E-surveillance market rises as banks boost security for branches, ATMs

Industry sources say that only around 40% of ATMs and 20% of bank branches are enabled with AI-led e-surveillance

Last month, an enterprising duo covered themselves in bedsheets, sprayed paint on the CCTV camera inside a kiosk and used a gas-cutter to hack into an ATM of Axis Bank in Bengaluru. Gas-cutters were also used to disgorge an ATM of State Bank of India in Roorkee in November 2023.

What emboldens folks to find new ways of pulling out cash from ATMs?

“The issue here is that a CCTV camera merely records what’s going on. From a security point, you will see a marked change. For instance, if you see someone up to mischief at an ATM, you could not only alert the backend real-time, but can also have alarms go off at the location or use a speaker to warn the perpetrator that he is being watched. You can technically even have the shutters come down locking the mischief-maker,” says Sunil Udupu, co-founder and managing director of Securens, an e-surveillance firm.

RBI guidelines

Now, you would have thought ATM security was robust. After all, the Reserve Bank of India had issued a detailed circular in 2019: ATMs had to be fixed (to a wall, pillar, or floor) except for those installed in highly secured premises such as airports. Banks were also to roll out a comprehensive e-surveillance mechanism at ATMs to ensure timely alerts and quick response. 

What’s the status?

Industry sources say that only around 40 per cent of ATMs and 20 per cent of bank branches are enabled with AI-led e-surveillance. Banks are now seeking integrated players for end-to-end outsourcing needs to converge their existing technology stack with AI modules for ATM and branch ATM security. In FY25, some 8,000-10,000 banking sites are expected to come up for ‘Requests for Proposals (RFPs)’ which are slated to unfold over the next 12-18 months. According to Manjunath Rao, president, (managed services), CMS Info Systems, “the success and convenience of ATM security have now led banks to extend similar comprehensive e-surveillance solutions to their branches”.

For the record, new branch openings by banks were up at 5,308 in FY23 from 3,254 in FY22, primarily due to private banks expanding their reach in smaller cities to take the country’s branch network to 1,26,445. The number of ATMs (on-site and off-site) grew by 3.5 per cent (primarily driven by the increase in the number of white-label ATMs) to 2,55,304 from 2,46,560. The current ATM base stands at 2,60,000.

But there is more to e-surveillance than the old-world security set-up.

Rishi Agrawal, chief executive officer and co-founder of Teamlease Regtech, has it that e-surveillance should not be looked at as being about camera recordings at ATMs or branches. There are heightened concerns over security – be it physical or cyber. “We are living in extremely volatile times; and threats could hit the financial sector on the digital side. This could be from anywhere in the world. They affect civilians and disrupt their lives, hence have attached costs like civil unrest and the like,” he says.

A recent case is of nearly 300 small banks being forced to go offline for a day due to a ransomware attack. It had affected C-Edge Technologies, a technology service provider to banks. There are about 1,500 cooperative and regional rural banks, which largely serve customers in the hinterlands, and one-fifth of were affected by the attack.

But e-surveillance has other spinoffs too.

E-surveillance

Kailash Prabhu, partner (risk consulting, financial Services) at EY India, would have you believe that investment in e-surveillance is crucial for not only maintaining compliance and meeting regulatory requirements but also to ensure fair treatment of clients and upholding the highest standards on employees conduct and integrity. The technology and methodologies used are evolving to address new challenges and improve monitoring capabilities. In the past, e-surveillance focused on structured trading data, such as trade timestamps and rates. “Nowadays, there’s a greater emphasis on integrating chat-data, sentiment analysis, and other forms of metadata. This provides a more comprehensive view of trading activities and communications.”

You can also use e-surveillance to improve customer service, and banks’ can dovetail this to their human resources practice.

Like, what is happening within a branch. What happens when bank staffers are busy? Over a period of time, if you look at the traffic within a branch, it can also lead to better space allocation and the layout of the branch can be improved. “You will know exactly where the traffic is coming if you are going to monitor the counters and visitors’ area. In a particular branch, a lot of people may be coming for cash withdrawals. And if you have only one counter, you may want to put two counters there,” says K V Karthik, partner, Deloitte India (and financial crime leader in the APAC financial crime network). 

Yet, it is a business that’s shrouded. There’s no sizing study on investments. All you get is a Udupu telling you, “The investments riding on this business is substantial. It takes around Rs 3,000 a month for an ATM site and Rs 10,000 for a branch.”

If e-surveillance in banks comes across as esoteric, you are not to be faulted – the plot is unfolding. Annual reports of banks hardly give you sense of the kind of investments being made in this area. Are security spends included in the overall costs on technology? Or is e-surveillance itself a dressed-up term for security? You will not get far with these posers. But all concede that a few hundred crores are spent annually. It’s cause for cheer for some of the big firms in this trade: CMS, Provision, SIS and Securens. E-surveillance is worth keeping an eye on.