India’s ATM market is set to grow more than three-fold by 2015

In 1987, HSBC set up the country’s first automated teller machine (ATM) in Mumbai’s Andheri East. Soon, almost all banks followed suit. By end March 2010, India had 59,737 ATMs. And the number is set to grow manifold in the future, too. There will be about 175,000 ATMs by 2015, according to the latest forecast by Retail Banking Research (RBR), a strategic research and consulting company based in the UK. That is an expected growth rate of 193 per cent in ATMs. And it is this lucrative prospect that makes the big two ATM vendors in the world — Diebold and NCR — drool. “We are pretty overwhelmed with the prospects for 2015. The installed ATM base is growing at more than 20 per cent year-on-year,” says Naresh Hosangady, South Asia vice-president and managing director of Diebold. “There are only 51 ATMs out here for a million heads,” points out Jaivinder Gill, who runs the show at NCR India. The comparative ATM numbers per million for Brazil, Russia and China are higher — 704, 536 and 155, respectively.  According to RBR, ATM growth in the first half of this decade was driven by private banks. State-run banks have since taken charge, with the State Bank of India and its eight associate banks leading the pack. The SBI Group set up 18,000 ATMs in the past seven years. Its share of installed ATM terminals went up from 32 per cent to 36 per cent during this period. The group created a world record in ATM shipments when it set up 10,000 terminals in 2009-10. It was the key reason why the share of state-run banks in ATMs now stands at 70 per cent, up from 50 per cent in 2003. Six others — private players such as ICICI Bank, HDFC Bank and Axis Bank, and the state-run Punjab National Bank, Union Bank of India and Canara Bank — have together set up more than 2,000 ATMs. They account for a combined market share of 34 per cent. ATM numbers will move up sharply.  “The places where you have ATMs are also going up. Take malls, for instance,” says Gill, referring to the retail boom — you have many more places to swipe when you shop, eat and play. Then you have debit cards, which are to reach 450 million by 2015, double the current base. Of course, it remains to be seen if point-of-sale swipes will mean that many less number of people will flock to ATMs. If so, it can technically act as a brake on ATM installations. But the counter point is that with cheque-truncation, ATMs are now more than just cash dispensers. The shared-ATM networks of banks have dramatically changed the story. Currently, there are five of them — the National Financial Switch (NFS), Cashnet, Cashtree, Mitr and BANCS. NFS is the leader. In March 2010, NFS had 56,711  ATMs of 38 banks — 95 per cent of the country’s ATMs were on it. And ATM usage got a huge boost when the Reserve Bank of India (RBI) asked banks not to charge cardholders of their rivals. Users can now make five free transactions a month on an ATM of other banks. You pay for more of such usage.