Financial inclusion poses challenges for ATM models

By : Neill Malcolm Harris

July 28, 2015 12:30 PM

Building financial inclusion offers a clear set of gains for banks. More people with accounts, paying bills, saving, buying mortgages - it’s generally good news for traditional financial institutions.

But the rapid fall in the number of people who are described as ‘unbanked’ poses challenges to banks, too.


Between, 2011 and 2014, the World Bank says 700 million people became account holders at banks, financial institutions, or mobile money service providers. In this time the number of unbanked individuals fell 20 percent to two billion adults.

There are lots of things to consider as more people have access to financial services, such as the impact on the ATM channel and cash management.


How are people making payments? Generally, moves to improve financial inclusion are seen as pushing consumers towards greater use of electronic payments. This is certainly true, but rising numbers of account holders also means more people using ATMs and therefore more cash in the system.


For instance, the World Bank says 230 million people in South Asia with an account pay utilities or school fees in cash. It’s just one example, but it highlights that financial inclusion does not just mean a move from notes and coins to debit cards and mobile money.


Banks also need to consider whether charging for ATM use makes sense in particular scenarios. But it’s even broader than that - what services can we deliver through the ATM so it’s relevant to these new consumers?


More customers can make it cost effective to deploy ATMs more widely; however we need to also consider the type of financial inclusion we’re talking about, as it varies. Someone with a simple mobile money service account, which practically replaces the traditional banking system, doesn’t need to use an ATM or a branch. In many emerging markets, particularly Sub-Saharan Africa, it is these kinds of services, and not banks, that are leading to higher levels of financial inclusion.


These consumers have access to a mobile money account for electronic payments and transfers and can ‘cash out’ or withdraw hard currency at shops and other locations approved to do so. If people are accessing the financial services they require without banks, where do the banks fit in? Does the ATM have a role in this environment?


ATM infrastructure needs to be flexible enough to adapt to evolving needs of consumers and meet the demands of a new sect of customers who have not grown up in the mainstream of financial services.


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Neill Malcolm Harris

NCR Product Marketing Dir. for ATM Solutions

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Neill drives marketing for NCR’s ATM solution portfolio. He travels extensively to many of the World’s leading banks and financial Institutions, articulating how SelfService technology and innovation can inform and support strategies and solve challenges.