ATM FUNCTIONALITY AND UTILIZATION ON CUSTOMER RETENTION IN NIGERIAN DEPOSIT MONEY BANKS: THE MODERATING ROLE OF TECHNOLOGICAL LITERACY

Abstract

This study examined the impact of Automated Teller Machine (ATM) functionality and utilisation on customer retention, measured by account maintenance and deposit growth in Nigerian banks, with the moderating role of technological literacy. A quantitative correlational design was adopted. Structured questionnaires were used to collect primary data from 768 respondents, comprising 384 customers and 384 staff drawn across seven internationally authorised Nigerian Deposit Money Banks (DMBs). The study employed Partial Least Squares Structural Equation Modelling (PLS-SEM), analysed using SmartPLS version 4.0. The measurement model confirmed composite reliability ranging from 0.947 to 0.982, average variance extracted ranging from 0.751 to 0.899, and HTMT ratios below 0.734, establishing strong reliability and discriminant validity. The structural model results revealed that ATM functionality and utilisation exert a strong positive effect on account maintenance (β = 1.026, p < 0.001) and a significant positive effect on deposit growth (β = 0.289, p < 0.001). Technological literacy significantly moderates both relationships — ATM → account maintenance (β = 0.069, p < 0.001) and ATM → deposit growth (β = 0.090, p < 0.001), while also exerting a strong direct effect on deposit growth (β = 0.510, p < 0.001), indicating that customers who possess advanced digital skills extract substantially greater value from the same ATM infrastructure. Multi-group analysis revealed negligible divergence in customer–staff path coefficients across all hypotheses (Δβ = 0.007–0.013, all p > 0.05). Blindfolding established Q² values of 0.312 for account maintenance and 0.389 for deposit growth, confirming out-of-sample predictive relevance. The study concluded that ATM functionality significantly enhances customer retention, with technological literacy amplifying its impact on both account maintenance and deposit growth. Banks are recommended to develop ATM enhancement plans in conjunction with comprehensive training programmes on technological literacy.