The latest news headlines are scrolling across the bottom of the screen in front of you. At the touch of the screen, you get a sneak peek of the forthcoming blockbuster hitting the screens next Friday. Your horoscope for the day reads “Prepare for a hot date tonight”. So as you debate whether to buy tickets for that film or surprise your partner with tickets to an Iron Maiden concert, you plug in your cell phone to recharge your battery. Suddenly, you remember that you have to pay your electricity bill. At another touch of the screen that matter too is taken care of. Finally, you do what you came to do in the first place— withdraw cash. And all this took less than 10 minutes of your time.
Welcome to the new world of automated teller machines (ATMs). The ubiquitous “anytime, anywhere money” vendor, is well on its way to becoming a full-fledged multimedia convenience kiosk and a complete financial services management centre.
ATMs have been on the frontlines of retail banking for two decades, but now the banks are arming them with technology that was unheard of when the machines made their debut. Comparing the new generation of ATMs to the cash dispensers of the early 1990s is like comparing blackand-white television sets to today’s plasma screens. It is apparent that more than the box has changed. We now have ATMs with touch screen technology offering services spanning the gamut from topping up your prepaid mobile connection to checking out current market rates to paying utility bills and school or college fees to making donations.
The biggest change probably has come by way of location. Once all ATMs were located near the branch and offered only localised services. “The ATM which was considered mainly a customer touch point is now also seen as a tool for brand visibility. This has led to the growth of offsite ATMs, those located in petrol pumps, hospitals, airports and malls,” says Samir Subberwal, general manager, Shared Distribution, Standard Chartered Bank. Not surprisingly, of the bank’s 189 ATMs, only 81 are located at branches. For the State Bank of India (SBI), boasting of a country-wide network of 5,630 ATMs along with its associate banks, the corresponding figure is about 35-40%. With 3,000 more ATMs slated to join the ranks soon, the bank is adding a huge number of offsite machines.
Moreover, as per a recent MoU with the Indian Railways, SBI ATMs would be set up at nearly 700 railheads, many of them offering e-ticketing facilities.
Reinforcements are also arriving in the form of intelligent bank machines that dispense new account information, calculate loan repayments, and help customers order replacement cheques. “ATMs will soon play a far bigger role. If the regulator permits it, there really is no limit on what you can offer at your ATMs, be it personalised marketing or dispensing event tickets,” says Sanjay Sharma, adviser IT at IDBI Bank, adding, “In future, the ATM will become a virtual branch.” According to Arvind Sharma, director, Institute for Development and Research in Banking Technology, at present, the 20,000 ATMs in the country handle roughly 30-40% of teller activity but will slowly morph to offer e-services too in the future.
So coming soon, at an ATM near you, are facilities like cheque truncation. Once that is in place when you deposit your cheque, the image will be scanned, bar-coded and, brace yourself, processed in real time. Cash transactions too will be enhanced. Currently one has to deposit money in an envelope and it takes time to get credited to your account but with the sophisticated cash counting machines of tomorrow, not only will the ATM scan for fake notes but also instantly credit the amount. Before long, you will be able to book airline tickets too when you nip across to withdraw cash. According to ICICI Bank officials, in the next decade India will also see a lot of mobile ATMs on the roads, especially in the rural areas.
But at the same time banks are increasingly debating whether ATMs should be retained as a cash withdrawal channel, pushing other functionalities to the Internet and mobile channels. “Online transactions are more convenient both from a customer’s point of view and for banks. Not only is it easier to avail of online facilities from the home or office, but it also is more cost effective for banks,” says Subberwal. The cost of an online transaction is 1/50th of the cost of that in an ATM. Hence banks are now questioning if the ATM ought to transcend its traditional role. At the very least, introducing new facilities will result in longer queues outside the ATM, something that defeats the very purpose of an automated teller.
Says a senior official at SBI, “The real success story lies in the way ATMs have been deployed in the country. It has done so much in its vanilla form that I think it is unfair to ask what’s next at this moment.” He should know. SBI has the country’s widest ATM network at present, collectively recording 45.29 million transactions per month. Surprisingly, the bank’s data reveals that the highest number of users come from areas like Madhya Pradesh, Chhattisgarh and Orissa. Hence, the true revolution in the ATM story is what it has managed to achieve in terms of breaking the class divide.
“An ATM deployer must also keep in mind that a majority of Indians still queue up essentially for quick money,” say bankers. Even in mature markets like North America, technological advances notwithstanding, cash withdrawals continue to account for 80% of all transactions reveals a Frost and Sullivan study.
The way forward could lie in fullfledged multimedia kiosks. Says Aspy Engineer, vice-president, ATM Channel Management, UTI Bank, “In future we would like to keep the ATM simple. We are examining the possibility of migrating the valueadded facilities to multi-media kiosks that may be set up in the next one year.” The reason UTI Bank is focusing on kiosks is simple: if you are standing in a queue at an ATM, would you like to have the person in front of you surf for airline tickets?
In addition, setting up a kiosk is cheaper than setting up an ATM. “We only need a 1x3 ft space which can be accommodated in the ATM centre itself so there is no additional incremental cost except the capital cost,” explains Engineer.
Concurs Subberwal: “Why convert an ATM into a multimedia kiosk? Why mix the two? You can have an ATM fulfilling its basic function and a separate kiosk offering the added services. But we are unlikely to see such kiosks anytime soon because its utility is limited. However, audio-enabled ATMs may come about sooner, depending on the cost benefit to banks, since they are needed by the visually impaired. Most of the other facilities like movie previews are more of a talking point than actual utility.” According to him, in the next decade, the focus will be increasingly on security rather than on introducing new functionalities. Banks are already working on chip card and we can soon expect ATM with biometrics-based authentication.
Yet, others like Sharma are not so quick to reject the concept of a smart ATM. “All machines are not equally busy. We can have a dynamic system in place whereby busy ATMs are limited to their cash dispensing function and relatively more idle ATMs offer the trimmings. But from an infrastructure point of view, banks should invest in fully integrated ATMs anyway because as technology evolves the cost of a smart machine will be the same as its runof-the-mill counterpart,” he says.
Simultaneously, with the ATM population increasing day by day, industry watchers say we are moving towards an era of shared ATMs. Says a senior ICICI Bank official: “There will be a move towards ATMs being set up by independent service providers popularly known as White Label ATMs that banks will be able to use for a transaction-based fee.”
But a world with generic ATMs where customers can use any ATM irrespective of where they have an account absolutely free is still a utopian concept.
“If I can allow my customers to use say an ICICI Bank ATM with no cost to me, why would I bother setting up my own ATM network? Each bank has to pay a certain amount for running an ATM and for each transaction. So while some banks may agree to join hands and form a shared network, it won’t become the norm,” says Engineer.
Be that as it may, you have the whole world in your hands with that tiny bit of plastic. The time will soon come when you go to an ATM and it will go beyond welcoming you by name — perhaps wish you happy birthday, and add as an aside, “Incidentally, your insurance is due. Do you want to pay up?”