Study: Global ATM market and forecast
Despite almost universal economic gloom, the number of ATMs worldwide actually grew in 2011. And at a healthy pace. The installed base of machines increased by 7.6 percent on the year — or nearly 170,000 units — to a grand total of just over 2.4 million.
These findings come from the "Global ATM Market and Forecasts to 2017", a just-published study by retail banking research and consulting firm RBR.
The study revealed that although the installed base did shrink in 12 of the 65 largest markets, some of the world's mature markets returned to growth last year after stagnating, or even contracting, during 2010.
The U.K., Italy and Germany all grew in 2011, though at a slow pace. The greatest decline in the number of ATMs occurred in Spain, where continuing bank mergers have led to consolidation of branch locations and ATM fleets.
On the other hand, Asia-Pacific set a record for growth in 2011, adding 112,000 ATMs — an increase of 13.5 percent, and the largest number of ATMs ever installed within one year. Other high-growth regions included the Middle East and Africa, and central and eastern Europe.
China and India — Tigers of Asia-Pacific
Almost two-thirds of ATM market growth came from the Asia-Pacific region, which includes four of the six countries that grew the most in absolute terms.
Slightly more than half of the region's new machines were installed in China, which accounted for one-third of the ATM growth globally. Most of the growth in China came from the country's five largest deployers. India and Indonesia accounted for another quarter of machines added in the region, and the State Bank of India generated a quarter of all growth in India.
China and India are home to the lion's share of the Asia-Pacific region's 3.8 billion people, and rising prosperity in both nations has brought millions into the middle class — and the banking system. Yet huge numbers of people in both countries still lack access to ATMs or other banking services. The Indian and Chinese governments are actively working to change this situation, which means that their potential for ATM growth remains immense.
The Middle East and Africa also achieved a strong rate of growth in 2011 —12.8 percent and 9.8 percent respectively. Most MEA growth came from Iran, where a cash-based economy coupled with high customer demand and government support of electronic banking prompted the country's newly privatized banks to focus on the ATM channel.
The report also draws attention to Nigeria and forecasts that it will grow considerably, overtaking Saudi Arabia to become the third largest market in the region by 2017. This is due in part — and somewhat counter-intuitively — to the "cash-less" policy of the central government of Nigeria. Government limits on ATM withdrawal amounts have driven up the frequency of ATM use by the banking public. Additionally, the government is working to bring more of its citizens into the banking economy.
Three-quarters of all new ATMs in central and eastern Europe were installed in Russia, where state-owned banks continue to drive growth. The RBR study concluded that Russia would continue to account for much of the region's ATM expansion as the result of rising debit card numbers, a strong demand for cash and government initiatives to provide financial services to all citizens.
Latin America dropped below the global average growth rate in 2011 — but not by much, at 7 percent. The western European installed base expanded by barely more than a percentage point, while North America showed no growth at all.
Developed markets want cost-control
Branch and cash handling costs are high in most developed countries and rising in many developing markets. FIs are working to cut costs by migrating routine transactions from the teller line to the ATM, and this is a key driver of deployment, the RBR study found. It was the most important driver throughout Europe, the second most important in North America and the third most important in Asiaâ€‘Pacific.
The need to control cash-handling costs has raised interest in deposit automation. The growth in ATMs with this feature significantly higher than the growth rate for cash dispensers. Automated note deposit was available at 23 percent of the world's ATMs by the end of 2011, up from 21 percent in 2010, Asia-Pacific generating the highest demand for auto-deposit functionality.
Operational and maintenance costs associated with operating ATM fleets pose a significant barrier to growth, RBR found. CIT costs are normally regarded as the most significant of these; the rising price of fuel further adds to the cost pressure.
Looking forward to 2017
By 2017, RBR anticipates that the global installed base of ATMs will rise by 46 percent to 3.5 million terminals. Asia-Pacific and the Middle East and Africa are forecast to be the leaders of growth, and the rate of ATM cash withdrawals is also expected to rise rapidly in these two areas, increasing by around 90 percent by 2017.
In Asia-Pacific, the Middle East and Africa, and central and eastern Europe, growth in ATM usage is expected to outpace the growth of installations. Worldwide, RBR expects the total number of cash withdrawals to rise at an average rate of 8 percent per year, compared with average growth of 7 percent per year for installations.
RBR concluded that, despite speculation about the emergence of cashless societies, worldwide demand for ATMs and cash withdrawals will remain high.