ATMs are much more than a till-box

Today's ATMs give you everything you want - from withdrawing cash to the possibility of depositing cheques and even opening a bank account

Banks have been a part of civil society, in one form or other, since the beginning of money-based transactions. Banking systems have evolved in tandem with currency and foreign trade requirements, giving rise to the regulated conglomerates we see today. As technology seeped into the sector, newer elements came to fore, from branch transactions to any-time money by way of automated teller machines (ATMs).

With people keeping their salaries and savings in bank accounts, it became necessary to enable “any-time withdrawals”, especially given the fact that branches were closed on Sundays and public holidays. Ever since the first fintech marvel, the ATM, was introduced in 1967, the way people transact has been revolutionised. The ATM has evolved over decades — allowing cash deposits and withdrawals using magnetic or chip-cards and even card-less withdrawals using one-time passwords (OTP), unified payment interface (UPI) and the quick response (QR) code.

Today, full-service banks, small finance banks and rural fintech companies offer such services to customers, ensuring financial democracy and inclusion across urban and rural spaces, along with easy access to cash withdrawals. ATMs also have changed with time — gone are the chunky machines with dysfunctional buttons which required you to attempt multiple tries before you could get your cash in hand.

We are now used to seamless touch-screen models which give you everything you want — from cash-withdrawal options to the possibility of depositing cheques and even opening a bank account, without actually visiting a branch. In fact, select ATMs are equipped to offer customers services such as payment of income tax or applications for loans, indicating the tremendous evolution of the ecosystem.

The ATM evolution is catalysed by the disruptions in banking. As financial institutions adopted fintech and began offering personalised solutions, ATMs followed suit, ensuring customers enjoy a holistic experience at all outlets. These transformations have also prompted the channel to reimagine services and, therefore, reduce costs. Consider the fact that, with cash deposits now a possibility, ATMs can act as cash recycling machines (CRMs), thus mitigating the need for repeated cash infusions. CRMs can reduce trips made by cash-management agencies to ATMs, minimise downtime, and save costs for banks. With the influx of cash deposit facilities, the old system can now be relegated to the past, making the entire chain more secure and efficient.

Factors such as the Reserve Bank of India’s decision to increase ATM interchange fee to Rs 17 from Rs 15 is expected to incentivise acquiring banks to set up more ATMs, especially in rural and under-penetrated areas. In fact, every new bank branch that opens now is expected to house at least one on-site ATM and a CRM. This is mainly because a bank branch incurs a cost of about Rs 60 for processing a cash transaction.

However, with the installations of CRMs, this cost is reduced significantly, thereby ensuring economies of scale for acquiring banks. This will also accelerate the growth of the ATM industry in India, which has been slow-paced for the last two years. In the near future, we may see CRMs being used for purchasing food coupons, metro train tickets, or even gift certificates.

Similarly, e-lobbies ensure enhanced customer service and convenience, as they offer customers access to all banking services via ATMs and kiosks, throughout the year. Further, ATMs are now being integrated with banking apps, thanks to interoperability. These integrations now allow customers to complete withdrawals and deposits by using OTPs or UPI QR codes — thus giving rise to a future-ready “phygital” economy. ATMs are set for further revolutions over the years, especially given the banking industry’s increased focus on hyper-personalisation and fintech adoption. As the means to access a host of services without travelling to the bank branch, ATMs are expected to complement digital banking in the years ahead, continuing to evolve and offer seamless services to customers.   

The writer is chairman and managing director, AGS Transact Technologies