ATMs: Getting Ready To Ride A New Wave

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: The innocuous automated teller machine (ATM) is poised for an overhaul. From being a mere cash-dispenser, it is increasingly being sought to be positioned as an integrated vending device. Why this change? It is the high cost of ATM deployment. Usage has to be optimised in order to make it a viable option for further investment.

Says Punjab National Bank’s deputy general manager, KS Bajwa: "If optimisation of ATM usage is to be achieved, they should not be limited to cash withdrawals. We need to add more functionality to the ATMs. I also believe that one should not set up ATMs everywhere... the economy of tomorrow will primarily run on cards, not on cash".

Adds UTI Bank’s president-retail banking Hemant Kaul: "A critical aspect of ATM business is ‘carding’. You might install so many ATMs, but it cannot generate cash on its own. It is critical to ensure that every customer has a card".

The Reserve Bank of India (RBI) in its monetary and credit policy review of November 2002 had asked banks to explore the options of sharing networks and employing a national switch which connects the networks of all ATMs to a common platform.

This has seen the entry of several bi-lateral, multi-lateral and national connectivities in the market including Mitr, The Indian Bank Association’s Swadhan, ‘Cashnet’ and lately the National Financial Switch (NFS) promoted by Euronet India and IDBRT, the technology arm of RBI. These are like models overseas: LINK in the United Kingdom while ADMOS looks after the operations of the LINK.

Some Number Crunching
As of today, the installed base of ATMs in the country is estimated at 11,000 units. It has been growing at over 70 per cent over the last three years. If growth continues at this pace, even by conservative estimates, the number will reach well over 35,000 in the next three years. State Bank of India (SBI) is the dominant player, both in terms of number of ATMs as well as the penetration level.

SBI has so far deployed 4,000 ATMs and is to install an additional 2,000 by the end of this year. The strategy is to become the largest ATM network in the country.