ATM network expansion plan well on track

The Reserve Bank of India’s (RBI) has decided to make ATM usage free from April 2009 and with this India’s largest ATM machine manufacturer is well on track.

A senior official of NCR Corporation told that there has not been any significant slowdown in the sales as compared with large banks recently. Fears of forthcoming slump and resistance from some banks to co-operate with RBI’s plan have led to market assumption that ATM infiltration would hit the table in the coming months.

While speaking on the sidelines of a press conference NCR Corporation India MD India area Pradeep Sen said, “We have not seen any significant drop in demand from banks for ATM machines”.

“Embracing technology is perhaps the best way to acquire new customers for banks, especially since there is still demand for cost-efficient solutions in the market,” he added. Nevertheless, he warned that in case the demand slipped down drastically from here, then things can worsen any moment.

Earlier in the last year, large number of banks had opposed RBI’s proposal to phase out all ATM fees by April 2009 and gave the reason that they have made huge investment to build the network, and the proposal will effectively hand over this platform for free to other banks. But banks slowly appeared to be falling in line with RBI instruction and sticking on to their aggressive ATM infiltration targets, at least, as of now.

HDFC Bank country head of retail liabilities Rahul N Bhagat informed that his bank has not made any changes in the target for either banks or ATMs in the coming months. In a recent press meet, a SBI official, too, had hinted that the bank will be sticking on to its target of increasing ATMs from the existing 7,200 to 25,000 within three years. Four banks — SBI, ICICI Bank, HDFC Bank and Axis Bank — together make up for more than 60% of the 35,000-ATMs in India.

According to Mr Sen the ATM sharing proposal should not stop banks from setting up their own ATMs. He pointed out that banks will have to pay fees for using somebody else’s services. As well the all important brand visibility is at risk when you allow a customer to visit a competitor’s ATM. “There’s a trade off between the costs of setting up an ATM and these two factors,” he said.

According to market experts ATM is one of the easiest ways by for the banks to contribute to financial inclusion (59% of rural India does not have financial assistance). According to them when the cost of setting up a branch is high and prospects of business are uncertain, banks should do best to make use of technology like ATMs.