The Hindu Business Line : India, China hungry for more ATMs: Study

Growth engines
Since 2000, the growth in ATMs has been exponential in India, with a CAGR of 70 per cent,
The growth of ATMs is closely linked to the growth in debit and credit cards.

G. Chandrashekhar

Mumbai, Nov. 28 Asia is set to vigorously jingle the Automatic Teller Machine (ATM) market in the coming years. China and India, in particular, are about to witness a phenomenal growth over the next three-five — from about 1.25 lakh ATMs in 2006 to 3.5 lakh ATMs by 2010, according to a new report ‘The Dragon and Tiger of ATM Markets: China and India’ by Celent, a Boston-based financial research and consulting firm.

At a time when traditional ATM markets are on the decline and markets in many industrialised nations have reached a level of saturation, overseas markets are rapidly becoming attractive venues of growth and destinations of choice for ATM industry players , the report pointed out. Cash usage in mature markets such as the US, Canada, Spain, Japan and the UK continues to decline as electronic payment vehicles (debit and credit cards) have become widespread. This, in turn, has slowed ATM transaction volumes and profitability.

The rapid development of banking and financial services in China and India represents a significant opportunity for ATM growth, particularly in the light of the extremely low penetration levels of this cost-effective self-service distribution channel, Celent said..

70% growth

While the first ATMs were installed in India in 1988 by a few foreign banks, the next 12 years saw the addition of only about 1,000 machines. Since 2000, the growth in ATMs has been exponential, with a CAGR of 70 per cent, the report said.

As of March 2006, there were 21, 523 ATMs across the country, but concentrated mostly in urban centres. Leading Indian banks are said to target a ratio of 1: 2.5 for bank branches v/s ATMs by 2012. This means the number of ATMs will grow to around 1.75 lakh, assuming the number of branches remains at the same level.

ATM growth in China has been much faster, especially after 1993. At the end of 2006, China had an estimated 1, 02,000 ATMs, mostly in urban areas.

Over the last two years, banks have begun concentrating on driving the usage of debit cards, the report observed. In India, Celent expects that over the next year, average ATM card annual fees of $10-12 will be common across every bank.

ATM growth in China has been much faster, especially after 1993. At the end of 2006, China had an estimated 1, 02,000 ATMs, mostly in urban areas. According to the report, ATM installations in China will increase by 20 per cent a year reaching 2.33 lakh by the end of 2010. The growth of ATMs is closely linked to the growth in debit and credit cards. In India, the credit card CAGR of 39 per cent since 2002 is similar to the ATM CAGR of 41 per cent over the same period. Over the last two years, banks have begun concentrating on driving the usage of debit cards, the report observed. In India, Celent expects that over the next year, average ATM card annual fees of $10-12 will be common across every bank. Interchange fees are on average $0.50 for cash withdrawals and $0.10-0.20 for balance enquiries.

More Stories on : Information Technology

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Regional rural banks’ net profit decreases

Rupee tad weaker

India, China hungry for more ATMs: Study

‘Make health insurance affordable’

CARE, United Bank in pact

LVB's funds transfer facility

Oriental Bank to focus on SMEs in eastern region

‘SBI move to reject LC to Iran may hit tea exports’

Bond prices fall by 12 paise

CIBIL members can have credit score of borrowers

A good source of business; no longer a regulatory pain