By Thyagarajan Seshadri
The ATM industry has altered the Indian banking landscape in last two decades, with banks trying to restructure themselves and reorient the entire banking sector.
This can be contributed to economic development in India, the increase in the per capita income of the population, particularly in the urban regions and to the mass banking phenomena.
The industry is also witnessing rising trend of outsourced ATMs in India, highlighting that banks expect to decrease their ATM operations and work toward their core business.
While the industry speculated that the rise of cashless economy might make ATMs obscure, the truth is quite the opposite. The enhanced technology, increased functionality and accessibility have made ATMs all the more beneficial.
According to a recent report by Retail Banking Research, the Asia Pacific region is experiencing the maximum growth in the ATM industry, resulting in an increased installation base of ATMs. The Western Hemisphere, particularly Europe and North America, is also witnessing a change.
The advancement of ATM technology is quite rapid as it’s adjusting itself to the evolving consumer needs. The developed nations are witnessing an advancement in the industry, as most ATM machines are being replaced by updated versions, and this is a sign of financial advancement.
This is seen as a vital improvement as the whole consumer experience is elevated, with a change in the design, aesthetics, and the machine overall being more user-friendly.
The future of the ATM industry is governed by the emerging trend of white-label ATMs, especially in semi-urban and rural areas.
With RBI playing an immense role in micro-financing and banking outreach programmes, financial institutions have started focusing on financial inclusion, and are motivating banks to be more adept to branchless channels. This development is bound to influence banks to create new ways to attract more customers and also to retain the existing customer base.
According to a recent report by Allied Market Research, the global ATM market is expected to reach $21.9 billion by 2020, registering a CAGR of 7.6% during the forecast period 2014-2020. With the adoption of latest technology in the ATM market, this growth is bound to multiply by many folds.
Today, Indian banks have started embracing the social media platform in a big way with the advancements in enhanced services, technological advancements and increased competition leading to vast volumes of transactions on a continuous basis, and this volume is only set to increase.
One particular area where ATMs are streamlining efficiencies in supporting banks is in their expansion plans while minimizing internal costs. Cost minimization through smart and efficient strategies is the way to approach the situation as banks are already understaffed and the intensity of the situation might increase with large-scale retirement.
By lowering costs, and implementing more efficient operations, lenders will be encouraged to invest more money in the banking sector, in turn, reducing the need of capital from government. There is lot of pressure on banks and other financial institutions to expand their outreach whilst minimizing internal costs because of direct effect of liquidity pressures, and tighter credit standards.
Financial institutions have already been cutting back on human resources, while also considering non-remunerative approaches. The government is also pushing state-run banks to implement cost alleviating tactics. These include exchange of branches and a joint infrastructure for back-end operations.
The fact is we have only just begun to realise the potential of ATMs and opportunities available through clever utilisation of these machines. Thanks to this, we have an abundance of opportunity to look forward to – the ATMs we are developing today will undoubtedly change the way we will do banking.
(The writer is President, Banking Relations at Electronic Payment and Services Pvt Ltd)
