Why so many ATMs at one place?

The need for establishment of independent ATM authority in India:

The recent decision of RBI to penalise excessive usage of ATMs pertaining to other Bank's by the customers is a retrograde decision especially in this age of modern Banking coupled with technology using innovative technologies.

Millions of customers of major nationalised Banks are now enjoying the fruits of computerisation, like core banking solution, and instant funds transfer through RTGS and NEFT. To top all this facilities, the customers of different banks are now allowed to use the ATM machines installed by other banks with effect from 1st April, 2009. This is really a boon to the ATM users as they need not go scouting for a nearest ATM of their own Bank but instead simply withdraw money from any nearest ATM at no extra cost!

However, the above decision of RBI will again bring the situation back to square one where the user has to think twice before entering into another Bank's ATM room.

NEED FOR A NEW ENTITY:

RBI and IBA in consultation with the Government can think about establishing a seperate independent authority preferably with the participation of all major banks and a software major (for technical support) to takeover the existing ATMs, establish new ATMs, manage them, maintain them and act a clearing agent for mutual claims for the ATM transactions taking place in the country.

With the introduction of such an exclusive “entity”, we no longer need to maintain a dozen ATMs in one busy centre by different banks. Instead one ATM centre will suffice for one area which result in cost savings in terms of space, equipment, security, expenditure for maintenance of cash etc. We can even have a ATM centres with 3 or 4 machines to cater the rush. Apart from the ATMs the "centre" can be used for various other activities which directly or indirectly promote the interest of the member banks like advertising the banking products, cross selling credit cards, bankassurance products, providing clearing cheque boxes etc.

WHO GAINS THE MOST WITH THE PROPOSED SYSTEM?

The banks no longer needs to bother about filling the cash, addressing the customer complaints about functioning of ATMs etc as the "entity" will be taking care of entire operations like filling the cash, ensuring proper functioning of machines, taking care of inter bank fund clearing etc. The customer will be better placed in such a situation as the ATM network will be integrated and professionally managed. He or she can draw cash from any nearest ATM centre in case of need without bothering to check the technical and financial implications. The banks should be happy because they need not depute their regular staff for ATM related work and the experienced bankers can be used for more productive purposes.

AFTER ALL, WHAT'S WRONG WITH PRESENT SYSTEM? :

It is a national waste of money to maintain different ATMs by different banks (even within public sector) involving investment of huge sums of money in terms of acquisition / leasing of site, installation of ATM, maintaining necessary software and hardware, security of the ATM, maintenance of the machine, Cash management involving usage of vast manpower. By installing "common ATMs" we can reduce the national expenditure of ATMs by all Banks by a staggering 90 percent !! This is possible because there are nearly 15-20 major banks are operating nationwide ATM network and the combined expenditure thus saved is huge. After all, the banks do not gain anything by having exclusive ATMs except for the burden of capital investment and deployment of scarce resources for their maintenance.

BUT HOW THE NEW ENTITY CAN SURVIVE FINANCIALLY?

Instead of penalising the customer for the usage, the "entity" can earn from fee based income from the member banks in the form of per card / per use fees, advertisement of banking and other financial products, commission on cross selling of products, using the premises partly for commercial uses, thereby earning rental income etc. A variety of options are available depending on the area, size of the premises available etc for partially using the premises for other commercial purposes. The business model can be built once the government moots such a proposal and all banks participates enthusiastically.

WHAT NEEDS TO BE DONE TO ESTABLISH SUCH ENTITY:

There should be consensus among all banks to share a common technological platform to integrate the ATM networks. All existing ATMs are to be transferred to the new "entity" for maintenance. If there are several ATMs in any particular area, only one convenient ATM will be retained and the remaining will be removed to reduce costs. All ATMs will carry a common brand name for easier identification. Security and Technical staff should be available for redressing the customer problems round the clock. State of the art technical facilities and connectivity is to be ensured. New ATMs are to be installed whereever necessary like in rural, tourist, educational areas etc where till now no banks have established because of viability issue. The entity can think about innovative services like mobile ATMs, temporary ATMs (for major events), Cash deposit service etc in due course.

Thus it is a win-win situation for both the banks and customers as the bankerscan save on their costs and resources and the customers need not worry for penalties on ATM usage. I sincerly hope RBI and the government take my suggestion in right spirit and take suitable steps in this direction.