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As a customer of a bank where you hold your bank account, you obviously get access to a host of services offered by the bank. While many are digital such as internet banking, paying through wallets or debit cards, the human-machine interface comes into play when you go to withdraw cash and avail of other services either from a bank or an ATM.
India has a less than optimal penetration of bank ATMs. In fact, according to statistics over the past five years, while India is next only to China in terms of the cash withdrawals from ATMs, India’s ATM penetration relative to population is one of the lowest amongst the emerging markets. India has 18 ATMs per lakh of population, compared to China (63), Brazil (81), Japan (107) & Australia (132). In India, less than a fifth of the ATMs are in rural areas which translates into approximately five ATMs for every lakh citizens, thereby aggravating this issue even further. Under such circumstances, it is not far-fetched to say that the nearest ATM or bank branch may be quite some distance away.
The government’s financial inclusion program such as Jhan Dhan Yojana and Direct Benefit Transfers (DBT) have equipped most Indians with a bank account and a debit card and as the subsidies are distributed as cash transfers in their bank account, more ATMs are required in rural locations as digital touch points to access this cash and avail of a host of banking facilities in a safe and convenient manner.
White Label ATMs (WLAs), operated by private non-bank companies and licenced by the RBI, that focus primarily on semi-urban and rural locations for ATM deployment can fill this gap, driving ATM penetration while contributing to financial inclusion. White Label ATMs (WLAs) are operated by WLA operators. Additionally, what will give a boost to the industry is the deployment of Cash Recycling Machines (CRMs) at WLAs and Cash Deposit Interoperability.
Simply put, Cash Recycling Machines enable both cash withdrawals and cash deposits in the same machine. With cash deposit interoperability, a customer of one bank can deposit money in other bank or WLA operated CRM using his debit card or just by entering his account details. This leads to quite a few advantages for the customer, one of which is that the hunt for the elusive ATM of the card issuing bank is unnecessary. In fact, WLAs have got good response considering low ATM penetration in semi-urban and rural locations and with cash deposit interoperability, it will further drive convenience for customers.
It’s a huge boon to small retailers and other merchants who can deposit their daily earnings at their nearest ATM or WLA, without having to either keep physical cash in their establishment or spend unproductive time in depositing them at a far-away branch.
With the increase in WLA deployments, the deployment of CRMs at WLAs and with cash deposit interoperability, the ATM penetration levels in the country especially in rural and semi-urban regions will improve further, enabling easy access to cash and a host of banking facilities for the financially underserved. This will also help and support the government in achieving its financial inclusion vision.
(By Rustom Irani, MD and CEO, Hitachi Payment Services)