The Adoption of Automatic Teller Machines in Nigeria: An Application of the Theory of Diffusion of Innovation

Introduction Globally, Automatic Teller Machines (ATMs) have been adopted and are still being adopted by banks. They offer considerable benefits to both banks and their depositors. The machines can enable depositors to withdraw cash at more convenient times and places than during banking hours at branches. In addition, by automating services that were previously completed manually, ATMs reduce the costs of servicing some depositor demands. These potential benefits are multiplied when banks share their ATMs, allowing depositors of other banks to access their accounts through a bank's ATM (McAndrews, 2003). Banks have become the principal deployers of ATMs. Two reasons for this are that they want to increase their market share, although due to the prevalence of ATMs, it is not likely to be the primary means by which ATMs increase profitability for most banks; or/and above a certain level of operations, the cost of a single transaction performed at an ATM is potentially less than the cost of a transaction conducted from a teller, as ATMs are capable of handling more transactions per unit of time than are tellers (Laderman, 1990). In Nigeria the deployment of ATM by banks and its use by bank customers is just gaining ground and has burgeoned in recent times. This has happened especially after the recent consolidation of banks, which has in all probability, made it possible for more banks to afford to deploy ATMs or at least become part of shared networks (Fasan, 2007). The increased deployment of ATMs in the banking sector has made the issue of technology relevance important. ATM services have a history that is less than ten years in Nigeria. At first, they were operated as elitist services designed for those desirous of exclusive service. Cards were rare and the process for obtaining them tortuous. Presently, the use of ATM cards has been widely promoted. Banks no longer appear to want personal contact with their customers. Some banks have resorted to penalizing the customer as it were, for not possessing an ATM card, by debiting the account of such a customer for withdrawing below a certain amount across the counter. Agboola (2006) reported that although only a bank had an ATM in 1998, by 2004, fourteen of them had acquired the technology. Agboola (2006) discovered that the adoption of ICT in banks has produced largely positive outcomes such as improved customer services, more accurate records, ensuring convenience in business time, prompt and fair attention, and faster services etc. Also, the banks' image is improved creating a more competent market. Work has also been made easier, and more interesting, the competitive edge of banks, relationship with customers, and the solution of basic operational and planning problems has been improved. Fanawopo (2006) stated that Nigeria's debit card transactions rose by 93 per cent between January 2005 and March 2006 over previous years owing to aggressive roll out initiatives by Nigerian banks, powered by Interswitch network. The number of ATM transactions through the Interswitch network had increased from, 1,065,972 in 2004, to 14, 448, 615 between January 2005 to March 2006. This is a rise of 92.6 percent with respect to the previous years. More than 800 ATMs have been deployed on the network, while about 2 million cards have been issued by 23 banks as at March 2006. A recent survey conducted by Intermarc Consulting Limited revealed that ATM services provided by banks and non-financial institutions stood as the most popular e-business platform in Nigeria (Intermarc Consulting Limited, 2007). The report showed that awareness for various banking services rendered by Nigerian banks is mostly limited to the traditional banking services. Findings showed that 99 percent of the respondents were aware of savings accounts, while 92 percent were aware of current accounts and 72 percent are aware of local money transfer services. However, among the more modern banking services such as electronic banking, Internet banking, Point of Sales (PoS) transactions, money transfer, ATMs emerged as the most popular with 96 percent awareness level. …