Financial Daily from THE HINDU group of publications
Saturday, Mar 06, 2004
Financial Daily from THE HINDU group of publications Saturday, Mar 06, 2004 |
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Money & Banking
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Information Technology ATM tie-ups: Too many, too soon Poornima Mohandas
Mumbai , March 5 WHILE every bank has gone to town announcing ATM tie-ups in the last six months, the average customer seems to be unclear on the benefits of the multitude of marriages. In some cases, the networks are yet to go `live' while in some others the customer does not know which all banks he can count on and at what charge. There are also cases where there is no active card usage by customers. Take the case of the two big guns in the banking industry, State Bank of India and ICICI Bank, which announced a tie-up in October 2003. Even after five months, "... the technical details are still being worked out," said a senior official from ICICI Bank, who did not wish to be quoted. Another similar case is that of `Cash Online', an arrangement between five prominent PSU banks, Canara Bank, Central Bank of India, Indian Overseas Bank, UCO Bank and Union Bank of India. `Cash Online', said Canara Bank officials, is yet to choose its service provider for the infrastructure integration process and will take some more months to be rolled out! ATM sharing arrangements have been announced at regular intervals - such as MITR, CashTree, Cashnet, Cash Online, BANCS plus the bi-lateral ones — but "... how can one keep track of which all banks one's bank has tied up with,'' complains a bank customer. "The confusion is because several sharing arrangements have been announced with many of them not even operationalised. There has to be focused branding and communication to the customer. For instance, we are putting up branded stickers at every machine that is part of our shared network,'' said Mr Shameek Bhargava, Head - ATMs & Card Product, IDBI Bank, which has entered into tie-ups with three other banks. "There is a lack of standardisation of charges across banks. When this is done and the customer also pays a standard charge the confusion will tide over. Statistics show that only about 5 per cent of total ATM transactions in the country are carried out on non-proprietary ATM networks,'' said Mr Mani Mamallan, COO, India Switch Company, which pioneered the defunct, Swadhan network and currently integrates several other ATM networks. In a sharing arrangement between bank X and bank Y, bank X charges bank Y (something between Rs 10-Rs 25) each time a customer of bank Y uses the ATM network of bank X and vice versa. Each individual bank at its discretion then passes on this charge to the customer either fully/partially. In this nascent industry there are profit makers emerging. UTI Bank, for instance, claims to earn Rs 1.5 crore a month by extending its 1,200 ATMs to about 28 banks. For a sharing arrangement to click there has to be a large and active debit/credit card base, awareness amongst customers, good distribution of machines with sound systems and robust back-end processing, said Mr Bhargava.
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