Prof.
Jyotiranjan Hota
Article Associate Professor and Area Chairperson of Information Systems
wing at KIIT School of management, Bhubaneswar
Growth of ATM Industry in India
Introduction
ATM channel provides opportunity for
banks to go for competent and cost
effective models. There was a belief
that internet banking channel will make
the ATM channel irrelevant. However,
ATM Channel has dominated the public
technology segment, and future of ATM
industry is also quite bright in India. New
technological innovations emerge in our
society on a continuous basis. But the
diffusion of this technological innovation
by the members of the society determines
its success and continuation. In that
sense, Automated Teller Machine (ATM)
is not an exception. With the advent of
ATMs, banks are able to serve customers
outside the banking halls. The most
exciting experience for the customers
as well as the bankers, is that the plastic
card is replacing all the hassles of bank
transactions, personal attendance of the
customers, banking hour constraints, and
paper based validations. Now a customer
can withdraw money, deposit money
with and without envelope, transfer fund
from card to account, pay insurance bills,
apply for loan, book air and train tickets,
movie tickets, and avail coupons. Even
gold coins are possible to withdraw from
ATM counters.
Now there is a societal shift towards
ATM, as a personalized delivery channel.
Multivendor software has brought a
revolution in leading banks around the
globe. Here, banks do not depend on a
single vendor to purchase software and
hardware equipments of ATM. As the
technology supports to integrate multiple
parts of ATMs from different vendors, this
arrangnment puts a competitive pressure
on ATM vendors. Multivendor software
facilitates and independent decision
making for the banks in opting for hardware
vendors, reduces the cost of ownership of
ATMs for the banks. Deployment of MVS
(Multivendor Software) has also reduced
Infrastructure management issues in
these banks. Denitely, it is a revolutionary
concept to execute a single software
application in the entire ATM network. The
ATM technology has developed to such
an extent that some ATMs can memorize
consumer preferences as per their past
transactions, behavior, and tailor services
accordingly. In many cases, ATMs have
internet scope which facilitates two
way communications with live agents,
provide biometric options, and have
the ability to demonstrate personalized
advertisements. Maintenance of web
enabled ATMs are easy. These ATMs can
be quickly connected to central monitoring
system of vendors.
Within two decades, ATM technology
development is happening at an alarming
rate. Gone are the days when customers
were limited to only withdrawing cash
from ATMs. We have now reached an
era, where we can use multi function and
biometric ATMs, equipped with touch
sensitive and user friendly options to
transfer funds, book air and train tickets,
go for mobile recharge, and even deposit
cheques with scanning (Table 1).
Growth of the Industry
As per the Global ATM Market and
Forecasts to 2016, the maximum growth
of ATMs is happening in Asia pacic
region. India and Indonesia are having one
fouth of the number of ATMs, and china
is accounted for half of the New ATMs.
Worldwide growth of ATMs is steadily
increasing (Fig. 1). The growth of ATMs
Table 1
Period
1988-1994 (the Initial Period)
1995-1999 (Early
Developments)
2000-2001 (First Extension)
2002-2004 (Extended
Functionalities)
2004-2006 (non-banking
services)
Future (2007 onwards)
Source: Kumar, L., Malathy, D., & Ganesh, L.S. (2011). The diffusion of ATM technology in
Indian banking. Journal of Economic Studies, 38(4), 483-500
in Western countries and other advanced
countries has reached at a mature stage.
However; there is a lot of scope of growth
of ATM industry in developing countries
like India.
In India, ATM industry is growing at
an exponential rate. So to say, ATM has
brought a self service revolution. ATMs
were introduced to the Indian banking
industry during 1987 by HSBC Bank in
Mumbai. Mr Jaivinder Gill, MD of NCR
India has stated, As banks continue
to open new branches, attract new
customers, and encourage existing and
new account holders to use cards, the
Indian ATM industry is set to grow. Since
many banks still operate proprietary
networks, the increasing number of
banking customers is likely to spur ATM
growth.ATM technology was used to
reach the customers at a lower initial and
transaction cost with hassle free services.
As per an interaction with senior
general managers (South Asia channel
partners and strategic alliance), ATM
segment witnessed a growth rate of 30%
since last 5 years in India. ATM terminals
in India will be expected to grow at a
compounded average growth rate of 25%
between 2011 and 2015. There is now a
Features/Functionalities
Deposit of Cash
Withdrawal of Cash
Mini Statement
Balance Inquiry
Coupon Dispensing
Fullling Requests from Customers (e.g. Check
Book)
Account Transfers
Touch Screen Menus/Facilities
Ticket Booking-Railway and Airlines
Bill Payments
Mobile Recharges
Check Deposit with Scanning
Customized ATMs
Ubiquitous Multifunction
ATMs Biometric ATMs
CSI Communications | February 2013 | 23
 service providers take the responsibility
3,500,000
of identication of ATM installation site,
3,195,880
3,046,685 connectivity and power arrangement,
3,000,000 2,891,190 negotiation with landlords, and nishing
2,728,425
2,561,465
the interiors of ATM site. Banks do not
2,500,000 2,407,870 have the core competencies to handle
2,249,497
2,096,372
these issues[3].
2,000,000
1,939,501 NCR, Diebold and Wincor Nixdorf are
1,783,169
1,647,644
the leading original ATM manufacturers
in India. However, there are many Brown
1,500,000
level ATM service providers, which are
connected with Indian Banks. Now there
1,000,000
is a trend in India, to outsource ATM
functions and activities like; ATM selection
500,000 and Installations, site up keeping, card
issuance and management, transaction
0 processing, eld services, and provide
2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

