Aug 16, 2017, 06.08 PM IST
Sense of an ending
The business of automated teller machines (ATMs), which was marketed as ‘Any Time Money’ to convey its convenience, is staring at a crisis. What was once thought to be a vital component of the banking industry, is now being relegated to the margins.
Losing importance The number of ATMs, which nearly doubled between 2012 (around one lakh) and 2015, is stagnating around 2 lakh and has hardly shown any growth in the past six months. The number of debit card transactions on ATMs has collapsed to an average of 660 million a month from over 750 million before demonetisation.
When cash is less relevant The number of PoS terminals jumped to 2.7 million in June from 1.5 million in November last year. Mobile banking transactions surged to 390 million in 2015-16 from 53 million in 2012-13, data from the regulator shows. The advent of wallets such as Paytm, which can be used to pay from bubble gums to television sets, has made the younger generation skip cash payments.
Evolution of ATM An ATM was first deployed at a Barclays Bank branch in London (in pic) and it reached India in 1987. This was the time when foreign banks were using them to quickly expand their footprint in India.When liberalisation gave birth to banks such as HDFC Bank, IndusInd Bank, ICICI Bank, and Axis Bank (erstwhile UTI Bank), they copied global banks to acquire customers quickly. But the biggest growth phase came when state-run banks realised that without ATMs their customers were moving to rivals and interchange fee had become a drain.
Jan Dhan and demonetisation No other policy maker gave the kind of impetus to the ATM industry the way Prime Minister Narendra Modi did with his Jan Dhan programme, where every household was provided with a bank account and a RuPay debit card.That pushed the total number of debit cards in the system to more than 550 million in 2014-15 from 331 million in 2012-13, thereby increasing the chance of card swipes at ATMs.
Losing importance The number of ATMs, which nearly doubled between 2012 (around one lakh) and 2015, is stagnating around 2 lakh and has hardly shown any growth in the past six months. The number of debit card transactions on ATMs has collapsed to an average of 660 million a month from over 750 million before demonetisation.When cash is less relevant The number of PoS terminals jumped to 2.7 million in June from 1.5 million in November last year. Mobile banking transactions surged to 390 million in 2015-16 from 53 million in 2012-13, data from the regulator shows. The advent of wallets such as Paytm, which can be used to pay from bubble gums to television sets, has made the younger generation skip cash payments.Evolution of ATM An ATM was first deployed at a Barclays Bank branch in London (in pic) and it reached India in 1987. This was the time when foreign banks were using them to quickly expand their footprint in India.When liberalisation gave birth to banks such as HDFC Bank, IndusInd Bank, ICICI Bank, and Axis Bank (erstwhile UTI Bank), they copied global banks to acquire customers quickly. But the biggest growth phase came when state-run banks realised that without ATMs their customers were moving to rivals and interchange fee had become a drain.Jan Dhan and demonetisation No other policy maker gave the kind of impetus to the ATM industry the way Prime Minister Narendra Modi did with his Jan Dhan programme, where every household was provided with a bank account and a RuPay debit card.That pushed the total number of debit cards in the system to more than 550 million in 2014-15 from 331 million in 2012-13, thereby increasing the chance of card swipes at ATMs.
Can recyclers save the day?
Cash recyclers are the latest innovation to happen to the ATM industry. These machines can both accept and dispense cash. Recyclers do have an advantage of being a multipurpose machine, but the problem is that they hardly find the right balance between deposits and withdrawals.Furthermore, the cost is prohibitive and that is forcing some manufacturers to set up facilities here."Manufacturing in India can reduce the cost of these machines. Recyclers had started at Rs 15 to 20 lakh per machine, and this has come down to about Rs 7 lakh already," says Antony of Hitachi.
Utility issues While price is a major concern, utilisation is also important. As State Bank of India's chief operating officer Neeraj Vyas puts it, though they have around 250 in-touch branches, major activity reported there is still cash withdrawals, while other facilities are hardly being used. Bankers believe upgrade of these machines may not be sufficient enough for them to buy more of them.The ATM industry may be trying out many ways to remain a viable business, but it may well be the industry's Walkman moment.
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