Digital banking may eat into ATM business: V. Balasubramanian

While some industry insiders see a plateauing of demand for ATMs because of the various other payment modes that will come into play in the near future, others are sanguine about the continued demand for the cash-dispensing machines.  

V Balasubramanian, President, Financial Software and Systems (FSS), says the demand for ATMs is unlikely to be affected in the next couple of years, but “it is not possible to make a growth estimate after two years given the changed situation”. On the other hand, K Srinivas, Managing Director and CEO of BTI Payments Pvt Ltd, said ATM numbers in India would grow for the next 15-20 years. As Srinivas pointed out, the US, with a population of around 320 million, has some 432,000 ATMs, while India, with a population four times that has only around 220,000. There are thousands of Indian villages that do not have even one such machine, he added, suggesting huge headroom for growth.

“Even in the most advanced countries, where digital banking is popular, cash transactions still take place. Over a period of time ATM players will also rediscover themselves and offer additional services,” Srinivas said. 

According to him, the increase in PoS terminals will not pose a major threat to ATM players, while Balasubramanian said one problem with rural areas migrating to mobile payments in large numbers is that not many have smartphones. The government, however, is pushing hard for higher penetration of digital banking so that the nation moves towards a cashless economy. 

According to a report prepared by SBI’s Group Chief Economic Advisor Soumya Kanti Ghosh, there is excess of Rs 5 lakh crore cash in circulation which is “neither required nor desirable” and that a digital economy needs to be encouraged. “The current size of digital banking (including credit cards, debit card transactions through PoS terminals, transactions through prepaid payment instruments like m-Wallets, and mobile banking) is around Rs 1.2 lakh crore,” he said in the report.