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N.S. Vageesh
Priya Nair

Technology is on a roll when it comes to the automated teller machine (ATM). Taking customer convenience a step further is the `Mobile ATM.' Has the service gained currency and has it driven banks' business for the better? eWorld tracks the s cene.

IT is a van. No, it is an ATM. No, it is an ATM in a van. It is a mobile ATM! If consumers will not go to the ATM to do their transactions, then the ATM will come to consumers.

That sums up the raison d'etre for mobile automated teller machines.

Users

Banks such as State Bank of India, State Bank of Patiala, Citibank, Bank of India, ICICI Bank and Jammu & Kashmir Bank have employed mobile ATMs.

For some banks, the introduction of mobile ATMs was done to reach remote areas that may not have a large enough population for the bank to invest in an ATM centre. For some others, the mobile ATM has served a more prosaic function - that of creating awareness and publicity for the bank's products.

Has it caught on?

Has the service caught on? Are banks placing more orders for them?

Rajiv Singh, Managing Director, Diebold Systems Pvt Ltd, ATM manufacturer, says, "At present, we have several enquiries from large private and public sector banks for these machines. We believe that mobile ATMs are about to take off in India. Several large banks are employing these delivery solutions effectively. Mobile ATMs, apart from expanding the reach of the bank, also effectively tackle the problem of exorbitant real estate costs in metropolitan cities. Mobile ATMs housed in vans also allow banks to carry out door-to-door advertising campaigns for other product categories, move the ATM to segments where revenue streams are higher."

Deepak Chandnani, Managing Director, NCR, ATM manufacturer, feels that "value-adds such as the ability to service a wider geographical area or the flexibility to service customers at temporary venues like events, concerts or games will also play a role in their growth."

Rajiv Singh says the mobile ATMs can help a bank reach out to a banking audience that does not comprise its regular customers. For instance, they can be positioned at events, trade fairs and exhibitions to get more mindshare from prospective new customers.

He cites the example of the State Bank of Patiala, which utilised a mobile ATM at the Kumbh Mela in Ujjain. Through the months of April and May 2004, this mobile ATM served thousands of visitors from round the globe at the internationally acclaimed fair.

User experience

What do banks have to say about their experience?

ICICI Bank has three mobile ATMs, one each in Mumbai, Chandigarh and Kochi. Anup Bagchi, General Manager, ICICI Bank, says, "A mobile ATM is one step closer to a fixed ATM. We usually map the areas where our customers stay and find out the distribution points like branch and ATM centres in that area. If the area is a critical mass, which means where a lot of customers reside, and there is no branch or ATM, then that area becomes part of our ATM route path."

D. Krishnamurthy, General Manager - Information Technology, Bank of India, (BoI), puts it succinctly, "Having one mobile ATM is the equivalent of having three off-site ATMs".

BoI presently operates one mobile ATM in Mumbai. It went in for this experiment two years ago. At that time, the bank wanted to use the mobile ATM as a marketing tool to gauge the kind of reception the ATM service got from customers. Based on this, it would decide whether to open a full-fledged branch.

Krishnamurthy recalled that BoI had earlier had the experience of operating mobile branches — in rural areas in Bihar, Orissa and Punjab. A mobile van with cashier, clerk and guard moves to different villages for a few hours every week to conduct banking operations. Computers and wireless connectivity ensured that records were also updated immediately at these mobile locations rather than being done manually at the end of the day.

The bank seems to have had a satisfactory experience. The mobile ATM gets about 75 `hits' or transactions per day. This is, of course, lower than the average hits at a stationary ATM where a minimum of 200 hits is required to pay for its economic use.

Agrees Bagchi, "Typically, transactions in a mobile ATM are lower than a normal ATM. But we have a lot of salary account holders who may be staying away from their workplaces. So, mobile ATMs help such customers."

Encouraged by this experiment, Krishnamurthy says, his bank is evaluating the options of going for more mobile ATMs. "We would like to look at another seven or eight mobile ATMs across the major cities," he says.

Of course cost factors play an important role in banks deciding whether to go for such a solution at all.

Non-user perspective

UTI Bank, for instance, had toyed with the idea of introducing mobile ATMs. But it gave up the idea due to the prohibitive costs, according to Aspy Engineer, vice-president, Retail Banking. Engineer says, "We had talked about it and even spoken to vendors about the costs. But the start-up cost for a mobile ATM is very high. It was working out to be a costly proposition for us. So, we put the idea on hold for now."

What are the costs like?

How much does a mobile ATM cost now?

A mobile ATM could cost anywhere between Rs 20 lakh and Rs 40 lakh depending on the features the ATM comes equipped with as well as the type of vehicle in which it will be housed.

NCR's Deepak Chandnani declined to put an exact price because of the many variants and choices for each element of the solution: the vehicle, the ATM, power source (generator &/or UPS), the communication equipment, the security solution, the GPS, etc. But he pointed out that they had introduced a sub- Rs 5 lakh model called ASAN, which could be extended into the mobile ATM concept and make it easier for banks to opt for mobile ATMs.

Loney Antony, Managing Director, Euronet India, which handles ATMs for banks, took a slightly contrarian view on the mobile ATM concept.

He says, "We manage a mobile ATM for Citibank. But not too many banks are placing orders for mobile ATMs.

I feel it is more of hype than real value for money. The costs of running it are prohibitive. There has to be a proper pattern in the way the van moves. Maintenance is also high as the van will require a generator or an engine running all the time."

Of course there is a via media for such situations - outsourcing.

Krishnamurthy, BoI, says his bank has outsourced its requirement of a mobile ATM. What does it cost them?

"The Mobile ATM on an outsourced basis may cost about Rs 3,000 per day," he says.

