Monday, 6 May 2013

Marketing Strategy of ATM Cards in India-Project Report

Project Report on Marketing Strategy of ATM Cards in India

Dissertation on Marketing Strategy of ATM Cards in India

Research Proposal and Case Studies on Marketing Strategy

Atm Transactions in India



·         ATM-only cards expected to be phased out by 2009 

·         Number of ATMs in India grows by almost 31%, from 16,000 in 2005, to 21,000 by March 2006 

·         Wide acceptance of ATMs by consumers, introduction of biometric ATMs and various value-added ATM services will maintain industry growth

·         State Bank of India (SBI) has the largest network of ATMs the country, with 5,479, which continues to expand rapidly. Transactions are free of charge at the ATMs

·         ATM withdrawals in India total around US$23 billion in 2007


·         Increase in inter-bank networks, like National Financial Switch (NFS), Mitr, BANCS, Cashtree and Cashnet is leading to growth in ATM usage. According to a 2006 survey by “Bank net India”, 95% of people now prefer this modern channel over the traditional method of banking and almost 60% people use an ATM at least once a week. ATMs are being used by banks not only to expand their reach to customers, but also to offer value-added services such as bill payment, fund transfers and cross-selling of retail banking products. 

·         ATMs are now seen to be more than mere cash dispensing machines, such as to top-up mobile phones, pay utility bills, even for mutual fund transactions – thus offering the same flexibility as internet banking - only more secure. 

·         According to a survey conducted by NCR Corporation, a leading global technology company and a leader in ATMs in India, in terms of usage, ATMs are typically used for cash withdrawals, mini-statements and balance enquiries. 

·         In 2007, there were only 21,500 ATMs in India, and a banked population estimated at only 400 million. It became imperative for issuers to expand the ATM network to give consumers access to simple banking services. Banking sources stated that there is a need to expand the ATM network – particularly within the urban cities. That said, banks are also in the midst of strategising a plan to reach out to rural customers and the un-banked majority.

Competitive Landscape

·         SBI, a public sector bank, has the largest network of ATMs in India, at more than double that of its closest competitor, ICICI Bank. SBI has 5,479 ATMs across the country. It also has the largest number of ATM/debit cards in circulation. This is mainly because of the large base of savings accounts held by the bank and also due to the vast reach of its network. The bank had around 16.9million financial cards in circulation in 2006.

·         ICICI bank, India’s largest private sector bank, has around 2,200 ATMs across India. It is also the second largest in terms of financial cards in circulation, with over 13 million in 2006.

·         UTI is one of the earliest private sector banks to start operations in India in 1994. It has around 1,737 ATMs, making it one of the largest networks in the country after SBI and ICICI.

·         Punjab National Bank (PNB), from modest beginnings, is today a front-line banking institution. It has 550 PNB ATMs and 11,000 ATMs through tie-ups with other banks. 

·         SBI & ICICI Bank have both followed a policy of avoiding multi-lateral shared ATM networks and opting for bi-lateral arrangements. While SBI has reciprocal ATM sharing arrangements with UTI Bank, HDFC Bank, Andhra Bank, Indian Bank, PNB and Corporation Bank, it is not a member of any multi-lateral network, not even NFS. ICICI Bank has reciprocal arrangements with Andhra Bank and Federal Bank, but it was the first bank to join NFS. HDFC Bank, which recently joined Cashnet, has also been avoiding multi-lateral ATM networks to date and relying more on reciprocal arrangements. Bi-lateral sharing of ATM networks is more popular among banks in India and is likely to co-exist with various multi-lateral sharing arrangements.

·         SBI has launched a “Rollout of ATM Prototype” as an initiative whereby cards are personalised for all eligible customers and handed out at the branches. To help them to acquaint themselves with ATM usage, dedicated support from ATM Dost is provided. ATM Dost is the bank’s marketing representative, selected from branch staff who give customers their cards and educate them about its usage and advantages. 

·         During the first half year of the 2005-2006 financial year, the new ATM prototype was rolled out to new 514 branches in 11 Circles. Another 500 branches were rolled out by the last quarter 2005. There was an increase in ATM usage and average of one million transactions took place in the network.

·         Andhra Bank has introduced an innovative ATM facility called “Quik Ticket”, which enables those holding an Andhra Bank debit or ATM card, or any Visa card, to book a flight with Kingfisher Airlines and also to purchase Kingfisher Airlines tickets through its network of 500 ATMs.


·         India’s number of ATMs per million people, at 10, is one of the lowest in the world – the potential for expanding the ATM network is thus tremendous, with the increase starting in country’s tier II cities. 

·         Interoperability between ATM networks for ATM cardholders from different banks is expected to take place by 2008-2009. Towards this objective, the IDRBT set up a “national financial switch” (NFS) in October 2006, to which all banks could connect to. At the time of writing, NFS had only six members.

·         There is a growing interest towards “white-label” ATMs or “no-name ATMs”. These are mostly owned and operated by private companies, not financial institutions. They provide an alternative source of cash withdrawal vis-à-vis traditional bank ATMs. Many companies are interested in this model, whereby the ATM is not owned by a bank but by a third party which deploys them and charges a fee on every transaction. White-Label ATMs are currently only at the conceptual stage in India as there are regulatory issues, particularly concerning the ownership of the cash in the ATM, which need to be addressed before this concept takes off. 

·         The central bank is pursuing the banks to introduce low-cost ATMs in rural areas in order to extend banking facilities. These ATMs would work as multi-service delivery channels providing better services to consumers.

·         The future of ATMs and self-service terminals lies in multi-tasking. Banks are increasingly looking at including additional services in ATMs. NCR Corporation, a maker of ATMs, has created a model which enables consumers to make bill payments, buy airline, railway or cinema tickets, print passbooks and renew driving licences. NCR is in the process of deploying or evaluating such a system for the banks. These ATMs are expected to trim costs, generate revenue and enhance customer loyalty.

Source-Euromonitor International : Country Sector Briefing April 2008
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