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
Headlines
·
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
Trends
·
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.
Prospects
·
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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