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Public sector banks are increasingly looking at outsourcing the operation and maintenance of their automated teller machines (ATMs).
As of now, tenders have been notified for over 40,000 ATMs in various States to outsource ATMs by a consortium of public sector banks. The Finance Ministry had asked public sector banks to take this approach to effect economies of scale. There is a lead bank for each State or geographical cluster which places the order on behalf of the consortium.
In the outsourced ATM model, a bank will not have any role in installation, maintenance and management of services of ATMs and cash dispensers unlike the own-ATM model currently in use.
Payments will be made to ATM vendors on per-transaction basis.
Banks are still cagey about the cost-advantage likely in the outsourced model. But sources say, the main driver for the outsourced ATM model is a perceived 10-20 per cent savings in cost per transaction.
“The main hassle in managing ATMs is their maintenance. There are increasing problems in operational aspects of the cash dispenses such as satellite link failure, electricity and security issues. We will not have to worry about this in the outsourced ATMs,” said a senior official of Andhra Bank.
However, not all banks are keen to outsource ATMs. Indian Bank, for instance, prefers to have it own ATMs.
“As of now, we wish to go ahead with our own ATM model,” Mr T. M. Bhasin, Chairman and Managing Director, Indian Bank, told Business Line .
When asked about the cost-advantage in outsourcing model, he said it would depend on a variety of factors and can differ from bank to bank due to individual agreements on transaction-based payments.
According to RBI data, there are 87,000 ATMs in the country.
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