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Introduction
More people are now moving towards using the automated teller machines (ATM) for their banking needs. According to a 2006 survey by Banknet India, 95% people now prefer this modern channel to traditional mode of banking. Almost 60% people use an ATM at least once a week.
Increased ATM usage is also helped by the fact that customers have now the flexibility of using ATMs of other banks, as most of the banks are part of major interbank networks like National Financial Switch (NFS), Mitr, BANCS, Cashtree and Cashnet. The interbank networks have brought together ATMs of several banks so that consumers would gain access to any of the participating banks’ ATMs. Banks find it cheaper to pay membership fees to these networks as against setting up additional units in expensive-to-deploy areas.
ATMs are now seen to be more than mere cash dispensing machines. Customers use ATMs to recharge their mobile phone pre-paid connections, pay their utility bills, even mutual fund transactions – making them at par with flexibility given in internet banking – only more secure. Of the value-added services provided at ATMs, bill-payment is the most used service, followed by prepaid mobile talk-time recharges. However, still about one third of the respondents do not use any value added services at ATMs.
Migration of routine bank transactions like cash withdrawals and balance enquiries from teller counters to ATMs significantly raises the potential for savings in employee costs. The cost per transaction at an ATM reduces to Rs. 18 from Rs. 40+ at a branch. ATMs have also grown to offer other value-added services like utility bill payments, mobile talk-time top-ups to even donations to temples. ATMs also have the potential for selling paper-based products like cinema and railway season tickets.
The machines work much faster than human tellers, with lower error-margins. Banks are then able to focus their employees on innovative services such as selling other financial products and advisory services to customers.
The ATM market in India is not yet saturated. Though the concentration of ATMs is greater in metros, the demand is increasing for other cities and even rural areas. Many ATM vendors have devised specialised machines, embedded with biometric devices for authentication. Catering to the rural population, these machines have enabled them to interact with the machine in their local language and on a graphical user interface. The rural customer has seemed to accept this new medium. This has the potential to further widen the scope of ATM usage in the interior parts of the country.
There is also interest towards white-label ATMs. Many companies are interested in this model, where the ownership of the ATM will not be with the banks but with third parties who deploy them and make money on fees charged on every transaction. The concept is prevalent in the American continent.
The number of ATMs installed in India grew by almost 28%, from 21,000 in March 2006, to more than 27,000 by March 2007. Wide acceptance of ATMs by consumers, introduction of biometric ATMs, and increasing scope of value-added ATM services will maintain growth in the industry.
History
The first Automated Teller Machine (ATM) was introduced
in the year 1967 by Barclays Bank in Enfield Town in North London. At that
time a few would have anticipated excess in ATMs. Then for many years after,
the aim was to shift people off the teller lines thus lowering a bank‘s
distribution costs and increase efficiency. But in the 1980s, it was noticed
that people continued to visit branches, though not as frequently, so that
with the added costs of ATMs, overall distribution costs were actually
rising.
Then, in the mid-1990s, came surcharges, which fuelled
the proliferation of off-premises ATMs, which led in turn to the current
overcapacity. There was a slowdown in ATM transactions, partially because of
the consumer’s reaction to the imposition of surcharges. Also by the advent
of surcharging there was a massive growth in the number of ATMs as it
offered ATM owner’s revenues making it economical to install ATMs where they
might not have been placed otherwise.
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