Indian Banks Migrating From Self-Service Model to Outsource Model in ATM Space

There was a time when banks wanted to have control of all the activities, especially those that involved the new technology; right from identification, deployment, installation, ownership and management. As time passed by, banks realized that all this took a significant bandwidth in order to have a dedicated team that did not justify the productivity and costs so involved. During this time, Reserve Bank of India allowed banks to partner with third party vendors to outsource certain technology completely even without prior approval from the central bank. Banks in India are increasingly migrating from self-service model to outsource model to achieve cost savings, increase the convenience for customers thereby banks can focus on core banking business. From banks perspective, there is better efficiency in ATMs if outsourced to third parties. Apart from this, it also helps to standardize the systems and process across locations. Another benefit of such model for banks is that the service charges incurred from such outsourcing can go under operational expenses in banks books as opposed to the assets in self – service model. ATMs in India are now in outsourcing phase, where banks are thinking on outsourcing ATM related deployment and maintenance to third party vendors. Banks like HDFC bank, ICICI bank and AXIS bank have already outsourced their ATM management and maintenance to third party vendors. And several others want to try out in bits and pieces before outsourcing the entire process. At present, 20,000 ATMs in the country are maintained by third party vendors like AGS Transact Technologies, Financial Software & Systems, Tata Communications, Euronet, Fidelity National Information Services, Prizm Payments and First Data. Apart from this there are also ATM equipment manufacturers like NCR, Diebold and Wincor Nixdorf who also cater to end-to-end solution needs in the ATM space.