(Source: Global ATM Market and Forecasts to 2016 (Retail Banking Research))
major focus on nancial inclusion, which
means ATMs now have a wider reach in
rural and remote corners of the country.
There is also a huge demand from the
urban population who are looking for
instant services, alongside seeking to
avail more value-based features[1]. As
per RBI, for ATM industry, India is a huge
market. It is a place with 1.2 billion people,
where 40% of them were unbanked. ICICI
Bank general manager OP Srivastava
commented: "When we saw a man in
a dhoti in a remote town in South India
withdraw money from an ATM, tuck it in
the folds and ride away on his cycle, we
were truly inspired by the ATM growth in
the country." As per the ATM Statistics
computed by Reserve Bank of India, total
number of onsite and offsite ATMs of all
Indian Banks are 100042 by July 2012.
9%
CARG: 2
34,789
21,509 27,088
16,750
2005 2006 2007
Fig. 2 The number of ATM's in India is growing at a brisk pace...
(Source: Edelweiss IB Estimates; Assumed a 24% growth rate for the period 2012 - 2015)
Fig. 1: No. of ATMs, 2006 to 2016
Brown Level ATMs
In case of brown level ATMs, the hardware
and the lease is under the ownership
of the service provider. However,
the connectivity, cash handling, and
management are the duty of the sponsor
bank[2]. The ATM is under the brand and
logo of the sponsor bank. This model is
about a shared network, which results
in drastically cutting costs within banks.
These ATMs have two major advantages.
Firstly, the capital investment is undertaken
by the ATM vendors. So, banks need not
lock their funds in fast depreciating assets.
Secondly, vendors receive a fee from bank
for each transaction whose ATM card
is used. There is an incentive to ensure
efficiency of the usage. Another advantage
is that the speed of ATM deployment
is increased once the brown level ATM
G: 24%
CAR
114,364
92,455
74,743
60,153
43,651
2008 2009 2010 2011 2012 2013
2016
technology solutions to connect ATMs by
service providers (Table 2).
White Level ATMs
In case of White Level ATMs, non banking
entities are allowed to set up, own, and
operate ATM machines. As per RBI
Guidelines, minimum net worth necessary
for non banking entities to set up ATM
services should be minimum of 100
crores. These WLAs (White level ATMs
can provide services to all customers of
all banks. WLA operators are acquirer
for all transactions at the WLAs, and earn
fees correspondingly. WLA operators
would be permitted to earn extra revenue
through advertisement at ATM counter,
and by offering value added services.
As per RBI, the advertisements placed
on such ATMs would be subjected to
Advertising Standard Council of India
(ASCI) codes and other regulations.The
operator will have one sponsor bank. This
bank will serve as the settlement bank
for all the transactions at the WLAs.The
maintenance and servicing shall be the
responsibility of the operator. Settlement
174,988 of all the transactions at the ATMs, shall be
141,465
done only in the books of the sponsor bank
through the ATM Network with whom the
operator has established connectivitys.
Cash Management at the WLAs is the
responsibility of the sponsor bank[4]. As
per RBI, the sponsor bank can tie up with
other banks for loading and reconciliation
of cash at WLAs, at locations where the
sponsor bank does not have a premise.
Conclusion and Future Directions
2014 2015
There is a huge opportunity for growth of
ATM market in India. The future will see
multi vendor ATM popularity, which will

