Posted by Ajay Kelkar on Tue, Sep 22, 2009
I recently read a blog post which said that
ATMs would now be irrelevant! I could not disagree with it more!
http://www.cashcow.in/index.php/2009/07/23/the-growing-irrelevance-of-the-atm-network/
For many of us, the ATM has become the true
face of our bank. We hardly walk into our branch but we often use the ATM. Colin
Henderson has this very interesting post which centres on the reality
that with each transaction, a consumer is making a decision about their banking
service.
“ What has really happened is that
the product experience has transferred from the old view of product, the bank
account, to the new view, which is the experience. The experience occurs at the
ATM, the POS terminal, the
online banking session, the iphone app (oops you haven’t got that!). The
customer experience is in the use of the account, not in the interest rate.
That rate stuff is relegated to another mind space that is related to return
and investment quality. That other mind space is critical, but not at the point
of transactional experience.”
Read more of Colin’s comments at:
http://thebankwatch.com/2009/07/29/bring-the-banking-experience-forward-to-the-transactional-experience/
Whereas the first ATM’s in the United States appeared in the
1960’s, the ATM is a fairly new phenomenon in India. The total number of
ATMs in India, a country of 1.15 billion people, has increased approximately
30% this year to 40,000, mainly in urban areas. By contrast, in the United
States with a population of only 305 million people, ATMs are
ubiquitous. Their number peaked at 395,000 in 2005.
The Reserve Bank of India, which tightly regulates the ATM
business, ruled in 2008 that banks could not charge depositors from other
Indian banks more than 20 rupees (about $.10) for a cash withdrawal, and that
they would have to eliminate even this fee by April of 2009, which apparently
they did. Last month, however, the RBI modified its decree to permit banks
to charge up to 20 rupees per transaction starting in October if a customer of
another bank uses its ATM’s more than five times in a month. Have a look at
this interesting analysis:
http://www.glgroup.com/News/Indian-ATM-Sharing-Reminiscent-of-Earlier-US-Pattern-42807.html
My take is as follows:
- ATMs are a huge
opportunity for banks and can become an intelligent channel for cross
selling . Imagine the opportunity
to present personalized cross sell messages at the ATMs for a bank the size
of an HDFC bank which runs 3,100 ATMs pan India with a daily turnover
of 300 transactions per day per ATM, which adds up to about one million
transactions per day.
- Analytics can help in creating
a “Next product purchase” framework which determines a customer’s propensity
for purchase of another product. Basis
this a centralized Campaign can be pushed out to the customer at the ATM point.
- Analytics can also play a
very important role in determining a location strategy for ATMs. What is
needed is a way by which external data at a pin code level can be aggregated
which includes locations & transaction volumes of competing banks and
profile information at a pin code level. This along with the banks
transactional data can help in analyzing a pin code level strategy for ATM
deployment.