Outsourcing of automated teller machines (ATMs) is on the rise. At least two large banks plan to outsource the installation and management of ATMs as they look to rapidly expand their networks in the current financial year.
Private sector lender Axis Bank is in talks with BAIL, Euronet Worldwide, Prizm Payments and two other independent service operators for the outsourcing contract.
Similarly, Bank of Baroda (BoB) has invited request-for-proposals from prospective vendors for the site construction, supply and installation of ATMs. The bank intends to set up 500 ATMs at its branches as well as off-site over the next three years.
This includes 70 bio-metric ATMs that uses a customer’s fingerprint to authenticate a transaction instead of the customary four-digit personal identification number. Currently, BoB has more than 3,000 ATMs across the country.
“We hope to outsource the installation and day-to-day working of new ATMs within the first half of the current financial year,” Aspy Engineer, head of alternate channels at Axis Bank said. The bank is looking at a pay-per-transaction model to keep costs low. Last year, State Bank of India (SBI), which has the largest ATM network in the country, outsourced the roll-out and maintenance of its ATMs on an experimental basis C-Edge, a JV between SBI and Tata Consultancy Services.
As part of the pilot project, 500 ATMs were set up all over the country. The public sector lender currently has 12,250 ATMs and is aiming to double the number to 25,000 by March 2010. SBI has, however, not stopped setting up ATMs on its own. It opted for ATM outsourcing to help meet its roll-out target and also to save on capital expenditure, a senior bank executive said.
At present, Axis Bank’s ATM count stands at 3,595 and plans are afoot to set up 1,000 ATMs in the current financial year. Like SBI, the private sector lender does not plan to stop installing ATMs on its own. “The outsourcing plan is intended to complement our independent roll-out strategy. We want to be a large acquirer in the ATM business and don’t want to lose out on opportunities as the ATM business has opened up,” Engineer said.
Since April 1, customers are free to use ATMs of any bank without incurring a charge, according to Reserve Bank of India (RBI) guidelines. The acquiring bank whose ATM is used for a transaction will have to be paid an interchange fee by the customers bank.
Banks with larger ATM networks treat inter-change fee as an important stream of revenue and expect to benefit from the April 1 rule, which they say will prompt more customers to use their ATMs.