CSI Communications | February 2013 | 24 www.csi-india.org

 Table 2

No of ATMs
Company Name Service Offerings Key Tie Ups
serviced
SBI, Axis Bank, HDFC Bank,
NCR Corporation ATM manufacturing, ATM Management n.a.
Manufacturer

Canara Bank
ATM

ATM manufacturing, ATM Management,

Diebold Systems n.a. SBI, Axis Bank
ATM Security
SBI, ICICI Bank, Punjab National Bank,
Wincor Nixdorf ATM manufacturing, ATM Management n.a.
Axis Bank and Union Bank of India
Complete ATM Management(ATM
FSS Selection and Installation, Site up ~15000 SBI, ICICI Bank, IDBI Bank, HDFC Bank
keeping, Cash Optimization and loading)
ATM Selection and Installation,
Prizm Payments Management of ATM Network, Provide ~8500 Axis Bank
Service Providers

Technology Solutions to connect ATMs

End to End ATM Deployment and
Tata Communications Management, card Issuance and ~5000 ICICI Bank
Management
AGS Transact End to End ATM Deployment and
~15000 Axis Bank, Dhanlaxmi Bank
Technologies Management
Transaction Processing Services, ATM
Euronet India Operations and Management, Field ~10700 Axis Bank, IDBI Bank, HDFC, HSBC
Services
Source : http://tsi.swishdesign.com.au/wp-content/uploads/2011/08/Indian-Payment-Industry-2012.pdf

provide personalized features and a user a common man. Banks are trying to shift [3] Edelweiss. (2012). Indian Payment
friendly interface. ATM will be a popular slowly from multi vendor to multi channel Industry in 2012. Available at http://
Public Technology. Original equipment integration, so as to get a complete picture tsi.swishdesign.com.au/wp-content/
manufacturers and vendors will get of the activities of customers. uploads/2011/08/Indian-Payment-
ample scope for handling ATM machines. Industry-2012.pdf fetched on
References
Modern ATMs are now capable of 11.09.2012.
[1] Aritcles-place. (July, 2012). Brown
personalized branding, CRM applications, [4] Firstpost. (Feb. 2012). RBI issues
Level ATM-An Introduction, available
integrated fraud alert, customer guidelines for White Label ATMs
at http://www.articles-place.com/
notications, and exible services. Though owned by non-banks, available at
brown-label-atm-an-introduction/
ATM industry is growing rapidly, there are http://www.firstpost.com/fwire/
fetched on 01.10.2012.
many challenges related to security issues business-fwire/rbi-issues-draft-
[2] Bagchi, S (2012). The Indian ATM
of the software, increase of rental costs by norms-on-white-label-atms-owned-
Industry is getting Smarter, available
the day in major cities, housekeeping, and by-non-banks-213549.html fetched
at http://www.cxotoday.com/story/
replenishment of cash. Few banks have on 29.09.2012. n
the-indian-atm-industry-is-getting-
introduced biometric ATMs in rural India,
smarter/fetched on 08.09.2012.
which are quite secure and easy to use by

Prof. Jyotiranjan Hota, is an Associate Professor and Area Chairperson of Information Systems wing at KIIT
School of management, Bhubaneswar. He is a BE in computer science from NIT Rourkela and PGDBM from
About the Author

Xavier Institute of Management, Bhubaneswar. His research interest lies in Banking technologies, Analytics,
and ERP. He has published several papers in many Journals and Conferences in India and abroad. He is a
member of Computer Society of India, Odisha IT Society, IEEE, and Indian Science Congress Association. He
has discharged the role of Publicity Chair, Program Committee member, Session Chair, and Reviewer of many
International Conferences in India and abroad.

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