Whether it is costs or other factors, the numbers are yet to stack up.

Antony , says, "Not many banks are placing orders for mobile ATMs. For instance, Citibank, which has around 350 ATMs, has only one mobile ATM. And ICICI Bank, which has around 1,800 ATMs, has only three mobile ATMs."

True. The numbers are still small. A quick poll among various banks indicates that there probably are not more than 10 to 15 mobile ATMs running in the field. That's a measly figure when compared to the imposing number of 17,000 ATMs fixed at different locations all over the country.

Competitive threat from network sharing

And there's another development during the past year that could have a bearing on the success of this concept - the sharing of ATM networks among various banks. If customers of different banks can access each other's ATMs, then the `reach' is there automatically. So do mobile ATMs still serve a need?

Rajiv Singh strongly defends the concept saying, "Mobile ATMs are needed to expand reach in different scenarios. For instance, banks may like to service new townships quickly to gain first- mover advantage without really setting up the infrastructure for ATMs. Again, they may like to service big events, trade fairs, etc, where there is a seasonal demand and it is unviable to invest in real estate."

He also tackles the question of the payment-sharing network posing a competitive threat to mobile ATMs. He says, "On the contrary, it enhances reach and adds value. For instance a customer of Bank A can withdraw cash from the mobile ATM of Bank B, thereby increasing usage and reach!"

Krishnamurthy seems to think on the same lines. He says, " We are also planning to make this a part of our CASHTREE network so that cards of our other member Banks also can be used on this ATM. More deployment of such ATMs can also become part of the CASHTREE expansion."

Deepak Chandnani sees the growth of ATM sharing networks and mobile ATMs as parallel movements.

Technical glitches

What about technical glitches and problems associated with any technology innovation?

Says Rajiv, Diebold, "When mobile ATMs were first introduced, there were some issues pertaining to connectivity through VSAT and leased lines. However, with the introduction of CDMA, connectivity glitches have been ironed out."

According to Chandnani, NCR, "On the technology front, a Mobile ATM requires connectivity to the Bank's host through wireless communications channel like CDMA/GPRS. While the mobile services providers have been able to address the issue of security of data in the recent past, it needs to be noted that the channel is largely designed to support voice traffic and the technology is still being refined."

Policy redressal

But Chandnani feels that the challenges to further facilitate mobile ATM usage are not as much technology-led as policy issues. He says, "Among the issues that the banks need to address are also the fact that mobile ATMs require the presence of a trained ATM custodian (either a Bank official or CIT (cash-in-transit) rep). This means that it is treated in the same league as a Bank branch and requires similar licensing policies to be adhered to. At times, the halts and routes for the mobile ATM need prior approval. However, the procedural timeframes sometimes make it difficult for the banks to maximise the benefits of using the resource for key events such as a mela or a cricket match. Logistical issues such as the vehicle registration also necessitate that a mobile ATM resource may be used only in a given State where the vehicle is registered."

Security risks

Are mobile ATMs prone to security risks? How do you handle them?

According to Chandnani, "NCR's mobile ATMs are as secure as the `fixed' ATMs. NCR's mobile ATM solutions are advanced solutions equipped with sophisticated central tracking system through GPS, which keeps trace of the vehicle's movement. In the event of any mishap, the entire vehicle can be, remotely, electronically immobilised. Last, but most importantly, most Mobile ATMs have a presence of one or two guards from the CIT agency that looks after cash replenishment tasks.

Besides, NCR also has wide repertoire of solutions like Fluiditi ink staining which secures the currency in the ATMs as well as in-transit from any unauthorised access. Certain regulatory norms do not allow us to launch Fluiditi in the Indian market at present but globally, this has been an important solution to increase ATM security and we expect the Indian market to move closer to global trends."

Rajiv Singh of Diebold says, Mobile ATMs are not prone to security risks. He adds, "The cash replenishment process takes place within the vehicle. Further, in mobile ATMs where the customer does not enter the vehicle, the ATMS are rear-load machines. There are also attendants in the mobile ATMs to monitor the cash replenishment process. As for the cash in the Diebold mobile ATM, it is secured in an ATM chest, which is UL 291 certified (an international quality certification for the steel used in the chest).

Bank officials also confirm that there have been no untoward incidents with regard to Mobile ATMs.

So what does the future hold for the concept of mobile ATMs?

Anup Bagchi, General Manager, ICICI Bank, says, "The concept is still evolving. Mobile ATMs give benefits to manage locally and on a micro level. As and when general usage of ATMs increases, the need for mobile ATMs will come down. But as the market is very large, I feel the need will continue. For a country of this size, we will not reach a situation where we won't need mobile ATMs. I doubt if we will have a situation where we will have an ATM at every half kilometre."

We'll end with a favourite anecdote.

This happened a couple of years ago. We had gone to interview a private bank executive. That was when a couple of new private banks had just opened for business. It was also a time when the ubiquitous mobile (cell-phone) was just making its appearance among the elite.

We asked this executive about his bank's plans for introducing mobile (cell-phone) banking. He misunderstood the question and gave a reply that we thought was hilarious - "Our customers are just beginning to develop confidence in us, since we are a new private bank. If they see their money/bank moving away, even that confidence will evaporate."

The passage of time, developments in technology and the growing reach of private banks have turned what was then a comic interlude into reality now - but with a difference. Customers are actually seeing their money moving away, courtesy the phenomenon of Mobile Automated Teller Machines (ATMs) - but their confidence remains undiminished! It is also a reflection on the kind of makeover that public sector banks have had, that they too are experimenting with this concept, in trying to reach out to more customers.

Picture by Shashi Ashiwal

vageesh@thehindu.co.in

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