ATMs will rule, even if cash isn't the king

Automated Teller Machines (ATM) have been the lifeline of banking for more than a decade now. But with the rise in digital technology such as mobile and phone banking, apart from the revolutionary Unified Payments Interface, would we see the ATMs growth stagnating? The answer is a loud "No" in unison from the emerging ATM-infrastructure enabling firms.

The growth in transactions at ATMs too is evidence enough to indicate that disruptive technology would not be able to weed out the mighty old ATM channel.

As on May 2015, 70.52 crore cards present in the ecosystem clocked transactions worth Rs 2,20,506.03 crores. This is when the ATM infrastructure is largely underdeveloped with 15 ATMs per 1 lakh adults. "World Bank data that shows China, South Africa, Brazil and Russia are having 50, 62, 130 and 150 ATMs per 1 lakh adults respectively," says Thyagarajan Seshadri, president – banking, electronic payment and services, who points out that young millennials who have opened their accounts, wouldn't have seen the branch after they have received their ATM cards as they have access to nearly all services through ATMs.

Digital transactions may have rendered regular bank branches redundant, but the inability of elderly to adapt new technology and lack of supporting infrastructure, especially the internet pose a major challenge. "The infrastructural challenges with limited penetration of smartphones and availability of internet and data in the far-flung areas of the country and increasing online frauds, will continue to push the envelope for the ATM sector," points out Ravi B Goyal, the founder, chairman & managing director, at the helm in leading AGS Transact Technologies (AGS).

As a result, the number of ATMs is likely to increase from the present 215,000 to 450,000 by the year 2018-19, anticipate banking industry stalwarts.

"We believe that growth in the ATM industry in the country is promising with many banks issuing orders to install ATMs – 15,000 of which would be in FY 2016-17. This growth is also supported by an increase in path breaking innovations in ATMs such as IRIS identification; fingerprint scanning and braille function keys," says Goyal. The growth in transactions, he points out, would stem from non-metros and villages in the wake of increased proliferation of ATMs in the rural areas.

The average time spent at the ATM has reduced significantly for regular ATM transactions especially in cities where people have got used to using ATMs, says Goyal.

The functionality is improving to eradicate security concerns in lieu of card fraud and skimming cases. "Biometric ATMs are gaining popularity, IRIS identification and Fingerprint scanning are some of the latest biometric innovations in this segment. Ratnakar Bank will soon be deploying finger scanner ATMs," says Goyal.

The types of transactions at ATMs would revolutionise too as the underlying technology used would undergo dramatic change. "Card-enabled transactions would move to cordless transactions. ATMs are not going to be the conventional ATM as in a short span of time cardless transactions, NSC-enabled and QR Code-based transactions would drive transactions at mobile-enabled, Aadhar-enabled ATMs, which would use biometric authentication. Cardless transactions would reduce fraud such as cases of skimming and some element of mischief by hackers would be warded off," Thyagarajan reveals.

Elaborating on the additional options on the ATM menu, Thyagarajan adds, "In the future, you could print an airline ticket through ATM and even recharge your wallet through ATMs, which currently banks are not geared to offer."

But be careful while checking out of the ATM as loan offers and card cross-sells are being sneaked into the ATM screen as you transact. With the RBI giving banks a free hand to extend all their banking products and services through their ATMs in 2016, banks are offering pre-approved loans, cards and other products through the ATMs.

Even currently non-financial transactions at ATMs are seeing higher traction, especially on the NPCI platforms, from 812.22 million in FY 2014-15 to 1498.52 million in Financial year 2015-16. These transactions include a bulky layer of balance enquiries, mini statement, mobile number registration, apart from Aadhar status verification and account verification.

"Non-financial transactions introduced at ATMs would see more traction in 6-9 months as they are allowing customers to fulfill their banking requirements like opening accounts or applying for loans without visiting the bank branch thereby lowering customer servicing costs," elucidates Goyal.