Sharing ATMs appears to be the latest trend sweeping the Indian banking industry, with several financial institutions in late July announcing tie-ups with other banks for sharing their respective ATMs.
It is largely the "have-nots" -- institutions with few ATMs -- who have sought the use of the facilities of the "haves" or banks with larger networks.
UTI Bank, one of the newest privately-owned banks, has signed an agreement with ABN-Amro Bank to allow the latter's customers to use its network of 575 ATMs across the country. UTI earlier forged a similar alliance with BNP Paribas. (See related story Indian banks take different approaches to ATMs)
For the private UTI Bank, HDFC Bank and ICICI Bank, which between them have more than 2,000 ATMs in most major Indian cities, renting out their extensive networks provides additional fee income. Each time one of their ATMs is used by another bank's customer, they stand to gain nearly Rs 50 (just over U.S. $1) per transaction.
Older private banks have also jumped on the bandwagon. South Indian Bank has tied up with Centurion Bank to share its ATM network, while Lakshmi Vilas Bank is reportedly on the lookout for partners.
Industry watchers say that foreign banks (barring Standard Chartered and Citibank, which have large ATM networks of their own) make logical candidates as alliance-seekers, since they do not have a large retail presence.
Confined as they are to a few branches and a handful of ATMs, these banks find it profitable to tie up with the increasingly aggressive private banks such as UTI that are pumping substantial funds into building large ATM networks all over the country.
Among the old public sector banks, though, the urge to make a lot more ATMs available to their customers is not so strong. Barring Corporation Bank, which is in talks with a couple of smaller state-run banks with an eye toward shared networks, the others have so far preferred to continue on their own.
Many of India's 14 government-owned banks, including State Bank of India, have announced plans to install between 100 and 200 ATMs each by year's end.
Why do these banks not want to share their ATMs? Harish K Murthi, chairman of the Chennai-based HMA group, a supplier of retail banking solutions including ATMs, believes it will happen in the long term as the market evolves.
HMA, which has a relationship with ATM provider Diebold, feels that banks will also widen their participation instead of entering into exclusive arrangements.
"Look at the Swadhan ATM sharing network being operated by the Indian Banks Association (a group of state-owned banks)" Murthi said. "Banks will come together when they do not fear the possibility of customer migration to another bank."
