
The first objective of the study was to determine the Cash 38
deposit
extent and level of ATM usage. Cross-tabulations were
made on the basis of user and non-user groups with
_

0 50 100 150 200 250 300 350 400 450

questions relating to respondent awareness, acceptance, Frequency
proportion of banking conducted on ATMs and transac-
tion choice patterns. Chi-square tests were used to
determine the statistical significance of the responses
from each group. Second, the study attempted to
Figure 2. Proportion of Banking Done on ATMs by Adopters
(Combined Samples)
determine if there were significant differences in how user
and non-user groups perceived ATM attributes. For this
70 –
purpose, respondents rated ATM attributes on 14 (five
point) Likert scale statements. A factor analysis reduced 60 –
the 14 perceptual statements to a smaller number of P 50 –
E
factors that define broad categories of customer R
40 –
perceptions. These factors were then used as predictor C
(independent) variables in a logistic regression where the E 30 –
62.9
N
response variable refers to ATM usage versus non-usage. T 20 –
The principal objective of using factor analysis was to
10 – 22.5
ascertain the reliability of the scales and logistic 8.5
6.2
regression to assess the relative importance of the 0–
<50 50–74 75-89 90-100
different perceptual variables in determining whether an Percentage
individual is a user or non-user.
 32 INTERNATIONAL JOURNAL OF BANK MARKETING 12,2

Extent of Non-usage perceptual items but rather on four distinct characteris-

Despite the overall high awareness levels for both tics as presented in Table I.
banking institutions (less than 90 per cent), a significant
number of respondents (over 30 per cent) overall, were The eigenvalues for these four factors are 4.48, 1.70, 1.10
found to be non-users of ATMs. Of these, the majority and 0.99, and they explain 59 per cent of the variation in
(over 20 per cent) claim never to have used ATMs. the original 14 perceptual statements.
Notably the most important motivation for ATM non-
usage was preference for human tellers (50 per cent) A logistic regression of usage/non-usage on the two
followed by preference for personal service (25 per cent) banking institutions and these four factors reveals that
implying a preference for traditional ways of banking. there is no significant difference in usage (adoption) levels
Also, specific situational factors may have an important between the institutions, and that the first three factors
bearing on the extent of non-usage, particularly in the are important in predicting ATM usage, while the “other”
case of those who have never heard of ATMs, those who factor appears to have relatively less influence. This
do not really understand them sufficiently well to use finding, illustrated in Figures 3-5, specifically demon-
them, and those who have wanted to use them but for lack strates that individuals who perceive ATMs as conve-
of availability or other factors have not.
nient, reliable and suited to their needs are more likely to
use ATMs.
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The preceding analysis indicates that usage patterns

reflect consumer perceptions of ATMs. This is illustrated
further in the next section of this article. The graphs in Figure 3-5 can be interpreted on the basis
of the given factor scores. For example, in the case of the
convenience factor items (Figure 3), consumers who
Perceptions of Characteristics of ATMs “agreed” with the relevant statements and were neutral
Analysis of respondent groups’ perceptions of the on the other statements would score approximately 0.25
attributes of ATMs showed that ATM users from both on the convenience scale. On the other hand, consumers
institutions generally differed quite significantly from who “disagreed” with the relevant statements and were
non-users in their perceptions of the ATM attributes. The neutral on the rest would score approximately 1.4 on the
combined data sets from the two banking institutions convenience scale. In effect, lower respondent scores
produced four interpretable factors corresponding to (1) imply greater perceived convenience. Consumer
convenience, (2) reliability, (3) suitability and (4) another responses to the reliability factor items (Figure 4) as well
factor which contains seemingly unrelated statements on as suitability factor items (Figure 5) suggest a similar (but
accuracy i.e. social cost and on understanding all options reversed) pattern: that is, the larger scores imply greater
i.e. observation. These results suggest that this group of perceived reliability and a greater perceived level of
consumers do not mentally group ATMs in terms of all 14 compatibility respectively, in using ATMs .

