Banks plan to ramp up penetration via ATMs, branches: CMS Info Systems CEO

CMS Info Systems, which manages cash deployment at ATMs, hit the capital market in December last year. Rajiv Kaul, executive vice-president and chief executive officer of the company, says cash withdrawal from ATMs via UPI provides a good business opportunity because many Jan Dhan accounts do not have the debit card. Excerpts:

There are two main revenue streams of CMS Info Systems. One is cash management and other is managed services. Cash management contributes roughly 70 per cent of your revenues. You plan to double your revenues to Rs 2,500 crore by FY25. What will be the driver for this growth?

We ended FY21 with revenues of Rs 1,300 crore and from there doubling it to Rs 2,500-2,600 crore by FY25 should be a compound annual growth rate of 18 per cent. If you look at FY20, the year before Covid, revenues grew 20 per cent. I’m ignoring the Covid year for obvious reasons and then in FY22, we grew at 22 per cent. So we are on track to meet this goal, which we set for ourselves in the mid-term. We have an order book of almost Rs 2,500 crore today.

There was a lull in ATM deployment for three-four years. It has picked up now. State Bank of India (SBI) and HDFC Bank are some that have announced big branch expansions, which mean ATM installation. So do you see more banks installing ATMs?

At sector level, large banks, both public-sector as well as private, need to increase their reach. We see big plans for banks, not just the two you mentioned. India has almost 250,000 ATMs, which need to be replaced because technology becomes obsolete every six, seven or eight years. Large infrastructure is required to do that and we are a key player in that sector.

Do you think white-label ATM deployment has gained pace in the past few years?

The white-label business in India has done well in the past two years. The number of such ATMs should be 30,000-35,000, so 12-13 per cent of India’s ATMs are white-label, which means they’re owned by a private company and not a bank. I see good growth prospects there. Public-sector banks like SBI are expanding their networks, and large private lenders like HDFC Bank are looking to increase their ATMs and bank branches. We see all of this contributing to a healthy growth opportunity for our sector.

The Reserve Bank of India recently proposed card-less cash withdrawal at ATMs through the UPI. What are the operational and technological challenges for this and when do you see this becoming operational on a large scale?

It’s a brilliant move because when you think of a business like ours, it brings the best of the physical and the UPI. In terms of value, 80 per cent of the UPI today is person to person and 20 per cent is person to merchant. By volume it is 50-50. We don’t have a role to play in person to person, but in person to merchant, we do.

It’s great because all Jan Dhan accounts don’t have the debit card. We would like them to have the debit card because the more the number of debit cards, the more they can access ATM service. But for the bank, there’s a cost on the debit card, and for some reason debit card issuances have been lagging behind. But now thanks to the UPI, that bottleneck gets reduced and removed.