By : Colin Gordon
February 06, 2018 08:00 AM
The global ATM market has recently witnessed a healthy share of innovation, at a time when consumer demand for cash continues to grow.
Retail Banking Research (RBR) has provided some eye-opening insights into recent trends in the sector, with the Global ATM Market and Forecasts to 2021 report showing there were 99.5 billion cash withdrawals in 2016, with a total value equating to US$13.2 trillion. That breaks down to more than US$25 million being taken out of cash machines across the globe every minute.
Looking to the future, one of the most interesting trends to anticipate is where the most notable growth in ATM deployment will take place. According to the latest forecasts from RBR, all eyes should be on the increasing number of smaller emerging markets in regions such as south Asia and Africa.
Countries like Myanmar, Bangladesh, Algeria and Mozambique were singled out on the basis of their potential for expansion in ATM networks and, as a result, better delivery of fundamental banking services to customers. It is in countries like these where financial inclusion and the use of cash are very important to people – hence the growth in ATMs
RBR put the south-east Asian state of Myanmar at the top of its list of markets expected to see considerable growth in ATM figures over the next five years. The country's install base will expand by 132 percent up to 2022, if the predictions prove accurate.
The local economy has recently experienced major reforms, which contributed to the nation's number of ATMs rising from zero in 2011 to almost 2,500 by the end of 2016. It can be expected that the type of ATM functionality that will prove popular here will be a mix of both cash dispense only as well as recycling, such are the volume of banknotes in Myanmar.
Myanmar shares a border with Bangladesh, which has been going through a boom in ATM numbers since early 2015, when local deployment regulations were relaxed. The country is expected to see ongoing growth of 106 percent in ATM numbers over the next five years.
The North African nation of Algeria (70 percent) also featured among RBR's top five markets by projected growth in ATMs, along with Pakistan (57 percent) and Mozambique (56 percent).
Rowan Berridge, who led the research, said: "These markets are characterized by a low density of ATMs to population - fewer than 100 machines per million people - but are enjoying rapid economic growth and benefiting from state-driven programs to increase financial inclusion. Cash is set to remain hugely important in these markets and prospects for growth in ATM deployment are excellent."
Mature markets turn to optimization
The data showed that the total number of ATMs worldwide increased to a record 3.3 million in 2016, partly driven by 80,000 new installations in China and India. These two countries showed rapid growth in prior years, though have slowed slightly due to factors such as demonetization in India, whilst the growth in Alipay and WeChatpay in China could in the future mean growth in China is not as high.
RBR Global noted that this figure for these two major markets, while "still impressive", represents something of a slowdown. This hints at a trend of financial institutions in China and India turning their focus to estate optimization, rather than expansion. This still means that the ATM will be important. Cash recycling, Multi-Function or Video Teller based ATMs may start to gain in popularity where consumers also get the ability to undertake a more diverse range of transactions also
This ongoing change can be a positive development for providers and users of financial services in these countries, given the many advantages that can be gained from investing in innovation and modernization in the ATM channel.
From a commercial perspective, FIs that optimize their ATM fleet with the latest solutions and technologies can significantly reduce costs. One way this can be achieved is by deploying intelligent deposit technologies in the ATM channel, cutting the cost of manually processing cash and check deposits at a branch teller. This can free up branch staff to focus on revenue-generating activities such as sales and customer relationship management.
On the consumer side, the evolution of the ATM is opening up new experiences such as contactless access, on-screen connections to remote tellers and seamless integration with other banking channels.
Banks that are willing to invest in this sort of progress will be well-positioned for a future in which cash and the ATM channel will have a critical role to play.