Table I. Distinct Characteristics of ATMs

Statement Factor 1 Factor 2 Factor 3 Factor 4

a ATMs are conveniently placed +

Relative advantage b The best thing is 24-hour service +
c I would save time using ATMs +
d ATMs don’t give any privacy +
Social cost e ATMs are more accurate than humans +
f Others like me would use ATMs +
Compatibility g Others like me find ATMs suitable +
Complexity h Others like me find ATMs complex +
Trialability i ATMs have always been easy +
Observability j I understand the effects of all options –
k I wouldn’t feel safe using ATMs +
Perceived risk l I’m never sure if it will work +
m Danger of losing one’s card +
n I feel confident using ATMs +
NB: A plus (+) or minus (-) indicates whether the question contributes positively or negatively to that factor, respectively.
 PERCEIVED ATTRIBUTES OF ATMS AND THEIR MARKETING IMPLICATIONS 33

Figure 3. Convenience Table II. ATM Usage

Predicted
1– Observed User Non-User Total
0.9 –
0.8 –
User 382 17 399
0.7 –
0.6 – Non-user 56 42 98
Proportion
of users 0.5 –
0.4 – Total 438 59 497
0.3 –
0.2 – Bank
0.1 – Credit union
0–
By referring to these graphs, it is evident that
-

-
-1.5 -0.5 0.5 1.5 2.5 3.5

Convenience score (factor 1)

convenience is the most powerful determinant of ATM
usage. For example, whereas among respondents who
perceive ATMs as having low reliability, almost 80 per
cent are users and among those who do not feel suited to
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using ATMs, between 50 per cent and 65 per cent are, in

fact, users. On the other hand, the convenience scale
shows that the proportion of users extends from a score
Figure 4. Reliability of approximately “1” for people who strongly agree with
the convenience items down to a score of “0” for people
who strongly disagree with them.
1–
0.9 – The fourth “other” factor which was found to be weaker
0.8 – in predicting ATM usage, is interpreted as suggesting
0.7 – that people do not primarily base their decisions to use
0.6 – ATMs on their perceived accuracy or, for that matter, on
Proportion
0.5 – their understanding of all the ATM options. Using this
of users 0.4 – logistic regression model to predict ATM usage yields the
0.3 – tabulations shown in Table II, in which 85 per cent of the
0.2 – Bank subjects are classified correctly.
0.1 – Credit union
0–
-

-1.5 -0.5 0.5 1.5 2.5 3.5

Reliability score (factor 2)

Discussion
The overriding perceived benefit of ATMs for users is the
attribute of convenience (relative advantage), followed by
the perceived benefits of reliability and suitability which
in effect also imply a measure of convenience. These three
Figure 5. Suitability perceptual variables, which have been found to be
significant discriminators between ATM users and non-
users are complemented by the data gathered on general
usage patterns and therefore reflect the most important
1– considerations for retail banking service strategies.
0.9 –
0.8 – Users perceived ATMs to be convenient, reliable and
0.7 – generally risk free where cards are concerned, and felt
0.6 – more suited to ATMs than non-users even though the
0.5 – majority utilized the innovation as a convenient cash
Proportion
of users 0.4 – dispenser, using ATMs only once or twice a week and
0.3 – ultimately conducting less than 50 per cent of their
0.2 – Bank banking needs by ATMs. Essentially, users responded in
0.1 – Credit union a way quite in keeping with findings from prior research
0– on the relationships of perceptions of innovation
-

-1.5 -0.5 0.5 1.5

attributes and usage (Ostlund, 1974) i.e. positively, to the
Suitability score (factor 3) attributes of convenience (relative advantage), suitability
(compatibility), and negatively to the “black box” nature
 34 INTERNATIONAL JOURNAL OF BANK MARKETING 12,2

