White Label ATMs – The Way Forward for New Age Agile Banks to Widen Their Reach

For India’s population of over 1.3 billion, cash remains favoured, and for many the only means of payment, especially in the semi-urban and the rural areas. While the number of debit-cum-ATM cards issued has increased significantly over the years, the number of ATMs has not increased commensurately. For the lack of sufficient means to access banks, and the low penetration of the digital solution is such areas, cash offers the convenience of quick transactions. 

Let us Look at India’s ATM Penetration 

The public sector banks in India collectively own about 134,518 ATM in India out of which only 28,900 are located in the rural area, which is about only 21.4% of their ATM deployment. SBI, one of the leading banks in India with the widest network of ATMs in the country (58,582) has about 11,104 (19%) of the ATMs operational in the rural markets. 

The new-age banks have even more meagre penetration in the rural and semi-urban areas with 11% of their total ATM deployment for the quarter ended June 2020. AU Small Finance Bank, which has one of the largest networks of ATMs among the small finance bank accounts deployed more than 140 new ATMs in the same period, which is about 45% of their total deployment.

The figures paint a clear picture of the Indian new-age banks’ infinitesimal presence and reach in the rural market. But, as Benjamin Franklin said, ‘out of adversity comes opportunity.’ As the businesses are slowly ushering into the unlock phase, new age banks can capitalise on the services provided by White Label ATM operators, that have uberised the way ATMs are deployed in the country.

To put things into perspective, the white-label ATM service providers collectively operate about 23,790 ATMs across India. Tata Communications Payment Solutions Ltd owns and manages the Indicash ATM network and has the highest network of ATMs in the country with 8,252 ATMs, of which 3,807 (46%) ATMs are deployed in the rural areas and 2,177 (26%) ATMs in semi-urban areas. 

The Significance of WLAs for New Age Agile Banks

The WLAs, by design, are focused on catering to the ATM needs of the rural and semi-urban population. As per the RBI mandate, the WLAs need to deploy 67% of their total deployment between tier 3 and tier 6 towns and villages. In a bid to grow the distribution network while keeping the cost under check, especially in the post COVID-19 phase, Banks can rely on WLA services’ plug and play operation model and get their branded ATM up and running across locations of their choice almost instantly. It is a win-win solution, where the agile banks can increase their brand footprint without investing in capital expenditure or operational cost and the WLAs provide end to end management services for a monthly fee. 

WLA – A Feasible Solution for New Age Agile Banks

A progressing economy and ever-increasing demand for financial services are putting massive pressure on the banking system. At the current level of infrastructure, it will be quite untenable. Partnering with WLA’s can help new age banks stay competitive with the big players in the market and propel their growth. 

*Data Source RBI