of ATMs (complexity) and unreliability (risk). As as an integral part of their banking methods should
expected, non-users generally reacted in quite the obviously become the prime targets of any new ATM
opposite manner on these attributes, again very much in features and other automated banking innovations
keeping with previous findings on the relationships (Stevens et al, 1986). While acknowledging this
between perceived innovation attributes and usage. suggestion, the fact that a significant number of ATM
users have been shown as still perceiving and using this
The fact that only four factors overall were required to innovation as a mere convenient cash dispenser suggests
describe how consumers perceive ATMs in this study and that it is imperative that marketers of banking services in
that the fourth “other” factor combined seemingly Australia recognize the critical role that perceptions of
unrelated attributes of observability and social cost may attributes of this service innovation play in consumer
suggest that the prescribed statements were not adequate usage patterns of ATMs. The fact that personal banking
in clearly distinguishing and measuring the three consumers can be profiled and indeed segmented on the
hypothesized innovation attributes of social cost, basis of their perceptions of attributes of ATMs, over and
trialability and observability. It is, however, worth noting above specific situational and personal characteristics,
that ATMs do not lend themselves easily to low risk and provides important opportunities to bankers for better
low involvement trial or to the observation of their understanding of their customer needs and expectations.
positive effects, hence attempts to measure these It has been suggested in another USA study (Stanley,
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attributes may be inappropriate. 1983) that ATM technology has advanced faster than
changes in customer habits. Perceptions of ATM
The above statistical analysis supports the overall attributes would in such circumstances present an
expectation that the typical users of ATMs would important means by which marketers can keep in touch
perceive the attributes of these innovations favourably, with customer expectations.
while non-users and rejectors perceive them unfavour-
ably enough not to use them. Given the relationship
between perceptions and ATM usage, these findings Possible Limitations of the Study
generally support a thumbnail profile of the ATM user as This research is of an exploratory character and of
being an individual who is involved in the product/service limited scope. Further research on the different retail
class and who uses the service innovation because banking institutions should be undertaken because the
perceived benefits of the attribute of the innovation results reported are limited in sample generalizability and
outweigh the perceived risks (Venkatraman, 1991). situation generalizability. For instance, the samples,
Findings also suggest that the profile of the non-user is although random, were limited to a two-state area,
quite the opposite, and implicitly that of the rejector as an Second, the usual caveats applied to the use of “intercept”
individual who was once involved in the product/service technique must be acknowledged (e.g. respondent’s time
class and who has ceased using the innovation due to pressures). Third, a lack of readily available data on ATM
product/service-use situations which have made per- studies in Australia did not permit a more in-depth
ceived risks much greater than perceived benefits. analysis of possible customer similarities to, and
differences from, overseas electronic banking markets.
Fourth, the differences between the institutions in terms
of the services carried by their respective chains of ATMs
Conclusions as well as in their traditional customer profiles meant that
This study sought to examine the association between combining the data may have left out important
retail bank consumers’ ATM usage patterns and their consumer differences which affect usage patterns and
perceptions of ATM attributes by identifying those perceptions. Fifth, this study is in part reliant upon the
variables which distinguish users and non-users. By assumption that findings of overseas ATM studies are
assessing ATM usage patterns and perceptual variables, generalizable to Australia and vice versa. Despite these
the study concludes that a strategy of stressing the most limitations, the findings of this study do provide a
important perceived attribute of relative advantage is platform for future investigation and diagnosis as well as
crucial to the success of the current efforts by bank yielding valuable insights into the importance of a
marketers aimed at increasing ATM usage. number of pertinent variables. Clearly, additional factors
would be worth specifying, and sample size could be
Findings from this study demonstrate quite clearly that increased. Further investigation could examine disaggre-
ATMs in Australia are still not performing to their full gately different types of consumer markets, as well as
potential and by and large have not been accepted as different types of banking institutions.
innovations which can fully replace human tellers in
nominated functions, as is reflected by the perceptions of A comparative study across different forms of retail
the majority of users and non-users regarding ATM banking institutions might be meaningful. It is the
attributes. Previous studies in the USA have suggested authors’ belief that different forms of banking institutions
that ATM users who have adopted this form of banking by virtue of their different target markets and unique
 PERCEIVED ATTRIBUTES OF ATMS AND THEIR MARKETING IMPLICATIONS 35

marketing efforts could have an important bearing on Stanley, T.J and Moschis, G.P. (1983), “The ATM-Prone
their consumers’ perceived attributes of ATMs. Consumers: A Profile and Implications”, Journal of Retail
Banking, Spring, pp. 45-51.
A priority for future research should be to examine the Stevens, R.E., Carter, P.S., Martin, R.T., and Cogshell,D. (1986),
degree of fit between the demographic and psycho- “A Comparative Analysis of Users and Non-Users of
graphic profiles of banking customers and predicted Automatic Teller Machines”, Journal of Retail Banking, Vol.
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8, pp. 71-8.
Stevens, R.E., Carter, P.S., Martin, R.T. and Cogshell, D. (1987),
“ATM Non-Adopters: How Valuable are They?”, The
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Robert Rugimbana is Lecturer in Marketing in the Department of Management, and Philip Iversen is a Lecturer in The
Department of Statistics, at The University of Newcastle, Australia.